Financial. Statements

Transcription

1 Financial Statements Directors Report 44 Independent Auditors Report 48 Statements of Profit or Loss and 50 Other Comprehensive Income Statements of Financial Position 51 Statements of Changes in Equity 53 Statements of Cash Flows 56 Notes to the Financial Statements 59 Supplementary Information 126 Statement by Directors 127 Statutory Declaration 128

2 Directors Report The Directors of ANN JOO RESOURCES BERHAD present their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The principal activity of the Company is investment holding. The principal activities of its subsidiaries are as stated in Note 16 to the financial statements. There have been no significant changes in the nature of the principal activities of the Company and of its subsidiaries during the financial year. RESULTS OF OPERATIONS The results of operations of the Group and of the Company for the financial year are as follows: The Company Loss attributable to: Owners of the Company (135,475) (989) In the opinion of the Directors, the results of operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature other than the effect arising from the write down amounting to RM60,561,000 of inventories to their net realisable values as disclosed in Note 8 to the financial statements. DIVIDENDS Since the end of the previous financial year, the Company has paid a final single tier dividend of 1 sen per ordinary share amounting to RM5,006,510 in respect of the financial year ended 31 December 2014 on 23 June The directors do not recommend the payment of any final dividend in respect of the financial year ended 31 December RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year except as disclosed in the financial statements. ISSUE OF SHARES AND DEBENTURES The Company has not issued any new shares or debenture during the financial year. SHARE OPTIONS No options have been granted by the Company to any parties during the financial year to take up unissued shares of the Company. No shares have been issued during the year by virtue of the exercise of any option to take up unissued shares in the Company. As of the end of the year, there were no unissued shares of the Company under options. 44 Annual Report 2015

3 Directors Report OTHER STATUTORY INFORMATION Before the statements of profit or loss and other comprehensive income and the statements of financial position of the Group and of the Company were made out, the directors took reasonable steps: (a) (b) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and had satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values. At the date of this report, the Directors are not aware of any circumstances: (a) (b) (c) (d) which would render the amount written off as bad debts or the amount of allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or which have arisen and render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or not otherwise dealt with in this report or financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading. At the date of this report, there does not exist: (a) (b) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year and secures the liability of any other person; or any contingent liability of the Group and of the Company which has arisen since the end of the financial year. No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve 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. In the opinion of the Directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of operations of the Group and of the Company for the financial year in which this report is made. DIRECTORS The Directors who have held office since the date of the last report are as follows: Dato Lim Kiam Lam Dato Lim Hong Thye Lim Sin Seong Lim Kien Lip Y.A.M. Tunku Naquiyuddin Ibni Tuanku Ja afar Datuk Kamarudin bin Md Ali Lim Hun David Lim Lim Aun Chuan (Appointed on 1 July 2015) Lim Hong Hock (Appointed on 1 July 2015) Annual Report

4 Directors Report DIRECTORS INTERESTS The interests and deemed interests in the shares of the Company and of its related corporations (other than whollyowned subsidiaries) of those who were Directors at year end (including the interest of the spouses or children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors Shareholdings are as follows: (a) Shares in the Company Number of ordinary shares of RM1 each Balance at / Date of appointment Acquired Sold Balance at Direct interest Dato Lim Kiam Lam 9,018,250 9,018,250 Dato Lim Hong Thye 1,809,400 30,000 1,839,400 Lim Aun Chuan 50,000 10,000 60,000 Lim Hong Hock 419, ,500 Indirect interest Dato Lim Kiam Lam* 252,480, ,000 (50,000) # 252,635,632 Lim Sin Seong* 197,575, , ,780,032 Lim Kien Lip* 1,500,000 1,500,000 # Cessation of deemed interest in shares held by Lim Aun Chuan pursuant to Section 134(12)(c) of the Companies Act, (b) Shares in the Ultimate Holding Company Ann Joo Corporation Sdn. Bhd. Number of ordinary shares of RM1 each Balance at Balance at Acquired Sold Direct interest Dato Lim Kiam Lam 750, ,000 Indirect interest Dato Lim Kiam Lam* 23,900,000 23,900,000 Lim Sin Seong* 5,000,000 5,000,000 * Deemed interest by virtue of Section 6A(4)(c) and Section 134(12)(c) of the Companies Act, Annual Report 2015

5 Directors Report DIRECTORS INTERESTS cont d By virtue of Section 6A(4)(c) of the Companies Act 1965, Dato Lim Kiam Lam and Mr. Lim Sin Seong are also deemed to have interest in the shares of the Company and its related companies during the financial year to the extent that the ultimate holding company has an interest. None of the other Directors in office at the end of the financial year had any interest in the ordinary shares and options over ordinary shares of the Company and of its related companies during or at the beginning of the financial year. DIRECTORS BENEFITS Since the end of the previous financial year, no Directors has received or become entitled to receive any benefits (other than the benefits included in the aggregate amount of emoluments received or due and receivable by the Directors or the fixed salaries of fulltime employees of the Company as shown in Note 8.2 to the financial statements) by reason of a contract made by the Company or a related corporation with any 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 companies which traded with certain companies in the Group in the ordinary course of business. 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. HOLDING COMPANY The ultimate holding company of the Company is Ann Joo Corporation Sdn. Bhd., a private limited liability company incorporated in Malaysia. AUDITORS The auditors, Messrs. Deloitte, have indicated their willingness to accept reappointment. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors, DATO LIM KIAM LAM DATO LIM HONG THYE Petaling Jaya 13 April 2016 Annual Report

6 Independent Auditors Report to the Members of Ann Joo Resources Berhad Report on the Financial Statements We have audited the financial statements of ANN JOO RESOURCES BERHAD, which comprise the statements of financial position of the Group and of the Company as of 31 December 2015, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 50 to 125. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation of these financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatements, 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 misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 December 2015 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that: (a) (b) in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and by the subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act; we have considered the accounts and auditors reports of the subsidiaries of which we have not acted as auditors, as shown in Note 16 to the financial statements, being accounts that have been included in the financial statements of the Group; 48 Annual Report 2015

7 Independent Auditors Report to the Members of Ann Joo Resources Berhad (c) (d) we are satisfied that the accounts of the subsidiaries that have been consolidated with the financial statements of the Company 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 as required by us for those purposes; and the auditors reports on the accounts of the subsidiaries were not subject to any qualification and did not include any adverse comment made under subsection (3) of Section 174 of the Act. Other Reporting Responsibilities The supplementary information set out on page 126 of 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 and Losses in the Context of Disclosures 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 towards any other person for the contents of this report. DELOITTE AF 0080 Chartered Accountants YEE YOON CHONG Partner 1829/07/17 (J) Chartered Accountant Kuala Lumpur 13 April 2016 Annual Report

8 Statements of Profit or Loss and Other Comprehensive Income for the financial year ended 31 December 2015 The Company Note Revenue 5 1,760,928 2,291,974 10,824 Cost of sales (1,731,852) (2,078,825) Gross profit 29, ,149 10,824 Other operating income 4,061 14, Administrative expenses (71,064) (79,520) (992) (1,077) Distribution expenses (37,085) (42,208) Other operating expenses (7,889) (27,077) Results from operating activities (82,901) 78,884 (991) 9,751 Interest income 6 2,459 2, Finance costs 7 (60,092) (56,323) Operating (loss)/profit 8 (140,534) 24,990 (990) 9,818 Share of results of associates (10) (20) (Loss)/profit before tax (140,544) 24,970 (990) 9,818 Income tax credit/(expense) 9 5,069 (1,582) 1 (17) (Loss)/profit for the year (135,475) 23,388 (989) 9,801 Other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations 3, Change in fair value of equity securities classified as availableforsale (2) Net movement on cash flow hedges: Foreign currency forward contracts Other comprehensive income for the year, net of tax 3, Total comprehensive (loss)/income for the year (131,887) 24,369 (989) 9,801 (Loss)/profit attributable to: (135,475 ) 23,388 (989 ) 9,801 Total comprehensive (loss)/income attributable to: (131,887 ) 24,369 (989 ) 9,801 Earnings per ordinary share (sen): Basic and diluted 10 (27.06) 4.67 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 50 Annual Report 2015

9 Statements of Financial Position As at 31 December 2015 The Company Note ASSETS Noncurrent assets Property, plant and equipment 12 1,038,971 1,077,284 Prepaid lease payments 13 10,846 11,165 Investment properties 14 4,058 4,105 1,763 1,785 Intangible assets 15 7,182 7,182 Investment in subsidiaries , ,724 Investment in associates Other investments Deferred tax assets 19 78,166 67,445 Total noncurrent assets 1,139,750 1,167, , ,509 Current assets Inventories ,990 1,165,046 Receivables and prepayments , , ,127 Derivative assets 171 Current tax assets 4,139 3, Cash and bank balances 22 62,415 61, Total current assets 1,305,795 1,554, ,298 TOTAL ASSETS 2,445,545 2,721, , ,807 Annual Report

10 Statements of Financial Position As at 31 December 2015 The Company Note EQUITY AND LIABILITIES Capital and reserves Share capital , , , ,708 Treasury shares 24 (71,366) (71,343) (71,366) (71,343) Other reserves 25 86,135 82,547 22,342 22,342 Retained earnings , , , ,305 Total equity 926,576 1,063, , ,012 Noncurrent liabilities Loans and borrowings ,000 Provision for retirement benefits 27 5,942 6,238 Deferred tax liabilities 19 14,230 15,084 Total noncurrent liabilities 20, ,322 Current liabilities Loans and borrowings 26 1,300,283 1,183,539 Payables and accruals , ,400 3, Current tax liabilities 730 1, Total current liabilities 1,498,797 1,416,817 3, Total liabilities 1,518,969 1,658,139 3, TOTAL EQUITY AND LIABILITIES 2,445,545 2,721, , ,807 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 52 Annual Report 2015

11 Statements of Changes in Equity for the financial year ended 31 December 2015 Nondistributable reserves Distributable reserves Note Share capital Other reserves Treasury shares Retained earnings Total equity At 1 January ,708 82,547 (71,343) 529,581 1,063,493 Loss for the year (135,475) (135,475) Other comprehensive income for the year 3,588 3,588 Total comprehensive income/(loss) for the year 3,588 (135,475) (131,887) Share buybacks 24 (23) (23) Dividends to owners of the Company 11 (5,007) (5,007) At 31 December ,708 86,135 (71,366) 389, ,576 Annual Report

12 Statements of Changes in Equity for the financial year ended 31 December 2015 Nondistributable reserves Distributable reserves Note Share capital Other reserves Treasury shares Retained earnings Total equity At 1 January ,708 82,007 (71,284) 515,764 1,049,195 Profit for the year 23,388 23,388 Other comprehensive income for the year Total comprehensive income for the year ,388 24,369 Transfer to retained earnings upon disposal of property, plant and equipment (441) 441 Share buybacks 24 (59) (59) Dividends to owners of the Company 11 (10,012) (10,012) At 31 December ,708 82,547 (71,343) 529,581 1,063, Annual Report 2015

13 Statements of Changes in Equity for the financial year ended 31 December 2015 Nondistributable reserves Distributable reserves Note Share capital Other reserves Treasury shares Retained earnings Total equity The Company At 1 January ,708 22,342 (71,343) 458, ,012 Total comprehensive loss for the year (989) (989) Share buybacks Dividends to owners of the Company (23) (5,007) (23) (5,007) At 31 December ,708 22,342 (71,366) 452, ,993 At 1 January ,708 22,342 (71,284) 458, ,282 Total comprehensive income for the year 9,801 9,801 Share buybacks 24 (59) (59) Dividends to owners of the Company 11 (10,012) (10,012) At 31 December ,708 22,342 (71,343) 458, ,012 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. Annual Report

14 Statements of Cash Flows for the financial year ended 31 December 2015 CASH FLOWS FROM/ (USED IN) OPERATING ACTIVITIES The Company (Loss)/profit before tax (140,544) 24,970 (990) 9,818 Adjustments for: Allowance for diminution in value of raw materials 7,052 5,541 Allowance for impairment losses on receivables 2,374 6,459 Amortisation of prepaid lease payments Bargain purchase gain on acquisition of subsidiary (35) Bad debts written off 295 Depreciation of property, plant and equipment 47,813 47,774 Depreciation of investment properties Derivatives gain (116) Gain on disposal of property, plant and equipment (628) (2,873) Finance cost 60,092 56,323 Interest income (2,459) (2,429) (1) (67) Inventories written down to net realisable value ( NRV ) 60,561 16,082 Inventory adjustment (gain)/loss (463) 7,275 Property, plant and equipment written off Recovery of bad debts (9) (47) Retirement benefits Reversal of allowance for impairment losses on trade receivables (44) Share of results of associates Unrealised loss on foreign exchange 4,005 7,335 38, ,886 (969) 9, Annual Report 2015

15 Statements of Cash Flows for the financial year ended 31 December 2015 CASH FLOWS FROM/ (USED IN) OPERATING ACTIVITIES cont d The Company Note Movements in working capital: Decrease in inventories 146, ,009 Decrease in receivables and prepayments 34,810 59, (Decrease)/increase in payables and accruals (36,342) 23, Cash flows from/(used in) operations 184, ,520 (951) 9,959 Finance costs paid (44,205) (39,579) Income tax (paid)/refunded (5,833) (4,510) (27) 168 Interest income received 2,458 2,428 Retirement benefits paid 27 (1,130) (1,098) Net cash flows from/(used in) operating activities 135, ,761 (978) 10,127 CASH FLOWS FROM/ (USED IN) INVESTING ACTIVITIES Acquisition of associate (300) Acquisition of subsidiary (161) Acquisition of other investment (14) Interest received Proceeds from disposal of property, plant and equipment 1,407 4,998 Purchase of property, plant and equipment 12 (10,760) (15,016) Net cash flows (used in)/from investing activities (9,652) (10,192) 1 67 Annual Report

16 Statements of Cash Flows for the financial year ended 31 December 2015 CASH FLOWS (USED IN)/ FROM FINANCING ACTIVITIES The Company Note Changes in intercompany balances 5,841 Dividends paid to owners of the company (5,007) (10,012) (5,007) (10,012) Finance cost paid (15,887) (16,744) Net repayment of bank borrowings (107,680) (425,958) Share buybacks 24 (23) (59) (23) (59) Withdrawal/(Additional) of deposits pledged with licensed banks 1,088 (34) Net cash flows (used in)/from financing activities (127,509) (452,807) 811 (10,071) NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS (1,653) 7,762 (166) 123 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 57,018 48, Effects of exchange differences 3,343 1,211 CASH AND CASH EQUIVALENTS AT END OF YEAR 22 58,708 57, The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 58 Annual Report 2015

17 1. GENERAL INFORMATION The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad ( Bursa Malaysia ). The principal activity of the Company is investment holding. The principal activities of its subsidiaries are as stated in Note 16. There have been no significant changes in the nature of the principal activities of the Company and of its subsidiaries during the financial year. The registered office and principal place of business of the Company is located at Wisma Ann Joo, Lot 19391, Batu 8 ½, Jalan Klang Lama, Petaling Jaya, Selangor Darul Ehsan. The Directors regard Ann Joo Corporation Sdn. Bhd., a private limited liability company incorporated in Malaysia, as its ultimate holding company. The financial statements of the Group and of the Company were authorised for issuance by the Board of Directors in accordance with a resolution of the Directors on 13 April BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ( MFRS ), International Financial Reporting Standards ( IFRS ) and the requirements of the Companies Act 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted all the new and revised MFRSs and Issues Committee Interpretations ( IC Interpretation ) issued by the Malaysian Accounting Standards Board ( MASB ) which are mandatory for financial periods beginning on or after 1 January 2015 as described fully in Note 2.1. The financial statements are presented in Ringgit Malaysia ( RM ) and all values are rounded to the nearest thousand () except as otherwise indicated. 2.1 Application of new and revised Malaysian Financial Reporting Standards The accounting policies adopted are consistent with those of the previous financial year, except in the current financial year, the Group and the Company adopted the following new and amended MFRS which are mandatory for annual financial periods beginning on or after 1 January Amendments to MFRS 119: Defined Benefits Plans: Employee Contributions Annual Improvements to MFRSs Cycle Annual Improvements to MFRSs Cycle The adoption of these new and revised MFRSs did not result in significant changes in the accounting policies of the Group and of the Company and have no significant effect on the financial performance or position of the Group and of the Company. Annual Report

18 2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS cont d 2.2 Standards issued but not yet effective At the date of authorisation for issue of these financial statements, the new and revised Standards, which were issued but not yet effective and not early adopted by the Group and the Company are as listed below: Effective for financial periods beginning on or after 1 January 2016 MFRS 14 Amendments to MFRS 11 Amendments to MFRS 101 Amendments to MFRS 116 and MFRS 138 Amendments to MFRS 116 and MFRS 141 Amendments to MFRS 127 Amendments to MFRS 10, MFRS 12 and MFRS 128 Annual Improvements to MFRSs Cycle Regulatory Deferral Accounts Accounting for Acquisitions of Interests in Joint Operations Disclosure initiative Clarification of Acceptable Methods of Depreciation and Amortisation Agriculture: Bearer Plants Equity Method in Separate Financial Statements Investment Entities: Applying the Consolidation Exception Effective for financial periods beginning on or after 1 January 2018 MFRS 9 MFRS 15 1 The standard was initially effective for annual periods beginning on or after 1 January 2017, but issued in October 2015, moved the mandatory effective date to 1 January Deferred to a date to be determined by the MASB Financial Instruments Revenue from Contracts with Customers 1 1 Amendments to MFRS 10 and MFRS 128 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The Directors anticipate that the abovementioned Standards will be adopted in the annual financial statements of the Group and of the Company when they become effective and that the adoption of these Standards will have no material impact on the financial statements of the Group and of the Company in the period of initial application other than as disclosed otherwise below. MFRS 9 Financial Instruments In November 2014, MASB issued the final version of MFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. 60 Annual Report 2015

19 2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS cont d 2.2 Standards issued but not yet effective cont d MFRS 9 Financial Instruments cont d Key requirements of MFRS 9: All recognised financial assets that are within the scope of MFRS 139 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under MFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss. With regard to the measurement of financial liabilities designated as at fair value through profit or loss, MFRS 9 required that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability be presented in other comprehensive income, unless the recognition of the effect of changes in the liability s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability s credit risk are not subsequently reclassified to profit or loss. Under MFRS 139, the entire amount of the change in fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss. The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in MFRS 139. Under MFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of nonfinancial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an economic relationship. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity s risk management activities have also been introduced. The Directors of the Company anticipate that the application of MFRS 9 in the future may have a material impact on amounts reported in respect of the Group s and of the Company s financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of the effect of MFRS 9 until the Group completes a detailed review. MFRS 15 Revenue from Contracts with Customers MFRS 15 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111 Construction Contracts and the related interpretation when it becomes effective. The core principle of MFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5step approach to revenue recognition: Step 1 : Identify the contract(s) with a customer Step 2 : Identify the performance obligations in the contract Step 3 : Determine the transaction price Step 4 : Allocate the transaction price to the performance obligations in the contract Step 5 : Recognise revenue when (or as) the entity satisfies a performance obligation Annual Report

20 2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS cont d 2.2 Standards issued but not yet effective cont d MFRS 15 Revenue from Contracts with Customers cont d Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when control of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in MFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by MFRS 15. The Directors of the Company do not anticipate that the application of MFRS 15 in the future will have a significant impact on the amounts reported and disclosures made in these financial statements. Amendments to MFRS 101: Disclosure Initiatives The amendments to MFRS 101 include narrowfocus improvements in the following five areas: Materiality Disaggregation and subtotals Notes structure Disclosure of accounting policies Presentation of items of other comprehensive income arising from equity accounted investments The Directors of the Company do not anticipate that the application of these amendments will have a material impact on the Group s and the Company s financial statements. Amendments to MFRS 116 and MFRS 138 Clarification of Acceptable Methods of Depreciation and Amortisation The amendments to MFRS 116 prohibit entities from using a revenuebased depreciation method for items of property, plant and equipment. The amendments to MFRS 138 introduce a rebuttable presumption that revenue is not an appropriate basis for amortisation of an intangible asset. This presumption can only be rebutted in the following two limited circumstances: a. when the intangible asset is expressed as a measure of revenue; or b. when it can be demonstrated that revenue and consumption of the economic benefits of the intangible asset are highly correlated. The Directors of the Company do not anticipate that the application of these amendments to MFRS 116 and MFRS 138 will have a significant impact on the Group s and the Company s financial statements. Annual Improvements to MFRSs Cycle The Annual Improvements to MFRSs Cycle include a number of amendments to various MFRSs, which are summarised below. The Directors of the Company do not anticipate that the application of these amendments will have a significant impact on the Group s and the Company s financial statements. MFRS 5 Noncurrent Assets Held for Sale and Discontinued Operations The amendment to MFRS 5 clarifies that changing from one disposal methods to the other should not be considered to be a new plan of disposal, rather it is a continuation of the original plan. There is therefore no interruption of the application of the requirements in MFRS 5. The amendment also clarifies that changing the disposal method does not change the date of classification. This amendment is to be applied prospectively to changes in methods of disposal that occur in annual periods beginning on or after 1 January 2016, with earlier application permitted. 62 Annual Report 2015

21 2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS cont d 2.2 Standards issued but not yet effective cont d Annual Improvements to MFRSs Cycle cont d MFRS 7 Financial Instruments: Disclosures The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and arrangement against the guidance for continuing involvement in MFRS 7 in order to assess whether the disclosures are required. In addition, the amendment also clarifies that the disclosures in respect of offsetting of financial assets and financial liabilities are not required in the condensed interim financial report. Amendments to MFRS 119 Defined Benefit Plans: Employee Contributions The amendment to MFRS 119 clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used. MFRS 134 Interim Financial Reporting MFRS 134 requires entities to disclose information in the notes to the interim financial statements if not disclosed elsewhere in the interim financial report. The amendment states that the required interim disclosures must either be in the interim financial statements or incorporated by crossreference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report). The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. 3. SIGNIFICANT ACCOUNTING POLICIES 3.1 Basis of Accounting The financial statements of the Group and of the Company have been prepared on the basis of historical cost other than as disclosed in the accounting policies explained below. Historical cost is generally based on the fair value of the consideration given in exchange for assets. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristic into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such as basis, except for sharebased payment transactions that are within the scope of MFRS 2, leasing transactions that are within the scope of MFRS 117, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in MFRS 102 or value in use in MFRS 136. In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs for the asset or liability. Annual Report

22 3. SIGNIFICANT ACCOUNTING POLICIES cont d The principal accounting policies are set out below. 3.2 Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries (together referred to as the Group and individually referred to as Group entities ) at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. (i) Subsidiaries The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved when the Company: has power over the investee; is exposed, or has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company s voting rights in an investee are sufficient to give it power, including: the size of the Company s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; potential voting rights held by the Company, other vote holders or other parties; rights arising from other contractual arrangements; and any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders meetings. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. Investments in subsidiaries are stated in the Company s statement of financial position at cost less impairment losses, unless the investment is classified as held for sale. The cost of investments included transaction costs. (ii) Accounting for business combination Business combinations are accounted for using the acquisition method from the acquisition date except for business combinations involving Ann Joo Metal Sdn. Bhd., Ann Joo Trading Sdn. Bhd., Anshin Steel Industries Sdn. Bhd. and Saga Makmur Industri Sdn. Bhd. (business combinations prior to 1 January 2006) which were accounted for using the poolingofinterests method of accounting. Under the acquisition method of accounting, the financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control is ceased. 64 Annual Report 2015

23 3. SIGNIFICANT ACCOUNTING POLICIES cont d 3.2 Basis of consolidation cont d (ii) Accounting for business combination cont d Under the poolingofinterests method of accounting, the results of entities or businesses under common control are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established. The assets and liabilities acquired were recognised at the carrying amounts recognised previously in the Group s controlling shareholder s consolidated financial statements. The difference between the cost of acquisition and the nominal value of the shares acquired together with the share premium are taken to merger reserve (or adjusted against any suitable reserve in the case of debit differences). The other components of equity of the acquired entities are added to the same components within Group equity. 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 noncontrolling 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 bargain purchase gain is recognised immediately in profit or loss. For each business combination, the Group elects whether it measures the noncontrolling interests in the acquiree either at fair value or at the proportionate share of the acquiree s identifiable net assets at the acquisition date. Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisitiondate fair value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. (iii) Accounting for acquisition of noncontrolling interests treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its noncontrolling 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 subsidiary, any noncontrolling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an availableforsale financial asset depending on the level of influence retained. Annual Report

24 3. SIGNIFICANT ACCOUNTING POLICIES cont d 3.2 Basis of consolidation cont d (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. 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 equity accounted 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 equity accounted associate, the carrying amount of that interest including any longterm 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 investee. 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 the 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 stated in the Company s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale. The cost of investments includes transaction costs. (vi) Noncontrolling interests Noncontrolling 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 are 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 year between noncontrolling interests and the owners of the Company. Losses applicable to the noncontrolling interests in a subsidiary are allocated to the noncontrolling interests even if doing so causes the noncontrolling interests to have a deficit balance. (vii) Transactions eliminated on consolidation Intragroup balances and transactions, and any unrealised income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements. Uniform accounting policies are adopted in the consolidated financial statements for transactions and events in similar circumstances. Unrealised gains arising from transactions with equity accounted investees 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. 66 Annual Report 2015

25 3. SIGNIFICANT ACCOUNTING POLICIES cont d 3.3 Foreign currencies The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in Ringgit Malaysia ( RM ), which is the functional currency of the Company and the presentation currency for the consolidated financial statements. In preparing the financial statements of the individual entities, transactions in currencies other than the entity s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Nonmonetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognised in profit or loss in the period in which they arise except for: (a) Exchange differences arising on the retranslation of nonmonetary items carried at fair value in respect of which gain and losses are recognised in other comprehensive income. For such nonmonetary items, the exchange component of that gain or loss is also recognised in other comprehensive income; (b) Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; (c) Exchange differences on transactions entered into in order to hedge certain foreign currency risks; and (d) Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore, forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayments of the monetary items. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group s foreign operations are translated in RM using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to noncontrolling interests as appropriate). On the disposal of a foreign operation (i.e. a disposal of the Group s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly controlled entity that includes a foreign operation, or loss of significant influence over an associate that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss. Any exchange differences that have previously been attributed to noncontrolling interests are derecognised, but they are not reclassified to profit or loss. In addition, in relation to a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are reattributed to noncontrolling interests and are not recognised in profit or loss. For all other partial disposals (i.e. of associates or jointly controlled entities that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. Goodwill and fair value adjustments on identifiable assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of the reporting period. Exchange differences arising are recognised in other comprehensive income and accumulated in equity. Annual Report