KEY CONTROL PROCESSES The key processes adopted to establish, monitor and review the effectiveness of the Group s internal control system are as follows and these processes are embedded within the Group s overall business operations and guided by operational manuals on policies and procedures: Group and Organisational Structure Each company and key subsidiaries within the Group has its own management and internal control structures. The Management of each business unit bears responsibility for the identification and mitigation of major business risks and each maintains controls and procedures appropriate to its own business environment. These include procedures to identify and then mitigate significant risks; The Management Committees and Management of the Company and its key subsidiaries are responsible for effective risk management. Each business segment/division/department of the Company and key subsidiaries within the Group will evaluate its key risks and controls; The Group maintains an organisational structure with clearly defined responsibilities and delegation to the respective Boards and Management Committees of the key subsidiaries. Clear and well-defined lines of accountabilities, appropriate organisation structure for planning, executing, controlling and monitoring business operations and authority limits for all significant aspects of the businesses have been established in the Company and its key subsidiaries. This organisation structure and authority limits are subject to regular review and improvement; Key functions such as finance, tax and corporate affairs & secretarial are centralised at the Group s head office in Malaysia, together with the treasury and legal functions shared with TA Enterprise Berhad. Board and Management Committees The following Board and Management Committees with well-defined terms of reference and functions have been established to assist the Board in discharging its duties: Board Committees - Audit & Risk Committee; - Nomination Committee; and - Remuneration Committee. Management Committees - Property Management Committee; - Tender Committee; - Treasury Investment Committee; and - Risk Management Committee. Regular Board meetings are held to discuss and decide on major business direction, while the Management Committees discussions, briefings and meetings are held periodically to: Identify, discuss and resolve financial and key management issues; Manage the operational controls; Monitor and assess the business performance; Review the risks and controls of the businesses; Review and evaluate the information technology requirements and systems support of the various subsidiaries; and Deliberate on the investment proposals. The agenda and minutes of these meetings are presented to the Board of the Company, the respective Boards of the key subsidiaries and/or its Management periodically. TA Global Berhad Annual Report 81
Statement on Risk Management and Internal Control Planning, Monitoring and Reporting The Board evaluates and assesses the long and short-term risks and opportunities identified by each of the subsidiaries in the course of the Company s annual planning process. Regular reporting support the active monitoring of the Group s performance against plan to ensure that the objectives of the subsidiaries are in the context of the Group s overall s business strategies and objectives; Management reports and information on key operating statistics, assessment of business performance against approved budgets, environmental and regulatory matters are provided to the Board regularly from the Management of various business divisions; The Group emphasises continuous effort in ensuring the quality of its property development products. Its Property Development Division ensures that safety and health regulations, environmental controls and the related legislations in connection with the industry have been considered and complied with; Property investment, property development and hotel operations are an integral part of the Group s business. The Board places emphasis on appropriate controls and management of the following key functions of the Company: Sales and Marketing of its development products; Project and Contract Management function covering product planning and designing, project planning and scheduling, project cost control and environmental, quality assurance and quality control, project timeline control, health and safety; Credit Control and Administration function on billings and collections; and Management of its properties and buildings covering lease and rental as well as management of its unsold property units which have been fully developed. Management of its hotels and hospitality portfolio. Approved Policies and Authority Limits Policies and procedures for key business processes are formalised and documented for the Company and each of its key subsidiaries. Relevant regulations, rules, guidelines, laws, policies and procedures governing the major business operations of the Group are incorporated into control processes, operational manuals and guidelines. The manuals are reviewed and approved by the respective Heads of Department and Management before they are tabled to the Board for adoption and implementation; Limits of Approving Authorities are formalised and documented for key aspects of the Group's businesses, including matters that require Board approval. This provides a clear line of accountability and responsibility to facilitate decision making at the appropriate levels within the Group. Code of Conduct Corporate values which emphasise ethical behavior and quality service are set out in the TA Group Employees Code of Ethics and Conduct; The Board also adopts a Directors Code of Conduct which outlines the conduct required for Board members to discharge their duties in a professional, honest and ethical manner. A Whistleblower Policy is established to provide a channel of reporting for all employees and third parties to disclose any improper conduct, irregularities or wrongdoing. Human Resource Management The professionalism and competence of staff are maintained through a rigorous recruitment process, an annual appraisal system and training and development programmes to conform with regulatory requirements. Suitable employees with the required qualifications and experience are appointed. In addition, on-going internal and external training and development programmes are provided to develop and to enhance the competencies, skills and technical knowledge of the employees. 82 TA Global Berhad Annual Report
BOARD S CONCLUSION For the period under review, the Executive Director and Chief Financial Officer have provided the Board with assurance that the Group s risk management and internal control system are operating adequately and effectively, in all material aspects. The Management continues to take measures to strengthen the control environment. The Board recognises that the Group operates in a dynamic business environment in which the risk management and internal control system must be responsive in order to support its business objectives. As such, the Board is pleased to report that the current system of risk management and internal controls in place throughout the Group is adequate and satisfactory in addressing its principle risks and to safeguard the Group s interest and assets. The Board believes that the Group s business objectives and operational efficiency have been attained and there is no control failure or weakness that would have material adverse effect on the performance and results of the Group for the year under review and up to the date of approval of this statement for inclusion in the annual report. REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS The external auditors have reviewed this Statement on Risk Management and Internal Control pursuant to the scope set out in the Audit and Assurance Practice Guide ( AAPG ) 3, Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the Annual Report issued by the Malaysian Institute of Accountants ( MIA ) for inclusion in the annual report of the Group for the year ended 31 December 2017, and reported to the Board that nothing has come to their attention that causes them to believe that the statement intended to be included in the annual report of the Group, in all material respects: a. has not been prepared in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, or b. is factually inaccurate. AAPG 3 does not require the external auditors to consider whether the Directors Statement on Risk Management and Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group s risk management and internal control system including the assessment and opinion by the Board of Directors and management thereon. The auditors are also not required to consider whether the processes described to deal with material internal control aspects of any significant problems disclosed in the annual report will, in fact, remedy the problems. This Statement was approved by the Board on 27 April 2018. TA Global Berhad Annual Report 83
Statement on Directors Responsibility in Relation to the Financial Statements The Directors are required under Paragraph 15.26 (a) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad to issue a statement explaining their responsibility for preparing the annual audited financial statements. The Directors are required to ensure that the financial statements for each financial year are properly drawn up in accordance with the provisions of the Companies Act 2016 and in compliance with applicable approved accounting standards to give a true and fair view of the state of affairs of the Group and the Company as at the end of the financial year and of the results and cash flows of the Group and the Company for the financial year. In preparing those financial statements, the Directors are satisfied that: - The Group and the Company have used appropriate accounting policies and are consistently applied; Reasonable and prudent judgements and estimates were made; and All applicable approved accounting standards in Malaysia have been followed and confirmed that the financial statements have been prepared on a going concern basis. The Directors are responsible for keeping proper accounting records, which discloses with reasonable accuracy the financial position of the Group and of the Company at any time and to ensure that these financial statements comply with the Companies Act 2016. This Statement was approved by the Board on 23 April 2018. 84 TA Global Berhad Annual Report
The Westin Melbourne Melbourne, Australia TA Global Berhad Annual Report 85
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 2017. 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 40 to the financial statements. There has been no significant change in the nature of these activities during the financial year. Ultimate holding company The Company is a subsidiary of TA Enterprise Berhad, of which is incorporated in Malaysia and regarded by the Directors as the Company s ultimate holding company, during the financial year and until the date of this report. Subsidiaries The details of the Company s subsidiaries are disclosed in Note 40 to the financial statements. Results Group RM 000 Company RM 000 Profit attributable to owners of the Company 140,468 7,879 Reserves and provisions There were no material transfers to or from reserves and provisions during the financial year under review, except as disclosed in Note 17 the financial statements. 86 TA Global Berhad Annual Report
Directors Report Dividends Since the end of the previous financial year, the amount of dividends paid by the Company were as follows: (i) In respect of the financial year ended 31 December 2016 as reported in the Directors Report of that year: a final ordinary dividend of 0.40 sen per ordinary share totaling RM21,286,896 declared on 19 April 2017 and paid on 17 July 2017. The final ordinary dividend recommended by the Directors in respect of the financial year ended 31 December 2017 is 0.60 sen per ordinary share totaling RM31,930,344 to be approved by shareholders of the Company at the forth coming Annual General Meeting. 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 Khoo Poh Kim @ Kimmy The names of the directors of the Company s subsidiaries in office during the financial year until the date of this report are: Datuk Tiah Thee Kian Datin Tan Kuay Fong Khoo Poh Kim @ Kimmy Dato Sri Mohamed Bin Abid Ernest Yeap Kian Fuj Chuah Wen Pin Loi Kent Liak Tiah Joo Kim Dulsi Karabet Ong Khay Soon Tony Ong Thian Bok Peter John Tudehope Tan Kuay Geok Jimmy Wong Mike Mootien Chau Koan Hung Lee Medd Somnuk Chapin Tiah Ee Laine Khong Kim Kong Yip Kam Mun TA Global Berhad Annual Report 87
Directors Report 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 of the Company at financial year end (including the interests 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: Number of ordinary shares At 1.1.2017 Bought Sold At 31.12.2017 Interest in the holding company TA Enterprise Berhad ( TAE ) Datuk Tiah Thee Kian - direct 544,012,600 - - 544,012,600 - others @ 1,018,000 - - 1,018,000 Datin Tan Kuay Fong - direct 5,296,000 - - 5,296,000 - others @ 1,018,000 - - 1,018,000 Dato Sri Mohamed Bin Abid - direct 100,000 - - 100,000 Christopher Koh Swee Kiat - direct 16,000 - - 16,0000 Khoo Poh Kim @ Kimmy - direct 430,000 - - 430,000 Interest in the Company Datuk Tiah Thee Kian - direct 394,131,938 132,716,300-526,848,238 - others @ 266,260,782 - - 266,260,782 Datin Tan Kuay Fong - direct 6,755,200 - - 6,755,200 - others @ 266,260,782-266,260,782 Zainab Binti Ahmad - direct 200,000 - - 200,000 Dato Sri Mohamed Bin Abid - direct 529,880 - - 529,880 - others @ 15,360 - - 15,360 U Chin Wei - direct 156,000 - - 156,000 Leong Kam Weng - direct 60,000 - - 60,000 - others # 66,000 - - 66,000 Christopher Koh Swee Kiat - direct 94,200 - - 94,200 Datin Rahmah Binti Mahmood - direct 105,000 - - 105,000 Khoo Poh Kim @ Kimmy - direct 636,000 - - 636,000 Deemed interests in the Company Datuk Tiah Thee Kian 3,202,334,270 - - 3,202,334,270 Datin Tan Kuay Fong 3,202,334,270 - - 3,202,334,270 # Indirect interest held through spouse @ Indirect interest held through children 88 TA Global Berhad Annual Report
Directors Report Directors interests in shares (continued) By virtue of their interests 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 TA Global Berhad has an interest. Directors benefits Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than those fees and other benefits 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 Company or 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 companies which traded with certain companies in 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 39 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 other changes in the 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. Indemnity and Insurance costs During the financial year, the Company effected a Group Directors and Officers Liability Insurance Policy under TA Enterprise Berhad, covering TA Enterprise Berhad and its subsidiaries. The aggregated amount of insurance effected for the Directors and Officers was RM40,894. TA Global Berhad Annual Report 89
Directors Report 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) iii) iv) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or 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 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. In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended 31 December 2017 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 during and after the financial year end The significant and subsequent events of the Group and of the Company are as disclosed in Notes 41 and Note 42 respectively to the financial statements. 90 TA Global Berhad Annual Report
Directors Report Auditors The auditors, KPMG PLT, have indicated their willingness to accept re-appointment. The auditors remuneration is disclosed in Note 28 to the financial statements. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors: Dato Sri Mohamed Bin Abid Director Khoo Poh Kim @ Kimmy Director Kuala Lumpur Date: 27 April 2018 TA Global Berhad Annual Report 91
Statements Of Financial Position AS AT 31 December 2017 Group Company Note 31.12.2017 31.12.2016 1.1.2016 31.12.2017 31.12.2016 1.1.2016 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Assets Property, plant and equipment 3 2,355,738 2,131,954 2,039,900 24,561 25,594 25,821 Investment properties 4 590,863 606,630 585,017 - - - Inventories 5 604,471 900,565 817,000 - - - Intangible assets 7 310,435 318,370 311,161 5 4 2 Investment in subsidiaries 8 - - - 2,401,316 2,401,316 2,401,316 Investment in associates 9 14,331 14,446 14,615 - - - Investment in joint ventures 10 76,661 229,783 89,853 - - - Investment in securities 11 186,918 290,323 198,543 318,057 321,424 324,570 Deferred tax assets 12 85,482 81,184 75,573 - - 190 Receivables 14 17,026 17,979 293,732 - - - Total non-current assets 4,241,925 4,591,234 4,425,394 2,743,939 2,748,338 2,751,899 Contract costs 6 8,304 3,326 2,342 - - - Investment in securities 11 341,281 413,555 156,805 - - - Inventories 5 786,800 259,534 282,165 - - - Contract assets 13 4,204 - - - - - Receivables 14 95,539 165,030 85,056 1,632,564 1,698,797 1,569,223 Derivatives 21 240-720 - - - Tax recoverable 33,429 25,248 18,541 5,600 6,497 3,857 Cash and cash equivalents 15 745,827 912,036 420,140 9,291 16,334 61,942 Total current assets 2,015,624 1,778,729 965,769 1,647,455 1,721,628 1,635,022 Total assets 6,257,549 6,369,963 5,391,163 4,391,394 4,469,966 4,386,921 The notes on pages 104 to 247 are an integral part of these financial statements. 92 TA Global Berhad Annual Report
Statements Of Financial Position AS AT 31 December 2017 (continued) Group Company Note 31.12.2017 31.12.2016 1.1.2016 31.12.2017 31.12.2016 1.1.2016 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Equity Share capital 16 2,660,862 2,660,862 2,660,862 2,660,862 2,660,862 2,660,862 Reserves 17 391,091 358,107 54,541 431,288 444,696 330,519 Total equity attributable to owners of the Company 3,051,953 3,018,969 2,715,403 3,092,150 3,105,558 2,991,381 Preference shares issued by subsidiaries 18 57,988 57,988 57,988 - - - Total equity 3,109,941 3,076,957 2,773,391 3,092,150 3,105,558 2,991,381 Liabilities Deferred tax liabilities 12 226,330 237,382 270,301 56 82 - Borrowings 19 363,691 1,302,286 742,903-476,762 491,487 Payables 20 7,468 9,070 8,179 - - - Total non-current liabilities 597,489 1,548,738 1,021,383 56 476,844 491,487 Borrowings 19 2,060,513 1,275,462 1,281,278 657,333 237,198 234,218 Payables 20 452,988 443,271 307,222 638,345 647,963 669,013 Contract liabilities 13 3,013 2,173 1,069 - - - Income tax payable 28,913 19,454 4,602 3,510 2,403 822 Derivatives 21 4,692 3,908 2,218 - - - Total current liabilities 2,550,119 1,744,268 1,596,389 1,299,188 887,564 904,053 Total liabilities 3,147,608 3,293,006 2,617,772 1,299,244 1,364,408 1,395,540 Total equity and liabilities 6,257,549 6,369,963 5,391,163 4,391,394 4,469,966 4,386,921 The notes on pages 104 to 247 are an integral part of these financial statements. TA Global Berhad Annual Report 93
Statements of Profit or Loss FOR THE FINANCIAL YEAR ENDED Group Company Note 2017 2016 2017 2016 RM 000 RM 000 RM 000 RM 000 Revenue 22 745,059 646,146 63,690 63,507 Other income 23 57,455 37,195 1,535 19,685 Cost of inventories (52,947) (39,423) - - Cost of properties and construction materials sold 24 1,400 (62,919) - - Hotel operation costs (excluding personnel costs) (198,472) (135,325) - - Personnel costs 25 (260,139) (190,273) (39,721) (27,272) Depreciation (101,475) (80,803) (999) (946) Foreign exchange gain/(loss), net 27 32,555 26,122 (52,341) 36,815 Other expenses (56,360) (81,201) (13,899) (8,143) Operating profit/(loss) 167,076 119,519 (41,735) 83,646 Finance income 29 70,283 41,575 82,387 80,988 Finance costs 30 (72,054) (62,531) (27,197) (30,665) Share of results in investment in associates, net of tax 9 (178) (169) - - Share of results in joint ventures, net of tax 10 575 124,802 - - Profit before tax 28 165,702 223,196 13,455 133,969 Income tax 31 (25,234) 9,872 (5,576) (6,488) Profit for the financial year 140,468 233,068 7,879 127,481 Profit attributable to: Owners of the Company 140,468 233,068 7,879 127,481 Basic earnings per ordinary share (sen) 32 2.64 4.38 The notes on pages 104 to 247 are an integral part of these financial statements. 94 TA Global Berhad Annual Report
Statements of Profit or Loss And Other Statements Comprehensive of Profit Income or Loss FOR THE FINANCIAL YEAR ENDED Group Company 2017 2016 2017 2016 RM 000 RM 000 RM 000 RM 000 Profit for the financial year 140,468 233,068 7,879 127,481 Other comprehensive income: Items that will be reclassified subsequently to profit or loss: Net (loss)/gain on foreign currency translation differences (82,570) 74,828 - - Available-for-sale financial assets - Net fair value (loss)/gain (5,616) 9,504 - - - Reclassification to profit or loss 2,487 (574) - - - Income tax effect (498) 44 - - Other comprehensive (loss)/ income for the financial year (86,197) 83,802 - - Total comprehensive income for the financial year 54,271 316,870 7,879 127,481 Total comprehensive income attributable to: Equity holders of the Company 54,271 316,870 7,879 127,481 The notes on pages 104 to 247 are an integral part of these financial statements. TA Global Berhad Annual Report 95
Consolidated Statement Of Changes In Equity Note Share capital /------------------ Non-distributable -----------------/ Distributable Merger deficit Availablefor-sale reserve Exchange translation reserve Capital reserve Retained earnings Total Preference shares issued by subsidiaries Total equity RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Group At 1 January 2016 2,660,862 (926,077) 3,449 397,307 214 579,648 2,715,403 57,988 2,773,391 Total comprehensive income for the year - Profit for the year - - - - - 233,068 233,068-233,068 - Other comprehensive income - - 8,974 74,828 - - 83,802-83,802 - - 8,974 74,828-233,068 316,870-316,870 Contributions by and distributions to owners of the Company - Dividend to owners of the Company 33 - - - - - (13,304) (13,304) - (13,304) Total transactions with owners of the Company - - - - - (13,304) (13,304) - (13,304) At 31 December 2016 2,660,862 (926,077) 12,423 472,135 214 799,412 3,018,969 57,988 3,076,957 Note 16 Note 17 Note 17 Note 17 Note 17 Note 17 The notes on pages 104 to 247 are an integral part of these financial statements. 96 TA Global Berhad Annual Report
Consolidated Statement Of Changes In Equity (continued) Note Share capital /------------------- Non-distributable-------------/ Distributable Merger deficit Availablefor-sale reserve Exchange translation reserve Capital reserve Retained earnings Total Preference shares issued by subsidiaries Total equity RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Group At 1 January 2017 2,660,862 (926,077) 12,423 472,135 214 799,412 3,018,969 57,988 3,076,957 Total comprehensive income for the year - Profit for the year - - - - - 140,468 140,468-140,468 - Other comprehensive expense - - (3,627) (82,570) - - (86,197) - (86,197) - - (3,627) (82,570) - 140,468 54,271-54,271 Contributions by and distributions to owners of the Company - Dividend to owners of the Company 33 - - - - - (21,287) (21,287) - (21,287) Total transactions with owners of the Company - - - - - (21,287) (21,287) - (21,287) At 31 December 2017 2,660,862 (926,077) 8,796 389,565 214 918,593 3,051,953 57,988 3,109,941 Note 16 Note 17 Note 17 Note 17 Note 17 Note 17 The notes on pages 104 to 247 are an integral part of these financial statements. TA Global Berhad Annual Report 97
Statement Of Changes In Equity Distributable Share capital Retained earnings Total equity Note RM 000 RM 000 RM 000 Company At 1 January 2016 2,660,862 330,519 2,991,381 Profit and total comprehensive income for the year - 127,481 127,481 Contributions by and distributions to owners of the Company - Dividend to owners of the Company 33 - (13,304) (13,304) At 31 December 2016/1 January 2017 2,660,862 444,696 3,105,558 Profit and total comprehensive income for the year - 7,879 7,879 Contributions by and distributions to owners of the Company - Dividend to owners of the Company 33 - (21,287) (21,287) At 31 December 2017 2,660,862 431,288 3,092,150 Note 16 Note 17 The notes on pages 104 to 247 are an integral part of these financial statements. 98 TA Global Berhad Annual Report
Statements Of Cash Flows FOR THE FINANCIAL YEAR ENDED Group Company 2017 2016 2017 2016 RM 000 RM 000 RM 000 RM 000 Cash flows from operating activities Profit before tax 165,702 223,196 13,455 133,969 Adjustments for: Amortisation of: - deferred leasing costs 676 579 - - - intangible assets 505 492 1 2 - deferred tenant inducement costs 2,664 1,872 - - Depreciation 101,475 80,803 999 946 Loss on disposal of property, plant and equipment 16 155 - - Gain on disposal of investment properties (3,866) - - - Property, plant and equipment written off 37 2,595 - - Bad debts written off 363 436 - - Net provision for employee benefits 246 867 - - Net allowance/(reversal) for impairment losses on: - financial receivables 309 (114) - - - trade receivables (501) (805) - - - investment securities 88 3,138 - - - Inventories (property development cost) (1,000) - - - - Investment property (330) - - - - due from subsidiaries or related companies - - 1,405 (18,052) - plant & equipment 652-652 - Unrealised fair value loss on derivatives 980 1,505 - - Net fair value gain on fair value through profit of loss ( FVTPL ) investment (11,667) (430) - - Share of loss of associates net of tax 178 169 - - Net gain on disposal/ redemption of investment in securities (2,487) (1,528) - - Net unrealised loss/(gain) on foreign exchange 5,475 (13,818) 54,781 (36,750) The notes on pages 104 to 247 are an integral part of these financial statements. TA Global Berhad Annual Report 99
Statements Of Cash Flows FOR THE FINANCIAL YEAR ENDED (continued) Group Company 2017 2016 2017 2016 RM 000 RM 000 RM 000 RM 000 Cash flows from operating activities (continued) Realised fair value gain on derivatives (29,532) (13,782) - - Realised fair value (gain)/loss on held for trading investment (712) 71 - - Interest income (70,283) (71,619) (82,387) (80,988) Interest expense 72,054 62,531 27,197 30,665 Financial guarantee income - - (909) (1,241) Gross dividend from subsidiaries - - (46,432) (39,986) Share of profit in joint ventures (575) (124,802) - - Gross dividends from quoted and unquoted investments (1,677) (2,331) - - Operating profit/(loss) before changes in working capital 228,790 149,180 (31,238) (11,435) Changes in working capital: Contract costs 4,118 707 - - Contract assets (4,204) - - - Contract liabilities 840 963 - - Receivables 147,651 295,471 (233) (139) Inventories (195,068) 21,217 - - Payables (6,385) 62,098 (263) 8,921 Net amount due from/to related companies 59,581 9,206 115,193 21,643 Cash generated from operations 235,323 538,842 83,459 18,990 Taxes paid (39,394) (20,097) (3,598) (7,275) Interest paid (56) (9) (18) - Interest received 6,229 4,612 1,763 133 Net cash from operating activities 202,102 523,348 81,606 11,848 The notes on pages 104 to 247 are an integral part of these financial statements. 100 TA Global Berhad Annual Report
Statements Of Cash Flows FOR THE FINANCIAL YEAR ENDED (continued) Group Company 2017 2016 2017 2016 RM 000 RM 000 RM 000 RM 000 Cash flows from investing activities Purchase of: - property, plant and equipment (357,878) (109,822) (618) (719) - intangible assets (136) (36) (2) (4) - investment property (11,250) (19,204) - - - Inventories - land held for property development (65,098) (73,174) - - - investment securities (774,232) (431,636) - - Proceeds from disposal of: - property, plant and equipment 6,543 9 - - - investment property 7,761 - - - - derivatives 29,533 13,782 - - - investment securities 96,240 59,760 - - Distribution received from joint venture 166,855 - - - Investment in an associate (63) - - - Proceeds from redemption of bond 722,315 131,361 - - Decrease/(increase) in pledged deposits for investing facilities 123,009 (512,640) - - Interest received 64,053 68,778 - - Dividends received 1,266 1,934 - - Deposits paid for acquisition of property, plant and equipment - (66,536) - - Net cash from/(used in) investing activities 8,918 (937,424) (620) (723) Cash flows from financing activities Drawdown of borrowings 298,314 616,945 5,000 49,199 Repayment of borrowings (354,546) (152,283) (48,337) (74,316) Interest paid (73,863) (64,293) (23,341) (18,669) Dividend paid (21,287) (13,304) (21,287) (13,304) Net cash (used in)/from financing activities (151,382) 387,065 (87,965) (57,090) Net increase/(decrease) in cash and cash equivalents 59,638 (27,011) (6,979) (45,965) Effect of exchange rate fluctuation on cash held (35,784) 6,267 (64) 357 Cash and cash equivalents at beginning of financial year 156,186 176,930 16,334 61,942 Cash and cash equivalents at end of financial year 180,040 156,186 9,291 16,334 The notes on pages 104 to 247 are an integral part of these financial statements. TA Global Berhad Annual Report 101
Statements Of Cash Flows FOR THE FINANCIAL YEAR ENDED (continued) 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 2017 2016 2017 2016 RM 000 RM 000 RM 000 RM 000 Cash and bank balances 15 745,827 912,036 9,291 16,334 Less: Deposit pledged for bank guarantees 15 (565,787) (755,850) - - 180,040 156,186 9,291 16,334 Reconciliation of movements of liabilities to cash flows arising from financing activities Borrowing Interest Payable Due to ultimate holding Total RM 000 RM 000 RM 000 RM 000 Group As at 1 January 2017 2,577,748 4,387 127,088 2,709,223 Changes from financing activities Drawdown borrowing 298,314 - - 298,314 Repayment of borrowing (354,546) - - (354,546) Interest paid - (68,000) (5,863) (73,863) Total changes from financing cash flows (56,232) (68,000) (5,863) (130,095) Other changes Capitalised in contract costs - 741-741 Finance cost - 66,041 5,950 71,991 Net amount due to ultimate holding company - - (4,168) (4,168) Foreign exchange differences (97,312) (32) - (97,344) Total liability related other changes (97,312) 66,750 1,782 (28,780) As at 31 December 2017 2,424,204 3,137 123,007 2,550,348 Note 19 Note 20.3 Note 20.4 The notes on pages 104 to 247 are an integral part of these financial statements. 102 TA Global Berhad Annual Report
Statements Of Cash Flows FOR THE FINANCIAL YEAR ENDED (continued) Reconciliation of movements of liabilities to cash flows arising from financing activities (continued) Borrowing Interest Payable Due to ultimate holding Due to subsidiaries Total RM 000 RM 000 RM 000 RM 000 RM 000 Company As at 1 January 2017 713,960 1,584 122,076 511,303 1,348,923 Changes from financing activities Drawdown borrowing 5,000 - - - 5,000 Repayment of borrowing (48,337) - - - (48,337) Interest paid - (17,299) (5,863) (179) (23,341) Total changes from financing cash flows (43,337) (17,299) (5,863) (179) (66,678) Other changes Finance cost - 16,949 5,863 4,367 27,179 Net amount due to ultimate holding company/subsidiaries - - 117 11,766 11,883 Foreign exchange differences (13,290) - - (25,075) (38,365) Total liability related other changes (13,290) 16,949 5,980 (8,942) 697 As at 31 December 2017 657,333 1,234 122,193 502,182 1,282,942 Note 19 Note 20.3 Note 20.4 Note 20.4 The notes on pages 104 to 247 are an integral part of these financial statements. TA Global Berhad Annual Report 103
Notes To The Financial Statements TA Global 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 the 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, 50250 Kuala Lumpur. The consolidated financial statements of the Company as at and for the financial year ended 31 December 2017 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 2017 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 40 to the financial statements. There has been no significant change in the nature of these activities during the financial year. The holding company during the financial year was TA Enterprise Berhad, a company incorporated in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad. The financial statements were authorised for issue by the Board of Directors on 27 April 2018. 1. Basis of preparation (a) Statement of compliance The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ( MFRSs ), International Financial Reporting Standards ( IFRSs ) and the requirements of Companies Act 2016 in Malaysia. These are the Group and the Company s first financial statements prepared in accordance with MFRSs and MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards has been applied. In the previous financial years, the financial statements of the Group and of the Company were prepared in accordance with Financial Reporting Standards ( FRSs ). The transition to MFRS has no material financial impact to the financial statements of the Group and of the Company except as disclosed in Note 43. 104 TA Global Berhad Annual Report
Notes To The Financial Statements 1. Basis of preparation (continued) (a) Statement of compliance (continued) MFRSs, Interpretations and amendments early adopted by the Company MFRS 15, Revenue from Contracts with Customers The Group and the Company early adopted MFRS 15, Revenue from Contracts with Customers in the current financial year. Adoption of this MFRS requires the Group and the Company to recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the considerations to which the entity expects to be entitled in exchange for those goods or services. The timing of revenue recognition and satisfaction of performance obligation of the Group and of the Company are stipulated in Note 2(p). The recognition of contract costs are as stipulated in Note 2(h). The impact on transition to MFRS 15 is disclosed in Note 43. 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: MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2018 MFRS 9, Financial Instruments (2014) IC Interpretation 22, Foreign Currency Transactions and Advance Consideration Amendments to MFRS 2, Share-based Payment Classification and Measurement of Share-based Payment Transactions Amendments to MFRS 4, Insurance Contracts Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts Amendments to MFRS 128, Investments in Associates and Joint Ventures (Annual Improvements to MFRS Standards 2014-2016 Cycle) Amendments to MFRS 140, Investment Property Transfers of Investment Property MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2019 MFRS 16, Leases IC Interpretation 23, Uncertainty over Income Tax Incentives Amendments to MFRS 3, Business Combinations (Annual Improvements to MFRS Standards 2015-2017 Cycle) Amendments to MFRS 9, Financial Instruments Prepayment Features with Negative Compensation Amendments to MFRS 11, Joint Arrangements (Annual Improvements to MFRS Standards 2015-2017 Cycle) Amendments to MFRS 112, Income Taxes (Annual Improvements to MFRS Standards 2015-2017 Cycle) Amendments to MFRS 119, Employee Benefits Plan Amendment, Curtailment or Settlement TA Global Berhad Annual Report 105
Notes To The Financial Statements 1. Basis of preparation (continued) (a) Statement of compliance (continued) MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2019 (continued) Amendments to MFRS 123, Borrowing Costs (Annual Improvements to MFRS Standards 2015-2017 Cycle) Amendments to MFRS 128, Investments in Associates and Joint Ventures Long-term Interests in Associates and Joint Ventures MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2021 MFRS 17, Insurance Contracts MFRSs, Interpretations and amendments effective for a date yet to be confirmed Amendments to MFRS 10, Consolidated Financial Statements and MFRS 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 2018 for those accounting standards that are effective for annual periods beginning on or after 1 January 2018 except for Amendments to MFRS 2 and Amendments to MFRS 4 which are not applicable to the Group and the Company; and from the annual period beginning on 1 January 2019 for the accounting standard that is effective for annual periods beginning on or after 1 January 2019. The Group and the Company do not plan to apply MFRS 17, Insurance Contracts that is effective for annual periods beginning on or after 1 January 2021 as it is not applicable to the Group and the Company. The initial application of the above mentioned accounting standards, amendments and interpretations are not expected to have any material impacts to the financial statements of the Group and the Company except as mentioned below: i) MFRS 9, Financial Instruments MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the classification and measurement of financial assets and financial liabilities, and on hedge accounting. MFRS 9 contains three principal classification categories for financial assets measured at amortised cost, Fair Value through Other Comprehensive Income ( FVTOCI ) and Fair Value through Profit or Loss ( FVTPL ). The standard eliminates the existing MFRS 139 categories of held-to-maturity, loans and receivables and available-for-sale. 106 TA Global Berhad Annual Report
Notes To The Financial Statements 1. Basis of preparation (continued) (a) Statement of compliance (continued) i) MFRS 9, Financial Instruments (continued) The Group and the Company will take advantage of the exemption allowing it not to restate comparative information for prior years with respect to classification and measurement (including impairment) changes. Differences in carrying amounts of the financial assets and financial liabilities resulting from the adoption of MFRS 9 will generally be recognised in retained earnings and reserves as at 1 January 2018. In respect of impairment of financial assets, MFRS 9 replaces the incurred loss model in MFRS 139 with an expected credit loss ( ECL ) model. The new impairment model applies to financial assets measured at amortised cost, contract assets and debt investments measured at FVTOCI, but not to investments in equity instruments. The Group and the Company do not expect the classification and measurement (including impairment) changes to have material impact on its financial statements as at 1 January 2018. The estimated impact on initial application is based on assessment undertaken to date and the actual impacts of adopting the standard may be subject to changes arising from further detailed analysis or additional reasonable and supportable information being available to the Group in the future until the Group presents its first financial statements that include the date of initial application. ii) MFRS 16, Leases MFRS 16 replaces the guidance in MFRS 117, Leases, IC Interpretation 4, Determining whether an Arrangement contains a Lease, IC Interpretation 115, Operating Leases Incentives and IC Interpretation 127, Evaluating the Substance of Transactions Involving the Legal Form of a Lease. MFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard which continues to be classified as finance or operating lease. The Group and the Company are currently assessing the financial impact that may arise from the adoption of MFRS 16. TA Global Berhad Annual Report 107
Notes To The Financial Statements 1. Basis of preparation (continued) (b) Basis of measurement The financial statements have been prepared on the historical cost basis unless otherwise disclosed in Note 2. As at 31 December 2017, the current liabilities of the Group exceeded the current assets by RM534,495,000. The validity of the going concern basis is dependent on the ability of the Group to generate sufficient cash from its operations to enable the Group to meet its obligations as and when they fall due. Subsequent to the financial year end, the Group has received sales proceeds of AUD245,000,000 (RM774,000,000 equivalent) from the disposal of a development property as disclosed in Note 42(i) and a compensation sum of RM32,000,000 pursuant to a compulsory acquisition of an undeveloped land as disclosed in Note 42(ii), for working capital on ongoing property development projects and repayment of bank borrowings. The Group also negotiated to restructure certain short term borrowings to correspond with the funding requirements of its long term business plan. At the date of this report, there is no reason for the Directors to believe that the preparation of financial statements of the Group on a going concern basis is inappropriate. Accordingly, the financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that may be necessary if the Group is unable to continue as a going concern. (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 MFRSs 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. 108 TA Global Berhad Annual Report
Notes To The Financial Statements 1. Basis of preparation (continued) (d) Use of estimates and judgements (continued) 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 7 Impairment on intangible assets Determining whether goodwill is impaired requires estimation of recoverable amount of cash generating unit 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 7. Note 8 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 11 Valuation on unquoted 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. Note 22 Revenue recognition The new accounting policy of revenue requires significant accounting estimates and judgements made in determining the transaction price, allocating the transaction price to performance obligations and determining when performance obligations are satisfied. 2. Significant accounting policies The accounting policies set out below have been applied consistently to the periods presented in the financial statements and in preparing the opening MFRS statements of financial position of the Group and of the Company at 1 January 2016 (the transition date to MFRSs framework), unless otherwise stated. TA Global Berhad Annual Report 109
Notes To The Financial Statements 2. Significant accounting policies (continued) (a) Basis of consolidation (i) Subsidiaries Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The Group controls an entity when it is exposed, or has rights, to variable returns 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 securities, that the Group incurs in connection with a business combination are expensed as incurred. 110 TA Global Berhad Annual Report