Looking forward to 2015...
ANNUAL REPORT OLDTOWN BERHAD (797771-M) 2014 “ The measure of intelligence is the ability to change.”
Albert Einstein
In the midst of our busy and hectic lives, some long for the good old days that we grew up in. When everything was simple and life was peaceful.
At OLDTOWN™ White Coffee, we strive to recreate charming memories of good old days. So come and rekindle unique memories of a time worth remembering. Come and enjoy the Aroma Of Good Times with OLDTOWN™ White Coffee. Annual Report 2014 Contents
2 Our Legacy – 27 Corporate Responsibility Vision & Mission Statement 29 Corporate Governance 4 Group Structure Statement
5 Corporate Information 37 Audit Committee Report
6 Board of Directors 40 Statement On Risk Management & Internal Control 7 Board of Directors Profile 42 Additional Compliance Information 10 Chairman’s Statement 49 Financial Statements 14 Group Managing Director’s Review of Operations 135 List of Properties Owned by Oldtown Group 22 Financial Highlights 140 Analysis of Shareholdings 23 Sustainability & Corporate Responsibility 143 Notice of Annual General Meeting
Proxy Form
1 1 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) Our Legacy
From the day our proprietary OLDTOWN™ White Coffee blend was formulated, it has been steadfastly Vision carried down over the years to this day. Our white To be Asia Pacific’s Leading White Coffee Brand coffee are roasted and prepared according to the original method to ensure that every cup of Mission Statement OLDTOWN™ White Coffee imparts the same full- OUR PEOPLE : bodied taste, texture and aroma year after year. Our We Believe That Our People Are Our Assets commitment to maintain the true essence of our We acknowledge and appreciate our people as those who grow with us and for their full dedication. We value them for their heritage has helped us to create a one-of-its-kind effort and what they are able to bring to the company, hence brand that is renowned the world over. we constantly provide a platform and opportunities for career growth and enrichment of knowledge. We cultivate the passion of To date, our white coffee products are exported to delighting our consumers into all our staffs to bring forth the best more than 13 countries worldwide. Our business also experience possible. includes the OLDTOWN™ White Coffee chain of café Community : outlets. Carrying the charm of a traditional Ipoh coffee We Nurture The Community shop, we serve a variety of Malaysian delicacies from We are aware and committed to our community hence we operate our business in a manner that does not compromise the wellness white coffee to toasts, rice and noodles. To date, we of our future generations. We are passionate about our corporate have more than 200 café outlets through out Asia. responsibilities and do our best to provide for the community in different ways, from doing our part for the earth we live in to providing underprivileged children with better homes. We will not look lightly upon our social responsibilities as we believe in giving back to the community as part of the effort towards a better future.
Our Consumers : We Delight Our Consumers with Our Products
We are consumer centric and are always focused on consumer needs. Hence we are dedicated to delighting our consumers with all our product offerings, by committing ourselves in sourcing the finest ingredients through ethical ways to provide them with the best quality products. We hold strongly to our origins in order to bring to consumers the authentic experience that they expect to enjoy.
MOTHER EARTH : We Do Our Part in Saving Mother Earth
We are attuned with the growing needs to nurture our mother earth and to do our part in caring for the environment. With this, we share and grow the passion and knowledge of caring for the environment with our partners and consumers for them to live this together with us as part of our corporate values.
INVESTORS : We Focus on Prospering Our Investors
We are dedicated to growing and maximising the financial rewards of our investors as we see it as a platform for our company to continue to provide to our consumers and the community.
2 Business Overview The business activities of Oldtown Group can be divided into three broad categories as follows:
Operation of Cafe Chain
• Own Cafe Outlets* • Franchised Outlets • Food Processing
Manufacturing of coffee and other beverages
• Instant Coffee Mix • Roasted Coffee Powder • Instant Milk Tea Mix • Instant Chocolate
Marketing and sales of coffee and other beverages
• Instant Coffee Mix • Roasted Coffee Powder • Instant Milk Tea Mix • Instant Chocolate • Ready-to-drink coffee
*Own cafe outlets include those that are fully and partially owned.
3 OLDTOWN BERHAD (797771-M) Group (Incorporated in Malaysia) Structure as at 31 March 2014
OldTown Berhad 100%White Cafe Sdn Bhd
100%Gongga Food Sdn Bhd
100%White Cafe Marketing Sdn Bhd
100%Emperor’s Kitchen Sdn Bhd
100%Dynasty Confectionery Sdn Bhd
100%Esquire Chef Sdn Bhd
100%Kopitiam Asia Pacific Sdn Bhd 100% Old Town Kopitiam Sdn Bhd
100%Oldtown Singapore Pte Ltd 50%OTK Singapore Pte Ltd
100%Old Town Kopitiam Butterworth Sdn Bhd 100%Dynasty Kitchen Sdn Bhd
100%Old Town Kopitiam Kuala Lumpur Sdn Bhd
100%Old Town Kopitiam Cheras Sdn Bhd
100%Oldtown Logistics Sdn Bhd 70%Advance City Limited 100%Old Town (M) Sdn Bhd 100%OTK (HK) Investment Limited 100%Oldtown APP Sdn Bhd
80%Conneczone Sdn Bhd
50%Plus One Solution Sdn Bhd
40%OTK Eatery Sdn Bhd
4 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) Corporate Information
Board of Directors Datuk Dr. Ahmed Tasir Mark Wing Kong Chuah Seong Meng Bin Lope Pihie Independent Non-Executive Executive Director PJN, PMP, JSM, FASc Director Independent Non-Executive Clarence D’Silva A/L Leon D’Silva Chairman Tan Chon Ing @ Tan Chong Ling Executive Director Independent Non-Executive Lee Siew Heng Director Goh Ching Mun Group Managing Director Executive Director Dato’ Wong Guang Seng Independent Non-Executive Tan Say Yap Director Executive Director
Board Committees Audit Committee Remuneration Committee Nomination Committee Mark Wing Kong Tan Chon Ing @ Tan Chong Ling Datuk Dr. Ahmed Tasir Chairman Chairman Bin Lope Pihie Chairman Datuk Dr. Ahmed Tasir Datuk Dr. Ahmed Tasir Bin Lope Pihie Bin Lope Pihie Mark Wing Kong
Tan Chon Ing @ Lee Siew Heng Tan Chon Ing @ Tan Chong Ling Tan Chong Ling Mark Wing Kong Dato’ Wong Guang Seng Dato’ Wong Guang Seng Dato’ Wong Guang Seng
Goh Ching Mun
Company Secretaries Head Office Principal Bankers
Chan Chee Kheong No. 2, Jalan Portland, CIMB Bank Berhad (13491-P) (MAICSA 0810287) Kawasan Perindustrian Tasek, HSBC Bank Malaysia Berhad (127776-V) 31400 Ipoh, Perak. Wong Wai Foong Tel : (605) 541 5511 Statutory Auditors (MAICSA 7001358) Fax: (605) 541 2860 Messrs. Deloitte (Formerly Known As Deloitte KassimChan) (AF0080) Registered Office Website Chartered Accountants Level 18, The Gardens North Tower, www.oldtown.com.my No. 87, Jalan Sultan Abdul Jalil Mid Valley City, Lingkaran Syed Putra, 30450 Ipoh, Perak Darul Ridzuan 59200 Kuala Lumpur. Registrars Tel: (605) 253 1358 Tel : (603) 2264 8888 Fax: (605) 253 0090 Tricor Investor Services Sdn Bhd (118401-V) Fax: (603) 2282 2733 Level 17, The Gardens North Tower, Stock Exchange Listing Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur. Main Market of Tel: (603) 2264 3883 Bursa Malaysia Securities Berhad Fax: (603) 2282 1886 (Listed since 13 July 2011) Stock Name: OLDTOWN Stock Code: 5201 5 OLDTOWN BERHAD (797771-M) Board of (Incorporated in Malaysia) Directors
01 Datuk Dr. Ahmed Tasir Bin Lope Pihie 06 Chuah Seong Meng
02 Lee Siew Heng 07 Clarence D’Silva A/L Leon D’Silva
03 Mark Wing Kong 08 Tan Chon Ing @ Tan Chong Ling
04 Goh Ching Mun 09 Tan Say Yap
05 Dato’ Wong Guang Seng
08 06 04 03 01 02 05 07 09
Notes:- 1. Family Relationship with Director and/or Major Shareholder 3. Conviction of Offences (i) Mr Lee Siew Heng is a deemed substantial shareholder of Oldtown Berhad. None of the Directors has been convicted of any offence within the past 10 (ii) Mr Lee Siew Heng is the brother of Mr Lee Siew Ming, a deemed substantial years other than possible traffic offences. shareholder of Oldtown Berhad. 4. Directors’ Shareholdings Save as disclosed herein, none of the Directors has any family relationship The details of Directors’ interest in securities of the Company are set out in with any Director and/or major shareholder of Oldtown Group. the Analysis of Shareholdings on page 140 of this Annual Report. 2. Conflict of Interest 5. Attendance of Board Meetings Save for related party disclosures as disclosed under Note 25 to the The details of attendance of Directors at the Board Meetings are set out in Audited Financial Statements of this Annual Report and the Circular to the Corporate Governance Statement on page 29. Shareholders dated 19 August 2014, which is despatched together with this Annual Report, the Directors have no conflict of interest in any business arrangement with the Company and its subsidiaries. 6 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) Board of Directors’ Profile
Datuk Dr. Ahmed Tasir Bin Lope Pihie, Lee Siew Heng, a Malaysian, aged 48, Mark Wing Kong, a Malaysian, aged 55, is an a Malaysian, aged 63, is the Independent is the Group Managing Director of Oldtown Independent Non-Executive Director of Oldtown Non-Executive Chairman of Oldtown Berhad Berhad and was appointed to the Board on Berhad and was appointed to the Board on and was appointed to the Board on 10 30 November 2007. He is also a member of 10 November 2009. He is the Chairman of November 2009. He is the Chairman of the Remuneration Committee. He brings with the Audit Committee and also a member of the Nomination Committee and a member him invaluable industry experience, having the Nomination Committee and Remuneration of the Audit Committee and Remuneration accumulated more than 22 years of experience Committee. He is a member of the Malaysian Committee respectively. He holds a Doctor of in the manufacturing and retailing industries, Institute of Certified Public Accountants. His Philosophy (PhD) in Science and Technology of which more than 12 years is in the coffee career started as an auditor with Kassim, Chan & Policy from the University of Manchester, beverage industry. He has been instrumental Co in 1980. He joined Arab-Malaysian Securities Master of Science in Seed Technology in the growth and development of the Oldtown Sdn Bhd as Operations Manager in 1986 and from the University of Edinburgh, Scotland Group of Companies and has been a key driving was transferred to Arab-Malaysian Merchant and a Bachelor in Agriculture Science force in the expansion of the Group’s beverage Bank Berhad (now known as AmInvestment from the University of Malaya. He was with manufacturing and cafe chain operation Bank Berhad) in 1988 where he took up the the Malaysian Agricultural Research and businesses. Upon completion of his secondary post of Operations Manager in the Investment Development Institute (MARDI) from 1972 education in 1986, he started his career as a Department. In 1990, he was transferred to the to 1992 and last held the post as a Director Production Manager of Chong Ngai Knitting Corporate Finance Department where his last before he left the Institute. He was the Chief Factory Sdn Bhd, a garment manufacturer held position was General Manager, Corporate Executive Officer of the Malaysia Industry- and was later promoted to the position of a Finance. In 1997, he joined LB Aluminium Government Group for High Technology General Manager. He left the company in 1997 Berhad, a company principally engaged in the (MIGHT) from 1993 to 2008. He is presently to become a Director of CN Supplies Sdn Bhd business of manufacturing, marketing and trading the Chairman of Strand Aerospace Malaysia which was trading in hotel supplies. In 2001, of aluminium extrusion, where he is currently the Sdn Bhd; President and Director of Inno Bio he joined White Cafe Marketing Sdn Bhd, a Chief Executive Officer. He is also an Independent Ventures Sdn Bhd, Inno Biologics Sdn Bhd and company in the Oldtown Group as a Managing Non-Executive Director of M3 Technologies (Asia) Inno Bio Diagnostics Sdn Bhd and a director Director and was subsequently re-designated Berhad which is involved in the provision of of several private companies including A7N as the Group Managing Director of Oldtown mobile-internet messaging solutions and retailing Sdn Bhd and R7 Sdn Bhd. Group in 2009. He holds directorships in several of GPS navigators and other IT accessories. LB private companies and is currently the Chairman Aluminium Berhad and M3 Technologies (Asia) of Old Town International Sdn Bhd, the holding Berhad are listed on the Main Market and ACE company of Oldtown Berhad. Market of Bursa Malaysia Securities Berhad respectively. He is also a director of Calltime Technology Sdn Bhd. 7 OLDTOWN BERHAD (797771-M) Board of (Incorporated in Malaysia) Directors’ Profile
Goh Ching Mun, a Malaysian, aged 43, is Dato’ Wong Guang Seng, a Malaysian, aged Chuah Seong Meng, a Malaysian, aged an Executive Director of Oldtown Berhad 62 is an Independent Non-Executive Director 39, is an Executive Director of Oldtown and was appointed to the Board on 30 of Oldtown Berhad and was appointed to the Berhad and was appointed to the Board on November 2007. He is also a member of the Board on 1 April 2014. Dato’ Wong is a Fellow 10 November 2009. He graduated with a Remuneration Committee. He completed his of the Institute of Chartered Accountants Bachelor of Business, majoring in Marketing secondary education in 1988. As the co-founder (England & Wales) as well as a Chartered from the University of Tasmania, Australia of Oldtown Group of Companies, he has Management Accountant (UK). He is also a in 1997. He is also a certified marketer of accumulated more than 22 years of experience member of Malaysian Institute of Accountants the Chartered Institute of Marketing, United in the coffee manufacturing industry. His career (MIA), Malaysian Institute of Certified Public Kingdom. He has more than 16 years of started in 1983 when he was involved in the Accountants (MICPA) and an Associate of extensive experience in Sales and Marketing. family business of operating the Nam Heong Chartered Tax Institute of Malaysia (ACTIM). His career started in 1997 as a Sales Coffee Shop in Ipoh. Subsequently in 1999, he He holds a Master Degree in Business Executive with Besta Computerized Dictionary co-founded and established White Cafe Sdn Bhd Administration (MBA) from the Cranfield Sdn Bhd, a distributor of computer dictionary where he was appointed Product Research and Institute of Technology (UK). Dato’ Wong has products. He joined White Cafe Sdn Bhd Development Director and was then responsible served Deloitte for over 40 years, holding in 1999 as Marketing Manager and was for the formulation of the blend of white coffee various positions including Head of Clients promoted to Senior Marketing Manager in that is currently produced by the Group and the and Markets as well as Exco Member of 2003 and subsequently the Group Marketing product research and development activities Deloitte Malaysia. He is currently an Executive General Manager of White Cafe Marketing Sdn of the Group from 1999 to 2013. Mr Goh & Director of AG Legal Tax Services Sdn. Bhd. Bhd in 2007. He currently assumes the role Mr Tan Say Yap are currently assuming a co- Dato’ Wong also sits on the board of Unisem of Chief Operating Officer of the Fast Moving advisory role to the Group Managing Director (M) Berhad as an Independent Non-Executive Consumer Group (FMCG) sector of the Group. in matters relating to the FMCG segment in Director. He is responsible for the overall business relation to the production of coffee mixtures. strategy formulation, objectives setting He is also the Chairman of the Corporate Social and strategy implementation for all FMCG Responsibility (CSR) Committee that carries out activities and businesses including sales and the social responsibility functions of the Group marketing, manufacturing and research and via Oldtown Children Care Fund (OCAF) and development functions. He is also heading the Oldtown Earthcare activities. He is a director of Group Marketing Communication Division. several private companies which are involved in property investments and cafe and restaurant business.
8 Clarence D’Silva A/L Leon D’Silva, a Malaysian, Tan Chon Ing @ Tan Chong Ling, a Tan Say Yap, a Malaysian, aged 39, is an aged 53, is an Executive Director of Oldtown Malaysian, aged 53, is an Independent Non- Executive Director of Oldtown Berhad and was Berhad and was appointed to the Board on Executive Director of Oldtown Berhad and was appointed to the Board on 10 November 2009. 10 November 2009. He has over a span of 31 appointed to the Board on 7 November 2012. He has more than 14 years of experience in years in the Food Service industry where he He is the Chairman of the Remuneration the coffee manufacturing industry. As the co- managed several International Brands and has Committee and is a member of the Audit founder of the Oldtown Group of Companies, done start up for new food business in Indonesia, Committee and Nomination Committee of he is instrumental in the formulation of the Thailand, Philippines, Hong Kong and Malaysia Oldtown Berhad. He graduated with a honours blend of white coffee, which started the and served in several senior positions with degree in Bachelor of Civil Engineering beverage manufacturing business of the Group. several Multi-National Companies.He graduated from the National University of Singapore in He obtained a Diploma in Hotel Business with a Bachelor of Business Administration from 1985. He joined WTS Konsultant in Kuching Management from Syuen Hotel and Catering the California Technical College, United States from 1985 to 1990 as a Civil Engineer. He Management Institute, Ipoh in 1996. His career in 1982. His career started in 1983 when he was the Managing Director of Uomo Donna started in 1997 as Commis One at the Pangkor joined Kentucky Fried Chicken as a Management Sarawak Sdn Bhd from 1991 to 1993 and Laut Resort Hotel where he was mainly involved Trainee. In 1989, he took up employment with was appointed Chief Executive Officer of PT in the preparation of food for the hotel’s food Carl’s Jr. Asia Development Corporation, part of Indoscala, Indonesia, a wholesaler and retailer and beverage outlets. In 1999, he co-founded the MBF Group of Companies and was eventually of ladies apparel, from 1993 to 1996. He and established White Cafe Sdn Bhd and was promoted to General Manager of the brand in is a business entrepreneur with more than appointed Director of White Cafe Sdn Bhd. Thailand. In 1998, he joined Sushi Kin Sdn Bhd 17 years of experience in construction and He was appointed Business Development as the General Manager/Chief Operating Officer property development which include a golf Director of Kopitiam Asia Pacific Sdn Bhd and and was appointed to the Board of Directors of the course township development. Mr Tan is the is responsible for the cafe outlet operations company in 2000. In 2003, he joined Yoshinoya founder and Vice Chairman of Eduland China from 2005 to 2009 and held the position of Food Systems, part of the Wing Tai Asia Limited in with 12 years of experience in the setting Corporate Relations Director where he was Singapore as the Chief Operating Officer. In 2006, up, operation and franchise of a chain of responsible for fostering corporate relations he took up the position of Chief Operating Officer Bilingual Early Childhood Education centres in with franchisees, landlords, business associates with FB Food System (HK) Ltd, a subsidiary of Far Shanghai City, Suzhou and Zhejiang Provinces and business partners from 2009 to 2013. East Consortium, Hong Kong. He joined Oldtown to provide quality early childhood care and Mr Tan and Mr Goh are currently assuming a Group of Companies in 2009 and is currently the education at purpose built kindergarten co-advisory role to the Group Managing Director Chief Operating Officer of the Food and Beverage buildings located at premium township and in matters relating to the FMCG segment in (F&B) Sector of the Oldtown Group. His main residential area. relation to the production of coffee mixtures. responsibilities include overseeing the domestic and international F&B operations, distribution and logistics as well as the development of the F&B franchise business of the Group. 9 OLDTOWN BERHAD (797771-M) Chairman’s (Incorporated in Malaysia) Statement
Dear Shareholders, Strong Overall Financial Performance
On behalf of the Board of Directors, I am pleased The solid financial performance of FY2014(Note) was another exemplary effort attributed to the dedicated commitment of the to present the Annual Report of Oldtown Berhad Group’s management team and employees. For the FY2014, the (“the Company” or “the Group”) for the financial Group achieved a consolidated revenue and profit of RM382.172 year ended 31st March 2014 (“FY2014”). million and RM50.33 million respectively. Despite operating under a competitive business Note: The Company had on 27th August 2012 changed its financial year end from environment, the Group turned in another year of 31st December to 31st March. The financial period ended 31st March 2013 was made up of results for 15 months covering the period from 1st January 2012 credible performance. to 31st March 2013. Thereafter, the fiscal financial year has restored back to ordinary 12 months covering the period from 1st April 2013 to 31st March 2014.
Manufacturing of Beverages Took Lead as Revenue and Earnings Growth Driver
Both the café chain operation and manufacturing of beverages contributed to the strong financial performance of the Group. The operation of the café chain segment continued to be the main and dominant revenue contributor to the Group, bringing in 54% of the FY2014 revenue, whilst the remaining 46% was contributed by the manufacturing of beverages segment.
The café chain operation registered a total revenue and profit before tax of RM207.059 million and RM31.341 million respectively. The Group’s manufacturing of beverages segment reported revenue of RM175.113 million and profit before tax of RM35.929 million in FY2014.
The Group’s FY2014 profit before tax included an amortisation of intangible assets of RM3.53 million wherein RM1.19 million was attributed to the amortisation of the acquired intangible asset of the foreign subsidiary in Hong Kong, Advance City Limited.
Overall, the profit after taxation of the Group for FY2014 was recorded at RM50.33 million. This was mainly attributed to the double-digit growth in the business operations of manufacturing of beverages segment.
10 Datuk Dr. Ahmed Tasir Bin Lope Pihie PJN, PMP, JSM, FASc Independent Non-Executive Chairman
11 OLDTOWN BERHAD (797771-M) Chairman’s (Incorporated in Malaysia) Statement
Sustainable Earnings The net cash outflow in respect of financing activities of RM25.488 million was primarily due to the repayment of term The Group registered a net profit attributable to owners of the loans of RM13.263 million and dividend payment of RM10.890 Company of RM48.938 million in FY2014 against the net profit million. As at 31st March 2014, the cash and cash equivalents attributable to owners of the Company of RM55.527 million was RM99.095 million. in FP2013 (15-month period ended 31st March 2013), which translated into an earnings per share of RM0.11 for FY2014 (an Enhancing Shareholders Value – Dividend average of 2.75 sen per quarter) against FP2013 earnings per Delivering consistent positive growth for the Group has always share of RM0.13 (an average of 2.60 sen per quarter), based on been a primary target of Oldtown in order to generate value for our an enlarged share capital base of 453.597 million ordinary shares shareholders. This is important given the fact that since our listing, at RM1.00 each after adjusting for a 1-for-4 bonus issue exercise we have a steadfast group of shareholders who have remained with which was completed on 28 January 2014. us and have enjoyed strong dividend yields coupled with significant Strengthening Financial Position capital appreciation on their investments.
As at 31st March 2014, the total shareholders’ fund increased to Towards this end, we have adopted a dividend policy to distribute RM329.290 million, an increase of RM24.439 million from FP2013. a minimum of 50% of the Group’s annual profit attributable to the This has also resulted in an improved gearing ratio (Net Debt to owners of the Company as a dividend. Equity) of 0.07x from 0.11x in FP2013. The reduction in the gearing Whilst retaining a sizable portion of profits and funds to finance ratio was due to the higher net profit generated and repayment of future growth, the Company also strives to reward its shareholders term loans. with a reasonable level of dividend payout. The fixed deposits, cash and bank balances as at 31st March 2014 In respect of the financial year ended 31st March 2014, a first amounted to RM99.884 million against a total debt of RM24.297 interim single-tier dividend of 3.0 sen per share amounting to million. As a result, the Group was in a net cash position of RM13.589 million, based on an enlarged share capital of 453.597 RM75.587 million as at 31st March 2014. million ordinary shares after completion of 1-for-4 bonus issue and With a solid financial position, the Group is well-placed to leverage net of 0.611 million treasury shares held by the Company, was paid on efficient financing options as well as flexibilities to expand its on 17th April 2014. business in the near future. The Group is in a strong position to deal The Board of Directors further recommended a final single-tier with any contingencies that may arise. dividend of 3.0 sen per share, based on an enlarged share capital of Healthy Financial Liquidity 453.597 million ordinary shares, net of treasury shares held by the Company at the time of dividend payment, in respect of the financial During the FY2014, the Group generated a net increase in cash year ended 31st March 2014. The recommended final single- flow of RM14.010 million (compared to RM0.4 million in FP2013) tier dividend is subject to the approval of the shareholders at the on the back of the strong EBITDA of RM87.411 million achieved forthcoming Annual General Meeting. and constant vigilance on working capital management strategies. The net increase in cash flow was generated even after the cash Should the estimated final single-tier dividend of RM13.589 million purchase of property, plant and equipment of RM17.366 million and be approved by the shareholders at the forthcoming Annual General net cash used in the acquisition of subsidiaries of RM18.289 million Meeting, coupled with the RM13.589 million interim single-tier to support the growth momentum of our two businesses. dividend paid on 17th April 2014, this will translate into a dividend payout ratio of 55.5% in respect of the financial year ended This clearly underlines the unique strength of the cash generative 31st March 2014. The cumulative total dividend payout would nature of the Group’s core business for the past 3 reporting periods be RM27.179 million against a net profit attributable to owners since the Company first reported its audited financial statements of the Company of RM48.938 million in FY2014, if and after the back in 2011. final single-tier dividend of RM13.589 million is approved by the shareholders at the forthcoming Annual General Meeting. 12 Recent Corporate Development We expect that the business environment in the Asia Pacific region will continue to be positively supported by the gradual improvement Bonus Issue Exercise in external demand. However, the degree of improvement in exports On 27th November 2013, the Company has proposed to undertake could vary across the region. Nevertheless, we do look forward to a bonus issue exercise that entails an issuance of up to 90.75 the future with confidence because of the fundamental strengths million bonus shares on the basis of one (1) bonus share for every of our businesses. We expect both our café chain outlets and four (4) existing ordinary shares held by the shareholders on the manufacturing of beverages to continue to generate growth by virtue entitlement date. of its powerful brands, distribution strength and market position in the regional markets on which we focus and which are delivering The bonus issue will increase the capital base of Oldtown to a level such robust growth opportunities. that will better reflect the Group’s current scale of operations and also serves to reward the existing shareholders of the Company The Company will continue to scale new heights in the near future for their continuous support by enabling them to have greater based on the holistic business and corporate strategies formulated participation in the equity of the Company in terms of the number of and as described in detail in the Group Managing Director’s Review shares held whilst retaining their percentage of equity interest. The of Operations of the Company in this Annual Report. I am optimistic bonus issue may also enhance the marketability, affordability and that all of these initiatives will be implemented by the current liquidity of Company’s shares trading on Bursa Malaysia Securities management team with the primary aim to achieve good Group’s Berhad (“Bursa Securities”). performance in the ensuing year.
On 28th January 2014, a total of 90.597 million bonus shares Acknowledgement pursuant to the 1-for-4 bonus issue exercise were successfully On behalf of the Board, I would like to thank and express my sincere listed and quoted on the Main Market of Bursa Securities. The appreciation to our valued shareholders, bankers, customers, newly issued 90.597 million ordinary shares represented an business partners and regulatory authorities for their continued increase of approximately 25% against the Company’s issue and support, guidance and assistance extended to the Group. The Board paid-up share capital of 363 million ordinary shares. The bonus would like to express its appreciation to the management and issue has subsequently increased the issued and paid-up share employees of the Group for their hard work and dedication. capital of the Company from RM363.0 million to RM453.597 million at RM1.00 each. The Board would also like to take this opportunity to extend a warm welcome to Dato’ Wong Guang Seng as an Independent Non- Challenging Business Prospects Moving Forward Executive Director of the Company. Dato’ Wong is a professional The Malaysian economy is expected to remain on a steady growth accountant by training and has served Deloitte Malaysia (“Deloitte”) path in 2014, expanding by 4.5%-5.5% after a robust year-on-year for over 40 years, holding various positions including Head of Clients GDP growth rate of 4.7% in 2013 against 5.6% in 2012. The growth and Markets as well as Exco Member of the firm. His extensive momentum is expected to be supported by improved performance experience will benefit the Group in the future as Dato’ Wong will in the external sector. Domestic demand will remain the key driver bring to the Board his valuable wealth of knowledge and expertise of growth, albeit at a more moderate pace, in tandem with moderate gathered from his career in a wide spectrum of business activities. household spending, reflecting in part the impact of higher inflation. Notwithstanding, the moderation in domestic demand, the underlying fundamentals of the Malaysian economy remain strong. Growth will be driven by the private sector across a diversified range of Datuk Dr. Ahmed Tasir bin Lope Pihie economic activities whilst employment remains strong and incomes Chairman are rising. The financial system is resilient with financial institutions expected to provide continued support to investment activities. In addition, the strength of Malaysia’s external position remains intact, with international reserves at healthy levels and external debt within prudent limits. 13 OLDTOWN BERHAD (797771-M) Group Managing (Incorporated in Malaysia) Director’s Review of Operations
Oldtown Berhad (“the Company” or “the Group”) Overall Financial Review - Another Record Year, An is one of the largest café operators and beverage Excellent Performance with Healthy Balance Sheet players in Malaysia. Our integrated business The Group ended the financial year with a total revenue of model, anchored by our two complementary RM382.172 million, an increase of 10.9% from the previous year based on 12-month comparative performance. In addition, we growth engines, has proven to be an outstanding were equally excited with the performance in the 3rd quarter of success. This is clearly evident by the Group’s FY2014 whereby we have achieved a notable breakthrough in robust performance during the 12-month financial our business performance as the Group’s revenue for a single quarter has breached the RM100 millionth mark for the first time year ended 31st March 2014 (“FY2014”). The since the listing of our Company in Bursa Malaysia in 2011. The Group has successfully sustained its business record revenue was attributable to the continued resilience of expansion momentum to grow its operation of our mainstay café chain business and the sterling growth of our café chain and manufacturing of beverages. beverage manufacturing segment. The café chain business remains the key revenue contributor, generating healthy sales with revenue reaching RM207.059 million in FY2014, an increase of 1.2% against RM204.625 million in the previous year (on 12-month comparison). On the other hand, revenue from the manufacturing beverage business grew 25.1% to RM175.113 million, compared to RM140.002 million the year before (on 12-month comparison). The healthy growth of this segment was underpinned by strengthening demand for our white coffee 3-in-1 products in existing and new markets, which is well supported by the additional production capacity that came on stream during the year.
Our integrated business enables us to control most aspects of the supply chain to ensure product quality, and mitigate price fluctuations in raw materials as well as to retain as much of the profit as possible within the Group. Amongst others, this allows us to be more cost- effective to compete with other service providers as well as other coffee beverage producers. As a result, the Group is able to maintain its Profit Before Tax (“PBT”) and Profit After Tax (“PAT”) margin within a narrow range of 16-18% and 12-14% respectively in each quarter during the financial year. Despite operating in a highly competitive environment, the Group is able to achieve a relatively stable and respectable PAT margin of about 17.4 % and 17.8% for the FY2014 and FP2013 (15-month financial period ended 31st March 2013) respectively through measures that drove effective cost management and operational efficiency.
The Group’s café chain operation recorded PBT of RM31.341 million for the FY2014 on the back of the revenue of RM207.059 million. This represents a 7.2% drop in PBT as compared to RM33.779 million achieved in a 12-month period ended 31st March 2013 owing to higher operating costs mainly attributable to the minimum wage ruling for foreign workers. 14 Lee Siew Heng Group Managing Director
15 OLDTOWN BERHAD (797771-M) Group Managing (Incorporated in Malaysia) Director’s Review of Operations
Manufacturing of beverages segment recorded revenue of and third-tier cities and townships present vast opportunities for the RM175.113 million and PBT of RM35.929 million for the 12-month Group to reach a wider scope and range of customers. period ended 31st March 2014. The revenue and PBT were Since the introduction of our first Generic Outlet back in 2005, we RM140.002 million and RM26.688 million respectively for the have progressed upscale to create Signature Outlets in 2008 and 12-month period ended 31st March 2013. The increase in PBT of Basic Kiosk Outlets in 2012. The evolution and innovation continued, 34.6% was attributable to the surge in revenue of 25.1% and eleven with the roll-out of our first Grand Outlet in 2013. (11) months’ profit contribution from the Hong Kong subsidiary acquired during the financial year, of which the results were Our Group’s main objective was always to provide our customers consolidated from 1st May 2013. with superior quality service and in-store experience. This means that we put the customer at the centre of our activity, and consequently, 2013/2014 OPERATIONS REVIEW all our decisions and actions take into consideration the needs of our Café Chain Segment - Challenging Environment customers. As a result, we introduced Generic, Basic, Signature and The operation of the café chain segment continued to be the main Grand outlet concepts to position OLDTOWN café outlets to become revenue contributor to the Group, attributing 54% of the consolidated the favourite destinations for comprehensive customers’ experience revenue for the FY2014 (60% of the consolidated revenue for the where all Malaysians can get together regardless of their social 15-month period, FP2013). status, disposable income and purchasing power.
The café chain segment revenue has grown more than four (4) folds We offer our customers a wide range of products through our well from a low proforma consolidated revenue of RM47.889 million thought-out and customer-friendly menus for breakfast, lunch, tea, achieved in FY2007 to RM207.059 million in FY2014 (Note 1). This dinner and supper time for each outlet concept, making it easy for clearly demonstrated the Group’s ability to consistently expand the each of them to make the right choice when it comes to ordering. scale of operation over the years. To complement the in-store experience, our outlets also provide customers with free access to wireless internet. The Oldtown Group spearheaded the development of the Asian café International Market – Untapped Potential chain in 2005 with our first outlet in Ipoh. As at 31st March 2014, the Group has a total of 238 café outlets in Malaysia, Singapore, For the international markets, we were able to penetrate deeper into Indonesia and China. Amongst the 238 café outlets, 89 are fully existing markets within Asia and further into new regions. As at 31st owned café outlets, 20 partially owned outlets, 108 franchised and March 2014, a total of 30 OLDTOWN café outlets were operating 21 licensed outlets. in Singapore, Indonesia and China as compared to 23 outlets as at 31st March 2013. Note (1): The restructuring exercise was completed on 16 May 2011 (“Completion Date”) as disclosed in the Prospectus of the Company dated 22 June 2011. As our operations continue to expand overseas, we face challenges The above comment on the Group’s financial performance refers to the audited in new markets and cultures, each with different types of customers Statements of Comprehensive Income for FY2014 against FY2007 which was prepared based on the combined results of Oldtown Berhad and its subsidiaries demanding for unique and appealing products. We continuously (“the Group”), assuming the Group has existed on or before 1 January 2007. strive to offer our customers superior value and satisfaction, focusing not only on product range, but also on the services we provide. Domestic Market – Vibrant and competitive On a related note, we have recently completed the refurbishment On the domestic front, we are adopting multipronged strategies to of our outlets with contemporary design and innovative concept for penetrate into new market segments and strengthen our leading OLDTOWN café outlets in Singapore. In addition, certain outlets were market position as the largest Asian café chain operator in Malaysia. relocated upon expiry of tenancy to mature developed areas such as Under the Group’s market development plans, we are planning to City Square Mall and Yew Tee Point in 2012 and 2013 respectively. add 12 to 15 new outlets in Malaysia in FY2015. Currently, our The sales performance post-refurbishment is fairly encouraging, OLDTOWN café outlets operate mostly in urban cities throughout thereby making Singapore as the most profitable overseas market for Malaysia and we shall progressively expand into the suburban and the Group. In line with our development plans in Singapore, two (2) rural markets over the next few years, whereby most of the second-
16 to three (3) new outlets are scheduled to be opened in FY2015 and from the manufacturing of beverages segment in FP2013 was at the same time we are also exploring new licensing opportunities RM169.685 million and RM33.765 million respectively) – year- within the same market. on-year increases of 3.2% and 6.4%. We believe that this record performance marks a ringing endorsement of our products, For the Indonesian market, we plan to add another six (6) to eight business model, and our strategies. (8) new café outlets in FY2015. To accelerate the expansion plans in Indonesia, we are shifting away from the business model of The higher quantum of revenue achieved in FY2014 compared to company-owned and operated outlets to the sub-licensing model as FP2013, despite FY2014 only has a shorter financial period of 12 we plan to open more sub-licensed outlets in Indonesia in FY2015. months against FP2013’s extended financial period of 15 months, Just a recap, we managed to open seven (7) new café outlets in was mainly due to increase in both local and export sales for the FY2014 and currently we are operating a total of seventeen (17) café Group’s beverage products as well as rapid expansion of distribution outlets in Indonesia as at 31st March 2014. networks across various countries.
Consistent with our aspirations to become Asia Pacific’s Leading Despite the challenging business environment in FY2014, the White Coffee Brand, we are continuing the planned expansion of growth momentum of our manufacturing of beverages division our international café outlets. Our determined efforts to expand remained strong and we achieved another year of record financial into new markets to fuel further growth will materialise soon as the performance, both top-line and earnings. More significantly, our team Group notched up a significant milestone on 19th May 2014 with has delivered a multi-year growth. Over FY2007 (Note 1) – FY2014, the appointment of OTK (Australia) Sdn Bhd as Master Licensee to the division’s revenue Compounded Annual Growth Rate (“CAGR”) spearhead the Group’s expansion of OLDTOWN café outlets business translates to 33% per annum with an even more impressive PBT in Australia through the execution of a Master License Agreement. CAGR of 35% per annum. The successful execution of holistic The appointed Master Licensee is responsible for the setting up strategy is the winning combination that has delivered record of a network of OLDTOWN café outlets in Australia, as well as to revenues and record earnings. establish, build and operate a distribution centre and a central Domestic Market – A Crowded Field kitchen to support the planned number of café outlets in the long run. The Master Licensee is also allowed to appoint Sub-Licensees to The local manufacturing of beverages industry is highly competitive. hasten the development of OLDTOWN café outlets upon fulfillment of The Group’s success in the white coffee segment has attracted certain terms and conditions set by the Group. the attention of competitors. Major local and international brands undertook strong advertising and promotional campaigns and we The recent venture into the Australian market forms part of the had to match the competition with more aggressive marketing Group’s overall international expansion plans and is expected to lift campaigns as well as frequent promotional activities. Our the Group’s operational performance and market position to greater competitors may disrupt our market position with lower pricing and heights in order to become a more sustainable and competitive products of different packaging. However, we are optimistic that we business enterprise of tomorrow. can overcome these challenges with our unique brand identity and Manufacturing of Beverages Segment – high-quality products. Another Record Year with Robust Growth During FY2014, the domestic market remained as our single largest The Group’s manufacturing of beverages division continued to grow market for our white coffee products and we maintained our leading from strength to strength in FY2014 with revenue of RM175.113 position in the white coffee segment in Malaysia. Our differentiated million, up from RM169.685 million in FP2013. This business brand marketing, leveraging on the origin of white coffee is reaping segment now accounted for 46% of the Group’s total revenue, up rewards as the marketing data have revealed success in reaching from 40% in the preceding period. the targeted market segment. In essence, our domestic market will be a potentially large coffee market, and we believe our strategy to The Group’s manufacturing of beverages division reported develop our coffee brands as premium labels will enable sustainable record revenues and record profits in FY2014. Revenues grew long-term growth in this growing coffee segment in the future. to RM175.113 million and profit before tax (“PBT”) grew to RM35.929 million (the consolidated revenue and PBT derived 17 OLDTOWN BERHAD (797771-M) Group Managing (Incorporated in Malaysia) Director’s Review of Operations
We believe our investment in strengthening our brand will help us Besides the mainstream TV commercial and advertisement that to stay ahead of the competition and taken our market position in are targeted to expand the Group’s market share, we have also the domestic market to newer heights. We will consistently invest organised various on-the-ground events such as consumer contests, in advertising, promotional and marketing campaigns to promote product testing and sampling, road shows, and participated in expos OLDTOWN’s branding and to enhance its brand equity value and and exhibitions. In the domestic market, we foresee growing demand customer loyalty in the marketplace. We appreciate that a successful as the Group is actively participating in various joint marketing brand strategy is critical to the growth of our business, especially in programs organised by the local key retailers such as the launching influencing consumers’ purchasing decisions. of Old Town White Coffee Chinese New Year Gift Pack, conducting exclusive consumer contests via collaborations with Giant and AEON Our marketing and promotional campaigns are comprehensive and launching of the Modern Trade Display Contest. Our marketing to ensure in-depth coverage of every customer group in the team has also initiated breakthrough efforts by participating in demographics. These include print media, such as major stream “Jom Heboh” events at various locations in Malaysia to broaden newspapers and magazines; the digital media world such as radio our brand presence in the Halal market segment. Similarly, our and TV commercials; online media and social networks. recent participation in ASTRO GEMPAK, and the group marketing In addition, the Group had initiated a nationwide True White Coffee campaigns, at Kuala Lumpur, Johor, and Kuala Terengganu is media campaign by working closely with various mainstream print targeted to raise OLDTOWN White Coffee brand awareness within media and online media to promote OLDTOWN’s branding directly the Halal-market segment. and indirectly via their platform since 2nd Quarter 2014 in Malaysia, We believe, by continuing to invest in our brand, OLDTOWN will be such as with an English daily The Star, Chinese daily Sin Chew Jit able to maintain its dominant presence in the domestic market. Our Poh, Sin Chew “Life Online”, and Malay daily Harian Metro, as well as Group has commanded a leading position in terms of market share with the borderless online media Says dot com and MSN dot com. for the past 5 years within the instant white coffee mix category, We are adopting an indirect yet innovative approach in pursuing our as a result of our continuous effort to engage consumers through goals instead of via ordinary conventional direct advertisement or successful execution of all the above mentioned promotional advertorial page. While we try to build awareness on the culture and activities and marketing campaigns. the heritage of the Ipoh Old Town, we strongly advocate Oldtown as International Market – Growing Rapidly the original True White Coffee producer; to discover OLDTOWN White Coffee’s unique ingredients and the process of producing the True Currently, with an established presence in the Asia Pacific region White Coffee; to explore creative ways of using of 3-in-1 OLDTOWN and an extensive distribution network, our products can be seen White Coffee in making desserts as an alternative to enjoy the True in over fourteen (14) countries and contributed about 58% of the White Coffee, etc. The underlying message is to educate consumers revenue of the manufacturing of beverages division. The aggressive on our ability to produce a wide range of products to suit different branding and marketing campaigns coupled with the continued taste preferences and raise the awareness level that the wide range customisation of products have contributed to the robust business of 3-in-1 OLDTOWN White Coffee are manufactured from the best momentum in countries such as Singapore, Taiwan, Thailand, Hong combination of three (3) types of premium coffee beans, i.e. Liberica, Kong and China. Arabica and Robusta, according to our proprietary formula. This international business segment grew strongly in FY2014 with Leveraging on the runaway success of the local production “The higher sales for the Asia region, particularly in China, Taiwan and Journey” in early 2014, we responded swiftly to collaborate with the Hong Kong, as well as increased demand from Southeast Asian lead actor and actress to produce a TV commercial with a storyline countries. The excellent growth in Asia is well supported by the to embed the True White Coffee’s message while connecting heritage comprehensive distribution networks. with family emotions within the advertisement. The TV commercials As Hong Kong is also one of the largest export markets for the were featured in different channels under local satellite TV station Group, we have intensified our advertising campaign by displaying – ASTRO, such as Wah Lai Toi, AEC, Hua Hee Dai, Shuang Xing, OLDTOWN advertisements at various MTR stations (underground TVB Xing He, TVB Classic, TVBS Asia, and TVB Entertainment News train system) in Hong Kong in November-December 2013 to create programmes in 2nd Quarter 2014. 18 greater awareness of our beverage products. Amongst the busiest manufacturing facility located in Tasek Industrial Estate, Ipoh is MTR stations with heavy daily human traffic flow that have displayed already fully operational since mid-2013 and able to increase the OLDTOWN advertisement during the last year-end holiday season production capacity by approximately 300% as compared to the were Mong Kok Station, Admiralty Station, Kowloon Tong Station, output capacity in the year 2012. With this increased production and Shatin Station. Several key objectives we wish to achieve are to capacity, the Group is expected to cope with the rising demand for create brand awareness through Hong Kong’s MTR stations and to our products over the next five (5) years. enhance brand value by advocating “True White Coffee” pioneered This fully commissioned and operational state-of-the-art integrated by Oldtown. The acquisition of Advance City Limited (“ACL”) in manufacturing facility, houses the production facility, warehouse, May 2013 had proven to be earnings accretive with an immediate research and development laboratory, administrative and logistic contribution to the Group’s profitability in FY2014. ACL, a distributor processing centre in a single location. of OLDTOWN beverage products, manages about 2,800 distribution network points in Hong Kong and the Guangdong Province. Sustaining Growth – Café Chain Operations and Manufacturing of Beverages The Group is able to widen its market reach by leveraging on third- party distributors, retailers and intermediary networks where they In a dynamic world, where more and more competitors are striving will carry and distribute our beverage products in various distribution to grow their market share to gain a strong position, and to attract points. Our product distribution points are no longer restricted and maintain as many customers as possible; we need to continually to conventional marketing networks, such as department stores, meet the ever-evolving needs of the market. hypermarkets, supermarkets, convenience stores and retail outlets, Under the current competitive environment, an effective brand located both locally and abroad, but also available under the online strategy is critical in winning customer loyalty and sustaining market platform or business-to-consumer e-commerce portal in China. share. Our Company took a bold step in 2013 to introduce a new The Group embraces another effective and cost-efficient avenue to brand tag line, “Aroma of Good Times”. The new tag line has been promote its products in overseas market such as the social media well-received and the full impact of the rebranding exercise is platform. In China, through the real-time micro blogging social expected to be more pronounced in the near future. Strong brand channel of Weibo, we are able to reach out to 500 million netizens equity is a key ingredient in today’s extremely competitive food and population which come from a diverse background ranging from beverage industry where consumers want to associate themselves professionals, managers, and executives. The Group has developed with a successful brand that fits their lifestyle. its own unique marketing and communication proposition in Weibo Café Chain China since October 2013. Weibo would act as a diverse and dynamic platform for us to communicate and interact with our target We shall continue to expand the café network via our franchise and audiences through one of the most popular social media websites in licensing programmes locally and internationally, in addition to the China today. The cost of customer acquisition and communicating establishment of our fully or partially owned outlets to fuel further to the outside world is significantly lower than traditional advertising. growth in our business. The feedback loop is making us better because of the insights we Besides strengthening our position as one of the largest Asian café are gaining through interactions with our customers. chain operators and beverages manufacturer that specialises in For the Thailand market, the Group appointed a large and well coffee-related products, we will also relentlessly focus on innovation established regional distributor in 2013 which has a strong presence and improvement of our existing café chain operations in Malaysia, in Thailand modern trade distribution channels, to distribute Singapore, Indonesia and China. OLDTOWN White Coffee products to more than 400 retail outlets. As We are making some modifications to our food and beverage items, a result, our products now can be found in Tops Supermarket and a as well as in the set-up of our outlets to suit the individual market few hypermarket chains such as Big C, Tesco and Makro. consumers’ tastes profile and local needs. Essentially, we need to Prior to FY2014, the Group had been constrained by its customise our operations to local requirements and expectations, production capacity, but had since addressed that issue when at the same time establishing a differential advantage and then production facilities were added in the year under review. The new sustaining it. 19 OLDTOWN BERHAD (797771-M) Group Managing (Incorporated in Malaysia) Director’s Review of Operations
Towards this end, we need to put our customers at the centre of all Note (2): IBISWorld, “Restaurants Market Research Report,” IBISWorld our decision-making activities. The market can follow new trends in Company website the future, but in order to succeed, we need to adopt a customer- Indonesia – Second Wave oriented approach. Our primary objective is to be the leading Asian café chain operator in each of our target markets by providing each The positive development in Indonesia had prompted the Group to customer a unique dining experience. Superior customer service is enter into a second Master License Agreement on 22 June 2014 aimed at building a high degree of customer loyalty. (“MLA”) with the existing Master Licensee of the Group, PT Oldtown Indonesia. The execution of the second MLA enables PT Oldtown The Group has evolved from an initial domestic operated café Indonesia to set up a network of OLDTOWN café outlets throughout chain to become a regional player where we have undergone a the Republic of Indonesia. PT Oldtown Indonesia is currently only tremendous change by expanding into the other Asian regions over licensed to establish and operate OLDTOWN café outlets in the the years since 2005. We marketed our products to Singapore in territories of Jawa and Bali. 2008, a proximate market that has an almost similar consumer taste profile to Malaysia, and followed by Indonesia and China Pursuant to the MLA, the Master Licensee is also responsible in 2011. Nonetheless, we are actively exploring opportunities in to establish, build, and operate a distribution centre as well as a other countries within the Asian region to be consistent with our central kitchen within twelve (12) months from the opening of the international market expansion plans while strengthening our market fiftieth (50th) outlet to support the larger number of café outlets position within each individual existing market that we presently in Indonesia. Further, in order to fast track the development of operate in. OLDTOWN café outlets in Indonesia, the Master Licensee is also allowed to appoint Sub-Licensees. Essentially, the second MLA is The Group plans to open more outlets in Malaysia in FY2015. in line with the Group’s primary objective to entrust upon its Master Realising most of the second- and third-tier cities and townships Licensee to fully expand OLDTOWN café outlets in Indonesia, which will present vast opportunity for the Group to reach a wider range of is renowned as the largest archipelago in the world as well as the customers; we are aiming to penetrate into the suburban and rural most populous nation in South East Asia. markets over the next few years. China – Laying Stronger Foundation for Future Growth New Market - Australia The Group’s medium-term plan is to set up a new food processing The appointment of a Master Licensee in Australia in May 2014 centre in Guangdong Province, China to support a larger number marks the Group’s first foray outside Asia for the café chain business of new café outlets. However, the establishment of a new food and the Master Licensee targets to open its first outlet, either in processing centre has taken longer than expected, owing to a Melbourne or Sydney, within the first half of 2015. The Australian protracted delay in the conceptualisation and discussions with market is selected owing to the overwhelming demand and various parties to deliver an ideal outcome. In the meantime, our acceptance of Asian cuisine, particularly Malaysian. operations are well supported by a local licensed food processing centre which supplies several core ingredients to our OLDTOWN café According to IBISWorld, the Australian restaurant industry performed outlets in Guangdong Province. strongly during the 2013-2014 period and contributed AUD11.4 billion to the Australian economy (Note 2). In this respect, we are Despite some setbacks faced by the Group in 2013, the Group is still fairly excited and optimistic that the Group’s recent expansion into optimistic about the huge growth potential in our café chain business Australian markets would bring promising outcome and contribution in China in view of the country’s large population base with growing to the Group in the medium to longer term. It is important to note spending power coupled with the rising number of middle class that pursuant to the agreement with the Master Licensee, our Group households year-on-year. The Group remains steadfast with the plan is granted an option to participate directly in the Australia operations to open more licensed outlets in strategic locations within Southern as a shareholder with up to 51% of equity stake after the fourth (4th) China to tap into this massive market. year of operations. Through this strategic option, the Group is poised Manufacturing of Beverages to ride on the better business performance of the café operations in Australia. As a successful brand owner, brands and innovations are the focus of our business model, and our white coffee products are well placed 20 to meet the needs and aspirations of our consumers across a variety A concerted effort was also implemented to create greater of categories, price points and channels, allowing us to compete awareness of the uniqueness of OTWC amongst the target consumer effectively in our key markets, especially in overseas. groups on a regular basis.
In order to stay ahead of our competitors, we have to be sensitive Comprehensive Coverage in Existing Markets to the changing needs of today’s consumers and continually being Recently, the Group has appointed new distributors in Indonesia and able to delight our consumers with fresh tastes, formats and even Philippines. Both distributors have vast experience in distribution packaging. In this regard, we are well supported by a group of and marketing of certain renowned Fast Moving Consumer Goods experienced workforce and an in-house R&D team. This, coupled (“FMCG”) brands in their respective countries. We expect the with their extensive knowledge of operating in the local marketplace appointment of these new distributors will boost the sales of our and global consumption trends, makes it a very formidable white coffee mix products in both countries in the future. Essentially, combination through which the growth of our business will continue we are aiming to extend our reach into markets with growth potential to be driven. In addition to our strong brands, distribution and such as Indonesia and Philippines. marketing expertise is just as vital to our successful business model. The regional distribution reach is complemented by the specialised The Group has adopted various flexible and adaptive strategies by expertise we have developed in both the modern and traditional customising its marketing campaign and product mix when venturing retail formats, extending from the supermarkets, hypermarkets to into the international markets, as we are mindful that each consumer the convenience stores and even to the corner mom-and-pop stores. market possesses unique characteristics and preferences. This provides us with a reach wider than many of our competitors Outlook and Prospects and gives us a tremendous competitive edge in distributing our white coffee products, and when introducing new products into the Looking ahead, the major markets we operate in will remain marketplace. competitive and challenging. Raw material prices, inflationary pressures and currency risks—specifically the fluctuations of the Next Engine of Growth major currencies against the Ringgit Malaysia—will likely have an The Group foresees that there are ample rooms to grow its sales impact on our business. Nonetheless, we will pro-actively manage in China in view of the country’s enormous market potential and costs, further strengthen our networks, and develop our segment and growing affluence amongst the urban population. Since 2011, many country markets with foresight and flexibility. major retailers operating within the tier-1 cities along the coastal line Despite achieving another year of impressive financial performance of China have been selling Oldtown’s beverage products. In 2013, in FY2014, we believe that our business still has tremendous room the Group managed to expand further into the central region of China for growth. The Group’s strong profitability represents another year of by distributing its beverage products progressively across the tier-2 record performance and reflects the positive business environment cities in China. for our two businesses and the successful execution of the Group’s China emerged as the fastest growing market for Oldtown’s growth strategy. The growth in the past has been powered by the beverage products in FY2014. Through trade exhibitions we strength of our white coffee products across the different categories have participated in China, the Group is able to meet, solicit new and regional markets, and going forward this will remain the key business opportunity and to build rapport directly with new business driver of future growth. associates, trade partners and retailers. In essence, we could gauge I believe our carefully formulated strategies to achieve sustainable the acceptance level of our products in the Chinese market. business models for growth will be executed by the management The Group will always strive to find ways and means to strengthen team as planned to deliver another successful year for the Group. its marketing initiatives and investing greater efforts in key ASEAN countries where the Group has already established its presence years ago. Various marketing campaigns, advertising and promotional activities have been conducted recently to entrench Lee Siew Heng OLDTOWN White Coffee (“OTWC”) brand equity in the marketplace. Group Managing Director 21 OLDTOWN BERHAD (797771-M) Financial (Incorporated in Malaysia) Highlights
2014 RM382,172 RM66,368 RM48,938 10.79SEN Revenue (RM’000) Profit Before Tax (RM’000) Profit Attributable to #Earnings Per Share Owners of the Company (RM’000)
Revenue (RM’000) Profit Before Tax (RM’000)
500,000 80,000 74,947 422,054 70,000 66,368 382,172 400,000 60,000 51,954 285,424 300,000 50,000 255,133 40,160 43,379 40,000 193,666 200,000 30,000
20,000 100,000 10,000
0 0 2009p* 2010p* 2011 2013a^ 2014 2009p* 2010p* 2011 2013a^ 2014
Profit Attributable to Owners of the Company (RM’000) #Earnings Per Share (Sen)
60,000 14.00 55,527 12.24 48,938 12.00 50,000 10.79 40,177 10.00 40,000 8.86 8.00 30,231 31,700 30,000 6.99 6.66 6.00 20,000 4.00
10,000 2.00
0 0 2009p* 2010p* 2011 2013a^ 2014 2009p* 2010p* 2011 2013a^ 2014
p* : based on the proforma consolidated financial information as disclosed in the Prospectus dated 22 June 2011. a^ : based on the audited financial statements for 15-month financial period ended 31 March 2013. The Company has on 27 August 2012 changed the financial year end of the Company from 31 December to 31 March. The financial period ended 31 March 2013 made up of 15 months results covering period from 1 January 2012 to 31 March 2013. # : The above EPS are calculated based on the enlarged share capital of 453.597 million ordinary shares after adjusted for 1-for-4 bonus issue for year-on-year comparison purpose. They are different from the EPS disclosed in the Prospectus for financial years from 2009 to 2010 (computed based on the enlarged share capital prior to the public listing) and EPS disclosed in the audited financial statements for year 2011, 2013 and 2014 respectively (computed based on weighted average number of shares).
22 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) Sustainability & Corporate Responsibility
Oldtown Berhad (“Oldtown” or “the Group”) recognises that acting saving and promotes environmental friendly practices and awareness responsibly and sustainably creates value for the group, employees, among employees to help make a difference to the environment. customers, shareholders and society as a whole. Sustainability is an integral part of our business and corporate responsibility serves as Oldtown EARTHCARE carried out various activities during the key to sustainability. financial year under review, such as: The Group’s corporate responsibility practices focus on four areas - • Contributed recycle bins and trees to schools. Environment, Workplace, Community and Marketplace which aim to • Allocation of Green Signage at nationwide Oldtown White Coffee deliver sustainable value to society at large. outlets. The Group will continue to build sustainable practices in every aspect • Conducted Oldtown Recycle Competition 2013 in October 2013. of the Group’s business and remain steadfast in achieving excellence in its corporate responsibility activities. • Conducted Oldtown Carnival of the Green 2013 at Kg. Tersusun Klebang Selatan on 9th November 2013. (A) Environment • Carried out Landscaping and Tree Planting Campaign at Kg Environmental Sustainability is of utmost importance due to the Tersusun Klebang Selatan on 9th November 2013. increasing depletion of the earth’s natural resources and global climate change issues. As a dynamic business entity, we rely on the • Established Oldtown Mother Earth website in January 2014 – A earth’s natural resources every day and climate change issues will charity fundraising platform for buying and selling recycled affect the supply chain and the source of many products. Therefore, creations and used items. it is essential to embed environmental sustainability principles into • Participated the Earth Hour Campaign 2014 at nationwide Oldtown our business operations and practices. White Coffee outlets on 29th March 2014. We aim for business growth that is in harmony with environment and • Implemented different practices of 3Rs (Reduce, Reuse and are committed to protecting the earth’s natural resources, conserving Recycle) such as established a Recycling Corner and arranged and preserving the environment. recycling pickup services to collect the recyclable materials and Among the approaches seek to heighten the positive impact sent out monthly “Green Alert” with various “go green” practices and minimise negative impacts of the Group’s operations on the and messages to all staff. environment are: Green Building • The efficient use of energy, water and raw materials in all our To support the Group’s commitment to “GREEN”, the Group’s new operations. integrated industrial complex located at Ipoh, Perak which comprise • The establishment of Oldtown EARTHCARE which inculcate a 21⁄2 storey factory building, 1 storey warehouse, 2 storey canteen environmentally intelligent practices with a variety of green cum Recreation Centre and 3 storey administration building was initiatives, activities and awareness programs. constructed based on GREEN BUILDING concept by adopting green building design and requirements. • The implementation of ongoing product wastage elimination program and packaging design optimisation. The design and layout of the building includes green features to minimise environmental impact such as: • The proper utilisation of reusable resources and recyclable materials. • Energy Efficiency • The practice of 3Rs (Reduce, Reuse and Recycle) at the - Usage of LED bulbs with low energy consumption, motion sensor workplace. lightings and electrical sub-metering to gauge the usage of individual blocks electricity consumption. • The participation in Earth Hour Campaign. - Installations of double glazed windows and thermal roof • The support of green environment and Eco-friendliness concept insulation materials to reduce heat builtup and minimise air- through “Plant a Tree” Campaign. conditioning load. The Group through Oldtown EARTHCARE takes a proactive approach - Limited parking capacity with parking priority for hybrid vehicles to promote an environmentally-conscious culture in the workplace. and encourage carpooling. Oldtown EARTHCARE sends out “Oldtown Green Alert” to all employees periodically to introduce various green initiatives and - Convenient location with easy access to public transportation to measures on the responsible use of resources to reduce, reuse and mitigate carbon emissions to the atmosphere. recycle materials wherever possible. It provides tips for resource-
23 OLDTOWN BERHAD (797771-M) Sustainability (Incorporated in Malaysia) & Corporate Responsibility
1
- Installation of air conditioning using environmentally friendly refrigerant gas. - Committed to use machinery and equipment with inverter technology to minimise electricity peak load. - Developed Building User Manual and forecasting budget for 2 sustainable maintenance to ensure long usage life for plant and machinery. • Water Efficiency - Installation of Rainwater Harvesting System to collect rainwater for toilet flushing and plant irrigation. - Insertion of Digital Flow Meters for effective pipeline leak detection. - Usage of sensor taps to enhance water conservation. • Materials Efficiency 3 - Disposal of construction waste according to regulations. Scrap materials collected during construction stage are stored and sent to recycle centres. - Packaging materials wastage is sold as recyclable content to be processed as alternative burning fuel with environmental conservation objective of reducing dumping into landfill areas and also reducing the consumption of fossil fuel. • Indoor Environmental Quality - Implementation of Environmental Tobacco Smoke Control to establish a non-smoking policy in and around the building. Allocation of a 4 smoking zone exclusively for a non-smoking premise. - Installation of Air Recirculation System contributing appropriate ventilation and thermal comfort. - Availabilities of breakout spaces, internal noise level monitoring, daylight and glare control create a conducive working environment for employees with visual, thermal and acoustic comfort. - Landscaping works by reserving area for grass turfing and plants.
The project is registered under the name of OLDTOWN MANUFACTURING PLANT (GBI Reg No GSB/INC/2012/01). It is currently at the Completion and Verification Assessment Stage and is expected to be certified as Green 5 Building under Non-Residential New Construction category by October 2014. 1. Design of Admin Block with 4. High ballast lightings for wide zone calculated sun screeding angles to illumination and Digital Power Meter allow natural daylighting but at same to monitor electricity consumption time reducing glare. by zones and analyis consumption 2. Parking Priority for Employees with trend. Hybrid Cars and employees who 5. Digital Flow Meter installed at practices carpool. various points and monitored using 3. Centralized Air Conditioning Unit with a computerized system to analyse Invertor technology. Air conditioning water consumption and immediately system equipped with zonal detect any internal water pipe temperature and humidity control to leakage. balance electricity consumption and comfort of employees. 24 (B) Workplace • Employees are provided with the necessary job related training, seminars and workshops on an ongoing basis to further enhance Employees are the backbone of the business. Essentially, employees their skills, knowledge, core competencies and proficiency level. are central to the smooth functioning of business operations and play a vital role in the success and sustainability of the Group. • Participation in various in-house and external training programs from technical-related skills to soft management skills. The Group believes that human capital is the most valuable asset. In line with this belief, the Group strives to provide a dynamic and • Participation in international trade fairs/exhibitions locally and challenging workplace that gives emphasis on the opportunity to overseas, to broaden the knowledge base and exposure of develop employee skills, talent and capability. the employees to keep abreast of new developments in their respective field of expertise. The Group, in fulfilling its corporate responsibility as a caring employer, places emphasis to build long lasting relationships with its iv) Recreational, Sports and Leisure Activities employees. The Group acknowledges a good work-life balance will lead to a The efforts towards achieving the above objectives are carried out in more productive workforce. various aspects: In order to cultivate balanced work life and create a caring, i) Employee Welfare & Well-being Program harmonious and cohesive working environment, employees are encouraged to participate in social, sports, recreational and leisure The Group aims to enhance the employee benefits schemes to build activities organised by the Group. Besides, communication and an engaged workforce that stay loyal and grow with the Group. In camaraderie among staff is fostered through social gatherings and pursuing the objective, we provide the following: team building events. • Medical benefits, hospitalisation and personal accident v) Retention, Talent Management and Succession Planning insurance coverage. Retaining key employees is crucial to ensure business success. • Financial assistance in the form of education subsidy and The Group shall continue to ensure the rewards package remain employee emergency assistance fund. competitive to attract, retain and motivate the right talents.
• Organises annual dinner and recognises long service staff with A proper succession plan is put in place for critical positions to the Long Service Award in recognition of their loyalty, dedication ensure sustainability in terms of continuous effective and efficient and commitment. operations within the Group and a healthy leadership pipeline.
• Review the Human Resource policies and staff benefits on regular During the financial year ended 31 March 2014, besides attending basis. various seminars, workshops, courses and training sessions relating to different scope of skills and knowledge coverage, the staff also ii) Safe, Healthy and Conducive Work Environment participated in various team building events and activities which aim at The Group strives to provide a safe, healthy, comfortable and promoting cohesiveness and team spirit amongst staff. conducive work environment for its employees through the following To maintain a healthy lifestyle, the Group also organised fitness initiatives: programmes after working hours for staff participation to help employees stay fit and healthy. • Setting up of Occupational Safety and Health Committee to initiate various health and safety programs such as fire drills, fire safety (C) Community briefings and safety system checks on the equipment. The Group recognises the interdependent relationship between • Ensuring safe practices in all aspects. business growth and social well-being and welfare. Therefore, in • Promoting the awareness of safety precautions and health. fulfilling its corporate responsibilities to the community it serves, the Group is obligated to nourish and improve the quality of the society iii) Training and Development Program at large while doing business. The Group seeks to promote and develop its human assets to be To be socially responsible, the Group focuses its corporate competent, multi-skilled and well-motivated to increase their career responsibilities on enhancing community sustainability through advancement opportunities. The Group continues to carry out the various activities and actions aim to promote community engagement following efforts: and address the needs of less fortunate and underprivileged families.
25 OLDTOWN BERHAD (797771-M) Sustainability (Incorporated in Malaysia) & Corporate Responsibility
The philanthropic activities and approaches include: • Accessible in the public domain and regular investors updates on our website. • The setting up of OldTown Children Care Fund to provide aid funds in the form of medical, educational and other short term The Group aims to develop a good relationship with investors and is emergency funds to orphaned, abandoned, vulnerable and accountable for providing timely information about the Group to the deprived children. investment community.
• Monetary and in kind donations to schools, charity, welfare and During the financial year ended 31 March 2014, the Group has voluntary associations. conducted investor relations activities via various communication channels such as one-to-one meeting, small group briefing, conference • Distribution of gifts, goodie bags, basic supplies and necessities to calls, regular meetings and road shows. the poor and impoverished communities during festivals. (ii) Suppliers • “Annual Orphanage Project” - Building funds donations to orphanage or purchase of building as shelter for orphans. We respect our suppliers and work with them through long-term relationships to realise mutual growth based on mutual trust. In this During the financial year ended 31 March 2014, the Group through aspect, we engage with our suppliers in the following areas: Oldtown Children Care Fund extended monetary donations to schools, charity, welfare and voluntary association and needy • Fosters new partnerships and delivers new business opportunities to families. It organised various festive celebrations, movie treats and expand the suppliers’ business coverage in the industry. day trips for children homes. It also donated school necessities to deprived primary school students from Pulau Ketam, Rawang, • Engages in ethical procurement practices by adopting standard Sepang, Sungai Pelek, Tanjung Sepat, Puchong, Jenjarom, Klang, procedures in vendors’ qualification. Sungai Buloh and Jinjang in the month of November 2013. • Ensures the products supplied are in accordance with the Group’s Under “Annual Orphanage Project”, the Group has purchased a materials requirements. bungalow in Ipoh and rented to a Children Home for RM1 (Ringgit • Conducts more in-depth suppliers’ audits to ensure improved Malaysia :One) only as a shelter for children who are orphaned and standards in the supply chain. abandoned. (iii) Customers (D) Marketplace Based on our philosophy of “Customer First”, we develop and provide To achieve the sustainable development of the marketplace, the innovative, safe and high quality products and services that meet a wide Group endeavors to carry out activities in a sustainable manner and variety of customers’ demands and earn the trusts of our customers : promote responsible practices among our investors, suppliers and customers. • Focuses on product innovation and development to meet the customers’ requirements. (i) Investors • Ensures halal compliance covering materials, employees and systems. We strive to enhance corporate value and maintain stable and long term growth for the benefit of shareholders. It is through engagement • Enhances customers’ satisfaction and confidence by providing safe, with its shareholders that the Group may learn of new and better reliable and affordable products. ways to enable a successful and sustainable business model. The Group continues its efforts to engage with its shareholders through • Establishes customers’ complaint and feedback system through the following initiatives: dedicated email address, social media such as Facebook and Twitter and suggestion boxes and ensures all customers complaints are • Disclose and disseminate all material information in a timely, open, acknowledged and resolved promptly. fair and transparent manner. • Sets quantitative benchmarks for its customer service delivery • Ensuring a robust system of corporate governance. standard such as Standard Waiting Time.
• Implementing policies that promote ethical behavior and • Continues to be covered by the internationally recognised ISO conducting business responsibly through high standards and 9001:2008 (Quality Management System), ISO 22000:2005 (Food business ethnics. Safety Management System), HACCP (Hazard Analysis Critical Control Point) and GMP (Good Manufacturing Practice) certifications for its • Actively engages with its shareholders and investors through manufacturing operations to ensure uniform and high standards various channels of communication such as investor relations of product. activities, general meetings of shareholders, financial results briefings, dialogues and regular press releases.
26 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) Corporate Responsibility
Community & Workplace Events 1 and Highlights
The Group’s corporate responsibility practices focus on four areas - Environment, Workplace, Community and Marketplace which aim to deliver sustainable value to society at large.
OldTown Children Care Fund (OCAF)
• Donations and Sponsorships
• Procurement of Building as Shelter for Orphans 2 3 • Contributions of School Necessities
• Festival Celebrations for the Unfortunates
• Charity Day Trip
4 5 6
7 8 1. Christmas & New Year movie-cum-lunch treat for 100 Orphans at AEON Station 18 on 21st December 2013 2. Chinese New Year Bowling Outing With 103 Less Fortunate Children on 22nd February 2014 at Ampang Superbowl, Ipoh Parade. 3. Hari Raya Open House at Bandar Baru Bangi Outlet with 100 deprived children on 24 August 2013. 4. Donation of RM 3,600 education aid fund to 3 deprived families from Kampar, Perak. 5. Bestowal of RM 1,800 education aid fund to an underprivileged family with 4 children from Kampar, Perak. 6. Contributions of school essentials to 50 deprived 9 students from SJK(C) Kuang, Rawang. 7. Charity Trip to Kidzania Kuala Lumpur with 73 orphans conducted on 19th April 2013. 8. Procurement of a bungalow at Merdeka Garden, Ipoh as a shelter for children who are orphaned and abandoned. 9. Sponsorship of RM 5,000 for Program Titipan Kasih Harian Metro 2013 at Kampung Sungai Nipah, Bagan Datoh, Perak. 27 OLDTOWN BERHAD (797771-M) Corporate (Incorporated in Malaysia) Responsibility
11
Earthcare • Oldtown Carnival of the Green 2013 • Landscaping & Tree Planting Campaign • Earth Hour Campaign 2014 • Contributions Of Trees and Recycle Bins To Schools • Oldtown Recycle Competition 2013 10 13
• Oldtown Mother Earth website 10. Tree Planting Session by students from SJK(C) Pei Cheng, SJK(T) Klebang and SK Tasek at Kg • Practises of 3Rs in the Office Tersusun Klebang Selatan, Ipoh. 11. Tree Planting Opening Ceremony by Guests of • Allocations of Green Signage Honor during OldTown Carnival of the Green 2013. 12. Cheque presentation to OldTown Recycle Competition 2013 first prize winner. Workplace Activities & Events 13. Donation of 3 sets of recycle bins to SRJK(C) Padang Gajah, Ipoh. • Learning, Training and Development 14. Team Building Event conducted at Nomad Program Adventure’s Earth Camp, Gopeng on 22nd September 2013 for Ipoh-based staffs. • Staffs Recreational, Sports and Leisure 12 15. Team Building Event Conducted at Gold Coast Activities Morib, Banting on 21st & 22nd February 2014 for KAP staffs. • Employee Welfare and Well-being Program 16. Team Building Event Conducted at A Famosa Malacca on 13th September 2013 for OTK staffs. • Safe, Healthy and Conducive Work 17. Staff’s Buka Puasa Treat conducted at Subang Environment offie on 30th July 2013. 18. Service Enforcement Training conducted at • Retention, Talent Management and OldTown White Coffee restaurants. Succession Planning 19. Staff fitness classes at OldTown Berhad Ipoh office. 20. Monthly Basic Operations Management Training conducted at Training Centers in Subang & Air Itam, Penang. 14
15 16 17
18 19 20 OLDTOWN BERHAD (797771-M) OLDTOWN BERHAD (797771-M) Annual Report 2014 (Incorporated in Malaysia) (Incorporated in Malaysia) Corporate Governance Statement
The Board of Directors (“the Board”) of Oldtown Berhad (“the Company”) b. Overseeing The Conduct of The Company’s Business recognises the value of good governance and believes that a high standard of corporate governance will deliver long-term sustainable To ensure the effective discharge of its functions and responsibilities, the shareholder value. The Board is committed to ensure good corporate Board delegates the day-to-day management of the Group’s business governance practices are applied throughout the Company and its to the Management. The Group Managing Director is responsible for the subsidiaries (“the Group”). implementation of the Board’s decisions, overall responsibilities over the day to-day operations of the Group’s business and operational efficiency. This Statement sets out the key aspects of how the Company has applied the Principles and Recommendations of the Malaysian c. Identifying Principal Risks and Ensuring The Code on Corporate Governance 2012 (“MCCG 2012”) during the Implementation of Appropriate Systems to Manage Them financial year ended 31 March 2014 and any non-observation of the The Risk Management Committee (“RMC”), headed by the Group Recommendations of MCCG 2012, including the reasons thereof, has Managing Director advises the Audit Committee and the Board on areas been included in this Statement. of high risk faced by the Group and the adequacy of compliance and Principle 1 – Establish Clear Roles and Responsibilities control throughout the Group. 1.1 Clear Functions of The Board and Management Details on the RMC and the Company’s Enterprise Risk Management are set out in the Statement on Risk Management and Internal Control of this The Board leads the Group and plays a strategic role in overseeing Annual Report. the Group’s corporate objectives, directions and long term goals of the business. The Board is responsible for oversight and overall management d. Succession Planning of the Group. The Board recognizes the importance of succession planning in building The Board Committees are established to assist the Board in discharging long-term sustainable performance excellence. its responsibilities. The Board delegates specific responsibilities to three A succession planning framework has been developed to identify (3) principal Committees, namely the Audit Committee, the Nomination candidates for senior managerial positions to ensure continuity of key Committee and the Remuneration Committee. All committees have positions. written terms of references and operating procedures and the Board receives reports on their proceedings and deliberations. The Chairman e. Overseeing The Development and Implementation of A of the respective Committees shall report the outcome of their meetings Communication Policy for The Company to the Board. Minutes of all Board Committee meetings are circulated to the Board members so that they are kept abreast of proceedings and The Board recognizes the importance of keeping shareholders and matters discussed at Board Committee meetings. investors informed of its latest business and corporate developments. The Board believes that an effective investor relationship is essential in Independent Non-Executive Directors provide unbiased and independent enhancing value to its shareholders. views in ensuring that the strategies proposed by the Management are fully deliberated and examined objectively, taking into perspective The dissemination of information about the Company, its businesses the long term interests of shareholders, other stakeholders and the and its activities is conducted via the timely release of quarterly financial community at large. results, press releases and announcements. The Company also holds regular briefing and dialogues with fund managers, analysts, potential The Board recognizes the importance of the role of the Independent shareholders and research houses from time to time. Whilst the Non-Executive Directors particularly in corporate accountability. They Company endeavors to provide as much information as possible, it is are essential for protecting the interests of non-controlling interests and aware of the legal and regulatory framework governing the release of can make significant contributions to a company’s decision making by material and price sensitive information. bringing in the quality of detached impartiality. The Company’s website at www.oldtown.com.my provides easy access The Executive Directors take on primary responsibilities for implementing to corporate and financial information of the Group. The Investor the Group’s business plans and managing the business activities. Relations (“IR”) updates and information on financial results are uploaded on the website immediately after announcements on the same 1.2 Clear Roles and Responsibilities are made to Bursa Malaysia Securities Berhad (“Bursa Securities”). In fulfilling its fiduciary and leadership functions, the Board meets During the financial year under review, the Company has been involved regularly to perform its functions, amongst others, as follows: in investor relations activities to keep shareholders duly informed on a. Reviewing and Adopting The Company’s Strategic Plans the performance of the Company. There were meetings with local and foreign fund managers and analysts to provide insights on the operations The Board provides strategic direction and guides the Group in and latest developments in the Group. promoting its core values, policies and objectives. The Board reviews the strategic plans presented by the Management.
29 29 OLDTOWN BERHAD (797771-M) Corporate (Incorporated in Malaysia) Governance Statement
f. Reviewing The Adequacy and Integrity of Management to confirmation of the minutes as correct records of the proceedings Information and Internal Control System of The Company and signed in accordance with the provisions of Section 156 of the Companies Act, 1965. The Board has established a sound risk management and internal control framework to manage risks and to safeguard shareholders’ In exercising their duties, the Board has complete and unrestricted investment and the Group’s assets, as presented in the Statement on access to all information on the Group, the advice and services of Risk Management and Internal Control of this Annual Report. the Company Secretary and independent professional advice where necessary, at the Company’s expense. 1.3 Formalised Ethical Standards Through Code of Conduct 1.6 Qualified and Competent Company Secretary The Board has adopted a Code of Conduct for Directors and employees. It sets out the ethical standards and underlying core ethical values to The Board is supported by the qualified and experienced Company guide actions and behaviors of all Directors and employees in conducting Secretary who facilitates overall compliance with the Listing the day to day duties and operations of the Group. Requirements and other relevant laws and regulations. The principles of which the Code of Conduct relies are principles in The Company Secretary carries out the following tasks: relation to accountability, anti-bribery, commitment, corporate social • Attend and ensure proper conduct and procedures at all Board responsibility, diligence, discipline, excellence, fairness, honesty, Meetings, Board Committee Meetings, Annual General Meeting, independence, integrity, loyalty, respect, responsibility, professionalism, Extraordinary General Meeting and any other meetings and ensure that transparency and trust. meetings are properly convened; The key principles and expected conducts and ethical behaviour are • Ensure that deliberations at the meetings are well captured and embedded into the Group’s business operations and corporate culture. minuted, and subsequently communicated to the relevant Management The Group strives to uphold ethical practices and high standards of for necessary actions; integrity in the Group’s dealings with employees, customers, suppliers, business associates and shareholders. • Inform and keep the Board updated of the latest enhancement in corporate governance, changes in the legal and regulatory framework, The Board will review the Code when necessary to ensure it remains new statutory requirements and best practices; relevant and appropriate. • Keep the Directors and principal officers informed of the closed period The full version of the Code of Conduct is published on the Company’s for trading in the Company’s shares; and website at www.oldtown.com.my. • Ensure proper record and maintenance of the Company’s proceedings, 1.4 Strategies Promoting Sustainability resolutions, statutory records, register books and documents. The Board has adopted a Sustainability and Corporate Responsibility 1.7 Board Charter Framework for the Group. The Framework reinforces the Group’s sustainability commitment to integrate sustainability and corporate The Directors are expected to act in a professional manner and responsibility strategies into daily operations with the ultimate objective discharge their duties with high ethical values, honesty and of achieving greater efficiency, better performance of the Group and accountability in their commitment to good corporate governance improved quality of life to the society at large. practices. The Group’s activities on sustainability are included in the Sustainability A Board Charter was formalised and adopted by the Board on 1 March and Corporate Responsibility section of this Annual Report. 2014. The Board Charter clearly sets out the roles, responsibilities, authorities and operation of the Board and Board Committees. All Board 1.5 Access to Information and Advice members are aware of their duties and responsibilities. All Board members are supplied with information concerning the The Board Charter also outlines: Company and the Group on a timely manner. All Directors are provided with comprehensive Board papers at least five (5) days before Board • The division of responsibilities and powers between the board and meetings to enable them to review and consider the agenda items management, the different committees established by the board, and to be discussed. The Board papers contain relevant information and between the Chairman and the Group Managing Director; justifications for each proposal for which Board’s approval is sought. Where necessary, members of senior management and external advisers • Set out processes and procedures for convening board meetings; are invited to attend these meetings to provide additional insights and • The Board’s commitment in upholding integrity in financial reporting, professional views on specific items on the agenda. conflicts of interest situations and related party transactions; Minutes of the Board and Board Committee meetings are circulated to • List of matters reserved for decision by the Board; Directors for their perusal prior to confirmation of the minutes at the following Board and Board Committee meetings. The Directors may • Board’s access to information and independent advice and request for further clarification or raise comments on the minutes prior • The role of the Company Secretary. 30 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
The Board Charter serves as a reference providing guidance to C. Responsibilities and Functions prospective and existing Board members and Management on the fiduciary and leadership functions of the Company’s Directors. It also i) To recommend to the Board, candidates to be appointed as Director ensures that the principles and practices of good Corporate Governance of the Company. are applied in all their dealings in respect of and on behalf of the ii) To consider in making its recommendations, candidates for Company; to help foster a culture of honesty and accountability and directorship proposed by the Group Managing Director or by any uphold the core values of integrity when dealing with ethical issues. senior management or any director or shareholder. A summary of the Board Charter is made available on the Company’s iii) To recommend to the Board, candidates to fill the seats on the Board website and will be reviewed when necessary to ensure the Charter Committees. remains consistent with the Board’s objectives, current law and practices. iv) To assist the Board in its annual review of the required mix of skills Principle 2 – Strengthen Composition and experience and other qualities including core competencies which Non-Executive Directors should bring to the Board and 2.1 Nomination Committee to assess the effectiveness of the Board as a whole, the Board The Nomination Committee comprises exclusively Independent Non- Committees and the individual director on an annual basis. Executive Directors. The Committee met three (3) times during the The Board has not nominated a Senior Independent Non-Executive financial year under review and the attendance record is as follows: Director to whom concerns may be conveyed as the Board will shoulder this responsibility collectively. Pursuant to the recommendation of the Attendance MCCG 2012, the Nomination Committee should be chaired by a Senior Name Designation Directorship (1 April 2013 to Independent Director identified by the Board. The Board is of the opinion 31 March 2014) that the Independent Non-Executive Chairman of the Board is suitable to act as Chairman of the Nomination Committee in view of his experience, Datuk Dr. Ahmed Chairman Independent 3/3 background and commitment. Tasir Bin Lope Pihie Non-Executive Director 2.2 Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors Mark Wing Kong Member Independent 2/3 Non-Executive Appointment of Directors Director The Nomination Committee, which comprises independent directors, Tan Chon Ing @ Member Independent 3/3 is responsible for making recommendations for any new appointments Tan Chong Ling Non-Executive to the Board. In making these recommendations, the Nomination Director Committee considers the required mix of skills and experiences which the Directors would bring to the Board. Any new nomination received is Dato’ New Independent Not recommended to the full Board for assessment and endorsement. Wong Guang Seng, Member Non-Executive applicable (Appointed on Director The key task of the Nomination Committee is to ensure that the 1 April 2014) Company recruits and retains the best available Executive and Non- The terms of reference of the Nomination Committee are as follows: Executive Directors with the right mix of skills and knowledge relevant to the Company. A. Size and Composition Re-election of Directors i) The Board shall appoint members to the Nomination Committee, comprise wholly of Non-Executive Directors and a majority of whom The Articles of Association (“Articles”) of the Company provides that one- are independent and shall consist of not less than three (3) members. third (1/3) of the Directors are subject to retirement by rotation at the Annual General Meeting (“AGM”) at least once in every three (3) years ii) The members of the Nomination Committee shall elect the Chairman and all retiring Directors shall be eligible for re-election. from amongst themselves who shall be an Independent Non- Executive Director. The Articles of the Company further provides that all Directors who are appointed during the financial year are subject to retirement and re- iii) In the event of any vacancy in the Nomination Committee resulting in election by the shareholders at the AGM following their appointment. the number of members being reduced to below three (3), the Board shall fill the vacancy within three (3) months. Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section B. Meetings 129(6) of the Companies Act, 1965. The Committee shall hold at least one meeting per year or more frequently when the need arises. The quorum for each meeting shall be two (2). Minutes of meeting shall be kept and circulated to each member. 31 OLDTOWN BERHAD (797771-M) Corporate (Incorporated in Malaysia) Governance Statement
Gender Diversity Policy Attendance The Group is an equal opportunity employer and does not practice Name Designation Directorship (1 April 2013 to discrimination of any form, whether based on age, gender, race or 31 March 2014) religion, throughout the organisation. Tan Chon Ing @ Chairman Independent 3/3 Where boardroom diversity is concerned, the Board does not adopt any Tan Chong Ling Non-Executive formal gender diversity policy in the selection of new Board candidates and Director does not have a specific policy on setting targets for female candidates. Datuk Dr. Ahmed Member Independent 3/3 The Group will continue to identify suitable candidates for appointment Tasir Bin Lope Pihie Non-Executive to the Board as and when vacancies arise. Such candidates will be Director considered based on merit and competence and what the chosen Lee Siew Heng Member Group 3/3 candidate can bring to further strengthen the Board. Managing The evaluation of the suitability of candidates as Board members is solely Director based on the candidates’ competency, character, time commitment, Mark Wing Kong Member Independent 2/3 knowledge and experience in meeting the needs of the Group. Non-Executive Director Annual Assessment Dato’ Member Independent Not The Nomination Committee shall conduct evaluation on an annual basis: Wong Guang Seng, Non-Executive applicable • The effectiveness of each director’s ability to contribute to the (Appointed on Director effectiveness of the Board and the relevant Board Committees; 1 April 2014) • The effectiveness of the Board Committees; and Goh Ching Mun Member Executive 3/3 Director • The effectiveness of the Board as a whole. The Nomination Committee met three (3) times during the financial year The terms of reference of the Remuneration Committee are: ended 31 March 2014. The activities carried out by the Nomination A. Size and Composition Committee were as follows: i) The Board shall appoint members to the Remuneration Committee, • Reviewed and assessed the mix of skills, expertise, composition, size comprise wholly or mainly Non-Executive Directors and shall consist and experience of the Board, including the core-competencies of both of not less than three (3) members. Executive and Non-executive Directors, effectiveness of the Board as a whole and the Board Committees. All assessments and evaluations ii) The members of the Committee shall elect the Chairman from carried out by the Nomination Committee were properly documented. amongst themselves who shall be an Independent Non-Executive Director. • Considered the appointment of new Director and member of the Board Committees. iii) In the event of any vacancy in the Committee resulting in the number of members being reduced to below three (3), the Board shall fill the • Considered and assessed the list of directors who are retiring by vacancy within three (3) months. rotation to put forward for re-election, subject to the approval of shareholders at the Company’s Annual General Meeting. B. Meetings The Nomination Committee considered that the performance of The Remuneration Committee shall hold at least one meeting per the existing Board and all Committees was consistently good and year or more frequently when the need arises. The quorum for each satisfactory. meeting shall be two (2). Minutes of meeting shall be kept and circulated to each member. 2.3 Remuneration policies C. Responsibilities and Functions Remuneration Committee i) To recommend to the Board the appropriate remuneration packages The Remuneration Committee comprises four (4) Independent Non- of the Group Managing Director and Executive Directors. None of Executive Directors and two (2) Executive Directors. The Committee met the Executive Directors participate in any way in determining their three (3) times during the financial year under review and the attendance individual remuneration. record is as follows: ii) To ensure the Executive Directors are fairly and appropriately remunerated for their individual contributions to the Company’s overall performance.
32 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
iii) To ensure the remuneration offered is commensurate with the level of During the financial year ended 31 March 2014, the Remuneration executive responsibilities and encourage Executive Directors to act in Committee met three (3) times to deliberate the following matters: ways that enhance the company’s long-term profitability and value. • Reviewed the new remuneration package for Group Managing Director, The Board as a whole determines the remuneration of the Non-Executive Executive Directors and General Managers (“eligible personnel”) Directors. None of the individual Directors participate in determining their by introducing incentive bonus and service agreement to eligible individual remuneration. personnel and recommended the same to the Board for approval; Directors’ Remuneration • Reviewed the remuneration package for Independent Non-Executive Directors and recommended the increase in the Directors’ fees with The Company aims to set the levels of remuneration in such a way that it effect from 1 April 2014 to the Board, for which shareholders’ approval supports the strategies and long-term vision of the Company as well as will be sought in due course; and provides adequate motivational incentive for directors to pursue the long- term growth and success of the Company. The levels of remuneration • Reviewed the increment and bonus for year 2014 of the Group. should be sufficient to attract and retain the directors needed to run the Company successfully and in line with industry standards. Principle 3 – Reinforce Independence Remuneration packages for Executive Directors are structured so 3.1 Annual Assessment of Independence as to link rewards to corporate and individual performance. The The Board recognises the importance of independence and objectivity remuneration of Executive Directors includes salary, bonus, allowance in the decision-making process as advocated in the MCCG 2012. The and benefits-in-kind. Board is committed to ensure that the independent directors are capable In the case of Non-Executive Directors, the level of remuneration to exercise independent judgment and act in the best interests of the reflects the experience and level of responsibilities undertaken by them. Company. Currently, the Non-Executive Directors are paid Directors’ fees and In line with Recommendation 3.1 of the MCCG 2012 whereby the attendance allowance for each Board/Committee meeting they attended. Board is required to develop criteria to assess independence of The aggregate remuneration of Directors of the Company for the directors, the Board has adopted the same criteria used in the definition financial year ended 31 March 2014 is categorised into the following of “independent directors” prescribed by the Main Market Listing components: Requirements (“MMLR”) of Bursa Securities. The Independent Directors of the Company fulfilled the criteria of Salaries & Bonus Fees Benefits- Total Other (RM’000) (RM’000) in-kind (RM’000) “Independence”. They act independently of management and are not Emoluments (RM’000) involved in any other relationship with the Group that may impair their (RM’000) independent judgment and decision making. Executive 1,481 1,383 105 95 3,064 Each Director has a continuing responsibility to determine whether he Directors has a potential or actual conflict of interest in relation to any material Non-Executive transactions. Such a situation may arise from external associations, 63 – 153 24 240 Directors interests or personal relationships. The Director is required to immediately disclose to the Board and to The number of Directors whose total remuneration fall in the bands of abstain from participating in discussions, deliberations and decisions of RM50,000 for the financial year ended 31 March 2014 is tabulated below: the Board on the respective matter. The Board, via Nomination Committee will develop the criteria to Remuneration Band No. of Executive No. of Non-Executive assess independence and formalise the current independence Directors Directors assessment practice. RM 50,000 and below 0 2 3.2 Tenure of Independent Directors RM 50,001 – RM 100,000 0 2 The Board is aware of the recommended tenure of an Independent RM 250,001 – RM 300,000 2 0 Director which should not exceed a cumulative term of nine (9) years RM 550,001 – RM 600,000 1 0 as recommended by MCCG 2012 and that an Independent Director may continue to serve on the Board if the Independent Director is RM 850,001 – RM 900,000 1 0 re-designated as a Non-Independent Non-Executive Director upon RM1,000,001 – RM1,050,000 1 0 completion of the nine (9) years.
33 OLDTOWN BERHAD (797771-M) Corporate (Incorporated in Malaysia) Governance Statement
3.3 Shareholders’ Approval for The Appointment As An To ensure that the Directors have the time to focus and fulfill their roles Independent Director After Serving Nine (9) Years In and responsibilities effectively, one of the criterions is they must not hold That Capacity directorships at more than five (5) public listed companies as prescribed in Paragraph 15.06 of MMLR. The Directors are required to submit an Subject to the assessment of the Nomination Committee and the update on their other directorships annually. shareholders’ approval, the Board may retain an Independent Director who has served nine (9) years or more. Presently, there is no During the financial year ended 31 March 2014, the Board met five (5) Independent Director of the Company whose tenure has exceeded a times to discuss issues on the Group’s financial performance, significant cumulative of nine (9) years. investments, corporate development, strategy and business plan. The attendance record of each Director at the Board Meetings is as follows:- 3.4 Separation of Positions of The Chairman and Group Managing Director Attendance The role of the Chairman and the Group Managing Director are clearly Name of Directors (1 April 2013 to 31 March 2014) distinct for effective balance of power and authority because the positions are held by two different individuals. The Chairman is primarily Datuk Dr. Ahmed Tasir Bin Lope Pihie 5/5 responsible for ensuring Board’s effectiveness and conduct. He ensures that all relevant issues and quality information to facilitate decision Lee Siew Heng 5/5 making and effective running of the Group’s business are included in the meeting agenda. Mark Wing Kong 4/5
The Group Managing Director is responsible for the daily management Tan Chon Ing @ Tan Chong Ling 5/5 of the Group’s operations and implementation of the Board’s policies and Dato’ Wong Guang Seng, Not applicable decisions. He is responsible for communicating matters relating to the (Appointed on 1 April 2014) Group’s business affairs and issues to the Board. His vast experience, Chin Lai Yoong business knowledge and skills contributed significantly towards the 2/5 attainment of the Group’s goals and objectives. (Retired on 26 September 2013)
3.5 Composition of The Board Chuah Seong Meng 5/5 Presently, the Board comprises four (4) Independent Non-Executive Clarence D’Silva A/L Leon D’Silva 5/5 Directors and five (5) Executive Directors (including the Group Managing Goh Ching Mun 5/5 Director). This composition complies with Paragraph 15.02 of the MMLR of Bursa Securities which requires at least two (2) directors or one-third Tan Say Yap 5/5 (1/3) of the Board, whichever is the higher, to be independent. The profiles of the Directors are set out on page 7 to page 9 of this Annual Report. 4.2 Meeting Calendar
The Executive Directors take on the primary responsibility of the day-to- The dates scheduled for Board meetings, Board Committee meetings day running of the Group’s business as well as implementing the policies and Annual General Meeting are set in advance and circulated to the and decisions of the Board. Directors to facilitate the Directors’ time planning. Circular Resolutions are used for determination of urgent matters arising in between The Independent Non-Executive Directors act independently of meetings. In accordance with Article 122 of the Articles of Association management and do not participate in any business dealings and are not of the Company, a signed and approved resolution by the majority of involved in any other relationship with the Group that may impair their the Directors shall be valid and effectual as if it had been passed at a independent judgment and decision-making. They provide a broader meeting of the Directors. view and independent assessment to the Board’s decision making process by acting as an effective check and balance. 4.3 Training
Together, with their diverse backgrounds, professional experience and The Board acknowledges that continuous education is essential for the wide range of skills, the Board can effectively manage and run the Directors to further enhance their skills and knowledge. As an integral Group’s operations. part of their training program, they are provided with updates from time to time on the relevant changes in laws, regulations and the business Principle 4 – Foster Commitment environment. During the financial year ended 31 March 2014, seminars and training courses attended by the Directors are as follows: 4.1 Time Commitment The Board meets at least four (4) times a year at quarterly intervals with additional meetings to be convened where necessary to deal with urgent and important matters that require attention of the Board.
34 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Statement On Directors’ Responsibility
Name of Directors Training/ Courses Attended The Directors are required, pursuant to Section 169 of the Act, to draw up financial statements for each financial year that gives a true and fair view of the state of affairs of the Company and the Group as at the end Datuk Dr. Ahmed Nominating Committee Program of the financial year and of the results and cash flow for the financial Tasir Bin Lope Pihie year. In addition, the Directors have the overall responsibility for taking Lee Siew Heng Managing Sustainable Business Transformation – such steps as are reasonably available to them to safeguard the assets From Good to Great of the Group and to prevent fraud and other irregularities. In preparing the financial statements for the financial year ended 31 March 2014, the Mark Wing Kong Maybank Global Markets Economic Talk – Directors have:- currency wars – At our doorstep? (i) adopted appropriate accounting policies and applied them Ambank-KL Economic Seminar: consistently; Managing Change – Poised for a turnaround (ii) made reasonable and prudent judgments and estimates; UOB- Corporate Seminar 2013 Bursa Malaysia –Advocacy Session on Corporate (iii) ensured that the applicable approved Malaysian Financial Reporting Disclosure for Directors Standards in Malaysia and the provisions of the Act are complied with; and Risk Management and Internal Control (iv) prepared financial statements on a going concern basis, having made Tricor - GST Conference enquiries that the Company and the Group have adequate resources Tan Chon Ing @ Planning Corporate Mergers & Acquisitions – to continue operations in the foreseeable future. Tan Chong Ling For execution excellence The Statement of Directors pursuant to the Act is set out on Page 134 in Chuah Seong Meng Managing Sustainable Business Transformation – this Annual Report. From Good to Great 5.2 Assessment of Suitability and Independence of Clarence D’Silva Financial Statement, Preparation and Analysis External Auditors A/L Leon D’Silva The Board has maintained a transparent and professional relationship with the Group’s external auditors through the Audit Committee. Goh Ching Mun Managing Sustainable Business Transformation – From Good to Great The Group’s external auditors are invited to attend the Audit Committee Tan Say Yap Managing Sustainable Business Transformation – meetings when deemed necessary. The Audit Committee meets the From Good to Great external auditors to review the scope and adequacy of the audit process, the financial statements and their audit findings.
In addition, the external auditors are invited to attend the Company’s Principle 5 – Uphold Integrity In Financial Reporting Annual General Meeting / Extraordinary General Meeting(s) and are available to answer any questions from shareholders on the conduct 5.1 Compliance With Applicable Financial Reporting Standards of the statutory audit and the contents of the Annual Audited Financial Financial Reporting Statements as well as any corporate exercise undertaken by the Group where the external auditors are involved. The Board is committed to provide a balanced, clear and comprehensive assessment of the Group’s financial position and prospects by making During the financial year ended 31 March 2014, the Audit Committee sure the financial statements and quarterly announcements are prepared met twice with the external auditors without the presence of the in accordance with the provisions of the Companies Act, 1965 (“the Act”) management. and applicable approved accounting standards. Messrs Deloitte has in place policies on rotation for partners and senior The Board is assisted by the Audit Committee in reviewing the professional personnel of an audit engagement to ensure objectivity, appropriateness of accounting policies applied by the Group as well as independence and integrity of the audit. The external auditors have the changes in these policies. declared their independence to the Group and their compliance with By-Laws (on professional ethics, conduct and practice) of the Malaysian The Audit Committee also assists the Board in overseeing the financial Institute of Accountants. reporting process and ensuring the quality of the financial reporting by the Group. The Audit Committee reviews and monitors the accuracy and integrity of the Group’s annual and quarterly financial statements for announcement to the public within the stipulated time frame.
35 OLDTOWN BERHAD (797771-M) Corporate (Incorporated in Malaysia) Governance Statement
Principle 6 – Recognise And Manage Risks Principle 8 – Strengthen Relationship Between Company and Shareholders 6.1 Sound Framework to Manage Risks 8.1 Encourage Shareholder Participation at General Meetings The Board acknowledges its responsibility for maintaining a sound system of risk management and internal controls in the Company and Annual General Meeting (“AGM”) the Group. These controls provide reasonable but not absolute assurance against material misstatement, loss or fraud. The AGM serves as the principal forum for direct interaction and dialogue among shareholders, Board and management. The AGM provides an The Directors’ responsibilities for the Group’s system of risk management opportunity for the shareholders to seek and clarify any issues and to and internal controls cover not only the financial aspects but also have a better understanding of the Group’s performance and other compliance and operational controls as well as risks management matters matters of concern. Shareholders are encouraged to actively participate and reviewing the adequacy and integrity of the system. in the question and answer session. The Board, senior management and the external auditors will be present to answer and provide appropriate The Company has in place an on-going process for identifying, clarifications at the meeting. evaluating and managing key risks that may affect the achievement of the business objectives of the Group. Towards cultivating a sustainable Normally, a press conference will be held after the AGM to advise the risk management culture, risk management principles and practices are media of the resolutions passed by shareholders, brief the media on the embedded into existing key processes across different functions within operations, performance and financial results of the Group for the year the Group. under review and clarify issues posed by the media.
6.2 Internal Audit Function The Company dispatches its notice of AGM and related papers to shareholders at least twenty one (21) days before the meeting to enable The Group’s internal audit function is carried out by outsourced external shareholders to go through the Annual Report and papers supporting the consultants who assist the Audit Committee and Board in providing resolutions proposed. independent assessment on the adequacy, efficiency and effectiveness of the Group’s governance, risk management and internal control 8.2 Encourage Poll Voting processes. In line with recommendation 8.2 of the MCCG 2012, the Chairman Details of the Company’s internal control system and framework are set informs shareholders of their right to demand a poll vote at the out in the Statement on Risk Management and Internal Control of this commencement of the AGM. Annual Report. All resolutions put for the shareholders’ approval at the 5th AGM held on Principle 7 – Ensure Timely And High Quality Disclosure 26 September 2013 were voted by a show of hands and duly passed. The resolutions passed at the meeting are released to Bursa Malaysia in 7.1 Corporate Disclosure Policy a timely manner.
The Board has put in place a Corporate Disclosure Policy to ensure 8.3 Effective Communication and Proactive Engagement the disclosure of material information pertaining to the Company’s performance and operations to the public is in accordance with the At the last AGM held on 26 September 2013, there was a presentation disclosure requirements under the MMLR and other applicable laws and on the Company’s operational review by the Group Managing Director. regulations. The Executive Director also provided shareholders with a brief review of the Company’s performance and prospects. Shareholders have the The Policy outlines the Company’s approach towards the determination opportunities to enquire on the Company’s performance and operations and dissemination of material information, the circumstances under and are invited to ask questions during the question and answer session. which the confidentiality of information will be maintained, preventing abuse of undisclosed material information and provides guidelines COMPLIANCE STATEMENT for achieving consistent disclosure practices. Confidential information is restricted to top management only. Selected members of top The Board is of the view that the Group is generally in compliance with management are responsible for making disclosures and responding to the Principles and Recommendations of the MCCG 2012. Where a market rumours and queries. specific Recommendation of the MCCG 2012 has not been observed during the financial year under review, the non-observance has been 7.2 Leverage on Information Technology for Effective explained and the reasons thereof has been included in this Statement. Dissemination of Information This Corporate Governance Statement is made in accordance with the The Board has established a dedicated section for corporate information resolution of the Board of Directors dated 23 July 2014. on the Company’s website where information on the Company’s announcements, financial information, share prices and analysts’ reports can be accessed.
36 OLDTOWN BERHAD (797771-M) OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) (Incorporated in Malaysia) Audit Committee Report
The Board of Directors (“the Board”) of Oldtown Berhad (“the Company”) (i) he must have passed the examinations specified in Part I of the is pleased to present the Audit Committee (“the Committee”) Report for 1st Schedule of the Accountants Act 1967; or the financial year ended 31 March 2014. (ii) he must be a member of one of the associations of accountants 1. Composition specified in Part II of the 1st Schedule of the Accountants Act The members of the Audit Committee are as follows:- 1967; or
Chairman (c) fulfills such other requirements as prescribed or approved by Bursa Mark Wing Kong, Independent Non-Executive Director Malaysia Securities Berhad (“Bursa Securities”).
Members (iv) In the event of any vacancy in the Audit Committee resulting in the Datuk Dr. Ahmed Tasir Bin Lope Pihie, Independent Non-Executive Director number of members being reduced to below three (3), the Board shall within three (3) months appoint such number of new members as may Tan Chon Ing @ Tan Chong Ling, Independent Non-Executive Director be required to make up the minimum number of three (3) members.
Dato’ Wong Guang Seng, Independent Non-Executive Director (v) No alternate director shall be appointed as a member of the Audit (Appointed on 1 April 2014) Committee.
2. Attendance (vi) The term of office and performance of the Audit Committee and each The Audit Committee of the Company held five (5) meetings during of its members shall be reviewed by the Board at least once every the financial year ended 31 March 2014 and details of attendance of three (3) years. members of the Audit Committee are as follows:- C. Authority (i) The Audit Committee is fully authorized by the Board to independently Attendance investigate without interference from any party on any activity within Name of Members (1 April 2013 to 31 March 2014) its terms of reference. It shall have:- (a) full and unrestricted access to any information pertaining to the Mark Wing Kong 4/5 Company and its subsidiary companies;
Datuk Dr. Ahmed Tasir Bin Lope Pihie 5/5 (b) direct communication channels with both the external Auditors and internal Auditors; Tan Chon Ing @ Tan Chong Ling 5/5 (c) the resources which are required to perform its duties; and
3. Terms Of Reference (d) the authority to convene meeting with the external Auditors, internal Auditors or both, excluding the attendance of the other directors and A. Objective of the Audit Committee employees of the Company, wherever deemed necessary. The primary objective of the Audit Committee is to assist the Board in fulfilling its fiduciary responsibilities relating to corporate accounting, (ii) The Audit Committee is also authorized by the Board to obtain external system of internal controls and risk management processes, or independent professional advice and may invite outsiders with management and financial reporting practices of the Group. relevant experience to attend their meetings, if necessary.
B. Composition of the Audit Committee D. Meetings, Quorum and Procedures (i) The Committee shall be appointed by the Board from amongst its (i) Meetings shall be held not less than four (4) times in a financial number and shall consist of not less than three (3) members, all of year, although additional meetings may be called at any time by the whom must be non-executive directors, with a majority of them being Chairman upon the request of any committee members, the external independent directors. or the internal Auditors or at the Chairman’s discretion.
(ii) The Chairman of the Audit Committee shall be elected among the (ii) The quorum shall consist of not less than two (2) members; the members of the Audit Committee and shall be an independent majority of the members present must be independent directors. In the director. absence of the Chairman, the members present shall elect a Chairman for the meeting from amongst the members present. (iii) The Board shall at all times ensure that at least one (1) member of the Audit Committee: (iii) The Secretary to the Committee shall, but need not, be the Company Secretary. (a) must be a member of the Malaysian Institute of Accountants; or (iv) The Audit Committee may, as and when deemed necessary, invite (b) if he is not a member of the Malaysian Institute of Accountants, other Board members, senior management personnel, a representative he must have at least three (3) years’ working experience and: of the external Auditors and external independent professional advisers to attend the meetings. 37 OLDTOWN BERHAD (797771-M) Audit (Incorporated in Malaysia) Committee Report
(v) The Audit Committee shall meet with the external Auditors at least (iv) Risk Management twice in a financial year without the presence of any executive board To review the adequacy and effectiveness of risk management, member. internal control and governance systems instituted in the Group.
(vi) Minutes of each meeting shall be kept and distributed to each (v) Related Party Transactions member of the Committee and of the Board. To monitor and review any related party transaction and conflict E. Duties and Responsibilities of interest situation that may arise within the Group including any transaction, procedure or course of conduct that raises questions on The duties and responsibilities of the Committee shall be: management integrity. (i) External Audit (vi) Other Matters (a) To consider and recommend the appointment of the external To perform such other functions and responsibilities as may be Auditors, the audit fee and any questions of resignation, dismissal or agreed by the Committee and the Board, and as may be required re-appointment. from time to time in compliance with the MMLR. (b) To discuss with the external auditors before the annual audit commences, the nature and scope of audit plan. 4. Summary Of Activities During The Financial Year
(c) To discuss problems and reservations arising from the final and The Audit Committee had carried out the following activities in interim audits; evaluation of the system of internal controls and accordance with the terms of reference of the Audit Committee during any matter the external Auditors may wish to discuss, including the financial year ended 31 March 2014: assistance given by the employees of the Group to the auditors A. Financial Reporting and to review the auditors’ audit report, management letter and management’s response. Reviewed the unaudited quarterly financial results and audited financial statements of the Group before recommending the same for the Board’s (ii) Internal Audit approval and release to Bursa Securities. (a) To review the adequacy of the scope, functions, competency and B. Internal Audit resources of the internal audit function and that it has the necessary authority to carry out its work. (i) Reviewed the annual audit plan of the outsourced internal audit function to ensure adequate scope and comprehensive coverage of (b) To review the internal audit program, processes and results and, the activities of the Group; where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function and provide general (ii) Reviewed the internal audit reports, recommendations made and guidance to the internal audit function. Management’s response to those recommendations; and
(c) To review the performance of the internal audit function including the (iii) Noted the corrective actions on outstanding audit issues to ensure appointment and termination of senior staff members of the internal the key risks and control lapses have been addressed and rectified. audit function. C. External Audit (d) To consider the major findings of internal investigations and (i) Reviewed the Annual Audit Planning Memorandum prepared by the management’s response. external Auditors to ensure adequate scope and comprehensive coverage over the activities of the Group; (iii) Financial Reporting To review the quarterly and annual financial statements of the Company (ii) Discussed the scope of work, key audit areas, audit approach, audit and the Group and to recommend the same to the Board for approval, timetable and the proposed audit fees of the Group for the financial focusing particularly on: year ended 31 March 2014;
(a) any changes in or implementation of new accounting policies and (iii) Recommended the re-appointment of the external Auditors for the practices; Board’s approval;
(b) significant and unusual events; (iv) Reviewed the extent of assistance rendered by the management and issues and reservations arising from audits with the external Auditors; (c) significant adjustments arising from the audit; and
(d) the going concern assumption; and (v) Had two (2) private sessions with the external Auditors without the presence of management staff and the executive board members. (e) compliance with applicable approved accounting standards and other legal and regulatory requirements.
38 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
D. Related Party Transactions (ii) reported the results of internal audit reviews and provided (i) Reviewed and noted all recurrent related party transactions entered recommendations for improvement to the Committee; into by the Company and the Group to ensure that the transactions (iii) followed up on the implementation of audit recommendations and entered into were on normal commercial terms; action plans agreed upon by the Management; (ii) Reviewed and recommended the revised procedure for Review (iv) ascertained the extent of compliance with the Group’s policies, Methods and Procedures for Related Party Transactions for the procedures and statutory requirements; and Board’s consideration; and (v) reviewed and recommended improvements to the existing system (iii) Reviewed the audit reports on related party transactions presented of internal controls, risk management and corporate governance by the outsourced external consultant to ascertain that the review processes. procedures established to monitor the related party transactions have been complied with in accordance to the MMLR of Bursa Securities. The internal audits conducted during the financial year did not reveal material weaknesses which would result in material losses, E. Risk Management contingencies or uncertainties that would require disclosure in the (i) Reviewed the follow up report on Enterprise Risk Management from Annual Report. outsourced external consultant to ascertain the adequacy of actions taken to mitigate the risks; and The costs incurred for the outsourced internal audit function in respect of the financial year ended 31 March 2014 was RM92,052. (ii) Reviewed the status reports on Enterprise Risk Management from the Chairman of the Risk Management Committee. 6. Statement On Share Issuance Scheme F. Other Matters There was no Share Issuance Scheme in place during the financial year (i) Reviewed and recommended to the Board, dividends to be declared ended 31 March 2014. to the shareholders of the Company;
(ii) Reviewed the Circular to Shareholders in relation to the Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions and Proposed New Shareholders’ Mandate for Recurrent Related Party Transactions;
(iii) Reviewed the Audit Committee Report and Statement on Risk Management and Internal Control prior to submission of the same to the Board for consideration and inclusion in the Annual Report of the Company; and
(iv) Reported to the Board on significant issues and concerns discussed during the Committee’s meetings together with applicable recommendations. Minutes of the Committee’s meetings were tabled, discussed and noted by the Board.
5. Summary Of Activities Of The Internal Audit Function
During the financial year ended 31 March 2014, the outsourced internal audit function assisted the Committee in discharging its duties and responsibilities by executing independent reviews to determine the adequacy and effectiveness of the Group’s internal control system. The activities performed by the internal audit function include:
(i) conducted review of business processes in accordance with the risk-based internal audit plan approved by the Committee, which covered reviews of the internal control system, risk management and follow up audits to address observations reported in preceding internal audit visits;
39 Statement OLDTOWN BERHAD (797771-M) On Risk (Incorporated in Malaysia) Management & Internal Control
Introduction and incorporate any new risk factor, review the risk profiles, ratings and update the management action plans; The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of risk management and internal control to • The RMC will review the updated Risk Register and evaluate the safeguard shareholders’ investment and the Group’s assets. Pursuant to effectiveness of actions plans in mitigating the risks identified; Paragraph 15.26 (b) of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”), the Board • The RMC meets periodically to discuss principal business risks in of Directors (“the Board”) of Oldtown Berhad is pleased to present the critical areas, assess the likelihood and impact of material exposures following Statement on Risk Management and Internal Control. This and determine its corresponding risk mitigation measures; and Statement outlines the nature and scope of risk management and • The Group Managing Director will update the Audit Committee on the internal control of the Group and covers all of the Group’s operations key risk related issues and the Audit Committee shall report to the except for associate companies. Board on the status of the risk management.
Board’s Responsibility Key Internal Control Processes
The Board acknowledges its responsibility in maintaining a sound system The Board is committed to maintain a strong control structure whereby of risk management and internal control and affirms its commitment internal control is embedded in the business processes for the Group for reviewing the adequacy and integrity of the system. The system to pursue its objectives. The key features of the Group’s internal control of risk management and internal control covers financial, operational, system are: environmental, governance and compliance control matters. 1. Control Environment The Group’s system is designed to manage, rather than eliminate, the risks towards achieving the Group’s business objectives. Accordingly, i) Organisation Structure and Authorization Procedures it can only provide reasonable but not absolute assurance against the occurrence of any material misstatement, fraud or loss. The Group maintains formal and structured lines of reporting that includes clear definition of responsibilities and delegation of authority. It Management’s Responsibility sets out the roles and responsibilities, review and approval procedures to enhance the Internal Control system of the Group’s various operations. Management is responsible for implementing the control systems and Limits of authorities are imposed for revenue and capital expenditure for processes to identify, evaluate, monitor and report on risks identified and all operating units to keep potential exposure under control. Capital and action steps taken to mitigate and/or minimize the risks. revenue expenditure, acquisition and disposal of investment interests are duly approved before they are carried out. Risk Management Framework ii) Annual Budget The Board recognizes that a sound risk management framework is essential to ensure proper management of the risks that may impede the Budgetary control is applied to every company in the Group and actual achievement of the Group’s objectives. performance is closely monitored against budgets to identify significant variances. Discussions are held between the Management and the The Group has established an Enterprise Risk Management (“ERM”) Departmental Heads to ensure the budgets are attainable and realistic. framework to identify, evaluate and manage the risks. A half yearly review of the annual budget is undertaken by Management to identify and where appropriate, to address significant variances from The key features of the ERM framework are as follows: the budget. • It outlines the ERM methodology on the identification of key business risks through a structured approach and to determine if controls are in iii) Active Involvement by Executive Directors place in mitigating the risks identified. The Executive Directors are actively involved in the running of the business and operations and they report to the Board on significant • It establishes guidelines to enable the Management to prioritize the changes in the business and external environment, which affect the risks and allocation of resources to manage the risks. operations of the Group at large.
The Board is supported by the Risk Management Committee iv) External Certification (“RMC”), headed by the Group Managing Director in overseeing the risk management efforts within the Group. The RMC comprised of The effectiveness of the system of internal control is also reviewed Executive Directors and senior management and ensures that the risk through the ISO9001:2008 (Quality Management System), ISO management and control framework is embedded into the culture, 22000:2005 (Food Safety Management System), HACCP (Hazard processes and structures of the Group. Analysis Critical Control Point) and GMP (Good Manufacturing Practice) certifications. Regular review and periodic audits are conducted internally The key aspects of the risk management process are:- as well as by external auditors from accredited certification bodies. • Business/Operations/Departmental Heads are accountable for all risks Results of these audits are reported to the Management. assumed under their respective areas of responsibility. They undertake to update their risk profiles on regular basis from the previous update 40 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
The demanding control procedures and documentation requirements During the financial year ended 31 March 2014, the outsourced external of the certifications further strengthen the control environment and the consultants carried out audits in accordance with the risk-based internal quality requirement of the Group’s products. audit plan approved by the Audit Committee.
v) Policies and Procedures The results of the internal audit reviews and the recommendations for improvement were deliberated upon during the Audit Committee Operational policies and procedures form an integral part of the meetings. Minutes of the Audit Committee meetings which recorded the internal control system to safeguard the Group’s assets against deliberations were presented to the Board. material losses. These include standard operating practices, memorandum, manuals and handbooks which are updated, reviewed Based on the internal audit reviews conducted, none of the weaknesses and revised periodically to meet changing business and operational noted have resulted in any material losses, contingencies or uncertainties requirements and statutory reporting needs. that would require separate disclosure in this Annual Report.
vi) Trained Personnel 3. Information and Communication Emphasis is placed on enhancing the quality and ability of employees Information critical to the achievement of the Group’s business objectives through a wide variety of training programs and workshops to enhance are communicated through established reporting lines across the their knowledge and expand the employees’ competency level in Group. This is to ensure that matters that require the Board and Senior executing daily jobs. Relevant training and courses are provided to Management’s attention are highlighted for review, deliberation and personnel across all functions to maintain a high level of competency decision on a timely basis. and capability. 4. Monitoring and Review vii) Board Committees Scheduled operational and management meetings are held to discuss Board Committees such as Audit Committee, Nomination Committee and review the business plans, budgets, financial and operational and Remuneration Committee are established with formal terms of performances of the Group. The Senior Management Team meets references clearly outlining their functions and duties delegated by regularly to review the reports, monitors the business development the Board. The Board Committees assist the Board to review the and resolves key operational and management issues. The quarterly effectiveness of the on-going monitoring processes on risk and control financial statements containing key financial results and comparisons matters for areas within their scope. are presented to the Audit Committee for review and recommendation to the Board for its approval. viii) Code of Conduct A Code of Conduct is established for all directors and employees, Review Of The Statement By External Auditors which outlines the acceptable business behaviour and conduct and to Pursuant to Paragraph 15.23 of the MMLR of Bursa Securities, this provide guidance on how the directors and employees should behave Statement has been reviewed by the External Auditors for inclusion in to demonstrate a culture of excellence while performing their duties. the Annual Report of the Group for the year ended 31 March 2014. ix) Insurance Their review was performed in accordance with Recommended Practice Guide 5 (Revised) issued by the Malaysian Institute of Accountants. The Sufficient insurance coverage on major assets is in place to ensure the External Auditors have reported to the Board that nothing has come Group’s assets are adequately covered against risks that can result to their attention that causes them to believe that this Statement is in material losses. The assets are insured at cost and it is reviewed inconsistent with their understanding of the process adopted by the on yearly basis to ensure adequate insurance coverage to protect Board in reviewing the adequacy and integrity of the system of risk the Group from potential loss. Besides, the Group also undertakes management and internal control. other insurance coverage, namely product liability, contaminated product liability and public liability to ensure the Group is adequately Conclusion covered against any potential claim arising from defective products or negligence. The Board has received assurance from the Group Managing Director and the General Manager of Finance and Accounts that the Group’s 2. Internal Audit Function risk management and internal control system, in all material aspects, is operating adequately and effectively. The Group’s internal audit function is carried out by outsourced external consultants to assist the Audit Committee and Board in providing The Board is of the view that the Group’s systems of risk management independent assessment on the adequacy, efficiency and effectiveness and internal controls are adequate to safeguard shareholders’ of the Group’s internal control system. investments and the Group’s assets. The process as outlined in this Statement for identifying, evaluating and managing risks has been in On quarterly basis, the outsourced external consultants submit audit place for the year under review and up to the date of approval of this reports, recommended corrective measures on risks identified (if any) Statement. for Management’s implementation and also conduct subsequent follow up audit to check and ensure that the Management has dealt with the This Statement is made in accordance with the resolution of the Board recommendations satisfactorily. dated 23 July 2014. 41 Additional OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) Compliance Information
1. Utilisation of Proceeds 3. Options, Warrants or Convertible Securities
On 21 December 2012, the Company completed its Private Placement No options, warrants or convertible securities have been issued by the exercise and the entire 33,000,000 Placement Shares were listed on Company. the Main Market of Bursa Securities. The gross proceeds that had been raised from the Private Placement of RM64.350 million and its status of 4. Depository Receipt Programme utilisation as at the latest practicable date are as follows: The Company did not sponsor any depository receipt programme during the financial year under review. Proposed Actual Intended Balance / Purpose Utilisation Utilization Timeframe for Deviation (RM’000) (RM’000) Utilisation (RM’000) 5. Imposition of Sanctions/Penalties
Capital expenditure for within There were no sanctions and/or penalties imposed on the Company and 44,695 39,890 4,805* business expansion 24 months its subsidiaries, Directors or management by any relevant regulatory bodies, which were material and made public during the financial year Working capital within ended 31 March 2014. 19,155 19,155 12 months – Estimated expenses within 6. Non-Audit Fees 500 504 1 month (4) The amount of non-audit fees incurred for services rendered to the 64,350 59,549 Group for the financial year ended 31 March 2014 by the Company’s external auditors and their affiliates amounted to RM218,773.
* The remaining proceeds of RM4.805 million are intended to be utilised 7. Variation in Results for business expansion purposes in the domestic and international markets, which comprise, but not limited to, opening of new outlets in There were no variances of 10% or more between the results for the domestic and international markets, acquisition of equipment for the financial year ended 31 March 2014 and the unaudited results the new and existing outlets, acquisition of plant and machinery for the previously announced. The Company did not make any release on the new and existing factories, and also investments into a “Central Kitchen profit estimates, forecasts or projections for the financial year ended 31 Business” to support the development of the licensed shops in China. March 2014.
2. Share Buy-Backs 8. Profit Guarantees
During the financial year, the Company repurchased a total of 611,000 The Company did not give any profit guarantee during the financial year ordinary shares of its issued shares from the open market of Bursa under review. Securities for a total consideration (including transaction costs) of RM1,486,508. Details of the shares purchased and retained as treasury 9. Material Contracts shares during the financial year were as follows: No material contracts (not being contracts entered into in the ordinary course of business) have been entered into by the Company and/or its No of shares Lowest Highest Average Total subsidiaries which involved Directors’ and/or substantial shareholders’ Month purchased and price price price consideration retained as paid per paid per paid per paid* (RM) interests, either still subsisting at the end of the financial year ended 31 treasury shares share (RM) share (RM) share (RM) March 2014 or, if not then subsisting, entered into since the end of the July previous financial year. 2013 10,000 2.83 2.90 2.87 28,744 10. Recurrent Related Party Transactions of a Revenue or November Trading Nature (“RRPT”) 2013 401,000 2.40 2.59 2.44 978,409 The Company had obtained shareholders’ mandate at the Annual December 2013 200,000 2.38 2.39 2.40 479,355 General Meeting held on 26 September 2013 to allow the Group to enter into RRPT with related parties. 611,000 1,486,508 Total The transactions entered into were in the ordinary course of business and were carried out on terms and conditions not materially different *inclusive of transaction costs from those obtainable from transactions with unrelated parties.
During the financial year, all the shares purchased by the Company The details of the RRPT conducted during the financial year ended 31 were retained as treasury shares. As at 31 March 2014, the number of March 2014 pursuant to the shareholders’ mandate are as follows: treasury shares was 611,000.
42 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Name of Company Related Parties and Value of Interested Related Parties Type of Recurrent Related Transaction Party Transactions for FY2014 (RM) Conneczone Sdn Bhd Rental of outlet from Gourmet Corner 250,800 Lim Ah Fah KL Sdn Bhd Dynasty Kitchen Sdn Bhd Sale of food and beverages products 871,415 Goh Ching Mun^ to OTK Northern Sdn Bhd Emperor’s Kitchen Sdn Bhd Sub-rental of office and factory from 432,000 Old Town International Sdn Bhd, Lee Siew Heng^, Old Town International Sdn Bhd Goh Ching Mun^, Tan Say Yap* and Lee Siew Ming# Esquire Chef Sdn Bhd Rental of factory from Lee Siew Heng 19,800 Lee Siew Heng^ Old Town Kopitiam Rental of outlet from Noble Virtue 59,400 Lee Siew Kong, Lee Teck Wai and Lee Siew Heng^, Butterworth Sdn Bhd Sdn Bhd Lee Siew Ming# Old Town Kopitiam Rental of outlet from Myth Empire 171,600 Chin Lai Yoong, Lee Siew Kong, Lee Siew Ming# Sdn Bhd Sdn Bhd ( formerly known as Soonsen Enterprise Sdn Bhd ) White Cafe Marketing Sub-Rental of office from Old Town 60,000 Old Town International Sdn Bhd, Lee Siew Heng^, Sdn Bhd International Sdn Bhd Goh Ching Mun^, Tan Say Yap* and Lee Siew Ming# Rental of warehouse from 21,200 Lee Siew Heng and Chin Lai Cheng @Angeline CN Supplies Sdn Bhd White Cafe Marketing Sale of food and beverages Sdn Bhd products to : Acadian Gourmet KK Sdn Bhd 13,060 Lee Siew Heng^ (1) , Lee Siew Ming# (1) Acadian Gourmet PB Sdn Bhd 16,949 Gourmet Corner KL Sdn Bhd 25,708 Lim Ah Fah OTK Logistics Sdn Bhd 440,289 Gourmet Chef Kinrara Sdn Bhd 7,119 GC Bangsar Two Sdn Bhd 13,181 Gourmet Corner Ipoh Sdn Bhd 18,772 OTK (Teluk Cempedak) Sdn Bhd 2,800 OTK (Senai) Sdn Bhd 2,454 OTK (Genting) Sdn Bhd 771,094 OTK Northern Sdn Bhd 16,998 Goh Ching Mun^ Carefree Avenue Sdn Bhd 8,008 Lee Siew Ming# Conneczone Puchong Sdn Bhd 5,236 Gourmet Corner Sdn Bhd 19,024 Lim Ah Fah, Chin Lai Cheng @ Angeline OTK (Petaling Jaya) Sdn Bhd 19,353 Lim Ah Fah, Lee Teck Wai OTK Sunway Sdn Bhd 14,939 Lim Ah Fah, Lee Teck Wai Gongga Food Sdn Bhd Sub-rental of office and warehouse 492,000 Old Town International Sdn Bhd, Lee Siew Heng^, from Old Town International Sdn Bhd Goh Ching Mun^, Tan Say Yap* and Lee Siew Ming# Rental of hostel and office from AC 24,880 Lee Siew Heng^, Chin Lai Yoong and Lee Siew Ming# Montage Marketing Sdn Bhd Rental of factory from Lee Siew Ming 18,900 Lee Siew Ming# Purchase of food and beverages 144,581 Lim Ah Fah products from Natural Marketing Sdn Bhd
43 Additional OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) Compliance Information
Name of Company Related Parties and Value of Interested Related Parties Type of Recurrent Related Transaction Party Transactions for FY2014 (RM) Gongga Food Sdn Bhd Sale of food and beverages products to : GC Alamanda Sdn Bhd 664,364 Lim Ah Fah GC Bangsar Two Sdn Bhd 613,830 GC Brickfields Sdn Bhd 566,686 GC Selayang Sdn Bhd 523,905 GC Shamelin Sdn Bhd 455,870 Gourmet Chef Sdn Bhd 388,659 Gourmet Corner KL Sdn Bhd 708,384 Gourmet Corner Ipoh Sdn Bhd 860,730 Gourmet Chef Kinrara Sdn Bhd 633,429 OTK (Alam Damai) Sdn Bhd 305,003 OTK (Intan) Sdn Bhd 591,239 OTK (Kuala Selangor) Sdn Bhd 388,687 OTK (Rawang) Sdn Bhd 712,249 OTK (Shah Alam) Sdn Bhd 817,734 OTK Manjung Sdn Bhd 445,024 OTK (Teluk Cempedak) Sdn Bhd 237,343 OTK (Senai) Sdn Bhd 205,289 OTK (Genting) Sdn Bhd 7,223,438 OTK Logistics Sdn Bhd 2,517,730 GC Bangsar Sdn Bhd 657,279 Lim Ah Fah (2) GC South City Sdn Bhd 431,393 GC Bangi Sdn Bhd 661,992 Nurul Asyiqin Motimbin bt Abdullah , Azmah Binti Abdul Aziz and Ahmed Razif bin Ahmed Tasir Gourmet Corner Sdn Bhd 611,145 Lim Ah Fah and Chin Lai Cheng@Angeline GC Kapar Sdn Bhd 466,274 Lim Ah Fah (4) OTK Northern Sdn Bhd 254,117 Goh Ching Mun^ OTK USJ Sdn Bhd 421,911 Lee Siew Fong and Koo Yai Peng Acadian Gourmet KK Sdn Bhd 505,785 Lee Siew Ming# (1) , Lee Siew Heng^(1) Acadian Gourmet PB Sdn Bhd 646,345 Acadian Gourmet Sdn Bhd 271,230 OTK (Petaling Jaya) Sdn Bhd 803,921 Lim Ah Fah and Lee Teck Wai OTK Ipoh Road Sdn Bhd 367,590 OTK Megah Sdn Bhd 218,804 OTK Sunway Sdn Bhd 524,806 OTK (MBH) Sdn Bhd 248,583 Lee Siew Ming# OTK Kopitiam (KLCC) Sdn Bhd 394,770 Carefree Avenue Sdn Bhd 662,957 Conneczone Puchong Sdn Bhd 295,363 Kopitiam Asia Pacific Purchase of uniform from Mayson 111,656 Chin Lai Yoong Sdn Bhd Trade (M) Sdn Bhd Rental of a terrace house from Lim 60,000 Lim Khim Lan Khim Lan Sub-rental of office from Old Town 156,000 Old Town International Sdn Bhd, Lee Siew Heng^, International Sdn Bhd Goh Ching Mun^, Tan Say Yap* and Lee Siew Ming# Payment of logistic and loading fees 34,062 Lim Ah Fah (5) to OTK Sarawak Sdn Bhd
44 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Name of Company Related Parties and Value of Interested Related Parties Type of Recurrent Related Transaction Party Transactions for FY2014 (RM) Kopitiam Asia Pacific Sale of furniture and utensils pursuant to the franchise Sdn Bhd arrangement in relation to the operation of cafe outlets to:
GC Brickfields Sdn Bhd 10,722 Lim Ah Fah GC Shamelin Sdn Bhd 5,209 Gourmet Corner Ipoh Sdn Bhd 481,269 OTK Logistics Sdn Bhd 72,897 GC Selayang Sdn Bhd 6,362 GC Alamanda Sdn Bhd 16,234 Gourmet Chef Sdn Bhd 5,755 Gourmet Corner KL Sdn Bhd 6,680 Gourmet Chef Kinrara Sdn Bhd 9,027 OTK (Rawang) Sdn Bhd 637,863 OTK (Shah Alam) Sdn Bhd 13,841 OTK (Senai) Sdn Bhd 419,276 OTK (Teluk Cempedak) Sdn Bhd 543,948 OTK (Intan) Sdn Bhd 8,893 OTK (Genting) Sdn Bhd 927,128 GC Bangsar Sdn Bhd 7,152 Lim Ah Fah (2) GC South City Sdn Bhd 11,131 GC Kapar Sdn Bhd 17,330 Lim Ah Fah (4) Gourmet Corner Sdn Bhd 10,020 Lim Ah Fah and Chin Lai Cheng@Angeline OTK (Petaling Jaya) Sdn Bhd 110,898 Lim Ah Fah and Lee Teck Wai OTK Northern Sdn Bhd 19,770 Goh Ching Mun OTK Kopitiam (KLCC) Sdn Bhd 5,622 Lee Siew Ming# Carefree Avenue Sdn Bhd 25,847 Conneczone Puchong Sdn Bhd 5,089 OTK (MBH) Sdn Bhd 238,994 Acadian Gourmet PB Sdn Bhd 7,792 Lee Siew Ming# (1) , Lee Siew Heng^ (1) Acadian Gourmet Sdn Bhd 4,777 Acadian Gourmet KK Sdn Bhd 13,241 OTK Sunway Sdn Bhd 9,317 Lim Ah Fah and Lee Teck Wai OTK USJ Sdn Bhd 44,161 Lee Siew Fong and Koo Yai Peng OTK Megah Sdn Bhd 9,225 Lim Ah Fah and Lee Teck Wai GC Bangi Sdn Bhd 15,923 Nurul Asyiqin Motimbin bt Abdullah, Azmah Binti Abdul Aziz and Ahmed Razif bin Ahmed Tasir Kopitiam Asia Pacific Advertising and promotion fees Sdn Bhd charged to: Acadian Gourmet KK Sdn Bhd 36,013 Lee Siew Ming# (1) , Lee Siew Heng^ (1) Acadian Gourmet PB Sdn Bhd 46,014 Acadian Gourmet Sdn Bhd 19,678 GC Bangi Sdn Bhd 51,876 Nurul Asyiqin Motimbin bt Abdullah , Azmah Binti Abdul Aziz and Ahmed Razif bin Ahmed Tasir GC Alamanda Sdn Bhd 58,830 Lim Ah Fah GC Bangsar Two Sdn Bhd 62,297 GC Brickfields Sdn Bhd 45,298 GC Selayang Sdn Bhd 47,344
45 Additional OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) Compliance Information
Name of Company Related Parties and Value of Interested Related Parties Type of Recurrent Related Transaction Party Transactions for FY2014 (RM) Kopitiam Asia Pacific Advertising and promotion fees Sdn Bhd charged to: GC Shamelin Sdn Bhd 47,311 Lim Ah Fah Gourmet Chef Sdn Bhd 34,949 Gourmet Corner Ipoh Sdn Bhd 73,353 Gourmet Corner KL Sdn Bhd 66,793 Gourmet Chef Kinrara Sdn Bhd 56,785 OTK (Alam Damai) Sdn Bhd 23,817 OTK (Intan) Sdn Bhd 55,103 OTK (Kuala Selangor) Sdn Bhd 35,875 OTK (Rawang) Sdn Bhd 60,349 OTK (Shah Alam) Sdn Bhd 72,335 OTK Manjung Sdn Bhd 38,316 OTK (Senai) Sdn Bhd 11,382 OTK (Teluk Cempedak) Sdn Bhd 18,385 OTK (Genting) Sdn Bhd 894,479 GC Bangsar Sdn Bhd 62,946 Lim Ah Fah (2) GC South City Sdn Bhd 38,848 GC Kapar Sdn Bhd 40,374 Lim Ah Fah (4) OTK Sarawak Sdn Bhd 40,874 Lim Ah Fah (5) Gourmet Corner Sdn Bhd 53,746 Lim Ah Fah and Chin Lai Cheng@Angeline OTK (Petaling Jaya) Sdn Bhd 73,010 Lim Ah Fah and Lee Teck Wai OTK Ipoh Road Sdn Bhd 31,073 OTK Megah Sdn Bhd 18,720 OTK Sunway Sdn Bhd 44,768 OTK Northern Sdn Bhd 77,661 Goh Ching Mun^ OTK USJ Sdn Bhd 40,295 Lee Siew Fong and Koo Yai Peng OTK Kopitiam (KLCC) Sdn Bhd 23,257 Lee Siew Ming# Carefree Avenue Sdn Bhd 56,979 Conneczone Puchong Sdn Bhd 27,313 OTK (MBH) Sdn Bhd 22,010 Kopitiam Asia Pacific Payment of royalty fees pursuant Sdn Bhd to the franchise arrangement by: Acadian Gourmet KK Sdn Bhd 60,021 Lee Siew Ming# (1) , Lee Siew Heng^(1) Acadian Gourmet PB Sdn Bhd 76,690 Acadian Gourmet Sdn Bhd 32,797 GC Bangi Sdn Bhd 86,460 Nurul Asyiqin Motimbin bt Abdullah, Azmah Binti Abdul Aziz and Ahmed Razif bin Ahmed Tasir GC Alamanda Sdn Bhd 98,050 Lim Ah Fah GC Bangsar Two Sdn Bhd 103,828 GC Brickfields Sdn Bhd 75,496 GC Selayang Sdn Bhd 78,906 GC Shamelin Sdn Bhd 78,852 Gourmet Chef Sdn Bhd 58,248 Gourmet Corner Ipoh Sdn Bhd 122,254 Gourmet Corner KL Sdn Bhd 111,321 Gourmet Chef Kinrara Sdn Bhd 94,642 OTK (Alam Damai) Sdn Bhd 39,695
46 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Name of Company Related Parties and Value of Interested Related Parties Type of Recurrent Related Transaction Party Transactions for FY2014 (RM) Kopitiam Asia Pacific Payment of royalty fees pursuant Sdn Bhd to the franchise arrangement by: OTK (Intan) Sdn Bhd 91,838 Lim Ah Fah OTK (Kuala Selangor) Sdn Bhd 59,791 OTK (Rawang) Sdn Bhd 100,582 OTK (Shah Alam) Sdn Bhd 120,559 OTK Manjung Sdn Bhd 63,861 OTK (Senai) Sdn Bhd 17,216 OTK (Teluk Cempedak) Sdn Bhd 30,642 GC Bangsar Sdn Bhd 104,910 Lim Ah Fah (2) GC South City Sdn Bhd 64,746 GC Kapar Sdn Bhd 67,289 Lim Ah Fah (4) OTK Sarawak Sdn Bhd 68,123 Lim Ah Fah (5) Gourmet Corner Sdn Bhd 89,577 Lim Ah Fah and Chin Lai Cheng@Angeline Oldtown Asia Pacific Limited 85,916 Lee Siew Heng^ OTK (Petaling Jaya) Sdn Bhd 121,683 Lim Ah Fah and Lee Teck Wai OTK Ipoh Road Sdn Bhd 51,788 OTK Megah Sdn Bhd 31,200 OTK Sunway Sdn Bhd 74,613 OTK Northern Sdn Bhd 129,435 Goh Ching Mun^ OTK USJ Sdn Bhd 67,158 Lee Siew Fong and Koo Yai Peng OTK Kopitiam (KLCC) Sdn Bhd 34,885 Lee Siew Ming# Carefree Avenue Sdn Bhd 94,965 Conneczone Puchong Sdn Bhd 45,522 OTK (MBH) Sdn Bhd 36,684 Payment of royalty fees and initial 1,730,798 Lim Ah Fah franchise fee pursuant to the franchise arrangement by OTK (Genting) Sdn Bhd
Details of relationships : Azmah Binti Abdul Aziz : Spouse of Datuk Dr Ahmed Tasir Bin Lope Pihie*. Ahmed Razif bin Ahmed Tasir : Son of Datuk Dr Ahmed Tasir Bin Lope Pihie*. Chin Lai Cheng @ Angeline : Spouse of Lee Siew Heng^ and sister-in-law of Lee Siew Ming#. Chin Lai Yoong : Spouse of Lee Siew Ming# and sister-in-law of Lee Siew Heng^. She ceased to be a Director and major shareholder of Oldtown Berhad with effect from (“wef”) 26/9/2013 & 21/11/2013 respectively. Koo Yai Peng : Spouse of Lee Siew Fong and brother–in-law of Lee Siew Heng^ & Lee Siew Ming#. Lee Siew Heng ^ : Spouse of Chin Lai Cheng @ Angeline and brother of Lee Siew Kong, Lee Siew Ming# and Lee Teck Wai Lee Siew Kong : Brother of Lee Siew Heng^ and Lee Siew Ming#. Lee Siew Fong : Sister of Lee Siew Heng^ and Lee Siew Ming#. Lee Siew Ming# : Brother of Lee Siew Heng^ and spouse of Chin Lai Yoong. He became a Major Shareholder of Oldtown Berhad wef 21/11/2013. Lee Teck Wai : Brother of Lee Siew Heng^ and Lee Siew Ming#. Lim Ah Fah : Sister-in-law of Lee Siew Heng^ and Lee Siew Ming#. Lim Khim Lan : Spouse of Mr Clarence D’ Silva*. Nurul Asyiqin Motimbin bt Abdullah : Daughter-in-law of Datuk Dr Ahmed Tasir Bin Lope Pihie*. ^ Our Director and Major Shareholder. * Our Director and shareholder. # Our Major Shareholder.
47 Additional OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) Compliance Information
Notes:
Ahmed Razif Bin Ahmed Tasir is a substantial shareholder of GC Bangi Sdn Lee Siew Ming# is a substantial shareholder of Old Town International Bhd (ceased to be substantial shareholder wef 7/11/2013). Sdn Bhd.
Azmah Binti Abdul Aziz is a director and substantial shareholder GC Bangi Lee Teck Wai is a director and substantial shareholder of CN Properties Sdn Sdn Bhd and GC Alamanda Sdn Bhd (ceased to be a substantial shareholder Bhd, Noble Virtue Sdn Bhd, OTK (Petaling Jaya) Sdn Bhd, OTK Ipoh Road Sdn of GC Alamanda wef 20/11/2013). Bhd, OTK Megah Sdn Bhd and OTK Sunway Sdn Bhd.
Chin Lai Cheng @ Angeline is a substantial shareholder of Gourmet Corner Lee Teck Wai is a shareholder of Old Town International Sdn Bhd. Sdn Bhd. Lim Ah Fah is a director and substantial shareholder of Gourmet Corner KL Chin Lai Yoong is a director and substantial shareholder of Myth Empire Sdn Sdn Bhd, Natural Marketing Sdn Bhd, GC Alamanda Sdn Bhd, GC Bangsar Bhd ( formerly known as Soonsen Enterprise Sdn Bhd ) and AC Montage Sdn Bhd(2), GC Bangsar Two Sdn Bhd, GC Brickfields Sdn Bhd, GC Kapar Marketing Sdn Bhd. Sdn Bhd(4), GC Selayang Sdn Bhd, GC Shamelin Sdn Bhd, GC South City Sdn Bhd(2), Gourmet Chef Kinrara Sdn Bhd, Gourmet Chef Sdn Bhd, Gourmet Chin Lai Yoong is a substantial shareholder of Mayson Trade (M) Sdn Bhd. Corner Ipoh Sdn Bhd, and Gourmet Corner Sdn Bhd, OTK Sarawak Sdn Bhd (5), OTK (Petaling Jaya) Sdn Bhd, OTK Ipoh Road Sdn Bhd, OTK Megah Sdn Goh Ching Mun^ is a director and substantial shareholder of OTK Northern Bhd and OTK Sunway Sdn Bhd. Sdn Bhd and Old Town International Sdn Bhd. Lim Ah Fah is a director and deemed substantial shareholder of OTK (Alam Koo Yai Peng is a director and substantial shareholder of OTK USJ Sdn Damai) Sdn Bhd(3),OTK (Intan) Sdn Bhd(3), OTK (Senai) Sdn Bhd (3), OTK Bhd. (Teluk Cempedak) Sdn Bhd(3), OTK (Kuala Selangor) Sdn Bhd(3), OTK (Rawang) Sdn Bhd(3),OTK (Shah Alam) Sdn Bhd(3)and OTK Manjung Sdn Lee Siew Heng^ is a substantial shareholder of Acadian Gourmet KK Sdn Bhd (3) and ceased to be a substantial shareholder of these 8 companies Bhd(1), Acadian Gourmet PB Sdn Bhd(1), Acadian Gourmet Sdn Bhd(1) wef 21/03/2014. (ceased to be deemed substantial shareholder of the 3 companies wef 1/7/2013). Lim Ah Fah is a director and substantial shareholder OTK (Genting) Sdn Bhd and ceased to be a director and substantial shareholder wef 9/10/2013 & Lee Siew Heng^ is a director and substantial shareholder of Oldtown Asia 21/3/2014 respectively. Pacific Limited and Old Town International Sdn Bhd. Lim Ah Fah is a substantial shareholder of OTK Logistics Sdn Bhd and a Lee Siew Heng^ is a shareholder of AC Montage Marketing Sdn Bhd (ceased shareholder of Old Town International Sdn Bhd. to be a shareholder wef 29/4/2013). Nurul Asyiqin Motimbin bt Abdullah is a director of GC Bangi Sdn Bhd and Lee Siew Heng^ is a director and substantial shareholder of Noble Virtue Sdn became a substantial shareholder wef 7/11/2013. Bhd (ceased to be a director and shareholder wef 22/4/2013 & 06/05/2013 respectively). Old Town International Sdn Bhd# (OTI) is the holding company of Oldtown Berhad. Mr Lee Siew Heng^ and Mr Goh Ching Mun^ are directors and Lee Siew Kong is director and substantial shareholder of CN Properties substantial shareholders of OTI. Chin Lai Yoong, Tan Say Yap* and Lee Siew Sdn Bhd, Noble Virtue Sdn Bhd and Myth Empire Sdn Bhd (formerly known Ming# are substantial shareholders of OTI. Chuah Seong Ming, a director of as Soonsen Enterprise Sdn Bhd) (ceased to be a director and substantial Oldtown Berhad is a shareholder of OTI. Lee Siew Kong, Lee Teck Wai, Tan shareholder of Myth Empire Sdn Bhd wef 12/4/2013 & 6/6/2013 Say Cheong (brother of Tan Say Yap) and Lim Ah Fah are shareholders of OTI. respectively ).
Lee Siew Kong is a shareholder of Old Town International Sdn Bhd. Notes:
Lee Siew Fong is a director and substantial shareholder of OTK USJ Sdn Bhd. (1) Deemed interested by virtue of his shareholding in Acadian L’Apparel Manufacturing Sdn Bhd, pursuant to Section 6A of the Companies Act, Lee Siew Ming# was a deemed substantial shareholder of Acadian Gourmet 1965 (the Act). KK Sdn Bhd (1) , Acadian Gourmet PB Sdn Bhd (1), Acadian Gourmet Sdn Bhd (1) wef 1/7/2013 to 14/04/2014. (2) Deemed interested by virtue of her shareholding in Gourmet Corner KL Sdn Bhd, pursuant to Section 6A of the Act. Lee Siew Ming# became a direct substantial shareholder of Acadian Gourmet KK Sdn Bhd, Acadian Gourmet PB Sdn Bhd and Acadian Gourmet Sdn Bhd (3) Deemed interested by virtue of her shareholding in OTK (Genting) Sdn wef 15/4/2014. Bhd, pursuant to Section 6A of the Act.
Lee Siew Ming# is a director and substantial shareholder of Noble Virtue Sdn (4) Deemed interested by virtue of her shareholding in Gourmet Corner Ipoh Bhd, Myth Empire Sdn Bhd, Carefree Avenue Sdn Bhd, Conneczone Puchong Sdn Bhd, pursuant to Section 6A of the Act. Sdn Bhd, OTK (MBH) Sdn Bhd and OTK Kopitiam (KLCC) Sdn Bhd. (5) Deemed interested by virtue of her substantial shareholdings in OTK Lee Siew Ming# is a director of CN Properties Sdn Bhd Logistics Sdn Bhd, the holding company of OTK Sarawak Sdn Bhd, pursuant to the Section 6A of the Act. Lee Siew Ming# is a shareholder of AC Montage Marketing Sdn Bhd.
48 OLDTOWN BERHAD (797771-M) OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) (Incorporated in Malaysia) Financial Statements
50 Directors’ Report
54 Independent Auditors’ Report
56 Statements of Profit or Loss & Other Comprehensive Income
58 Statements of Financial Position
60 Statement of Changes In Equity
62 Statement of Cash Flows
66 Notes to The Financial Statements
134 Statement by Directors
134 Declaration By The Officer Primarily Responsible For The Financial Management Of The Company
49 OLDTOWN BERHAD (797771-M) Directors’ (Incorporated in Malaysia) Report
The directors of OLDTOWN BERHAD have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended March 31, 2014.
Principal Activities
The Company is principally involved in investment holding.
The principal activities of the subsidiaries are disclosed in Note 17 to the financial statements.
There have been no significant changes in the nature of the principal activities of the Company and 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 Group The Company RM RM Profit for the year 50,329,638 76,300,284 Profit attributable to: Owners of the Company 48,938,252 76,300,284 Non-controlling interests 1,391,386 - 50,329,638 76,300,284
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.
Dividends
A final dividend declared in respect of the financial period ended March 31, 2013 under single tier tax system of 3.0 sen per share, amounting to RM10,889,700 was paid on October 30, 2013.
An interim dividend declared in respect of the current financial year under single tier tax system of 3.0 sen per share, amounting to RM13,589,587 was paid on April 17, 2014.
The directors proposed a final dividend of 3.0 sen per share, amounting to RM13,589,587 in respect of the current financial year computed based on the outstanding issued and paid-up capital, excluding treasury shares held by the Company of 611,000 ordinary shares of RM1.00 each. This dividend is subject to approval by the shareholders at the forthcoming Annual General Meeting of the Company and has not been included as a liability in the financial statements. Upon approval by the shareholders, the dividend payment will be accounted for in equity as an appropriation of retained earnings during the financial year ending March 31, 2015.
Reserves and Provisions
There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements.
Issue of Shares and Debentures
As approved by the shareholders at the Extraordinary General Meeting held on January 6, 2014, the issued and paid-up ordinary share capital of the Company was increased from RM363,000,000 to RM453,597,242 during the financial year by way of a bonus issue of 90,597,242 new ordinary shares of RM1 each through the capitalisation of RM40,000,000 and RM50,597,242 from share premium and retained earnings respectively on the basis of one (1) bonus share for every four (4) existing ordinary shares held.
These new shares rank pari passu with the then existing ordinary shares of the Company.
50 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Treasury Shares
During the financial year, the Company repurchased a total of 611,000 units of its own shares from the open market of Bursa Malaysia Securities Berhad for a total cost of RM1,486,508 and has been deducted from equity. The average price paid for the shares repurchased during the year was RM2.43 per share.
The repurchase transactions were financed by internally generated funds. The shares repurchased are being held as Treasury Shares in accordance with the requirements of Section 67A of the Companies Act, 1965.
The mandate given by the shareholders will expire at the forthcoming Annual General Meeting (“AGM”) and an ordinary resolution will be tabled at the AGM for shareholders to grant a fresh mandate for another 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 financial year by virtue of the exercise of any option to take up unissued shares of the Company. As of the end of the financial year, there were no unissued shares of the Company under options.
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) 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 no allowance for doubtful debts was necessary; and
(b) 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) which would render the amount written off as bad debts in the financial statements of the Group and of the Company inadequate to any substantial extent or require the making of allowance for doubtful debts in the financial statements of the Group and of the Company; or
(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or
(c) 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
(d) 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) 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
(b) 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 other than those disclosed in Note 41 to the financial statements.
51 OLDTOWN BERHAD (797771-M) Directors’ (Incorporated in Malaysia) Report
Directors
The following directors served on the Board of the Company since the date of the last report:
Datuk Dr. Ahmed Tasir bin Lope Pihie, PJN, PMP, JSM, FASc Mr. Lee Siew Heng Mr. Mark Wing Kong Mr. Tan Chon Ing @ Tan Chong Ling Dato’ Wong Guang Seng (appointed on April 1, 2014) Mr. Chuah Seong Meng Mr. Clarence D’Silva A/L Leon D’Silva Mr. Goh Ching Mun Mr. Tan Say Yap Madam Chin Lai Yoong (retired on September 26, 2013 and not re-elected)
In accordance with Article 84 of the Company’s Articles of Association, Datuk Dr. Ahmed Tasir bin Lope Pihie, PJN, PMP, JSM, FASc, Mr. Lee Siew Heng and Mr. Goh Ching Mun retire by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.
Dato’ Wong Guang Seng who was appointed to the Board since the last Annual General Meeting, retires under Article 91 of the Company’s Articles of Association and, being eligible, offers himself for re-election at the forthcoming Annual General Meeting.
Directors’ Interests
The shareholdings in the Company of those who were directors at the end of the financial year, as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 134 of the Companies Act, 1965, are as follows:
Number of ordinary shares of RM1 each Balance as of Bought Bonus Issue Sold Balance as of 1.4.2013 31.3.2014 Shares in the Company Registered in the name of directors Datuk Dr. Ahmed Tasir bin Lope Pihie, 50,000 - 5,000 (30,000) 25,000 PJN, PMP, JSM, FASc Mr. Lee Siew Heng 5,000,000 - 1,250,000 - 6,250,000 Mr. Mark Wing Kong 50,000 - 12,500 - 62,500 Mr. Clarence D’Silva A/L Leon D’Silva 100,000 - 25,000 - 125,000 Mr. Goh Ching Mun - 300,000 75,000 - 375,000 Mr. Tan Say Yap 372,750 - 93,187 - 465,937 Indirect interest by virtue of shares held by a company in which the directors have interest Mr. Lee Siew Heng 165,345,000 - 39,651,700 (7,738,200) 197,258,500 Mr. Goh Ching Mun 165,345,000 - 39,651,700 (7,738,200) 197,258,500 Shares in the ultimate holding company, Old Town International Sdn. Bhd. Mr. Lee Siew Heng 681,054 - - - 681,054 Mr. Chuah Seong Meng 73,684 - - - 73,684 Mr. Goh Ching Mun 968,422 - - - 968,422 Mr. Tan Say Yap 263,160 - - - 263,160
52 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
By virtue of their interest in the shares of the Company and of the holding company, Mr. Lee Siew Heng and Mr. Goh Ching Mun are also deemed to have an interest in the shares of the subsidiaries to the extent that the Company and the holding company have an interest.
Mr. Tan Chon Ing @ Tan Chong Ling and Mr. Chuah Seong Meng did not hold shares in the Company during the financial year. Under the Company’s Articles of Association, the directors are not required to hold any share in the Company.
Directors’ Benefits
Since the end of the previous financial period, none of the directors of the Company has received or become entitled to receive any benefit (other than the benefit included in the aggregate amount of emoluments received or due and receivable by directors as disclosed in the financial statements or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except for any benefit which may be deemed to have arisen by virtue of the transactions between the Company and certain companies in which certain directors of the Company are also directors and/or shareholders or have substantial financial interests as disclosed in Note 25 to the financial statements.
During and at the end of the financial year, no arrangement subsisted to which the Company was a party whereby directors of the Company might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
Holding Company
The Company is a subsidiary of Old Town International Sdn. Bhd., a company incorporated in Malaysia and the directors regard it as the ultimate holding company.
Auditors
The auditors, Messrs. Deloitte (formerly known as Deloitte KassimChan), have indicated their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the Directors,
DATUK DR. AHMED TASIR BIN LOPE PIHIE, PJN, PMP, JSM, FASc
MR. LEE SIEW HENG
Ipoh, July 23, 2014
53 OLDTOWN BERHAD (797771-M) Independent (Incorporated in Malaysia) Auditors’ Report
TO THE MEMBERS OF OLDTOWN BERHAD (Incorporated in Malaysia)
Report on The Financial Statements
We have audited the financial statements of Oldtown Berhad, which comprise the statements of financial position of the Group and of the Company as of March 31, 2014 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 page 56 to page 133.
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 misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on 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 March 31, 2014 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) 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;
(b) we have considered the accounts and auditors’ reports of the subsidiaries, of which we have not acted as auditors, which are indicated in Note 17 to the financial statements;
(c) 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
(d) the auditors’ reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174 (3) of the Act.
54 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Other Reporting Responsibilities
The supplementary information set out in Note 42 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1 “Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements” as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
Other Matters
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility towards any other person for the contents of this report.
DELOITTE AF 0080 Chartered Accountants
LIM KENG PEO Partner - 2939/01/16(J/PH) Chartered Accountant
July 23, 2014
55 Statements OLDTOWN BERHAD (797771-M) of Profit or (Incorporated in Malaysia) Loss & Other Comprehensive
Income FOR THE YEAR ENDED MARCH 31, 2014 (With Comparative Figures For The Period January 1, 2012 To March 31, 2013)
The Group The Company Year Ended Period Ended Year Ended Period Ended 31.3.2014 31.3.2013 31.3.2014 31.3.2013 (12 Months) (15 Months) (12 Months) (15 Months) Note RM RM RM RM
Revenue 6 382,171,650 422,054,343 77,134,054 34,739,024
Investment revenue 7 1,578,460 2,478,686 337,523 1,190,406
Other gains and losses 8 639,786 1,051,000 211,971 –
Other operating income 9 11,748,757 15,069,574 – –
Changes in inventories of finished goods, work-in-progress, trading merchandise, food, beverages and consumables 4,067,367 9,842 – –
Raw materials and consumables used (100,177,769) (108,625,603) – –
Purchase of trading merchandise, food, beverages and consumables (70,890,411) (79,756,129) – –
Directors’ remuneration 10 (3,184,617) (2,649,522) (307,632) (375,768)
Employee benefits expenses 9 (54,121,240) (60,023,198) (113,896) (134,157)
Depreciation of property, plant and equipment 14 (15,928,327) (17,583,643) (153,172) (173,383)
Amortisation of prepaid lease payments 15 (184,743) (230,928) – –
Amortisation of intangible assets 21 (3,529,319) (2,929,087) – –
Impairment loss on investment in a subsidiary 17 – – – (950,810)
Impairment loss on goodwill 20 – (1,959,643) – –
Share of (losses)/profits of associates 18 (157,055) 527,506 – –
Finance costs 11 (1,556,523) (1,345,971) (215) (848)
Other operating expenses 9 (84,107,623) (91,140,342) (808,349) (1,291,913)
Profit before tax 66,368,393 74,946,885 76,300,284 33,002,551
Tax (expense)/income 12 (16,038,755) (19,360,019) – 23,436
PROFIT FOR THE YEAR/PERIOD 50,329,638 55,586,866 76,300,284 33,025,987
56 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
The Group The Company Year Ended Period Ended Year Ended Period Ended 31.3.2014 31.3.2013 31.3.2014 31.3.2013 (12 Months) (15 Months) (12 Months) (15 Months) Note RM RM RM RM
Other Comprehensive Income/(Loss):
Items that may be reclassified subsequently to profit or loss:
Available-for-sale financial assets:
Changes in fair value of available-for-sale financial assets (31,582) 1,029,600 253,765 495,037
Reclassification adjustments relating to available-for-sale financial assets disposed of in the year 417,441 – (260,308) –
Exchange differences on translating foreign subsidiaries 1,382,671 (20,139) – –
TOTAL COMPREHENSIVE INCOME FOR THE YEAR/PERIOD 52,098,168 56,596,327 76,293,741 33,521,024
Profit attributable to:
Owners of the Company 48,938,252 55,527,110 76,300,284 33,025,987
Non-controlling interests 1,391,386 59,756 – –
50,329,638 55,586,866 76,300,284 33,025,987
Total comprehensive income attributable to:
Owners of the Company 50,405,249 56,536,571 76,293,741 33,521,024
Non-controlling interests 1,692,919 59,756 – –
52,098,168 56,596,327 76,293,741 33,521,024
Earnings per share
Basic and diluted (RM per share) 13 0.11 0.13
The accompanying Notes form an integral part of the financial statements.
57 Statements OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) of Financial Position
AS OF MARCH 31, 2014
The Group The Company 2014 2013 2014 2013 Note RM RM RM RM
ASSETS
Non-current assets
Property, plant and equipment 14 105,634,478 102,396,819 1,885,819 1,930,665
Prepaid lease payments 15 13,572,737 13,757,480 – –
Investment properties 16 3,890,000 2,040,000 – –
Investments in subsidiaries 17 – – 289,752,921 289,552,121
Investments in associates 18 1,505,141 1,706,196 1,101,002 1,101,002
Other investments 19 1,086,567 46,628,062 – 15,447,383
Goodwill on consolidation 20 23,711,995 23,711,995 – –
Intangible assets 21 33,398,124 19,136,699 – –
Deferred tax assets 22 963,000 1,280,000 – –
Total non-current assets 183,762,042 210,657,251 292,739,742 308,031,171
Current assets
Inventories 23 22,465,954 14,227,762 – –
Trade and other receivables 24 45,823,843 48,782,856 226,591 173,668
Amount owing by subsidiaries 25 – – 133,841,597 64,911,665
Amount owing by associates 25 1,562,022 1,349,508 44,000 –
Other investments 19 66,516,766 25,693,547 25,488,494 15,047,654
Current tax assets 12 4,059,601 1,105,598 9,774 10,951
Fixed deposits, cash and bank balances 26 99,883,920 86,227,153 19,845,929 29,343,928
Total current assets 240,312,106 177,386,424 179,456,385 109,487,866
Total assets 424,074,148 388,043,675 472,196,127 417,519,037
58 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
The Group The Company 2014 2013 2014 2013 Note RM RM RM RM
EQUITY AND LIABILITIES
Capital and reserves
Issued capital 27(a) 453,597,242 363,000,000 453,597,242 363,000,000
Treasury shares 27(b) (1,486,508) – (1,486,508) –
Reserves 28 (216,616,808) (178,083,805) 4,042,138 44,048,681
Retained earnings 29 93,796,133 119,934,410 2,298,506 1,074,751
Equity attributable to owners of the Company 329,290,059 304,850,605 458,451,378 408,123,432
Non-controlling interests 30 5,041,736 2,192,022 – –
Net equity 334,331,795 307,042,627 458,451,378 408,123,432
Non-current liabilities
Hire-purchase payables 31 269,368 837,040 – –
Borrowings 32 20,102,210 25,287,874 – –
Deferred income 33 1,930,393 2,060,600 – –
Deferred capital grant 34 – 16,628 – –
Deferred tax liabilities 22 5,770,731 2,069,412 – –
Total non-current liabilities 28,072,702 30,271,554 – –
Current liabilities
Trade and other payables 35 49,844,402 40,044,852 7,826,994 206,709
Amount owing to ultimate holding company 25 6,072,479 87,936 5,917,755 –
Amount owing to subsidiaries 25 – – – 9,188,896
Hire-purchase payables 31 545,735 648,266 – –
Borrowings 32 3,379,905 7,767,923 – –
Deferred income 33 1,332,001 1,496,427 – –
Deferred capital grant 34 16,629 24,180 – –
Current tax liabilities 12 478,500 659,910 – –
Total current liabilities 61,669,651 50,729,494 13,744,749 9,395,605
Total liabilities 89,742,353 81,001,048 13,744,749 9,395,605
Total equity and liabilities 424,074,148 388,043,675 472,196,127 417,519,037
The accompanying Notes form an integral part of the financial statements.
59 Statement OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) of Changes In Equity
FOR THE YEAR ENDED MARCH 31, 2014 (With Comparative Figures For The Period January 1, 2012 To March 31, 2013) RM Total Total Equity – 1,952,704 3,857,209 1,009,461 1,768,530 (1,952,704) (1,486,508) 56,596,327 52,098,168 55,586,866 50,329,638 64,242,312 334,331,795 (33,056,000) (25,226,997) 217,307,284 307,042,627 – RM
– – – 59,756 59,756 Interests (56,000) 301,533 235,562 (747,710) 5,041,736 1,952,704 3,857,209 1,692,919 2,192,022 1,391,386 (1,952,704) Non-controlling – – –- RM
– to Owners 1,009,461 1,466,997 Attributable (1,486,508) 56,536,571 50,405,249 55,527,110 48,938,252 64,242,312 329,290,059 (33,000,000) (24,479,287) 217,071,722 304,850,605 of the Company – – – – – RM
– Earnings Retained Reserve - – 93,796,133 Distributable 48,938,252 55,527,110 97,407,300 55,527,110 48,938,252 (33,000,000) (24,479,287) (50,597,242) 119,934,410 – – – – – – – – – – – RM Reserve 385,859 385,859 Investment 1,415,459 1,029,600 1,029,600 1,029,600 Revaluation Revaluation – – – – – – – – – – RM 6,984 Reserve Foreign Currency (20,139) (20,139) (13,155) Translation 1,067,983 1,081,138 1,081,138 – – – – – – – RM Reserve
Arising From – – – – – – – Restructuring (222,653,894) (222,653,894) (222,653,894) – – – – – – – RM
– – – – – Share Premium 3,553,644 31,242,312 12,311,332 43,553,644 (40,000,000) – – – – – – – RM
– – – – – – – – Shares Treasury Treasury (1,486,508) (1,486,508) – – – – – – – RM
Issued – – – – – Capital 33,000,000 90,597,242 453,597,242 330,000,000 363,000,000 30 36 30 30 36 Note 27(a) 27(a) 27(b) Non-distributable Re serves The Group 2012 Balance as of January 1, Arising from acquisition of subsidiaries Profit for the period Other comprehensive income for the period comprehensive income for Total the period Payment of dividends Issue of shares 2013 31, Balance as of March Arising from acquisition of a subsidiary Arising from disposal of interest in a subsidiary Profit for the year Other comprehensive income for the year comprehensive income Total for the year Payment of dividends Bonus issue Buy-back of ordinary shares Balance as of March 31, 2014 31, Balance as of March The accompanying Notes form an integral part of the financial statements. 60 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) RM Total Total Equity – (6,543) 495,037 (1,486,508) 33,025,987 33,521,024 64,242,312 76,300,284 76,293,741 (33,000,000) (24,479,287) 343,360,096 408,123,432 458,451,378 – – RM
– – Earnings Retained Reserve - 1,048,764 1,074,751 2,298,506 33,025,987 33,025,987 76,300,284 76,300,284 (33,000,000) (24,479,287) (50,597,242) Distributable RM – – – – – – – – (6,543) (6,543) Reserve 495,037 495,037 495,037 488,494 Investment Revaluation Revaluation – – – – Reserves RM
– – – – – Share Non-distributable Premium 3,553,644 12,311,332 31,242,312 43,553,644 (40,000,000) – – – – RM
– – – – – – – – Shares Treasury Treasury (1,486,508) (1,486,508) – – – – RM
– – – – – Issued Capital 33,000,000 90,597,242 330,000,000 363,000,000 453,597,242 36 36 Note 27(a) 27(a) 27(b) The Company Balance as of January 1, 2012 Balance as of January 1, Profit for the period Other comprehensive income for the period Total comprehensive income for Total the period Payment of dividends Issue of shares 2013 31, Balance as of March Profit for the year Other comprehensive income for the year comprehensive income for Total the year Payment of dividends 2014 31, Balance as of March Buy-back of ordinary shares Bonus issue The accompanying Notes form an integral part of the financial statements.
61 OLDTOWN BERHAD (797771-M) Statement of (Incorporated in Malaysia) Cash Flows
FOR THE YEAR ENDED MARCH 31, 2014 (With Comparative Figures For The Period January 1, 2012 To March 31, 2013)
The Group Year Ended Period Ended 31.3.2014 31.3.2013 (12 Months) (15 Months) Note RM RM CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES Profit for the year/period 50,329,638 55,586,866 Adjustments for: Tax expense recognised in profit or loss 16,038,755 19,360,019 Depreciation of property, plant and equipment 15,928,327 17,583,643 Amortisation of intangible assets 3,529,319 2,929,087
Finance costs 1,556,523 1,345,971 Cumulative loss reclassified from equity on disposal of available-for-sale financial assets 417,441 – Property, plant and equipment written off 343,726 1,566,759 Amortisation of prepaid lease payments 184,743 230,928 Share of losses/(profits) of associates 157,055 (527,506) Bad debts written off 76,181 9,762 Inventories written off 20,682 138,336 Loss/(Gain) on disposal of property, plant and equipment 1,188 (924,392) Investment revenue recognised in profit or loss (1,578,460) (2,478,686) Changes in fair values of investment properties (523,220) (180,000) Unrealised gain on foreign exchange (351,595) (103,264) Gain on disposal of available-for-sale financial assets (81,426) – Amortisation of deferred capital grant (24,179) (30,224) Dividend income (15,000) (15,000) Impairment on goodwill – 1,959,643 Inventories written down in value – 215,708 86,009,698 96,667,650 Movements in working capital: (Increase)/Decrease in: Inventories (5,536,126) 1,835,941 Trade and other receivables 9,030,443 (4,141,645) Amount owing by associates (158,829) 21,454 (Decrease)/Increase in: Trade and other payables (5,767,792) 1,312,614 Deferred income (298,217) (519,554) Amount owing to ultimate holding company – 28,910 Cash Generated From Operations 83,279,177 95,205,370 Income tax refunded 627,700 1,042,623 Income tax paid (16,360,605) (24,661,799) Net Cash From Operating Activities 67,546,272 71,586,194
62 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
The Group Year Ended Period Ended 31.3.2014 31.3.2013 (12 Months) (15 Months) Note RM RM CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES Proceeds from disposal of other investments 64,541,924 – Withdrawal/(Placement) of fixed deposits 1,770,325 (129,773) Interest income received 1,448,687 2,388,686 Proceeds from disposal of property, plant and equipment 110,070 1,915,263 Rental income received 129,773 90,000 Dividend income received 59,000 45,000 Purchase of other investments (59,773,804) (60,000,000) Purchase of property, plant and equipment 38(a) (17,365,805) (63,681,693) Acquisition of subsidiary* (16,335,721) – Acquisition of additional shares in a subsidiary from non-controlling interests (1,952,704) – Purchase of investment property (680,000) – Repayment from associates – 60,000 Investment in unquoted shares – (320,815) Advance payments for acquisition of property, plant and equipment – (208,292) Net Cash Used In Investing Activities (28,048,255) (119,841,624) CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES Proceeds from term loans 2,311,983 17,952,260 Advances from ultimate holding company 66,788 7,830 Repayment of term loans (13,263,408) (2,367,134) Dividends paid to owners of the Company (10,889,700) (33,000,000) Finance costs paid (1,556,523) (1,345,971) Buy-back of shares (1,486,508) – Repayment of hire-purchase payables (670,203) (1,205,448) Dividends paid to non-controlling interests – (56,000) Proceeds from issuance of shares – 64,350,000 Proceeds from trust receipts – 4,438,008 Payment for share issue expenses – (107,688) Repayment to a director of a subsidiary – (4,463) Net Cash (Used In)/From Financing Activities (25,487,571) 48,661,394 NET INCREASE IN CASH AND CASH EQUIVALENTS 14,010,446 405,964 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR/PERIOD 83,668,022 83,197,667 Currency translation differences 1,416,646 64,391 CASH AND CASH EQUIVALENTS AT END OF YEAR/PERIOD 38(b) 99,095,114 83,668,022
The accompanying Notes form an integral part of the financial statements.
63 OLDTOWN BERHAD (797771-M) Statement of (Incorporated in Malaysia) Cash Flows
FOR THE YEAR ENDED MARCH 31, 2014 (With Comparative Figures For The Period January 1, 2012 To March 31, 2013)
The Company Year Ended Period Ended 31.3.2014 31.3.2013 (12 Months) (15 Months) Note RM RM CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES Profit for the year/period 76,300,284 33,025,987 Adjustments for: Depreciation of property, plant and equipment 153,172 173,383 Loss on disposal of available-for-sale financial assets 48,337 -
Property, plant and equipment written off 1,091 - Finance cost 215 848 Dividend income (77,134,054) (34,739,024) Investment revenue recognised in profit or loss (337,523) (1,190,406) Cumulative gain reclassified from equity on disposal of available-for-sale financial assets (260,308) - Tax income recognised in profit or loss - (23,436) Impairment loss on investment in a subsidiary - 950,810 (1,228,786) (1,801,838) Movements in working capital: Increase in trade and other receivables (52,923) (75,333) Decrease in trade and other payables (62,370) (71,817) Cash Used In Operations (1,344,079) (1,948,988) Dividend received 26,150,046 34,739,024 Income tax refunded 4,335 - Income tax paid (3,158) (241,840) Net Cash From Operating Activities 24,807,144 32,548,196 CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES Proceeds from disposal of other investments 20,211,971 - Interest income received 337,523 1,190,406 Advances granted to subsidiaries - net (27,178,820) (54,006,009) Purchase of other investments (15,000,000) (30,000,000) Investments in subsidiaries (200,800) (50,640) Purchase of property, plant and equipment 38(a) (98,594) (1,595,692) Repayment received from associates - 60,000 Net Cash Used In Investing Activities (21,928,720) (84,401,935)
64 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
The Company Year Ended Period Ended 31.3.2014 31.3.2013 (12 Months) (15 Months) Note RM RM CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES Dividends paid (10,889,700) (33,000,000) Buy-back of shares (1,486,508) - Finance cost paid (215) (848) Proceeds from issuance of shares - 64,350,000 Advances received from subsidiaries - net - 1,734,928 Payment for share issue expenses - (107,688) Repayment to holding company - net - (1,545) Net Cash (Used In)/From Financing Activities (12,376,423) 32,974,847 Net Decrease In Cash And Cash Equivalents (9,497,999) (18,878,892) Cash And Cash Equivalents At Beginning Of Year/Period 29,343,928 48,222,820 Cash And Cash Equivalents At End Of Year/Period 38(b) 19,845,929 29,343,928
*ANALYSIS OF ACQUISITION OF SUBSIDIARY During the financial year, the Group acquired a subsidiary as mentioned in Note 17. The fair values of the assets acquired and the liabilities assumed are as follows:
RM RM Property, plant and equipment 113,156 Distribution network 17,790,744 Inventories 2,534,006 Trade and other receivables 5,647,652 Fixed deposits, cash and bank balances 10,455,177 Trade and other payables (3,948,757) Borrowings (1,394,797) Current tax liabilities (549,074) Fair value of net assets acquired 30,648,107 Non-controlling interests (3,857,209) Group’s share of net assets acquired 26,790,898 Consideration paid in cash 26,790,898 Less: Fixed deposits, cash and bank balances (10,455,177) Net cash outflow on acquisition of subsidiary 16,335,721 The accompanying Notes form an integral part of the financial statements.
65 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
1. General Information The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Board of Bursa Malaysia Securities Berhad.
The Company is principally involved in investment holding.
The principal activities of the subsidiaries are disclosed in Note 17.
There have been no significant changes in the nature of the principal activities of the Company and its subsidiaries during the financial year.
The registered office of the Company is located at Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur.
The principal place of business of the Company is located at No. 2, Jalan Portland, Tasek Industrial Estate, 31400 Ipoh, Perak Darul Ridzuan.
The financial statements of the Group and of the Company were authorised for issue by the Board of Directors in accordance with a resolution of the directors on July 23, 2014. 2. 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 (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the provisions of the Companies Act, 1965 in Malaysia. 2.1 Adoption of New and Revised Mfrss New and Revised Mfrss Affecting Amounts Reported and/or Disclosures in The Financial Statements In the current year, the Group and the Company have applied a number of new and revised MFRSs issued by the Malaysian Accounting Standards Board (“MASB”) that are mandatorily effective for an accounting period that begins on or after January 1, 2013.
The adoption of new and revised MFRSs has had no material impact on the disclosures or on the amounts recognised in the financial statements, except as follows: MFRS 13 Fair Value Measurement The Group and the Company have applied MFRS 13 for the first time in the current year. MFRS 13 establishes a single source of guidance for fair value measurements and disclosures about the fair value measurements. The scope of MFRS 13 is broad; the fair value measurement requirements of MFRS 13 apply to both financial instrument items and non-financial instrument items for which other MFRSs require or permit fair value measurements and disclosures about fair value measurements, except for share-based payment transactions that are within the scope of MFRS 2 Share-based Payment, leasing transactions that are within the scope of MFRS 117 Leases, and measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring inventories or value in use for impairment assessment purposes).
MFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under MFRS 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, MFRS 13 includes extensive disclosure requirements.
MFRS 13 requires prospective application from January 1, 2013. In addition, specific transitional provisions were given to entities such that they need not apply the disclosure requirements set out in the Standard in comparative information provided for periods before the initial application of the Standard. In accordance with these transitional provisions, the Group and the Company have not made any new disclosures required by MFRS 13 for the 2013 comparative period. Other than the additional disclosures, the application of MFRS 13 has not had any material impact on the amounts recognised in these financial statements. Amendments to MFRS 101: Presentation of Items of Other Comprehensive Income The Group and the Company have applied the amendments to MFRS 101 Presentation of Items of Other Comprehensive Income for the first time in the current year. The amendments introduce new terminology, whose use is not mandatory, for the statement of comprehensive income and income statement. Under the amendments to MFRS 101, the “statement of comprehensive income” is renamed as the “statement of profit or loss and other comprehensive income” and the “income statement” is renamed as the “statement of profit or loss”. The amendments to MFRS 101 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to MFRS 101 require items of other comprehensive income to be grouped into two categories in other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis - the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. The amendments have been applied retrospectively, and hence the presentation of items of other comprehensive income has been modified to reflect the changes. Other than the abovementioned presentation changes, the application of the amendments to MFRS 101 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income. 66 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
2.2 Standards and IC Interpretations (“IC Int.”) in issue but not yet effective As at the date of authorisation for issue of these financial statements, the new and revised Standards and IC Int. which were in issue but not yet effective and not early adopted by the Group and the Company are as listed below:
MFRS 9 Financial Instruments (IFRS 9 issued by IASB in November 2009) ¹
MFRS 9 Financial Instruments (IFRS 9 issued by IASB in October 2010) ¹
MFRS 9 Financial Instruments (Hedge Accounting and amendments to MFRS 9, MFRS 7 and MFRS 139) ¹
IC Int. 21 Levies ²
Amendments to MFRS 9 and MFRS 7 Mandatory Effective Date of MFRS 9 (IFRS 9 issued by IASB in November 2009 and October 2010 respectively) and Transition Disclosures ¹
Amendments to MFRS 10, Investment Entities ² MFRS 12 and MFRS 127
Amendments to MFRS 119 Employee Benefits (Amendments relating to Defined Benefit Plans: Employee Contributions)
Amendments to MFRS 132 Financial Instruments: Presentation (Amendments relating to Offsetting Financial Assets and Financial Liabilities) ²
Amendments to MFRS 136 Impairment of Assets (Amendments relating to Recoverable Amounts Disclosures for Non-Financial Assets) ²
Amendments to MFRS 139 Financial Instruments: Recognition and Measurement (Amendments relating to Novation of Derivatives and Continuation of Hedge Accounting) ²
Amendments to MFRSs contained in the document entitled Annual Improvements to MFRSs 2010 - 2012 Cycle
Amendments to MFRSs contained in the document entitled Annual Improvements to MFRSs 2011 - 2013 Cycle
¹ The mandatory effective date of MFRS 9 (IFRS 9 issued by IASB in November 2009 and October 2010 respectively) which was for annual periods beginning on or after January 1, 2015 has been removed with the issuance of MFRS 9 Financial Instruments: Hedge Accounting and amendments to MFRS 9, MFRS 7 and MFRS 139. The effective date of MFRS 9 will be decided when IASB’s IFRS 9 project is closer to completion. However, each version of the MFRS 9 is available for early adoption.
² Effective for annual periods beginning on or after January 1, 2014. MFRS 9 and Amendments Relating to Mandatory Effective Date of MFRS 9 and Transition Disclosures MFRS 9 (IFRS 9 issued by IASB in November 2009) introduces new requirements for the classification and measurement of financial assets. MFRS 9 (IFRS 9 issued by IASB in October 2010) includes the requirements for the classification and measurement of financial liabilities and for derecognition.
The amendments to MFRS 9 (IFRS 9 issued by IASB in November 2009 and October 2010 respectively) (“MFRS 9”) relating to “Mandatory Effective Date of MFRS 9 and Transition Disclosures” which became immediately effective on the issuance date of March 1, 2012 amended the mandatory effective date of MFRS 9 to annual periods beginning on or after January 1, 2015 instead of on or after January 1, 2013, with earlier application still permitted as well as modified the relief from restating prior periods. MFRS 7 which was also amended in tandem with the issuance of the aforementioned amendments introduces new disclosure requirements that are either permitted or required on the basis of the entity’s date of adoption and whether the entity chooses to restate prior periods.
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 values 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 equity instrument (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.
67 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
• with regard to the measurement of financial liabilities designated as at fair value through profit or loss, MFRS 9 requires 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, is presented in other comprehensive income, unless the recognition of the effects 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. Previously, under MFRS 139, the entire amount of the change in the fair value of the financial liability designated as at fair value through profit or loss was presented in profit or loss.
The directors do not anticipate the application of MFRS 9 to have significant 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 a detailed review has been completed. 3. Significant Accounting Policies Basis of Accounting The financial statements of the Group and of the Company have been prepared on historical cost basis except for certain non-current assets and financial instruments that are measured at revalued amounts or fair values at the end of each reporting period, as explained in the accounting policies 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 and the Company take into account the characteristics of the asset or liability if market participants would take those characteristics 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 a basis, except for share-based 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.
The principal accounting policies are set out below: Subsidiaries and Basis of Consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved where 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 reassessed 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 circumstance 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.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non- 68 controlling interests having a deficit balance. OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Changes in the Group’s ownership interest in existing subsidiaries Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the relevant assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable MFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under MFRS 139 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or joint venture. Business Combinations Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
At acquisition date, the identifiable assets acquired and liabilities assumed are recognised at their fair value.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another Standard.
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 acquisition-date 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.
The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is remeasured at subsequent reporting dates in accordance with MFRS 137 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.
Where a business combination is achieved in stages, the Group’s previously held equity interests in the acquiree are remeasured to fair value at the acquisition date (i.e. the date when the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised at that date.
The policy described above is applied to all business combinations that take place on or after January 1, 2011. 69 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
Business Combinations Involving Common Control Entities A business combination involving entities or businesses under common control is a business combination in which all of the combining entities or businesses are ultimately controlled by the same party or parties, both before and after the business combination, and that control is not transitory.
The consolidated financial statements incorporate the financial statements items of the combining entities in which the common control combination occurs as if they had been combined from the date when the combining entities first came under the control of the controlling parties.
The cost of investment in the holding’s book is recorded at the nominal value of shares acquired. A single uniform set of accounting policies is adopted by the combined entity. Therefore, the net assets of the combining entities are combined using the existing book values from the controlling parties’ perspective. No amount is recognised in respect of goodwill or excess of acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost at the time of common control combination, to the extent of the continuation of the controlling parties’ interest.
The consolidated statement of comprehensive income includes the results of each of the combining entities from the earliest date presented or since the date when the combining entities first came under the common control, where this is a shorter period, regardless of the date of the common control combination. Expenditure incurred in connection with the restructuring is recognised as an expense in profit or loss.
The effects of all transactions between the combining entities or businesses, whether occurring before or after the combination, are eliminated in preparing the combined financial statements of the combined entity.
The debit differences arising between the cost of acquisition and the nominal value of share capital of the subsidiaries are reflected within equity as reserve arising from restructuring. Associates An associate is a non-subsidiary in which the Group and the Company hold not less than 20% of the equity voting rights as long-term investment and in which the Group and the Company is in a position to exercise significant influence in its management.
The investment in associate of the Group for the financial year ended March 31, 2014 is accounted for under the equity method of accounting based on the audited financial statements of the associated company made up to December 31, 2013 and appropriate adjustments have been made for the effects of significant transactions between that date and March 31, 2014. Under this method of accounting, the interest in the post-acquisition profits and reserves of the associate of the Group is included in the consolidated results while dividend received is reflected as a reduction of the investment in the consolidated statement of financial position.
Unrealised profits and losses arising on transactions between the Group and its associate are eliminated to the extent of the equity interest of the Group in the associated company except where unrealised losses provide evidence of an impairment of the asset transferred. Goodwill/Negative Goodwill Goodwill arising on an acquisition of a business is carried at cost less any accumulated impairment losses, if any.
Goodwill is not amortised. Instead, it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss in the statements of profit or loss and other comprehensive income. An impairment loss recognised for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
Any excess of the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over costs of acquisition (previously known as negative goodwill), after reassessed, is recognised immediately to the statements of profit or loss and other comprehensive income.
70 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Revenue Recognition Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates, trade discounts and other similar allowances. Sale of food and beverages Sale of food and beverages are recognised when food and beverages are served, net of service tax. Sale of goods Revenue from sale of goods is recognised when the following conditions are satisfied:
• the Group has transferred to the customer the significant risks and rewards of ownership of the goods; • the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; • the amount of revenue can be measured reliably; • it is probable that the economic benefits associated with the transaction will flow to the Group; and • the costs incurred or to be incurred in respect of the transaction can be measured reliably. Dividend income Dividend income from quoted and unquoted investments is recognised when the shareholder’s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably). Interest income Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably. Interest income is accrued on a time apportion basis, by reference to the principal outstanding and at the interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. Rental income Rental income is accrued on a time apportion basis, by reference to the agreements entered. Rental income from investment properties is recognised on a straight-line basis over the term of the relevant lease. Franchise, advertising and promotion, rights and royalty fees Franchise, advertising and promotion, rights and royalty fees are recognised on an accrual basis (provided that it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably). Franchise fees are recognised on a straight-line basis over the period of the relevant agreement. Fees for opening of outlets and relocation Income from opening of outlets and relocation is recognised on a straight-line basis by reference to the terms of the agreements entered. Income from accounting services, initial training fees and management fees Income from rendering of accounting services, initial training fees and management fees are recognised as and when services are provided. Licence fees Licence fees are recognised as revenue on a straight-line basis over the length of the licensing contract. 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 also the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the functional currency of the entity (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. Non-monetary 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. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. 71 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
Exchange differences are recognised in profit or loss in the period in which they arise except for:
• exchange differences arising on the retranslation of non-monetary items carried at fair value in respect of which gains and losses are recognised in other comprehensive income. For such non-monetary items, the exchange component of that gain or loss is also recognised in other comprehensive income; and
• 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 repayment of the monetary items.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the foreign incorporated subsidiaries of the Group are translated in RM using exchange rates prevailing at the end of the reporting 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 non-controlling 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.
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 re-attributed to non-controlling 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 each reporting period. Exchange differences arising are recognised in other comprehensive income and accumulated in equity.
The closing rate per unit of functional foreign currency used in the translation of the subsidiaries and associate (foreign currency) into Ringgit Malaysia is as follows:
2014 2013 Foreign Currency RM RM Singapore Dollar 2.5903 2.4958 Hong Kong Dollar 0.4210 0.3985
Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Government Grants Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.
Government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the statements of financial position and transferred to the statements of profit or loss and other comprehensive income on a systematic and rational basis over the useful lives of the related assets.
Other government grants are recognised as revenue over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in the statements of profit or loss and other comprehensive income in the period in which they become receivable. 72 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Finance Lease Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statements of financial position as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group general policy on borrowing costs. Operating Lease Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Employee Benefits Short-term employee benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group and of the Company. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences and short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur. Defined contribution plan The Group and the Company are required by law to make monthly contributions to statutory defined contribution plan for all its eligible employees based on certain prescribed rates of the employees’ salaries. The Group’s and the Company’s contributions to statutory defined contribution plan are recognised as an expense when employees have rendered service entitling them to the contributions and are disclosed separately. The employees’ contributions to statutory defined contribution plan are included in salaries and wages. Once the contributions have been paid, the Group and the Company have no further payment obligations. Preliminary Expenses Preliminary expenses are charged to the statements of profit or loss and comprehensive income in the financial year in which they are incurred. Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. Current Tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in profit or loss because of items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The liability of the Group and of the Company for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of reporting period. Deferred Tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profits will be available against which those deductible temporary differences, unused tax losses and unused tax credits can be utilised.
The tax effects of unutilised reinvestment allowances are only recognised upon actual realisation. 73 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of each reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group and the Company expect, at the end of the reporting period, to recover or settle the carrying amount of their assets and liabilities.
For the purposes of measuring deferred tax liabilities and deferred tax assets for investment properties that are measured using the fair value model, the carrying amounts of such properties are presumed to be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. The directors of the Group and of the Company reviewed the Group’s and the Company’s investment property portfolio and concluded that none of the Group’s and of the Company’s investment properties are held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time, rather than through sale. Therefore, the directors have determined that the “sale” presumption set out in the amendments to MFRS 112 is not rebutted. As a result, the Group and the Company have recognised deferred taxes on changes in fair values of investment properties based on the expected tax rate that would apply on disposal of the investment properties.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group and the Company intend to settle its current tax assets and liabilities on a net basis. Current and Deferred Tax for The Period Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items that are recognised outside profit or loss (whether in other comprehensive income or directly in equity), in which case the current and deferred tax is also recognised in other comprehensive income or directly in equity respectively. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any.
The directors are unable to segregate the cost of the long-term leasehold land, which has a remaining lease period of 77 years, from the cost of long- term leasehold land and buildings. As such, the long-term leasehold land and buildings are amortised based on depreciation rate of 2% per annum. The directors do not consider the impact on the financial statements to be material.
Freehold land and capital work-in-progress are stated at cost and are not depreciated. Capital work-in-progress comprises contractors’ payments and directly attributable costs incurred in preparing these assets for their intended use. Depreciation on assets under construction commences when the assets are ready for their intended use.
Depreciation is recognised so as to write off the cost of assets, less their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Annual depreciation rates used to depreciate property, plant and equipment, over their estimated remaining useful lives are as follows:
Buildings 2% Apartments, factory and shop-office buildings 2% Plant, machinery and equipment 5% to 20% Motor vehicles 10% to 20% Factory equipment, signboard and electrical fittings 10% to 20% Air-conditioners, computers, furniture, fittings and office equipment 10% to 20% Renovation 10% to 20%
Assets held under hire-purchase arrangements are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no recoverable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sale proceeds and the carrying amount of the asset is recognised in profit or loss. 74 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Property, Plant and Equipment Under Hire-Purchase Arrangements Assets acquired under hire-purchase arrangements which transfer substantially all of the risks and rewards incident to ownership of the assets are capitalised under property, plant and equipment. The assets and the corresponding hire-purchase obligations are recorded at their fair values or, if lower, at the present value of the minimum lease payment of the assets under hire-purchase at the inception of the respective arrangements.
Finance costs, which represent the difference between the total hire-purchase commitments and the fair values of the assets acquired, are charged to profit or loss over the term of the relevant hire-purchase period so as to give a constant periodic rate of charge on the remaining balance of the obligations for each accounting period. Prepaid Lease Payments Leasehold land that normally has an indefinite economic life and where title is not expected to pass to the lessee by the end of the lease period is treated as an operating lease. The payment made on entering into or acquiring a leasehold interest is accounted for as prepaid lease payments at the end of the reporting period. In the case of a lease of land and buildings, the prepaid lease payments are allocated whenever necessary, between the land element and building element of the lease at the inception of the lease in proportion to their relative fair value.
Prepaid lease payments on leasehold land are stated at cost less accumulated amortisation and accumulated impairment losses, if any.
Leasehold land is amortised on a straight-line basis over the remaining lease terms ranging from 43 to 97 years. Investment Properties Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties are measured initially at its cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value. Fair value is arrived by reference to market evidence of transaction prices for similar properties. Gain or loss arising from changes in the fair values of investment properties is included in profit or loss in the period in which they arise.
Investment properties are derecognised upon disposal or when the investment properties are permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the properties (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) are included in profit or loss in the period in which the properties are derecognised. Investments Investments in subsidiaries, which are eliminated on consolidation, and investment in associate, are stated in the Company’s separate financial statements at cost less accumulated impairment losses, if any.
Other investments in quoted unit trusts and unquoted shares are classified as available-for-sale investments. Intangible Assets Intangible assets are initially measured at either cost or fair value and amortised on a straight-line basis over their useful economic lives, which are reviewed at the end of each reporting date. The fair value attributable to intangible assets acquired through a business combination is determined by discounting the expected future cash flows to be generated from that assets at the risks adjusted weighted average cost of capital of the Group. The residual values of intangible assets are assumed to be Nil.
The estimated useful economic lives of intangible assets are as follows:
Distribution network 15 years Supplier exclusive right 10 years
The following are the main categories of intangible assets: Distribution Network Distribution network relates to relationship established by the subsidiary with the customers. Supplier Exclusive Right Supplier exclusive right represents right for sale of goods to a chain of outlets.
At the end of each reporting period, the Group assesses whether there is any indication of impairment. If such indication exists, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. An impairment loss is provided for if the carrying amount exceeds the recoverable amount. 75 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
Impairment of Assets excluding Goodwill and Intangible Assets At the end of each reporting period, the Group and the Company review the carrying amounts of their assets (other than goodwill, intangible assets, investment properties, other investments, inventories and financial assets, which are dealt with in their respective policies) to determine if there is any indication that those assets may be impaired. If any such indication exists, the asset’s recoverable amount is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group and the Company estimate the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash- generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, so that the increased carrying amount would not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss. Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined principally on the “First-in, First-out” method.
Costs of trading merchandise, raw materials, packing materials, food, beverages, consumables, spare parts and goods-in-transit comprise the original purchase price plus cost incurred in bringing the inventories to their present location and condition. The costs of finished goods and work-in-progress comprise the cost of raw materials, direct labour and an appropriate proportion of production overheads. Net realisable value represents the estimated selling price less estimated costs of completion and costs to be incurred in marketing, selling and distribution. Provisions Provisions are recognised when the Group and the Company have a present obligation (legal or constructive) as a result of past event, it is probable that the Group and the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Financial Instruments Financial assets and financial liabilities are recognised in the statements of financial position when the Group and the Company become a party to the contractual provisions of the financial instrument.
Where the purchase or sale of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, such financial assets are recognised and derecognised on trade date.
Financial instruments are initially measured at fair value, plus transaction costs, except for those financial assets and financial liabilities classified as fair value through profit or loss (“FVTPL”), which are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs that are directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognised immediately in the profit or loss. Effective Interest Method The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset or financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Income and expense is recognised on an effective interest basis for debt instruments other than those financial assets or financial liabilities classified as at FVTPL. 76 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Financial assets Financial assets are classified into the following specified categories: financial assets at FVTPL, ‘held-to-maturity’ investments, ‘available-for-sale’ (“AFS”) financial assets and ‘loan and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. Financial assets of the Group and of the Company are classified into ‘FVTPL’, ‘AFS financial assets’ and ‘loans and receivables’.
(i) Financial assets at FVTPL Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL.
A financial asset is classified as held for trading if:
• it has been acquired principally for the purpose of selling it in the near term; or • on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or • it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or • the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or • it forms part of a contract containing one or more embedded derivatives, and MFRS 139 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the “other gains and losses” line item in the statements of profit or loss and other comprehensive income.
(ii) Available-For-Sale (“Afs”) Financial Assets AFS financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to- maturity investments or financial assets at FVTPL. All AFS financial assets are measured at fair value at the end of the reporting period. Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in the investment revaluation reserve, with the exception of impairment losses, interest calculated using the effective interest method, and foreign exchange gains and losses on monetary assets, which are recognised in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investment revaluation reserve is reclassified to profit or loss.
AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment losses at the end of the reporting period.
Dividends on AFS equity instruments are recognised in profit or loss when the Group’s and the Company’s rights to receive the dividends are established.
(iii) Loans and Receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
(iv) Impairment of Financial Assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.
For equity investments classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. 77 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
For all other financial assets, objective evidence of impairment could include:
• significant financial difficulty of the issuer or counterparty; or • breach of contract, such as default or delinquency in interest or principal payments; or • it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or • the disappearance of an active market for that financial asset because of financial difficulties.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in investment revaluation reserve are reclassified to profit or loss in the period.
Impairment losses of AFS financial asset previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve.
For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
(v) Derecognition of Financial Assets The Group and the Company derecognise a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group and the Company neither transfer nor retain substantially all the risk and rewards of ownership and continues to control the transferred asset, the Group and the Company recognise their retained interest in the asset and an associated liability for amounts it may have to pay. If the Group and the Company retain substantially all the risks and rewards of ownership of a transferred financial asset, the Group and the Company continue to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss. Financial Liabilities and Equity Instruments Issued by The Group and The Company (i) Classification as Debt or Equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement and the definition of a financial liability and equity instrument.
(ii) Equity Instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of its liabilities. Equity instruments issued by the Group and the Company are recorded at the proceeds received, net of direct issue costs.
Repurchase of the Company’s own equity instruments is recognised as treasury shares at the cost of repurchase, and including directly attributable costs and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.
78 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
(iii) Financial Liabilities Financial liabilities of the Group are classified as either financial liabilities “at FVTPL” or “other financial liabilities” categories while financial liabilities of the Company are classified into “other financial liabilities” category.
(iv) Financial Liabilities at FVTPL Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
• it has been acquired principally for the purpose of repurchasing it in the near term; or • on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or • it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or • the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or • it forms part of a contract containing one or more embedded derivatives, and MFRS 139 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the “other gains and losses” line item in the statements of profit or loss and other comprehensive income. Fair value is determined in the manner described in Note 37.
(v) Other Financial Liabilities Other financial liabilities are initially measured at fair value, net of transaction costs, and subsequently measured at amortised cost, using the effective interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
(vi) Derecognition of Financial Liabilities The Group and the Company derecognise financial liabilities when, and only when, the Group’s and the Company’s obligations are discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid or payable is recognised in profit or loss. Derivative Financial Instruments The Group enters into foreign exchange forward contracts to manage its exposure to foreign exchange rate risk.
Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset; a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
79 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
Segment Information For management purpose, the Group is organised into operating segments based on their business segment which is independently managed by the respective segment chief operation officer, responsible for the performance of the respective segments under their charge. The segment chief operation officer reports directly to the management of the Group who regularly reviews the segment results in order to allocate resources to the segments and to assess the segments performance. Statements of Cash Flows The Group and the Company adopt the indirect method in the preparation of the statements of cash flows.
Cash equivalents are short-term, highly liquid investments with maturities of three months or less from the date of acquisition and are readily convertible to cash with insignificant risks of changes in value. 4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty (a) Critical Judgement Made in Applying Accounting Policies In the process of applying the accounting policies of the Group and of the Company, the directors are of the opinion that there are no instances of application of judgement which are expected to have a significant effect on the amounts recognised in the financial statements.
In the application of the accounting policies of the Group and of the Company, which are described in Note 3, management is required to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
(b) Key Sources of Estimation Uncertainty The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets in the next financial year are discussed below:
(i) Impairment of Goodwill The Group tests goodwill for impairment annually in accordance with its accounting policy. More regular reviews are performed if events indicate that this is necessary.
For the purpose of assessing impairment, goodwill is allocated to cash-generating units that are expected to benefit from the synergies of the business combination in which the goodwill arose.
Significant judgement is required in the estimation of the present value of future cash flows generated by the cash-generating units, which involve uncertainties and are significantly affected by assumptions used and judgement made regarding estimates of future cash flows and discount rates. Key assumptions used in determining the recoverable amount of cash generating unit based on value-in-use calculations are disclosed in Note 20. Changes in assumptions could significantly affect the results of the tests for impairment of goodwill of the Group. (ii) Impairment of Property, Plant and Equipment and Intangible Assets The carrying amounts of property, plant and equipment of the Group and of the Company as of March 31, 2014 are RM105,634,478 (2013: RM102,396,819) and RM1,885,819 (2013: RM1,930,665) respectively and the carrying amounts of intangible assets of the Group is RM33,398,124 (2013: RM19,136,699).
For the purpose of the impairment review of the outlet’s property, plant and equipment, each individual outlet will be considered as a single cash-generating unit. Each individual outlet’s discounted cash flow will be compared against the carrying amount of the property, plant and equipment for each individual outlet.
80 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Recoverable amount is measured at the higher of the fair value less cost to sell for that asset and its value-in-use. The value-in-use is the net present value of the projected future cash flow derived from that asset discounted at an appropriate discount rate. Projected future cash flows are based on the Group’s and the Company’s estimates calculated based on historical, sector and industry trends, general market and economic conditions, changes in technology and other available information. Management of the Group and of the Company have carried out an impairment review on their property, plant and equipment and concluded that there is no indication of impairment.
The Group tested intangible asset for impairment in accordance with its accounting policy. (iii) Estimated Useful Lives of Property, Plant and Equipment and Intangible Assets The Group and the Company regularly review the estimated useful lives of property, plant and equipment at the end of each reporting period based on factors such as business plan and strategies, expected level of usage and future technological developments. Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned above. A reduction in the estimated useful lives of property, plant and equipment would increase the recorded depreciation and decrease the value of property, plant and equipment.
The Group reviews its intangible assets with finite useful lives at the end of each reporting date. The estimated useful economic lives reflect the management’s estimates of the periods that the Group intends to derive future economic benefits from the use of these intangible assets. (iv) Recoverability of Receivables The carrying amounts of third-party trade and other receivables of the Group as of March 31, 2014 were RM34,894,994 (2013: RM39,236,878).
An allowance is established when there is objective evidence that the Group and the Company will not be able to collect all amounts due according to the original terms of receivables. This is determined based on the ageing profile and collection patterns. (v) Obsolete Inventories The Group writes off inventories based on an assessment of the recoverability of the inventories through sales and recycling for alternatives uses. Write off is applied to inventories where events or changes in circumstances indicate that the costs may not be recoverable.
The identification of obsolete inventories requires use of judgement and estimates.
Where the expectation is different from the original estimate, such difference will impact the carrying values of the inventories and inventories written off/(back) in the period in which such estimate has been changed. (vi) Valuation of Acquired Intangible Assets Acquisitions may result in supplier exclusive right and distribution network being recognised. These are valued using discounted cash flow methods which require the application of certain key judgements and estimates to be made in respect of discount rate and future cash flows. 5. Segment Reporting The segment reporting is presented on the same basis as information reported to the chief operating decision maker and senior management for the purposes of allocating resources to the segment and assessing its performance. It is focused on the operations of the Group by business segment as disclosed below. Business Segment The Group’s operations can be segmented into three (3) business segments as follows:
a) Operation of a chain of cafes; b) Manufacturing of coffee and other beverages; and c) Others.
Inter-segment sales are charged at cost plus a percentage of profit mark-up.
81 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
Segment revenue from external customers is based on the business segments.
The Group Operations of Manufacturing Year Ended 31.3.2014 cafe chain of beverages Others Total (12 Months) RM RM RM RM Revenue Total revenue 308,882,398 255,286,956 78,855,378 643,024,732 Inter-company sales (101,823,085) (80,174,619) (78,855,378) (260,853,082) Total external sales 207,059,313 175,112,337 - 382,171,650 Results Segment results 31,205,586 36,537,176 (1,239,251) 66,503,511 Finance costs (1,556,523) Share of losses of associates (157,055) Investment revenue 1,578,460 Profit before tax 66,368,393 Tax expense (16,038,755) Profit for the year 50,329,638 Other information Depreciation and amortisation 13,899,630 5,589,587 153,172 19,642,389
The Group Operations of Manufacturing Period Ended 31.3.2013 cafe chain of beverages Others Total (15 Months) RM RM RM RM Revenue Total revenue 382,243,178 237,719,894 34,739,024 654,702,096 Inter-company sales (129,874,415) (68,034,314) (34,739,024) (232,647,753) Total external sales 252,368,763 169,685,580 - 422,054,343 Results Segment results 41,587,586 33,985,460 (2,286,382) 73,286,664 Finance costs (1,345,971) Share of profits of associates 527,506 Investment revenue 2,478,686 Profit before tax 74,946,885 Tax expense (19,360,019) Profit for the period 55,586,866 Other information Depreciation and amortisation 18,120,334 2,449,941 173,383 20,743,658 Impairment loss on goodwill 1,959,643 - - 1,959,643
82 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Geographical Segment The Group operates in four principal geographical areas - Malaysia (country of domicile), South East Asia, other Asian countries and others.
The Group’s revenue from continuing operations from external customers by geographical area are detailed below:
Revenue from external customers Year Ended Period Ended 31.3.2014 31.3.2013 (12 Months) (15 Months) RM RM Malaysia 263,450,956 317,447,907 South East Asia 36,743,267 41,742,703 Other Asian countries 72,629,052 54,432,958 Others 9,348,375 8,430,775 382,171,650 422,054,343
Revenue of approximately RM39,720,000 (2013: RM46,000,000) which contributed more than 10% (2013: 10%) of the total revenue of the Group is derived from one (1) external customer (2013: one (1) external customer) under manufacturing of beverages of Malaysia segment during the financial year.
Segment assets, segment liabilities and capital additions were not disclosed as they were not regularly provided to the chief operating decision maker for their day-to-day operation decision making. 6. Revenue
The Group The Company Year Ended Period Ended Year Ended Period Ended 31.3.2014 31.3.2013 31.3.2014 31.3.2013 (12 Months) (15 Months) (12 Months) (15 Months) RM RM RM RM
Sale of goods 362,308,920 398,817,812 - -
Royalty, advertising and promotion fees 17,222,321 19,954,020 - -
Franchise fees 1,370,299 1,659,995 - -
Rights fees 650,000 750,000 - -
Initial training fees 293,836 320,000 - -
Fees for opening of outlets 224,587 331,632 - -
Licence fees 50,157 121,310 - -
Relocation fees 20,000 64,756 - -
Management fees 16,530 19,818 - -
Dividend income 15,000 15,000 77,134,054 34,739,024
382,171,650 422,054,343 77,134,054 34,739,024
83 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
7. Investment Revenue
The Group The Company Year Ended Period Ended Year Ended Period Ended 31.3.2014 31.3.2013 31.3.2014 31.3.2013 (12 Months) (15 Months) (12 Months) (15 Months) RM RM RM RM
Investment revenue earned on loans and receivables (including cash and cash equivalents):
Interest income from:
Short-term investment funds 1,341,181 2,251,847 337,523 1,190,406
Fixed deposits 92,966 101,844 - -
Current account 14,540 34,995 - -
Investment revenue earned on non-financial asset:
Property rental income 129,773 90,000 - -
1,578,460 2,478,686 337,523 1,190,406
8. Other Gains and Losses
The Group The Company Year Ended Period Ended Year Ended Period Ended 31.3.2014 31.3.2013 31.3.2014 31.3.2013 (12 Months) (15 Months) (12 Months) (15 Months) RM RM RM RM
Changes in fair values of investment properties 523,220 180,000 - -
Gain/(Loss) on foreign exchange:
Unrealised 351,595 103,264 - -
Realised 77,995 (186,880) - -
Gain/(Loss) on disposal of available-for-sale financial assets 81,426 - (48,337) -
Amortisation of deferred capital grant 24,179 30,224 - -
Cumulative (loss)/gain reclassified from equity on disposal of available-for-sale financial assets (417,441) - 260,308 -
(Loss)/Gain on disposal of property, plant and equipment (1,188) 924,392 - -
639,786 1,051,000 211,971 -
84 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
9. Other Operating Income/(Expenses) and Employee Benefits Expenses Included in other operating income/(expenses) and employee benefits expenses are the following:
The Group The Company Year Ended Period Ended Year Ended Period Ended 31.3.2014 31.3.2013 31.3.2014 31.3.2013 (12 Months) (15 Months) (12 Months) (15 Months) RM RM RM RM
Service charge received - net 6,231,489 7,577,068 - -
Rental income:
Properties 741,281 1,706,743 - -
Machinery 1,300 330 - -
Rental of:
Premises (18,886,040) (24,966,279) (8,800) (60,000)
Server (217,801) - - -
Equipment (89,137) (54,639) - -
Motor vehicles (21,600) (22,800) - -
Machinery - (90,137) - -
Others (17,476) (36,628) - -
Audit fees:
Statutory audit:
- auditors of the Company (457,000) (445,000) (54,000) (50,000)
- other auditors (135,025) (34,782) - -
Non-statutory audit:
- current year (26,000) - (26,000) -
- prior year (3,000) (3,000) (3,000) (3,000)
Property, plant and equipment written off (343,726) (1,566,759) (1,091) -
Bad debts written off (76,181) (9,762) - -
Listing expenses (23,595) (37,760) (23,595) (37,760)
Inventories written off (20,682) (138,336) - -
Inventories written down in value - (215,708) - -
Preliminary expenses written off - (2,386) - -
Included in employee benefits expenses of the Group and the Company are contributions made to EPF of RM3,401,105 (2013: RM3,713,033) and RM10,740 (2013: RM12,568) respectively.
85 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
10. Directors’ Remuneration
The Group The Company Year Ended Period Ended Year Ended Period Ended 31.3.2014 31.3.2013 31.3.2014 31.3.2013 (12 Months) (15 Months) (12 Months) (15 Months) RM RM RM RM
Executive directors:
Salaries, bonuses, incentives and allowances:
The Company 83,100 106,500 83,100 106,500
Subsidiaries 2,603,500 1,968,700 - -
Fees - subsidiaries 104,621 99,816 - -
Non-executive directors of the Company:
Fees 153,000 217,250 153,000 217,250
Allowances 63,000 40,500 63,000 40,500
Contributions to EPF:
Executive directors:
The Company 8,532 11,518 8,532 11,518
Subsidiaries 168,864 205,238 - -
3,184,617 2,649,522 307,632 375,768
The estimated monetary value of benefits-in-kind received and receivable by the directors otherwise than in cash from the Group and from the Company amounted to RM118,927 (2013: RM139,659) and RM23,950 (2013: RM29,938) respectively.
Directors’ remuneration including benefits-in-kind paid or payable by the Company and its subsidiaries to the directors of the Company for the current financial year are broadly categorised into the following bands:
Number of directors
Executive Non-executive Range of remuneration directors directors
RM1 to RM50,000 - 2
RM50,001 to RM100,000 - 2
RM250,001 to RM300,000 2 -
RM550,001 to RM600,000 1 -
RM850,001 to RM900,000 1 -
RM1,000,001 to RM1,050,000 1 -
86 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
11. Finance Costs
The Group The Company Year Ended Period Ended Year Ended Period Ended 31.3.2014 31.3.2013 31.3.2014 31.3.2013 (12 Months) (15 Months) (12 Months) (15 Months) RM RM RM RM
Interest on:
Term loans 1,270,119 961,305 - -
Hire-purchase 67,350 161,302 - -
Trust receipts 62,523 26,185 - -
Bank overdrafts - 7,905 - -
Bank charges and commission 156,531 189,274 215 848
1,556,523 1,345,971 215 848
12. Tax (Expense)/Income
The Group The Company Year Ended Period Ended Year Ended Period Ended 31.3.2014 31.3.2013 31.3.2014 31.3.2013 (12 Months) (15 Months) (12 Months) (15 Months) RM RM RM RM
Income tax (expense)/ income comprises:
Current tax expense in respect of current year/period:
- Malaysia (10,573,350) (19,683,670) - -
- Foreign (1,195,692) - - -
(11,769,042) (19,683,670) - -
Adjustments recognised in the current year/period in relation (256,119) 45,309 - 23,436 to the income tax of prior years
(12,025,161) (19,638,361) - 23,436
Deferred tax (expense)/ income relating to origination and (4,109,594) 290,342 - - reversal of temporary differences
Adjustments recognised in the current year/period in relation 96,000 (12,000) - - to the deferred tax of prior years
(Note 22) (4,013,594) 278,342 - -
Total tax (expense)/income (16,038,755) (19,360,019) - 23,436
87 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
The Group’s and the Company’s income tax rate remained at 25% for the years of assessment 2014 and 2013 except for its foreign subsidiaries. Taxa- tion for other jurisdictions are calculated at the rates prevailing in the relevant jurisdictions.
The Malaysian Budget 2014 announced on October 25, 2013 the reduction of corporate income tax rate from 25% to 24% with effect from year of assessment 2016. The Real Property Gains Tax (“RPGT”) is also revised to 30% for disposal within the first three years, 20% within the fourth year, 15% within the fifth year and 5% from sixth year onwards, on gains from the disposal of real property effective January 1, 2014. Following these, the applica- ble tax rate to be used for the measurement of any applicable deferred tax will be the abovementioned expected rate.
The tax (expense)/income for the year/period can be reconciled to profit before tax as follows:
The Group The Company Year Ended Period Ended Year Ended Period Ended 31.3.2014 31.3.2013 31.3.2014 31.3.2013 (12 Months) (15 Months) (12 Months) (15 Months) RM RM RM RM
Profit before tax 66,368,393 74,946,885 76,300,284 33,002,551
Tax expense calculated using the Malaysian statutory income (16,592,000) (18,737,000) (19,075,000) (8,251,000) tax rate of 25% (2013: 25%)
Tax effects of:
Reinvestment allowances utilised 2,508,000 678,000 - -
Income that is not taxable in determining taxable profit 463,863 655,476 19,368,000 8,982,000
Expenses allowed for double tax deductions 321,000 1,082,000 - -
Corporate tax rebate 53,197 - - -
Expenses that are not deductible in determining taxable profit (3,149,360) (3,239,097) (207,000) (731,000)
Loss not available for offset against future taxable profit (90,000) - (86,000) -
Enhanced deduction for qualifying expenditure - 103,975 - -
Effect of difference in tax rates of subsidiaries operating in 606,664 63,318 - - foreign jurisdictions
Adjustments recognised in the current year/ period in relation to the taxes of prior years:
Income tax (256,119) 45,309 - 23,436
Deferred tax 96,000 (12,000) - -
Tax (expense)/income recognised in profit or loss (16,038,755) (19,360,019) - 23,436
88 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Current tax assets and liabilities
The Group The Company 2014 2013 2014 2013 RM RM RM RM
Current tax assets:
Tax refund receivable 4,059,601 1,105,598 9,774 10,951
Current tax liabilities:
Income tax payable 478,500 659,910 - -
13. Earnings Per Share The basic and diluted earnings per share are calculated as follows:
The Group
Basic and diluted 2014 2013
Profit for the year/period attributable to owners of the Company RM48,938,252 RM55,527,110
Number of ordinary shares in issue as of April 1 453,597,242 420,597,242
Effects of: Shares repurchased (209,819) -
Private placement - 7,470,330
Weighted average number of ordinary shares in issue 453,387,423 428,067,572
Basic and diluted earnings per ordinary share (RM) 0.11 0.13
Number of ordinary shares in issue as of April 1 includes the bonus issue of 90,597,242 units of ordinary shares issued during the financial year.
Comparative figures of the basic and diluted earnings per ordinary shares have been restated to reflect the bonus issue during the financial year.
89 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements RM Total - - 71,899 (65,626) (80,096) 152,617 451,933 (673,198) (524,257) (1,359,551) (2,357,422) (4,471,766) 20,155,713 92,748,422 69,818,194 173,866,862 155,729,231 RM ------Capital work-in- progress (33,600) 3,945,530 1,523,614 5,569,701 16,408,414 53,928,440 (13,986,498) (43,056,127) RM - - - - 57,613 76,335 15,447 37,495 (961,645) (377,860) Renovation (35,572) # 2,419,530 2,058,611 (2,129,825) 14,610,755 13,054,494 13,450,626 RM 57,473 23,688 furniture, 970,398 183,657 (111,770) (288,390) (547,900) computers, (66,032) * fittings and (17,421) # 3,336,627 2,249,451 3,456,891 - (1,376,080) 31,378,102 27,247,528 23,507,510 Air-conditioners, office equipment RM - - fittings Factory 23,367 10,716 electrical 561,607 180,829 (259,885) (109,516) (929,788) (868,163) (14,064) * equipment, (12,633) # 4,476,738 4,844,423 34,424,571 29,744,893 26,520,940 signboard and signboard
RM ------Motor 14,164 vehicles 191,941 (150,852) (468,274) 9,990,832 1,356,027 8,579,552 1,795,828 7,251,998 RM and Plant, ------(1,750) (97,698) 279,310 582,805 machinery equipment 2,307,001 26,279,521 12,336,293 11,637,977 10,873,560 RM ------buildings 894,200 factory and shop-office 4,736,176 2,168,952 1,294,687 Apartments, 49,425,105 43,794,729 40,331,090 RM land ------Freehold 815,000 (385,000) 1,200,000 1,200,000 RM and ------982,244 (288,198) (776,000) apartments 2,997,446 4,061,644 3,079,400 and buildings Leasehold land properties (Note 16) As of March 31, 2014 As of March 31, Translation reserve Translation Additions Disposals Write off Discount Reclassification reserve Translation 2013 As of March 31, Acquisition of subsidiary Additions Disposals Write off Discount Reclassification to investment Transfer Cost 2012 As of January 1, The Group * The discount was received from suppliers for assets purchased in 2011. * The discount was received from suppliers for assets purchased in 2013. # 14. Property, Plant and Equipment Property, 14. 90 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) RM Total - - 88,110 30,176 (26,418) 338,777 (412,999) 39,943,551 (1,015,825) (2,905,007) (1,319,951) 68,232,384 15,928,327 53,332,412 17,583,643 105,634,478 102,396,819 RM ------Capital work-in- progress 3,945,530 16,408,414 RM - - - 2,060 28,451 41,955 15,743 Renovation 6,396,403 (708,701) (186,441) 5,042,577 5,052,872 9,568,178 2,204,851 8,001,622 3,016,541 (1,242,684) RM 9,804 furniture, (2,760) 32,903 (84,484) 120,890 computers, fittings and (191,641) (964,388) (303,382) - 12,686,370 - 3,907,248 4,852,797 11,314,745 10,969,087 20,063,357 16,278,441 Air-conditioners, office equipment RM fittings Factory 4,629 8,949 - - - electrical 13,553 equipment, (115,483) (176,837) (630,956) (521,179) 13,444,630 4,649,070 5,889,836 signboard and signboard 11,858,359 11,548,984 22,566,212 18,195,909
RM - - - - - Motor vehicles (8,249) 13,203 175,932 2,971,353 (150,847) (308,949) 3,762,899 4,043,217 6,227,933 1,653,310 4,536,335 1,882,180 RM Plant, (831) ------equipment (66,979) 4,128,032 5,900,851 8,218,147 2,481,852 5,737,126 1,676,073 machinery and 18,061,374 RM ------buildings 34,920 165,327 965,284 339,361 174,034 factory and shop-office Apartments, 1,339,565 48,085,540 43,455,368 RM land ------Freehold 815,000 1,200,000 RM ------66,712 92,182 151,436 (26,418) (34,920) 248,992 243,618 and buildings 2,748,454 3,818,026 Leasehold land and apartments As of March 31, 2014 As of March 31, Carrying amounts 2013 As of March 31, As of March 31, 2014 As of March 31, Translation reserve Translation Transfer to investment properties Transfer (Note 16) Reclassification Write off Disposals Depreciation charge for the year Acquisition of subsidiary As of March 31, 2013 As of March 31, Translation reserve Translation Reclassification Write off Disposals Accumulated depreciation andAccumulated depreciation accumulated impairment losses 2012 As of January 1, Depreciation charge for the period The Group
91 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
Furniture, fittings and Capital Motor office work-in- vehicles Signboard equipment progress Total The Company RM RM RM RM RM
Cost
As of January 1, 2012 374,113 368 174,047 - 548,528
Additions 142,097 - 72,131 1,395,239 1,609,467
As of March 31, 2013 516,210 368 246,178 1,395,239 2,157,995
Additions - - 9,316 100,101 109,417
Write off - (368) (1,300) - (1,668)
As of March 31, 2014 516,210 - 254,194 1,495,340 2,265,744
Accumulated depreciation and accumulated impairment losses
As of January 1, 2012 31,176 49 22,722 - 53,947
Depreciation charge for the period 117,211 92 56,080 - 173,383
As of March 31, 2013 148,387 141 78,802 - 227,330
Depreciation charge for the year 103,242 68 49,862 - 153,172
Write off - (209) (368) - (577)
As of March 31, 2014 251,629 - 128,296 - 379,925
Carrying amounts
As of March 31, 2013 367,823 227 167,376 1,395,239 1,930,665
As of March 31, 2014 264,581 - 125,898 1,495,340 1,885,819
Leasehold buildings, freehold land, factory buildings, shop-office buildings and capital work-in-progress of the Group with total carrying value of RM51,302,515 (2013: RM49,014,704) are charged to certain local licensed banks for banking facilities granted to the Group as mentioned in Note 32.
The carrying amounts of certain motor vehicles and plant and machinery of the Group acquired under hire-purchase arrangements are RM771,396 and Nil (2013: RM1,506,163 and RM205,200) respectively.
In 2013, disposal of property, plant and equipment of the Group included disposal of outlet operations with carrying amount of RM802,684 to third parties. Gain arising therefrom amounted to RM837,315.
92 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
15. Prepaid Lease Payments
Short-term Long-term leasehold land leasehold land Total The Group 2014 RM RM RM
At cost
At beginning and end of year 105,820 14,256,333 14,362,153
Accumulated amortisation
At beginning of year 11,657 593,016 604,673
Amortisation for the year 2,385 182,358 184,743
At end of year 14,042 775,374 789,416
Carrying amount 91,778 13,480,959 13,572,737
The Group 2013
At cost
At beginning and end of period 105,820 14,256,333 14,362,153
Accumulated amortisation
At beginning of period 8,676 365,069 373,745
Amortisation for the period 2,981 227,947 230,928
At end of period 11,657 593,016 604,673
Carrying amount 94,163 13,663,317 13,757,480
93 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
The leasehold land of the Group with total carrying value of RM11,017,075 (2013: RM13,384,484) are charged to certain local licensed banks for banking facilities granted to the Group as mentioned in Note 32. 16. Investment Properties
Long-term leasehold Long-term land and leasehold Freehold Freehold buildings land land shoplot Buildings Total The Group 2014 RM RM RM RM RM RM
At fair value
At beginning of year 1,320,000 - - 720,000 - 2,040,000
Transfer from property, plant and - - 385,000 - 261,780 646,780 equipment (Note 14)
Additions during the year - 300,000 - - 380,000 680,000
Increase in fair value during the year 170,000 - 235,000 - 118,220 523,220
At end of year 1,490,000 300,000 620,000 720,000 760,000 3,890,000
Carrying amounts 1,490,000 300,000 620,000 720,000 760,000 3,890,000
The Group 2013
At fair value
At beginning of period 1,140,000 - - 720,000 - 1,860,000
Increase in fair value during the period 180,000 - - - - 180,000
At end of period 1,320,000 - - 720,000 - 2,040,000
Carrying amounts 1,320,000 - - 720,000 - 2,040,000
The fair values of the investment properties were estimated at RM3,890,000 (2013: RM2,040,000) based on valuation by an independent qualified valuer. Valuations were arrived at by reference to market evidence of transaction prices for similar properties. There has been no change to the valuation technique during the year.
Details of the Group’s investment properties and information about the fair value hierarchy as of March 31, 2014 are as follows:
Level 1 Level 2 Level 3 Total RM RM RM RM
Investment properties - 3,890,000 - 3,890,000
There were no transfers between Level 1 and Level 2 during the year.
The investment properties amounting to RM2,490,000 (2013: RM1,320,000) were charged to certain local licensed banks for banking facilities granted to the Group as mentioned in Note 32.
The strata title for the freehold shoplot is not available for auditor’s inspection as it is in the process of being transferred to the name of the subsidiary company.
The rental income and direct operating expenses arising from the investment properties of the Group which were recognised during the financial year/ period amounted to RM129,773 (2013: RM90,000) and RM16,115 (2013: RM16,067) respectively.
94 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
17. Investment in Subsidiaries
The Company
2014 2013
Unquoted shares, at cost 290,703,731 290,502,931
Less: Accumulated impairment losses (950,810) (950,810)
289,752,921 289,552,121
Details of the subsidiaries of the Company as at the end of the reporting date are as follows:
Effective Equity Interest Country of 2014 2013 Name of Company Incorporation % % Principal Activities Advance City Limited^^@ Hong Kong 70.00 - Marketing of beverages. Conneczone Sdn. Bhd. Malaysia 80.00 80.00 Operator of cafe outlets. Dynasty Confectionery Sdn. Bhd. Malaysia 100.00 100.00 Central bakery and confectionery processing centre. Dynasty Kitchen Sdn. Bhd. ^ Malaysia 100.00 100.00 Distribution centre. Emperor’s Kitchen Sdn. Bhd. Malaysia 100.00 100.00 Central food processing centre and trading of food products. Esquire Chef Sdn. Bhd. Malaysia 100.00 100.00 Central food processing centre. Gongga Food Sdn. Bhd. Malaysia 100.00 100.00 Manufacture of roasted coffee powder and procurement of food items. Kopitiam Asia Pacific Sdn. Bhd. Malaysia 100.00 100.00 Franchisor of cafe outlets and provision of management services. Oldtown Singapore Pte. Ltd.* Singapore 100.00 100.00 Franchisor of cafe outlets, provision of management services, procurement of food items and operator of cafe outlets. Oldtown APP Sdn. Bhd. Malaysia 100.00 100.00 Dormant. Oldtown Logistics Sdn. Bhd. Malaysia 100.00 100.00 Dormant. Old Town Kopitiam Sdn. Bhd.# Malaysia 100.00 100.00 Operator of cafe outlets. Old Town Kopitiam Butterworth Sdn. Bhd. Malaysia 100.00 100.00 Operator of cafe outlets. Old Town Kopitiam Cheras Sdn. Bhd. Malaysia 100.00 100.00 Operator of cafe outlets. Old Town Kopitiam Kuala Lumpur Sdn. Bhd. Malaysia 100.00 100.00 Operator of cafe outlets. Old Town (M) Sdn. Bhd. Malaysia 100.00 100.00 Investment holding. OTK (HK) Investment Limited ** @ Hong Kong 100.00 51.00 Dormant. White Cafe Sdn. Bhd. Malaysia 100.00 100.00 Manufacturing of beverages. White Cafe Marketing Sdn. Bhd. Malaysia 100.00 100.00 Marketing of beverages.
^^ The financial statements of this company are examined by a member firm of the auditors of the Company. * The financial statements of these companies are examined by auditors other than the auditors of the Company. # Held through Kopitiam Asia Pacific Sdn. Bhd.. ^ Held through Old Town Kopitiam Butterworth Sdn. Bhd.. @ Held through Old Town (M) Sdn. Bhd.. ** The financial statements of this company are not required to be audited by law in its country of incorporation. 95 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
During the financial year, the Group acquired a subsidiary for a total consideration of RM26,790,898. The acquisition was completed on April 22, 2013.
The effect of the acquired subsidiary on the results of the Group for the period from April 22, 2013 to March 31, 2014 are as follows:
2014 Revenue 26,566,212
Profit for the year 2,736,934
If the acquisition of the subsidiary had occurred at the beginning of the year, the effect on the Group’s revenue and profit for the year would have been as follows:
2014 Revenue 29,281,984
Profit for the year 3,331,221
Composition of the Group Information about the composition of the Group at the end of the reporting date is as follows:
Number of wholly-owned subsidiaries Industry Place of incorporation and operation 2014 2013 Fast moving consumer goods Malaysia 2 2
Food and beverages Malaysia 10 10 Singapore 1 1 Investment holding Malaysia 1 1 Others - dormant Malaysia 2 2 Hong Kong 1 - 17 16 Number of non-wholly-owned subsidiaries Industry Place of incorporation and operation 2014 2013 Fast moving consumer goods Hong Kong 1 -
Food and beverages Malaysia 1 1 Others - dormant Hong Kong - 1 2 2
Details of non-wholly owned subsidiaries that have material non-controlling interests are as follows:
Country of Proportion of ownership Profit allocated to Accumulated Name of Company incorporation and interest and voting rights non-controlling interests non-controlling interests principal place of held by non-controlling Year Ended Period Ended Year Ended Period Ended business interests 31.3.2014 31.3.2013 31.3.2014 31.3.2013 2014 2013 (12 Months) (15 Months) (12 Months) (15 Months) % % RM RM RM RM Conneczone Sdn. Bhd. Malaysia 20 20 30,657 59,756 259,975 239,318 Advance City Limited Hong Kong 30 - 1,360,729 - 4,781,761 - OTK (HK) Investment Hong Kong - 49 - - - 1,952,704 Limited Total 5,041,736 2,192,022 96 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Summarised financial information in respect of each of the Group’s subsidiaries that has material non-controlling interests is set out below. The summarised financial information below represents amounts before intragroup eliminations.
2014 2013 Conneczone Sdn. Bhd. RM RM
Current assets 1,671,274 1,541,266
Non-current assets 887,088 490,690
Current liabilities (1,207,764) (810,982)
Non-current liabilities (50,723) (24,384)
Equity attributable to owners of the Company 1,039,900 957,272
Non-controlling interests 259,975 239,318
Year Ended Period Ended 31.3.2014 31.3.2013 (12 Months) (15 Months) RM RM
Revenue 6,971,491 8,869,873
Expenses (6,818,206) (8,571,092)
Profit and total comprehensive income for the year/period 153,285 298,781
Profit and total comprehensive income attributable to owners of the Company 122,628 239,025
Profit and total comprehensive income attributable to non-controlling interests 30,657 59,756
Profit and total comprehensive income for the year/period 153,285 298,781
Dividend paid to non-controlling interests 10,000 56,000
Net cash from operating activities 628,175 534,416
Net cash (used in)/from investing activities (636,537) 30,909
Net cash used in financing activities (8,168) (456,024)
Net cash (outflow)/inflow (16,530) 109,301
97 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
2014 2013 Advance City Limited RM RM
Current assets 24,626,715 -
Non-current assets 91,048 -
Current liabilities (8,778,560) -
Equity attributable to owners of the Company 11,157,442 -
Non-controlling interests 4,781,761 -
Year Ended Period Ended 31.3.2014 31.3.2013 (12 Months) (15 Months) RM RM
Revenue 38,087,487 -
Expenses (33,551,725) -
Profit for the year/period 4,535,762 -
Profit attributable to:
Owners of the Company 3,175,033 -
Non-controlling interests 1,360,729 -
4,535,762 -
Other comprehensive income attributable to:
Owners of the Company 703,577 -
Non-controlling interests 301,533 -
Total comprehensive income for the year/period 5,540,872 -
Total comprehensive income attributable to:
Owners of the Company 3,878,610 -
Non-controlling interests 1,662,262 -
Profit and total comprehensive income for the year/period 5,540,872 -
Dividend paid to non-controlling interests 737,710 -
Net cash from operating activities 5,558,330 -
Net cash from investing activities 18,612 -
Net cash used in financing activities (1,467,269) -
Net cash inflow 4,109,673 -
98 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
2014 2013 OTK (HK) Investment Limited RM RM
Current assets - 3,985,110
Equity attributable to owners of the Company - 2,032,406
Non-controlling interests - 1,952,704
No disclosure was made on profit and total comprehensive income for the period and net cash movement for OTK (HK) Investment Limited for the period ended March 31, 2013 as the subsidiary company was only incorporated on March 26, 2013. 18. Investment In Associates
The Group The Company 2014 2013 2014 2013 RM RM RM RM
Unquoted equity shares, at cost 1,461,107 1,461,107 1,101,002 1,101,002
Group’s share of post-acquisition reserve 44,034 245,089 - -
1,505,141 1,706,196 1,101,002 1,101,002
Details of the Group’s associates as at the end of the reporting date are as follows:
Effective Equity Interest Country of 2014 2013 Financial Name of Company Incorporation % % Principal Activities Year End OTK Singapore Pte. Ltd. * # Singapore 50.00 50.00 Operator of cafe outlets. December 31 OTK Eatery Sdn. Bhd. Malaysia 40.00 40.00 Operator of cafe outlets. December 31 Plus One Solution Sdn. Bhd. Malaysia 50.00 50.00 Information technology service centre. December 31
* The financial statements of this company are examined by auditors other than the auditors of the Company. # Held through Oldtown Singapore Pte. Ltd..
The reporting date of the associates is December 31. This was the reporting date established when the associates were incorporated and management considers that it is unnecessary to change the reporting date. For the purpose of applying equity method of accounting, the audited consolidated financial statements of the respective associates for the year ended December 31, 2013/2012 have been used, and appropriate adjustments have been made for the effects of significant transactions between that date and March 31, 2014/2013.
99 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
Summarised financial information in respect of the Group’s associates is set out below:
The Group
2014 2013
Total assets 8,891,002 7,264,824
Total liabilities (7,034,228) (4,973,075)
Net assets 1,856,774 2,291,749
Group’s share of net assets of associates 802,921 1,003,976
Goodwill on associates 702,220 702,220
1,505,141 1,706,196
Total revenue 30,961,748 38,263,930
Total (loss)/profit for the year/period (357,734) 926,191
Group’s share of (losses)/profits of associates for the year/period (157,055) 527,506
19. OTHER INVESTMENTS
The Group The Company 2014 2013 2014 2013 RM RM RM RM
Non-current
Available-for-sale investments:
Unquoted shares at cost in:
Malaysia 29,000 29,000 - -
Indonesia 1,057,567 1,057,567 - -
1,086,567 1,086,567 - -
Available-for-sale investments:
Quoted unit trusts in Malaysia, at fair value - 45,541,495 - 15,447,383
1,086,567 46,628,062 - 15,447,383
Current
Available-for-sale investments:
Quoted unit trusts in Malaysia, at fair value 66,516,766 25,693,547 25,488,494 15,047,654
100 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
The fair value hierarchy for quoted unit trusts above are classified as follows:
Level 1 Level 2 Level 3 Total The Group 2014 RM RM RM RM
Available-for-sale: Other investments:
- quoted unit trusts 66,516,766 - - 66,516,766
The Group 2013
Available-for-sale: Other investments:
- quoted unit trusts 71,235,042 - - 71,235,042
Level 1 Level 2 Level 3 Total The Company 2014 RM RM RM RM
Available-for-sale: Other investments:
- quoted unit trusts 25,488,494 - - 25,488,494
The Company 2013
Available-for-sale: Other investments:
- quoted unit trusts 30,495,037 - - 30,495,037
There were no transfers between Level 1 and Level 2 in both 2014 and 2013.
20. Goodwill on Consolidation
The Group
2014 2013 At cost
At beginning and end of year/period 25,671,638 25,671,638
Accumulated impairment losses
At beginning of year/period 1,959,643 -
Impairment loss for the year/period - 1,959,643
At end of year/period 1,959,643 1,959,643
Carrying amount 23,711,995 23,711,995
Goodwill acquired in business combination is allocated, at acquisition, to the group of units that are expected to benefit from the synergies of the combination. For impairment testing purpose, goodwill is assigned to the acquired subsidiaries under operation of cafe outlets.
Goodwill arose from the acquisition of five (5) direct and indirect subsidiaries including Old Town Kopitiam Butterworth Sdn. Bhd., Old Town Kopitiam Kuala Lumpur Sdn. Bhd., Old Town Kopitiam Cheras Sdn. Bhd., Dynasty Kitchen Sdn. Bhd. and Conneczone Sdn. Bhd. because the cost of the combination included a control premium. In addition, the consideration paid for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of the subsidiaries. These benefits are not recognised separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets. 101 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
The Group also acquired the supplier exclusive rights as part of the acquisition from Emperor’s Kitchen Sdn. Bhd., Esquire Chef Sdn. Bhd. and Dynasty Confectionery Sdn. Bhd. and distribution network from Advance City Limited. These intangible assets have been separately recognised from goodwill as it met the definition of intangible assets as disclosed in Note 21.
None of the goodwill arising on these acquisitions is expected to be deductible for tax purposes.
The recoverable amounts of the CGUs were based on value-in-use calculations. The calculations were determined using projected cash flows for a ten- year period by extrapolation using the growth rate based on historical experience, management’s assessment of future trends and expectation of market development in the respective industries.
The key assumptions used in preparation of the projected cash flows are as follows:
• Pre-tax discount rates range from 14.0% to 18.0% (2013: 11.0% to 14.0%); • There will be no material changes in the structure and principal activities of the subsidiaries; • Chain of outlets will continue to operate under the franchise licence for 2 terms (5 years each term); • Projected growth rate of food and beverages of 4.0% (2013: 3.0% to 4.0%) per annum; • There will not be any significant changes in the prices and supply of raw materials, wages and other related costs, resulting from industrial dispute, adverse changes in economic conditions or other abnormal factors, which will adversely affect the operations of the Group; and • The statutory income tax rate for Malaysia will remain at 25% (2013: 25%). There will be no material changes to the present legislation or regulations, rates and bases of duties, levies and other taxes affecting the Group’s activities.
The Group conducted the annual goodwill impairment testing and no impairment loss need to be recognised except for RM1,959,643 which has been recognised in previous financial period.
The directors believe that any reasonably possible change in the key assumptions on which the recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the other subsidiaries. 21. Intangible Assets
The Group Supplier Distribution exclusive network right Total RM RM RM
Cost
As of January 1, 2012 - 23,432,693 23,432,693
Arising from acquisition of new subsidiary - - -
As of March 31, 2013 - 23,432,693 23,432,693
Arising from acquisition of new subsidiary 17,790,744 - 17,790,744
As of March 31, 2014 17,790,744 23,432,693 41,223,437
Accumulated amortisation
As of January 1, 2012 - 1,366,907 1,366,907
Amortisation for the period - 2,929,087 2,929,087
As of March 31, 2013 - 4,295,994 4,295,994
Amortisation for the year 1,186,050 2,343,269 3,529,319
As of March 31, 2014 1,186,050 6,639,263 7,825,313
Carrying amount
As of March 31, 2013 - 19,136,699 19,136,699
As of March 31, 2014 16,604,694 16,793,430 33,398,124
102 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
22. Deferred Tax Assets/(Liabilities)
At Recognised beginning in profit Translation At end The Group of year/period or loss differences of year/period 2014 RM RM RM RM
Deferred tax assets
Property, plant and equipment (116,000) (132,000) - (248,000)
Deferred income 1,326,000 (204,000) - 1,122,000
Unabsorbed tax capital allowances 70,000 19,000 - 89,000
1,280,000 (317,000) - 963,000
Deferred tax liabilities
Property, plant and equipment (2,028,412) (3,649,594) (4,725) (5,682,731)
Investment properties (15,000) - - (15,000)
Unrealised foreign exchange differences on:
Trade receivables (22,000) 56,000 - 34,000
Bank balances (7,000) (99,000) - (106,000)
Borrowings 3,000 (23,000) - (20,000)
Unabsorbed tax capital allowances - 19,000 - 19,000
(2,069,412) (3,696,594) (4,725) (5,770,731)
The Group 2013
Deferred tax assets
Property, plant and equipment (245,047) 129,047 - (116,000)
Deferred income 1,384,727 (58,727) - 1,326,000
Unabsorbed tax capital allowances 54,320 15,680 - 70,000
1,194,000 86,000 - 1,280,000
Deferred tax liabilities
Property, plant and equipment (2,219,061) 191,342 (693) (2,028,412)
Investment properties (15,000) - - (15,000)
Unrealised foreign exchange differences on:
Trade receivables (31,000) 9,000 - (22,000)
Bank balances - (7,000) - (7,000)
Borrowings - 3,000 - 3,000
Unabsorbed tax capital allowances 4,000 (4,000) - -
(2,261,061) 192,342 (693) (2,069,412)
103 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
23. Inventories
The Group
2014 2013 RM RM
Finished goods and trading merchandise 10,703,906 6,808,060
Food, beverages and consumables 4,624,697 1,776,142
Raw materials 4,580,788 3,790,727
Packing materials 1,811,052 1,084,670
Work-in-progress 396,759 389,364
Spare parts 192,857 -
Goods-in-transit 155,895 378,799
22,465,954 14,227,762
The cost of inventories of the Group recognised as an expense during the year/period was RM167,000,813 (2013: RM188,371,890). 24. Trade and Other Receivables
The Group The Company 2014 2013 2014 2013 RM RM RM RM
Trade receivables 34,414,703 36,969,378 - -
Other receivables 480,291 2,267,500 - 109,800
Refundable deposits 7,212,566 7,021,380 5,370 13,370
Loans and receivables 42,107,560 46,258,258 5,370 123,170
Advance payment for acquisition of plant and machinery 45,360 228,892 - -
Prepaid expenses 3,670,923 2,295,706 221,221 50,498
45,823,843 48,782,856 226,591 173,668
Trade and other receivables disclosed above are classified as loans and receivables and are therefore, measured at amortised cost.
Trade receivables of the Group comprise amounts receivable for the sale of goods. Other receivables of the Group comprise mainly expenses paid on behalf and advances granted which are unsecured, interest-free and repayable upon demand.
Included in other receivables of the Group are rental receivable from related parties of RM78,531 (2013: Nil).
Trade transactions of the Group were on cash terms and credit period which ranged from 7 to 90 days (2013: 30 to 90 days).
104 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
The currency profile of trade and other receivables are as follows:
The Group 2014 2013 RM RM
Ringgit Malaysia 23,447,533 27,231,113
Hong Kong Dollar 6,129,451 1,952,704
United States Dollar 3,340,977 8,194,172
Singapore Dollar 1,977,033 645,388
Thai Baht - 1,213,501
34,894,994 39,236,878
Movement in the allowance for doubtful debts is as follows:
The Group 2014 2013 RM RM
Balance at beginning of year/period - 6,325
Amounts written off during the year/period as uncollectible - (6,325)
Balance at end of year/period - -
Included in trade receivables of the Group are related parties’ balances of RM5,896,513 (2013: RM8,600,243).
Included in trade receivables of the Group are receivables with total carrying amount of RM9,385,666 (2013: RM6,129,686) which are past due at the reporting date for which the Group has not provided for impairment loss. The Group does not hold any collateral over these balances nor does it have a legal right to offset against any amounts owed by the Group to the counterparty.
Ageing of trade receivables which are past due but not impaired are as follows:
The Group 2014 2013 RM RM
Within 30 days 7,416,322 3,811,060
31 days to 60 days 1,329,949 1,759,479
61 days to 90 days 235,079 112,816
91 days to 120 days 102,359 248,652
Over 120 days 301,957 197,679
9,385,666 6,129,686
Average age (days) 39 89
The Group seeks to maintain strict control over its outstanding trade receivables and has a credit period policy to minimise credit risk. Overdue balances are reviewed regularly by management. The Group has not provided for impairment loss on trade receivable accounts that are past due as there has not been a significant change in credit quality and the amounts are still considered recoverable.
Transaction with related parties are disclosed in Note 25.
105 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
25. Holding Company and Related Party Transactions The Company is a subsidiary of Old Town International Sdn. Bhd., a company incorporated in Malaysia and the directors regard it as the ultimate holding company.
The amount owing to ultimate holding company arose mainly from dividend payable, rental payable and expenses paid on behalf which are unsecured, interest-free and repayable upon demand.
The Group The Company 2014 2013 2014 2013 RM RM RM RM
Amount owing by associates consist of:
Trade account 1,518,022 1,349,508 - -
Non-trade account 44,000 - 44,000 -
1,562,022 1,349,508 44,000 -
The trade balance of amount owing by associate of the Group arose mainly from normal trade terms. The non-trade balance arose from dividend receivable.
The amount owing by subsidiaries arose mainly from dividend receivable, advances granted and expenses paid on behalf which are unsecured, interest- free and repayable upon demand.
In 2013, the amount owing by subsidiaries arose mainly from advances and expenses paid on behalf which were unsecured, interest-free and repayable upon demand.
In 2013, the amount owing to subsidiaries related mainly to outstanding purchase consideration for the acquisition of subsidiaries, advances granted and expenses paid on behalf, which were unsecured, interest-free and repayable upon demand.
The currency profile of amount owing by associates are as follows:
The Group The Company 2014 2013 2014 2013 RM RM RM RM
Singapore Dollar 1,518,022 1,349,508 - -
Ringgit Malaysia 44,000 - 44,000 -
1,562,022 1,349,508 44,000 -
106 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Other than as disclosed elsewhere in the financial statements, the related parties and their relationship with the Company and its subsidiaries are as follows:
Names of related parties Relationship
Old Town International Sdn. Bhd. ) Holding company of the Company.
Advance City Limited )
Conneczone Sdn. Bhd. )
Dynasty Confectionery Sdn. Bhd. )
Dynasty Kitchen Sdn. Bhd. )
Esquire Chef Sdn. Bhd. )
Emperor’s Kitchen Sdn. Bhd. ) Subsidiaries of the Company.
Gongga Food Sdn. Bhd. )
Kopitiam Asia Pacific Sdn. Bhd. )
Old Town Kopitiam Butterworth Sdn. Bhd. )
Old Town Kopitiam Cheras Sdn. Bhd. )
Old Town Kopitiam Kuala Lumpur Sdn. Bhd. )
Old Town Kopitiam Sdn. Bhd. )
Old Town (M) Sdn. Bhd. )
Oldtown APP Sdn. Bhd. )
Oldtown Logistics Sdn. Bhd. )
Oldtown Singapore Pte. Ltd. )
OTK (HK) Investment Limited )
White Cafe Marketing Sdn. Bhd. )
White Cafe Sdn. Bhd. )
OTK Eatery Sdn. Bhd. ) Associates of the Company.
OTK Singapore Pte. Ltd. )
Plus One Solution Sdn. Bhd. )
107 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements RM Total 110 21,400 28,216 24,880 803,250 880,754 861,482 879,823 411,992 922,403 335,620 798,747 664,345 859,381 1,115,503 5,797,361 11,923,845 RM 200 - - - Others 4,787 4,500 2,428 4,957 4,800 37,165 36,215 33,215 33,469 73,647 36,225 288,964 222,175 RM Royalty ------86,460 98,050 45,522 94,965 32,797 76,690 60,021 receivable 103,828 104,910 395,035 1,062,022 fees received/ RM 62,297 62,946 51,876 58,830 27,313 56,979 19,678 46,014 36,013 receivable Advertising 637,219 237,021 ------fees received/ and promotion RM of staff charges ------received/ receivable Secondment
RM paid/ Rental ------payable 21,200 23,716 24,880 1,140,000 RM ------property, plant and equipment 186,600 Purchase of Purchase RM Trade Trade ------purchases purchases 639,939 RM 110 sales Trade Trade - - - - - 5,150 632,338 675,733 686,931 689,728 305,688 696,812 280,717 671,086 532,086 4,098,120 RM ------Dividend paid/payable 10,779,045 GC Bangsar Two Sdn. Bhd. Sdn. Two GC Bangsar GC Bangsar Sdn. Bhd. GC Bangsar Sdn. GC Bangi Sdn. Bhd. GC Bangi Sdn. GC Alamanda Sdn. Bhd. Alamanda Sdn. GC First Habour Coffee Shop CN Supplies Sdn. Bhd. CN Supplies Sdn. CN Properties Sdn. Bhd. CN Properties Sdn. Conneczone Puchong Sdn. Bhd. Conneczone Puchong Sdn. Carefree Avenue Sdn. Bhd. Sdn. Avenue Carefree Acadian Gourmet Sdn. Bhd. Bhd. Acadian Gourmet Sdn. Acadian Gourmet PB Sdn. Bhd. Bhd. Acadian Gourmet PB Sdn. Acadian Gourmet KK Sdn. Bhd. Bhd. Acadian Gourmet KK Sdn. Transactions with other related Transactions parties being companies in or certain directors which persons connected with certain or have directors are directors substantial financial interests as follows: are Bhd. AC Montage Marketing Sdn. Plus One Solution Sdn. Bhd. Plus One Solution Sdn. OTK Singapore Pte. Ltd. OTK Singapore Pte. Transactions with Associates Transactions Bhd. OTK Eatery Sdn. Transactions with related Transactions as follows: companies are Ultimate holding company Bhd. International Sdn. Town Old The Group Ended 31.3.2014 (12 Months) Year Related Party Transactions 108 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) RM Total 46,411 85,916 59,400 681,430 498,082 785,732 385,249 144,581 179,749 111,656 820,380 805,380 527,986 584,064 594,403 703,267 599,545 713,010 1,197,123 1,262,870 1,662,790 12,141,896 RM - - - - Others 3,107 3,000 4,047 2,862 4,378 2,907 3,610 6,492 64,658 33,657 36,710 93,184 34,215 33,215 34,715 464,036 106,412 134,889 RM Royalty - - - - - 59,791 91,838 39,695 85,916 89,577 94,642 58,248 64,746 78,852 78,906 67,289 75,496 receivable 121,683 111,321 122,254 1,490,798 fees received/ 36,684 RM 73,010 22,010 35,875 55,103 23,817 53,746 66,793 73,353 56,785 34,949 38,848 47,311 47,344 40,374 45,298 receivable 894,479 Advertising ------fees received/ and promotion RM of staff 3,600 charges ------received/ receivable 115,200 Secondment
RM paid/ Rental ------payable 59,400 171,600 250,800 RM ------property, plant and equipment Purchase of Purchase RM Trade Trade ------purchases purchases 144,581 111,656 RM sales Trade Trade - - - - 5,287 43,411 934,172 487,847 399,309 605,134 317,690 640,347 740,772 649,575 400,574 447,255 465,333 542,302 488,272 585,724 9,177,383 1,360,771 RM ------Dividend paid/payable OTK (Petaling Jaya) Sdn. Bhd. OTK (Petaling Jaya) Sdn. OTK (MBH) Sdn. Bhd. OTK (MBH) Sdn. OTK (Kuala Selangor) Sdn. Bhd. OTK (Kuala Selangor) Sdn. OTK (KB) Sdn. Bhd. OTK (KB) Sdn. OTK (Intan) Sdn. Bhd. OTK (Intan) Sdn. OTK (Genting) Sdn. Bhd. OTK (Genting) Sdn. OTK (Alam Damai) Sdn. Bhd. OTK (Alam Damai) Sdn. Oldtown Asia Pacific Limited Oldtown Nobel Virtue Sdn. Bhd. Virtue Sdn. Nobel Natural Marketing Sdn. Bhd. Natural Marketing Sdn. Myth Empire Sdn. Bhd. Myth Empire Sdn. Mayson Trade (M) Sdn. Bhd. (M) Sdn. Trade Mayson Gourmet Corner Sdn. Bhd. Gourmet Corner Sdn. Gourmet Corner KL Sdn. Bhd. Gourmet Corner KL Sdn. Gourmet Corner Ipoh Sdn. Bhd. Gourmet Corner Ipoh Sdn. Gourmet Chef Kinrara Sdn. Bhd. Gourmet Chef Kinrara Sdn. Gourmet Chef Sdn. Bhd. Gourmet Chef Sdn. GC South City Sdn. Bhd. GC South City Sdn. GC Shamelin Sdn. Bhd. GC Shamelin Sdn. GC Selayang Sdn. Bhd. GC Selayang Sdn. GC Kapar Sdn. Bhd. GC Kapar Sdn. Transactions with other related Transactions parties being companies in or certain directors which persons connected with certain or have directors are directors substantial financial interests as follows: are Bhd. GC Brickfields Sdn. The Group Ended 31.3.2014 (12 Months) Year 109 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements RM Total 20,100 60,000 18,900 616,430 703,108 179,468 286,741 592,151 461,564 483,665 935,201 775,617 1,382,826 3,030,916 1,051,687 1,556,268 RM 300 - - - Others 3,375 34,309 34,665 65,061 13,430 34,227 16,357 16,071 25,377 101,633 120,000 2,692 RM Royalty - - - - 67,158 74,613 68,123 31,200 63,861 51,788 30,642 17,216 receivable 129,435 120,559 100,582 fees received/ 34,885 RM 40,295 44,768 40,874 77,661 18,720 38,316 23,257 31,073 18,385 11,382 72,335 60,349 receivable Advertising - - - - fees received/ and promotion RM of staff charges ------received/ receivable Secondment
RM paid/ Rental ------payable 19,800 60,000 18,900 RM ------property, plant and equipment Purchase of Purchase RM Trade Trade ------purchases purchases RM sales Trade Trade - - - 5,410 474,668 549,062 233,446 455,747 400,730 384,447 784,541 627,019 842,722 1,162,300 3,030,916 1,369,960 RM ------Dividend paid/payable Transactions with a director of with a director Transactions as follows: the Company are Lee Siew Heng Lim Khim Lan Transactions with persons Transactions connected with certain directors as follows: are Lee Siew Ming OTK USJ Sdn. Bhd. OTK USJ Sdn. OTK Sunway Sdn. Bhd. OTK Sunway Sdn. OTK Sarawak Sdn. Bhd. OTK Sarawak Sdn. OTK Northern Sdn. Bhd. OTK Northern Sdn. OTK Megah Sdn. Bhd. OTK Megah Sdn. OTK Manjung Sdn. Bhd. OTK Manjung Sdn. OTK Logistics Sdn. Bhd. OTK Logistics Sdn. OTK Kopitiam (KLCC) Sdn. Bhd. OTK Kopitiam (KLCC) Sdn. OTK Ipoh Road Sdn. Bhd. OTK Ipoh Road Sdn. OTK (Teluk Cempedak) Sdn. Bhd. Cempedak) Sdn. OTK (Teluk OTK (Senai) Sdn. Bhd. OTK (Senai) Sdn. OTK (Shah Alam) Sdn. Bhd. Alam) Sdn. OTK (Shah Transactions with other related Transactions parties being companies in or certain directors which persons connected with certain or have directors are directors substantial financial interests as follows: are Bhd. OTK (Rawang) Sdn. The Group Ended 31.3.2014 (12 Months) Year 110 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) RM Total 550 25,500 83,715 65,020 954,834 583,737 799,651 1,064,358 1,029,439 1,082,836 1,082,910 1,465,068 6,736,896 1,168,068 18,393,243 RM - - - - Others 4,764 5,706 7,846 8,918 4,408 4,652 9,698 24,756 33,743 394,388 321,085 RM Royalty ------56,560 82,555 receivable 126,390 127,355 105,706 122,755 105,668 512,171 1,215,397 fees received/ RM 75,834 76,413 63,423 73,653 33,936 63,401 49,533 receivable Advertising 729,238 307,302 ------fees received/ and promotion RM of staff charges ------received/ receivable Secondment
RM paid/ Rental ------payable 25,500 83,715 65,020 1,425,000 RM ------property, plant and equipment 185,775 Purchase of Purchase RM Trade Trade ------purchases purchases 884,905 RM 550 sales Trade Trade - - - - - 27,510 747,846 854,884 852,464 877,510 488,833 909,189 657,865 4,767,505 RM ------Dividend paid/payable 16,934,500 GC Bangsar Two Sdn. Bhd. Sdn. Two GC Bangsar GC Bangsar Sdn. Bhd. GC Bangsar Sdn. GC Bangi Sdn. Bhd. GC Bangi Sdn. GC Alamanda Sdn. Bhd. Alamanda Sdn. GC First Habour Coffee Shop CN Supplies Sdn. Bhd. CN Supplies Sdn. CN Properties Sdn. Bhd. CN Properties Sdn. Acadian Gourmet Sdn. Bhd. Bhd. Acadian Gourmet Sdn. Acadian Gourmet PB Sdn. Bhd. Bhd. Acadian Gourmet PB Sdn. Acadian Gourmet KK Sdn. Bhd. Bhd. Acadian Gourmet KK Sdn. Transactions with other related Transactions parties being companies in or certain directors which persons connected with certain or have directors are directors substantial financial interests as follows: are Bhd. AC Montage Marketing Sdn. Plus One Solution Sdn. Bhd. Plus One Solution Sdn. OTK Singapore Pte. Ltd. OTK Singapore Pte. Transactions with Associates Transactions Bhd. OTK Eatery Sdn. Transactions with related Transactions as follows: companies are Ultimate holding company Bhd. International Sdn. Town Old The Group Period Ended 31.3.2013 (15 Months) 111 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements RM Total 66,000 22,800 572,057 964,491 456,217 135,432 241,051 162,847 333,025 633,675 652,166 739,601 844,347 917,372 981,164 1,499,977 1,398,278 1,496,334 1,452,158 11,145,032 RM - - - - Others 4,143 5,271 5,723 4,206 2,180 7,331 3,718 2,460 4,168 7,740 14,043 25,038 43,665 11,462 12,683 15,893 RM Royalty - - - - 70,885 50,328 91,767 38,857 71,063 73,615 94,739 98,572 80,442 receivable 160,163 118,884 158,730 141,312 166,869 109,966 1,562,353 fees received/ RM 96,098 42,531 71,331 30,197 95,238 84,787 23,314 42,638 44,169 56,844 59,143 48,265 65,980 receivable 937,412 100,122 Advertising - - - - - fees received/ and promotion RM of staff 6,000 charges ------90,000 18,000 received/ receivable Secondment
RM paid/ Rental ------payable 66,000 22,800 313,500 RM ------property, plant and equipment Purchase of Purchase RM Trade Trade ------purchases purchases 241,051 162,847 RM sales Trade Trade - - - - - 454,498 769,005 351,969 952,529 268,674 512,643 530,664 585,558 682,464 772,772 797,478 1,223,673 8,530,229 1,132,848 1,172,484 RM ------Dividend paid/payable OTK (Petaling Jaya) Sdn. Bhd. OTK (Petaling Jaya) Sdn. OTK (Kuala Selangor) Sdn. Bhd. OTK (Kuala Selangor) Sdn. OTK (Intan) Sdn. Bhd. OTK (Intan) Sdn. OTK (Genting) Sdn. Bhd. OTK (Genting) Sdn. OTK (Alam Damai) Sdn. Bhd. OTK (Alam Damai) Sdn. Oldtown Asia Pacific Limited Oldtown Noble Virtue Sdn. Bhd. Virtue Sdn. Noble Natural Marketing Sdn. Bhd. Natural Marketing Sdn. Mayson Trade (M) Sdn. Bhd. (M) Sdn. Trade Mayson Manifest Corporate Services Bhd. Sdn. Gourmet Corner Sdn. Bhd. Gourmet Corner Sdn. Gourmet Corner KL Sdn. Bhd. Gourmet Corner KL Sdn. Gourmet Corner Ipoh Sdn. Bhd. Gourmet Corner Ipoh Sdn. Gourmet Chef Kinrara Sdn. Bhd. Gourmet Chef Kinrara Sdn. Gourmet Chef Sdn. Bhd. Gourmet Chef Sdn. GC South City Sdn. Bhd. GC South City Sdn. GC Shamelin Sdn. Bhd. GC Shamelin Sdn. GC Selayang Sdn. Bhd. GC Selayang Sdn. GC Kapar Sdn. Bhd. GC Kapar Sdn. Transactions with other related Transactions parties being companies in or certain directors which persons connected with certain or have directors are directors substantial financial interests as follows: are Bhd. GC Brickfields Sdn. The Group Period Ended 31.3.2013 (15 Months) 112 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) RM Total 22,500 75,000 22,500 197,600 867,530 825,689 307,243 403,646 918,392 589,983 1,956,931 3,513,767 1,433,187 1,375,032 - RM - - - - Others 4,026 4,222 5,993 10,805 72,986 21,491 37,802 30,440 143,088 RM Royalty - - - - - 89,211 43,704 60,728 receivable 106,212 145,973 160,699 102,231 102,252 108,565 fees received/ RM 63,727 53,527 87,584 96,420 26,227 61,338 36,437 61,350 65,139 receivable Advertising - - - - - fees received/ and promotion RM of staff 6,000 charges ------30,000 received/ 30,000 48,000 receivable Secondment
RM paid/ Rental ------2,700 payable 22,500 75,000 22,500 197,600 RM ------property, plant and equipment Purchase of Purchase RM Trade Trade ------purchases purchases RM 700 sales Trade Trade - - - - 693,565 663,446 329,493 718,830 471,327 1,556,724 3,513,767 1,201,783 1,122,888 RM ------Dividend paid/payable Transactions with a director of with a director Transactions as follows: the Company are Lee Siew Heng Lim Khim Lan Transactions with persons Transactions connected with certain directors as follows: are Lee Siew Ming Myth Empire Sdn. Bhd. (formerly Bhd. Myth Empire Sdn. known as Soonsen Enterprise Bhd.) Sdn. OTK USJ Sdn. Bhd. OTK USJ Sdn. OTK Sunway Sdn. Bhd. OTK Sunway Sdn. OTK Sarawak Sdn. Bhd. OTK Sarawak Sdn. OTK Northern Sdn. Bhd. OTK Northern Sdn. OTK Megah Sdn. Bhd. OTK Megah Sdn. OTK Manjung Sdn. Bhd. OTK Manjung Sdn. OTK Logistics Sdn. Bhd. OTK Logistics Sdn. OTK Ipoh Road Sdn. Bhd. OTK Ipoh Road Sdn. OTK (Shah Alam) Sdn. Bhd. Alam) Sdn. OTK (Shah Transactions with other related Transactions parties being companies in or certain directors which persons connected with certain or have directors are directors substantial financial interests as follows: are Bhd. OTK (Rawang) Sdn. The Group Period Ended 31.3.2013 (15 Months) 113 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
Related Party Transactions
Dividend Rental Dividend received/ Advances Advances Acquisition paid/ The Company paid/payable receivable received granted of investment payable Others Total Year Ended 31.3.2014 (12 Months) RM RM RM RM RM RM RM RM Transactions with related companies are as follows: Ultimate holding company Old Town International Sdn. Bhd. 10,779,045 ------10,779,045 Subsidiaries Conneczone Sdn. Bhd. - 40,000 - - - - - 40,000
Dynasty Confectionery Sdn. Bhd. - 2,400,000 - - - - - 2,400,000 Emperor’s Kitchen Sdn. Bhd. - 5,400,054 - - - - - 5,400,054 Esquire Chef Sdn. Bhd. - 2,400,000 - - - - - 2,400,000 Gongga Food Sdn. Bhd. - 12,300,000 - - - - - 12,300,000 Kopitiam Asia Pacific Sdn. Bhd. - 20,000,000 1,700,000 - - - 3,700,500 25,400,500 Oldtown Singapore Pte. Ltd. - - - - 200,800 - - 200,800 Old Town Kopitiam Sdn. Bhd. ------21,949 21,949 Old Town Kopitiam Butterworth - 2,900,000 - - - - - 2,900,000 Sdn. Bhd. Old Town (M) Sdn. Bhd. - - - 26,890,900 - - 5,900 26,896,800 Oldtown Logistics Sdn. Bhd. - - - 30,000 - - - 30,000 White Cafe Sdn. Bhd. - 24,000,000 - 24,722,113 - 4,800 26,790,900 75,517,813 White Cafe Marketing Sdn. Bhd. - 7,650,000 - - - - 1,950 7,651,950 Transactions with Associates Plus One Solution Sdn. Bhd. - 44,000 - - - - - 44,000 Transactions with a related party being a company in which persons connected with certain directors are directors and have substantial interests are as follows: CN Properties Sdn. Bhd. - - - - - 4,000 4,500 8,500
114 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Dividend Rental Dividend received/ Advances Advances paid/ The Company paid/payable receivable received granted payable Others Total Period Ended 31.3.2013 (15 Months) RM RM RM RM RM RM RM Transactions with related companies are as follows: Ultimate holding company Old Town International Sdn. Bhd. 16,934,500 - - - - - 16,934,500 Subsidiaries Conneczone Sdn. Bhd. - 224,000 - - - - 224,000
Dynasty Confectionery Sdn. Bhd. - 800,000 - - - - 800,000 Emperor’s Kitchen Sdn. Bhd. - 2,400,024 - - - - 2,400,024 Esquire Chef Sdn. Bhd. - 1,800,000 - - - - 1,800,000 Gongga Food Sdn. Bhd. - 5,400,000 - - - - 5,400,000 Kopitiam Asia Pacific Sdn. Bhd. - 8,125,000 2,000,000 - - 280 10,125,280 Old Town Kopitiam Sdn. Bhd. - - - 19,000,000 - - 19,000,000 Old Town Kopitiam Butterworth Sdn. Bhd. - 3,700,000 - - - - 3,700,000 Old Town (M) Sdn. Bhd. - - - 250,000 - - 250,000 Oldtown Logistics Sdn. Bhd. - - - 2,000 - - 2,000 White Cafe Sdn. Bhd. - 7,500,000 - 34,500,000 - - 42,000,000 White Cafe Marketing Sdn. Bhd. - 4,760,000 - - - 9,806 4,769,806 Transactions with Associates OTK Eatery Sdn. Bhd. - - - - - 60,000 60,000 Plus One Solution Sdn. Bhd. - 30,000 - - - - 30,000 Transactions with a related party being a company in which persons connected with certain directors are directors and have substantial interests are as follows: CN Properties Sdn. Bhd. - - - - 60,000 - 60,000
115 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
Compensation of Key Management Personnel The remuneration of directors is disclosed in Note 10. The remuneration of other members of key management personnel of the Group during the financial year/period are as follows:
The Group Year Ended Period Ended 31.3.2014 31.3.2013 (12 Months) (15 Months) RM RM Salaries, incentive, bonus and allowances 1,474,158 1,307,360
EPF contributions 139,167 136,308 1,613,325 1,443,668
The estimated monetary value of benefits-in-kind received and receivable by the key management personnel otherwise than in cash from the Group amounted to RM85,271 (2013: RM82,068). 26. Fixed Deposits, Cash and Bank Balances
The Group The Company 2014 2013 2014 2013 RM RM RM RM Fixed deposits with licensed banks 788,806 2,559,131 - - Short-term investment funds 69,250,378 69,293,747 19,764,867 29,235,842 Cash and bank balances 29,844,736 14,374,275 81,062 108,086 99,883,920 86,227,153 19,845,929 29,343,928
The effective interest rates are as follows:
The Group The Company 2014 2013 2014 2013 % % % % Fixed deposits 3.00 - 3.15 3.00 - 3.14 - - Short-term investment funds 2.06 - 2.84 2.07 - 2.95 2.06 - 2.84 2.07 - 2.95
The fixed deposits of the Group have maturity period of 30 days to 365 days (2013: 30 days to 365 days).
The currency profile of fixed deposits, cash and bank balances are as follows:
The Group The Company 2014 2013 2014 2013 RM RM RM RM Ringgit Malaysia 80,257,351 83,179,051 19,845,929 29,343,928 Hong Kong Dollar 14,162,582 - - - Singapore Dollar 2,876,876 1,823,357 - - Chinese Renminbi 1,498,579 - - - United States Dollar 1,088,532 1,224,745 - - 99,883,920 86,227,153 19,845,929 29,343,928
The fixed deposits of the Group with carrying amounts of RM788,806 (2013: RM2,559,131) are placed under lien to local licensed banks as security for banking facilities granted to the Group as disclosed in Note 32. 116 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
27. Share Capital and Treasury Shares (a) Share Capital
The Group and The Company 2014 2013 Number of Number of ordinary ordinary 2014 2013 shares shares RM RM Authorised: 500,000,000 ordinary shares of RM1 each 500,000,000 500,000,000 500,000,000 500,000,000 Issued and fully paid: Ordinary shares of RM1 each: At beginning of year/period 363,000,000 330,000,000 363,000,000 330,000,000 Allotment of shares - 33,000,000 - 33,000,000 Bonus issue 90,597,242 - 90,597,242 - At end of year/period 453,597,242 363,000,000 453,597,242 363,000,000
As approved by the shareholders at the Extraordinary General Meeting held on January 6, 2014, the issued and paid-up ordinary share capital of the Company was increased from RM363,000,000 to RM453,597,242 during the financial year by way of a bonus issue of 90,597,242 new ordinary shares of RM1 each through the capitalisation of RM40,000,000 and RM50,597,242 from share premium and retained earnings respectively on the basis of one (1) bonus share for every four (4) existing ordinary shares held. These new shares rank pari passu with the then existing ordinary shares of the Company. (b) Treasury Shares The shareholders of the Company, by an ordinary resolution passed at the Annual General Meeting (“AGM”) held on September 26, 2013, granted the approval for the Company to repurchase its own shares. The directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the repurchase plan can be applied in the best interests of the Group and of the Company. Details of the shares repurchased and held as Treasury Shares of the Group and of the Company are as follows:
Average price Lowest price paid per share No. of shares paid per Highest price (including Total repurchased share paid per share incidental costs) consideration Month RM RM RM RM RM July 2013 10,000 2.83 2.90 2.87 28,744 November 2013 401,000 2.40 2.59 2.44 978,409 December 2013 200,000 2.38 2.39 2.40 479,355 611,000 1,486,508
During the financial year, the Company repurchased a total of 611,000 units (2013: Nil) of its own shares from the open market of Bursa Malaysia Securities Berhad for total cost of RM1,486,508 (2013: Nil) and has been deducted from equity. The average price paid for the shares repurchased during the year was RM2.43 (2013: Nil) per share. The repurchase transactions were financed by internally generated funds. The shares repurchased are being held as Treasury Shares in accordance with the requirements of Section 67A of the Companies Act, 1965.
As of March 31, 2014, 611,000 (2013: Nil) out of the total of 453,597,242 (2013: 363,000,000) issued and paid-up ordinary shares are held as Treasury Shares by the Company. The number of ordinary shares of RM1 each in issue and paid-up as of March 31, 2014 after excluding the Treasury Shares is 452,986,242 (2013: 363,000,000).
The mandate given by the shareholders will expire at the forthcoming AGM and an ordinary resolution will be tabled at the AGM for shareholders to grant a fresh mandate for another year. 117 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
28. Reserves
The Group The Company 2014 2013 2014 2013 RM RM RM RM Share premium 3,553,644 43,553,644 3,553,644 43,553,644 Reserve arising from restructuring (222,653,894) (222,653,894) - - Foreign currency translation reserve 1,067,983 (13,155) - - Investment revaluation reserve 1,415,459 1,029,600 488,494 495,037 (216,616,808) (178,083,805) 4,042,138 44,048,681
Share Premium
The Group and The Company 2014 2013 RM RM Balance at beginning of year/period 43,553,644 12,311,332
Bonus issue (40,000,000) - Issuance of ordinary shares - 31,350,000 Share issue expenses - (107,688) Balance at end of year/period 3,553,644 43,553,644
The share premium arose from the following:
The Group and The Company 2014 2013 RM RM Public issue of 63,394,000 ordinary shares issued at a premium of 12,311,332 12,311,332 RM0.25 per share in 2011, net of share issue expenses of RM3,537,168 Private placement of 33,000,000 ordinary shares issued at a premium of 31,242,312 31,242,312 RM0.95 per share in 2013, net of share issue expenses of RM107,688 Bonus issue of 40,000,000 new ordinary shares of RM1.00 each in 2014 (40,000,000) - 3,553,644 43,553,644
Reserve Arising From Restructuring
The Group 2014 2013 RM RM Balance at beginning and end of year/period (222,653,894) (222,653,894)
118 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Foreign Currency Translation Reserve
The Group 2014 2013 RM RM Balance at beginning of year/period (13,155) 6,984 Exchange differences on translating foreign subsidiaries and associates 1,081,138 (20,139) Balance at end of year/period 1,067,983 (13,155)
Exchange differences relating to the translation of the net assets of the Group’s foreign operations from their functional currencies to the Group’s presentation currency (i.e. Ringgit Malaysia) are recognised directly in other comprehensive income and accumulated in the foreign currency translation reserve. Exchange differences previously accumulated in the foreign currency translation reserve (in respect of translating the net assets of foreign operations) are reclassified to profit or loss on the disposal or partial disposal of the foreign operation. Investment Revaluation Reserve
The Group The Company 2014 2013 2014 2013 RM RM RM RM Balance at beginning of year/period 1,029,600 - 495,037 - Changes in fair value of available-for-sale financial assets (31,582) 1,029,600 253,765 495,037 Cumulative (gain)/loss reclassified to profit or loss on disposal of available-for-sale financial assets 417,441 - (260,308) - Balance at end of year/period 1,415,459 1,029,600 488,494 495,037
The investment revaluation reserve represents accumulated gains and losses arising from the changes in fair value of available-for-sale financial assets that have been recognised in other comprehensive income, net of amounts reclassified to profit or loss when those assets have been disposed of or are determined to be impaired. 29. Retained Earnings The Company opted to disregard the Section 108 tax credit balance in accordance with the Finance Act, 2007 and switched to a single tier tax system in the prior year. As such, the entire retained earnings on March 31, 2014 is available for distribution on single tier dividend. 30. Non-Controlling Interests
The Group 2014 2013 RM RM Balance at beginning of year/period 2,192,022 235,562 Non-controlling interest arising on acquisition of interest in subsidiary 3,857,209 1,952,704 Share of profit for the year/period 1,391,386 59,756 Share of other comprehensive income for the year/period 301,533 - Disposal of interest in subsidiary by non-controlling interest (1,952,704) - Dividend received (747,710) (56,000) Balance at end of year/period 5,041,736 2,192,022
119 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
31. Hire-Purchase Payables
Minimum Present value of minimum hire-purchase payments hire-purchase payments 2014 2013 2014 2013 The Group RM RM RM RM Amounts payable under hire-purchase arrangements: Within one year 582,175 721,303 545,735 648,266 In the second to fifth year inclusive 276,352 870,005 266,403 829,119 After fifth year 3,039 8,427 2,965 7,921 861,566 1,599,735 815,103 1,485,306 Less: Future finance charges (46,463) (114,429) - - Present value of hire-purchase payables 815,103 1,485,306 815,103 1,485,306 Less: Amount due within 12 months (shown under current liabilities) (545,735) (648,266) Non-current portion 269,368 837,040
The non-current portion is repayable as follows:
The Group 2014 2013 RM RM Financial years ending March 31: 2015 - 567,856 2016 207,054 206,870 2017 49,799 49,799 2018 4,594 4,594 2019 4,956 4,956 2020 and above 2,965 2,965 269,368 837,040
It is the Group’s policy to acquire certain of its property, plant and equipment under hire-purchase arrangements. The terms for hire-purchase of the Group ranged from 5 years to 9 years (2013: 5 to 9 years). For the financial year ended March 31, 2014, the effective hire-purchase interest rates of the Group ranged from 4.25% to 7.11% (2013: 4.25% to 8.03%) per annum. Interest rates are fixed at the inception of the hire-purchase arrangements.
The hire-purchase payables of the Group are secured by the assets under hire-purchase and are also guaranteed by certain directors of the Company.
The fair values of the hire-purchase payables of the Group are approximately equal to their carrying amounts.
120 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
32. Borrowings
The Group 2014 2013 RM RM Secured : Term loans 23,482,115 28,606,302 Trust receipts - 4,449,495 23,482,115 33,055,797
Less: Amount due within 12 months (shown under current liabilities) (3,379,905) (7,767,923) Non-current portion 20,102,210 25,287,874
The non-current portion is repayable as follows:
The Group 2014 2013 RM RM Financial years ending March 31: 2015 - 3,556,868 2016 3,435,771 3,724,516 2017 3,531,440 3,903,290 2018 3,631,449 3,371,539 2019 2,496,206 4,557,276 2020 and above 7,007,344 6,174,385 20,102,210 25,287,874
The Group’s term loans and other banking facilities with licensed banks amounting to RM54,320,580 (2013: RM61,058,817) are secured by:
(i) Fixed legal charge over the leasehold buildings, freehold land, factory buildings, shop-office buildings, capital work-in-progress and leasehold land of the Group as mentioned in Notes 14 and 15; (ii) Investment properties of the Group as disclosed in Note 16; (iii) Letter of set-off of fixed deposits as disclosed in Note 26; and (iv) A stamped facility agreement of RM31.003 million.
Certain term loans and other banking facilities are also guaranteed by the Company, the directors of the Company and the ultimate holding company jointly and severally.
The Group has nine (9) term loans:
(a) a fifteen (15) year term loan of RM458,000 (2013: RM458,000) which is repayable by 180 monthly instalments of RM4,130 each commencing October 2008 and RM3,393 each commencing December 2009;
(b) an eight (8) year term loan of RM8,000,000 (2013: RM8,000,000) which is repayable by 95 monthly instalments of RM98,260 each commencing January 2013 with a last instalment of RM97,918;
(c) an eight (8) year term loan of RM9,000,000 (2013: RM9,000,000) which is repayable by 95 monthly instalments of RM110,543 each commencing May 2013 with a last instalment of RM112,920;
(d) a five (5) year term loan of USD1,710,000 (2013: Nil) which is repayable by 20 quarterly principal instalments of USD95,001 each commencing November 2013;
121 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
(e) a ten (10) year term loan of RM1,147,500 (2013: RM1,147,500) which is repayable by 60 monthly instalments of RM11,893 each for the first to fifth year commencing October 14, 2009 and 60 monthly instalments of RM12,185 each for the sixth to tenth year commencing October 14, 2014;
(f) a ten (10) year term loan of RM552,500 (2013: RM552,500) which is repayable by 60 monthly instalments of RM5,726 each for the first to fifth year commencing October 14, 2009 and 60 monthly instalments of RM5,867 each for the sixth to tenth year commencing October 14, 2014;
(g) a ten (10) year term loan of RM765,000 (2013: RM765,000) which is repayable by 120 monthly instalments of RM7,892 each with effect from one (1) month after date of full release of the loan;
(h) a ten (10) year term loan of RM1,349,800 (2013: RM1,349,800) which is repayable by 120 monthly instalments of RM13,924 each with effect from one (1) month after date of full release of the loan; and
(i) a ten (10) year term loan of RM4,800,000 (2013: RM4,800,000) which is repayable by 120 monthly instalments of RM49,285 each commencing February 2011.
During the financial year/period, the Group fully settled three (3) term loans as follows:
(a) a seven (7) year term loan of RM4,000,000 (2013: RM4,000,000) which was repayable by 84 monthly instalments of RM58,051 each commencing April 2010;
(b) a ten (10) year term loan of RM2,500,000 (2013: RM2,500,000) which was repayable by 120 monthly instalments of RM28,451 each commencing May 2010; and
(c) a ten (10) year term loan of RM1,415,000 (2013: RM1,415,000) which was repayable by 60 monthly instalments of RM14,665 each for the first to fifth year commencing October 30, 2008 and 60 monthly instalments of RM15,025 each for the sixth to tenth year commencing October 30, 2013.
The fair values of the bank borrowings of the Group approximate their carrying amounts.
The effective interest rates per annum are as follows:
The Group 2014 2013 % % Term loans 3.09 - 5.80 4.02 - 7.60 Trust receipts 3.24 3.24 Bank overdrafts - 4.50 - 7.35
The currency profile of the borrowings are as follows:
The Group 2014 2013 RM RM Ringgit Malaysia 18,517,155 28,606,302 United States Dollar 4,964,960 4,449,495 23,482,115 33,055,797
122 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
33. Deferred Income
The Group 2014 2013 RM RM Non-current portion: Deferred franchise fees 1,930,393 2,060,600 Current portion: Deferred franchise fees 1,041,088 1,075,883 Others 290,913 420,544 1,332,001 1,496,427 Total 3,262,394 3,557,027
Deferred franchise fees represent franchise fees received in advance from franchisees. The revenue is recognised in the statements of profit or loss on a straight-line basis over the term of the franchise agreement of 5 years (2013: 5 years).
Others represent income from provision of information technology related services, secondment of staff charges received in advance and foreign workers training fees received in advance. The revenue income mentioned above are recognised in the statements of profit or loss on a straight-line basis over the term of the agreement of 1 year (2013: 1 year). 34. Deferred Capital Grant
The Group 2014 2013 RM RM Cost At beginning and end of year/period 120,897 120,897 Accumulated amortisation At beginning of year/period 80,089 49,865 Amortisation 24,179 30,224 At end of the year/period 104,268 80,089 Net carrying amount Current 16,629 24,180 Non-current - 16,628 16,629 40,808
Deferred capital grant relates to government grant received for the acquisition of plant and machinery. There are no unfulfilled conditions or contingencies attached to this grant.
123 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
35. Trade and Other Payables
The Group The Company 2014 2013 2014 2013 RM RM RM RM Trade payables 17,167,315 19,511,887 - - Other payables 16,374,381 7,865,509 7,746,994 133,924 33,541,696 27,377,396 7,746,994 133,924 Accrued expenses 12,063,599 9,654,566 80,000 72,785 Refundable deposits received 4,239,107 3,012,890 - - 49,844,402 40,044,852 7,826,994 206,709
Trade and other payables of the Group comprise amounts outstanding for trade purchases and ongoing costs. The terms granted to the Group for trade purchases ranged from cash to credit period of 90 days (2013: cash to credit period of 90 days). These amounts are non-interest bearing. The Group and the Company have financial risk management policies to ensure that all payables are paid within the pre-agreed credit terms.
Included in trade and other payables of the Group are related parties’ balances of RM250,588 (2013: RM554,532).
The amounts owing to other payables of the Group mainly consist of dividend payable, retention sum on the construction of the factory building and relate to purchase of property, plant and equipment. The remaining amount owing to other payables are unsecured, interest-free and repayable upon demand.
The currency profile of trade and other payables is as follows:
The Group The Company 2014 2013 2014 2013 RM RM RM RM Ringgit Malaysia 31,629,186 26,645,643 7,746,994 133,924 Hong Kong Dollar 770,423 - - - Chinese Renminbi 510,503 - - - Singapore Dollar 337,012 338,816 - - United States Dollar 155,895 392,937 - - Thai Baht 138,677 - - - 33,541,696 27,377,396 7,746,994 133,924
Transactions with related parties are disclosed in Note 25.
124 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
36. Dividends
The Group and The Company 2014 2013 RM RM Final dividend of 3.0 sen per share, single tier for 2013 (2013: 4.0 sen per share, single tier for 2011) 10,889,700 13,200,000 Interim dividend of 3.0 sen per share, single tier (2013: 6.0 sen per share, single tier) 13,589,587 19,800,000 24,479,287 33,000,000
A final dividend declared in respect of the financial period ended March 31, 2013 under single tier tax system of 3.0 sen per share, amounting to RM10,889,700 was paid on October 30, 2013. An interim dividend declared in respect of the current financial year under single tier tax system of 3.0 sen per share, amounting to RM13,589,587 was paid on April 17, 2014. Net dividend per share during the year is 6.0 sen (2013: 10.0 sen). The directors proposed a final dividend of 3.0 sen per share, amounting to RM13,589,587 in respect of the current financial year computed based on the outstanding issued and paid-up capital, excluding treasury shares held by the Company of 611,000 ordinary shares of RM1.00 each in respect of the current financial year. This dividend is subject to approval by the shareholders at the forthcoming Annual General Meeting of the Company and has not been included as a liability in the financial statements. Upon approval by the shareholders, the dividend payment will be accounted for in equity as an appropriation of retained earnings during the financial year ending March 31, 2015.
37. Financial Instruments, Financial Risks and Capital Risks Management Categories of Financial Instruments
The Group The Company 2014 2013 2014 2013 RM RM RM RM Financial assets Loans and receivables: Trade and other receivables 42,107,560 46,258,258 5,370 123,170 Amount owing by subsidiaries - - 133,841,597 64,911,665 Amount owing by associates 1,562,022 1,349,508 44,000 - Fixed deposits, cash and bank balances 99,883,920 86,227,153 19,845,929 29,343,928 Available-for-sale: Other investments - unquoted shares 1,086,567 1,086,567 - - Other investments - quoted unit trusts 66,516,766 71,235,042 25,488,494 30,495,037 Financial liabilities Amortised cost : Trade and other payables 49,844,402 40,044,852 7,826,994 206,709 Amount owing to ultimate holding company 6,072,479 87,936 5,917,755 - Amount owing to subsidiaries - - - 9,188,896 Hire-purchase payables 815,103 1,485,306 - - Borrowings 23,482,115 33,055,797 - - 125 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
Financial Risk Management Objectives and Policies Risk management is integral to the whole business of the Group and of the Company. Management continually monitors the Group’s and the Company’s risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect changes in the market conditions and the Group’s and the Company’s activities. There have been no changes to the Group’s and the Company’s exposure to these financial risks or the manner in which it manages and measures the risk. (a) Market Risk The Group’s and the Company’s activities expose them primarily to the financial risks of changes in foreign currency exchange rates, interest rates and prices of equity. There have been no changes to the Group’s and the Company’s exposure to market risks or the manner in which these risks are managed and measured. (i) Foreign Currency Risk Management The Group is exposed to the effects of foreign currency exchange rate fluctuation primarily in relation to the United States Dollar (“USD”), Singapore Dollar (“SGD”), Thai Baht (“BAHT”), Chinese Renminbi (“RMB”) and Hong Kong Dollar (“HKD”) arising from normal trading, investing and financing activities. Exposure to foreign currency risk is monitored on an ongoing basis and the Group endeavours to keep the net exposure at an acceptable level. The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting date are disclosed in Notes 24, 25, 26, 32 and 35. Foreign currency sensitivity analysis The following table details the Group’s sensitivity to a 3% increase and decrease in RM against the relevant foreign currencies. 3% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonable possible change in foreign exchange rates in next 12 months. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 3% change in foreign currency rates. A positive/(negative) number below indicates an increase/(decrease) in profit net of tax where relevant currencies strengthen 3% against RM. For a 3% weakening of relevant currencies against RM, there would be a comparable reversed impact on the profit net of tax and the balances below would be negative.
Profit or Loss Year Ended Period Ended 31.3.2014 31.3.2013 (12 Months) (15 Months) RM RM HKD 439,236 58,581 SGD 135,786 63,898 RMB 22,232 - USD (15,555) 137,295 BAHT (3,120) 36,405
The above impact are mainly attributable to the exposure on relevant currencies for receivables, bank balances, payables, borrowings and amount owing by associate of the Group outstanding at the end of the reporting date. In the opinion of the management, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure does not reflect the full exposure of the Group during the year.
126 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
(ii) Interest Rate Risk Management Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial instruments will fluctuate because of changes in market interest rates. The Group’s exposure to interest rate risk arises primarily from its borrowings. Interest rate sensitivity analysis At the end of the reporting date, if interest rates had been 100 (2013: 100) basis points lower/higher, with all other variables held constant, the Group’s profit net of tax would have been RM176,116 (2013: RM214,547) higher/lower arising mainly as a result of lower/higher interest expense on floating rate borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment. (iii) Equity Price Risk Management The Group and the Company are exposed to price risks arising from equity investments. Equity investments are held for strategic rather than trading purposes. Equity price sensitivity analysis The sensitivity analyses below have been determined based on the exposure to equity price risks at the end of the reporting date. If equity prices had been 1% higher/lower, the Group’s: • profit for the year would not be affected as the equity investments are classified as available-for-sale and there are no plans for disposal and no indications of impairment; and • other comprehensive income for the year would increase/decrease by RM665,168 (2013: increase/decrease by RM534,263) as a result of the changes in fair value of available-for-sale unit trusts. The Group’s sensitivity to equity prices has not changed significantly from the prior period. If equity prices had been 1% higher/lower, the Company’s: • profit for the year would not be affected as the equity investments are classified as available-for-sale and there are no plans for disposal and no indications of impairment; and • other comprehensive income for the year would increase/decrease by RM254,885 (2013: increase/decrease by RM228,713) as a result of the changes in fair value of available-for-sale unit trusts. The Company’s sensitivity to equity prices has not changed significantly from the prior period. (b) Credit Risk Management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group and the Company. The Group and the Company have adopted a policy of only dealing with creditworthy counterparties, as a means of mitigating the risk of financial loss from defaults. The exposure of the Group to credit risk arises principally from its receivables and other financial assets while the exposure of the Company to credit risk arises from its intercompany balances, financial guarantees given to licensed banks for credit facilities granted to subsidiaries and other financial asset.
Receivables Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of account receivables. As the Group does not hold any collateral, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statements of financial position. A significant portion of trade receivables are regular customers of the Group. The Group uses ageing analysis to monitor the credit quality of the trade receivables. For other receivables, management does not foresee any credit risk due to the nature of other receivables which comprise mainly advances granted which are repayable upon demand. The ageing of trade receivables that are past due and/or impaired is disclosed in Note 24.
127 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
Intercompany Balances The Company provided unsecured advances to its subsidiaries. There is no fixed repayment terms imposed on intercompany balances as the credit risk is managed on a group basis by the management of the Company to ensure that risk of losses incurred by the Company due to non-repayment by subsidiaries, is minimal. At the end of the reporting date, the maximum exposure to credit risk is represented by the carrying amounts in the statements of financial position. At the end of the financial date, there was no indication that the balances due from subsidiaries are not recoverable. Financial Guarantee The Company provides unsecured financial guarantees to licensed banks in respect of credit facilities granted to subsidiaries. The Company monitors on an ongoing basis the trend of repayments made by the subsidiaries. The maximum exposure to credit risk amounts to RM20,393,276 (2013: RM25,306,356) representing the outstanding balance of credit facilities of subsidiaries in which financial guarantees are given as of the end of the reporting date. At the end of the reporting date, there was no indication that the subsidiaries would default on repayment. Other Financial Assets The credit risk on liquid funds are limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. (c) Liquidity and Cash Flow Risks Management Ultimate responsibility for liquidity and cash flow risks management rests with the Board of Directors, which has established an appropriate liquidity and cash flow risks management framework for the management of the Group’s and of the Company’s short, medium and long-term funding and liquidity and cash flow management requirements. The Group and the Company manage liquidity and cash flow risks by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and financial liabilities. The Group and the Company expect that the cash generated from its operations, its existing credit facilities and the trade terms provided by its suppliers will be sufficient to meet the Group’s and the Company’s currently anticipated capital expenditure and working capital needs for at least the next 12 months. The Group has credit facilities of approximately RM11,661,000 (2013: RM9,438,000) which are unused at the end of the reporting date. The Group expects to meet its financial obligations from its operating cash flows and proceeds from maturing financial assets. The maturity profile for the non-derivative financial assets/liabilities of the Group and of the Company at the end of the reporting date based on the undiscounted cash flows of the respective financial assets/liabilities representing the earliest date on which the Group and the Company are entitled to receive/required to pay, is as follows:
On demand or 1 year Over The Group within 1 year to 5 years 5 years Total 2014 RM RM RM RM Non-derivative financial assets: Trade and other receivables 42,107,560 - - 42,107,560 Amount owing by associates 1,562,022 - - 1,562,022 Cash and cash equivalents 101,579,795 - - 101,579,795 Available-for-sale: Other investments - unquoted shares - - 1,086,567 1,086,567 Other investments - quoted unit trusts 66,516,766 - - 66,516,766 Total undiscounted non-derivative financial assets 211,766,143 - 1,086,567 212,852,710
128 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
On demand or 1 year Over The Group within 1 year to 5 years 5 years Total 2014 RM RM RM RM Non-derivative financial liabilities: Trade and other payables 49,844,402 - - 49,844,402 Amount owing to ultimate holding company 6,072,479 - - 6,072,479 Hire-purchase payables 582,175 276,352 3,039 861,566 Borrowings 4,176,078 17,616,353 4,587,079 26,379,510 Total undiscounted non-derivative financial liabilities 60,675,134 17,892,705 4,590,118 83,157,957 Total net undiscounted non-derivative financial assets/(liabilities) 151,091,009 (17,892,705) (3,503,551) 129,694,753 The Group 2013 Non-derivative financial assets: Trade and other receivables 46,258,258 - - 46,258,258 Amount owing by associates 1,349,508 - - 1,349,508 Cash and cash equivalents 88,021,354 - - 88,021,354 Available-for-sale: Other investments - unquoted shares - - 1,086,567 1,086,567 Other investments - quoted unit trusts 25,693,547 45,541,495 - 71,235,042 Total undiscounted non-derivative financial assets 161,322,667 45,541,495 1,086,567 207,950,729 Non-derivative financial liabilities: Trade and other payables 40,044,852 - - 40,044,852 Amount owing to ultimate holding company 87,936 - - 87,936 Hire-purchase payables 721,303 870,005 8,427 1,599,735 Borrowings 9,057,830 20,773,853 8,989,091 38,820,774 Total undiscounted non-derivative financial liabilities 49,911,921 21,643,858 8,997,518 80,553,297 Total net undiscounted non-derivative financial assets/(liabilities) 111,410,746 23,897,637 (7,910,951) 127,397,432
129 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
On demand or 1 year Over The Company within 1 year to 5 years 5 years Total 2014 RM RM RM RM Non-derivative financial assets : Trade and other receivables 5,370 - - 5,370 Amount owing by subsidiaries 133,841,597 - - 133,841,597 Amount owing by associates 44,000 - - 44,000 Cash and cash equivalents 20,330,169 - - 20,330,169 Available-for-sale : Other investments - quoted unit trusts 25,488,494 - - 25,488,494 Total undiscounted non-derivative financial assets 179,709,630 - - 179,709,630 Non-derivative financial liabilities : Trade and other payables 7,826,994 - - 7,826,994 Amount owing to ultimate holding company 5,917,755 - - 5,917,755 Total undiscounted non-derivative financial liabilities 13,744,749 - - 13,744,749 Total net undiscounted non-derivative financial assets 165,964,881 - - 165,964,881 The Company 2013 Non-derivative financial assets : Trade and other receivables 123,170 - - 123,170 Amount owing by subsidiaries 64,911,665 - - 64,911,665 Cash and cash equivalents 30,077,748 - - 30,077,748 Available-for-sale : Other investments - quoted unit trusts 15,047,654 15,447,383 - 30,495,037 Total undiscounted non-derivative financial assets 110,160,237 15,447,383 - 125,607,620 Non-derivative financial liabilities : Trade and other payables 206,709 - - 206,709 Amount owing to subsidiaries 9,188,896 - - 9,188,896 Total undiscounted non-derivative financial liabilities 9,395,605 - - 9,395,605 Total net undiscounted non-derivative financial assets 100,764,632 15,447,383 - 116,212,015
The Group and the Company have not committed to any derivative financial instruments during the financial year. (d) Capital Risk Management The Group and the Company manage their capital to ensure the Group and the Company will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group’s and the Company’s overall strategy remain unchanged from 2013. The capital structure of the Group and of the Company consists of net debt and equity of the Group and of the Company.
130 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Fair Values of Financial Assets and Financial Liabilities Financial Instruments Carried at Amortised Cost
The fair value of long-term financial assets and liabilities are determined by the present value of future cash flows estimated and discounted using the current interest rates for similar instruments at the end of the reporting date. There is no material difference between the fair values and carrying values of these assets and liabilities as of the reporting period.
The carrying amounts of short-term financial assets and financial liabilities approximate their respective fair values due to the relatively short-term maturity of these financial instruments.
The fair values of investments on unquoted shares are not established as it cannot be measured reliably without incurring excessive cost. Investment in unquoted shares are measured at cost. The Group intends to hold the unquoted investments on a long-term basis.
The fair values of hire-purchase payables and borrowings are included in Level 2 category of the fair value hierarchy in accordance with MFRS 7 Financial Instruments: Disclosure and have been estimated using discounted cash flow analysis based on the current borrowing rates for similar types of hire-purchase and borrowings arrangements and approximate their carrying amounts.
The fair values of other classes of financial assets and liabilities are disclosed in the respective notes to the financial statements. 38. Statements of Cash Flows (a) Purchase of property, plant and equipment Property, plant and equipment were acquired by the following means:
The Group The Company Year Ended Period Ended Year Ended Period Ended 31.3.2014 31.3.2013 31.3.2014 31.3.2013 (12 Months) (15 Months) (12 Months) (15 Months) RM RM RM RM Cash purchase 17,365,805 63,681,693 98,594 1,595,692 Amount owing to trade and other payables 2,615,680 4,089,436 10,823 13,775 Advance payment for acquisition of property, plant and equipment in previous year 174,228 2,034,065 - - Trade-in - 13,000 - - 20,155,713 69,818,194 109,417 1,609,467
The principal amounts of instalment repayments for property, plant and equipment acquired by hire-purchase are reflected as cash outflows from financing activities. (b) Cash and cash equivalents For the purposes of the statements of cash flows, cash and cash equivalents include fixed deposits, short-term investment funds and cash and bank balances. Cash and cash equivalents at the end of the reporting period as shown in the statements of cash flows can be reconciled to the related items in the statements of financial position as follows:
The Group The Company 2014 2013 2014 2013 RM RM RM RM Fixed deposits 788,806 2,559,131 - - Short-term investment funds 69,250,378 69,293,747 19,764,867 29,235,842 Cash and bank balances 29,844,736 14,374,275 81,062 108,086 99,883,920 86,227,153 19,845,929 29,343,928 Less : Fixed deposits held on lien to local licensed banks (788,806) (2,559,131) - - 99,095,114 83,668,022 19,845,929 29,343,928 131 OLDTOWN BERHAD (797771-M) Notes to (Incorporated in Malaysia) The Financial Statements
39. Operating Lease Arrangements Operating lease for the Group relates to leases of offices, outlets, billboards, factory, warehouses, hostels and kitchen equipment with average term of 1.5 to 3 years (2013: 1 to 3 years). In 2013, operating lease for the Company relates to leases of office with average term of 2 years. All operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew. The lessee does not have an option to purchase the leased offices, outlets, billboards, factory, warehouses, hostels and kitchen equipment at the expiry of the lease period. Payment recognised as an expense:
The Group The Company 2014 2013 2014 2013 RM RM RM RM Minimum lease payments 11,197,397 24,855,998 - 60,000
Non-cancellable operating lease commitments are as follows:
The Group The Company 2014 2013 2014 2013 RM RM RM RM Within one year 9,798,503 12,947,536 - 4,000 In the second to fifth year inclusive 6,671,787 12,331,408 - - After five years - 15,710 - - 16,470,290 25,294,654 - 4,000
40. Capital Commitments As of March 31, 2014, the Group and the Company have the following capital expenditure in respect of property, plant and equipment:
The Group The Company 2014 2013 2014 2013 RM RM RM RM Approved and contracted for 368,548 5,212,276 204,660 310,927 Approved but not contracted for - 916,047 - - 368,548 6,128,323 204,660 310,927
132 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
41. Subsequent Event A wholly foreign owned enterprise (“WFOE”), Shenzhen OldTown White Coffee Trading Co., Ltd. with a registered capital of USD1,000,000 in the territory of Shenzhen, People’s Republic of China was incorporated on July 21, 2014. The WFOE is a wholly-owned subsidiary of Advance City Limited, a subsidiary of Oldtown Berhad.
42. Supplementary Information - Disclosure on Realised and Unrealised Profits or Losses The breakdown of the retained earnings of the Group and of the Company as of March 31, 2014 into realised and unrealised profits or losses, pursuant to the directive issued by Bursa Malaysia Securities Berhad on March 25, 2010, is as follows
The Group The Company 2014 2013 2014 2013 RM RM RM RM Total retained earnings of the Company and its subsidiaries Realised 134,415,997 140,262,374 2,298,506 1,074,751 Unrealised (2,150,198) 852,117 - - Total share of retained earnings from associates Realised (27,228) 190,642 - - Unrealised 71,262 54,447 - - 132,309,833 141,359,580 2,298,506 1,074,751 Add: Consolidation adjustments (38,513,700) (21,425,170) - - Total retained earnings as per statements of financial position 93,796,133 119,934,410 2,298,506 1,074,751
The determination of realised and unrealised profits or losses is based on Guidance of Special Matter No. 1 “Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Securities Listing Requirements” as issued by the Malaysian Institute of Accountants on December 20, 2010. This supplementary information have been made solely for complying with the disclosure requirements as stipulated in the directives of Bursa Malaysia Securities Berhad and is not made for any other purposes.
133 OLDTOWN BERHAD (797771-M) Statement by (Incorporated in Malaysia) Directors
The directors of OLDTOWN BERHAD state that, in their opinion, the accompanying financial statements are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of March 31, 2014 and of the financial performance and the cash flows of the Group and of the Company for the year ended on that date.
The supplementary information set out in Note 42, which is not part of the financial statements, is prepared in all material respects, in accordance with Guidance on Special Matter No. 1 “Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements” as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad.
Signed in accordance with a resolution of the Directors,
DATUK DR. AHMED TASIR BIN LOPE PIHIE, PJN, PMP, JSM, FASc
MR. LEE SIEW HENG
Ipoh, July 23, 2014
Declaration By The Officer Primarily Responsible For The Financial Management of The Company
I, MS. CHAO KAR PO, the officer primarily responsible for the financial management ofOLDTOWN BERHAD, do solemnly and sincerely declare that the accompanying financial statements are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
MS. CHAO KAR PO Subscribed and solemnly declared by the abovenamed MS. CHAO KAR PO at IPOH this 23rd day of July, 2014.
Before me,
WILSON ARUMI DHAS (A182) COMMISSIONER FOR OATHS
134 OLDTOWN BERHAD (797771-M) OLDTOWN BERHAD (797771-M) List of (Incorporated in Malaysia) (Incorporated in Malaysia) Properties Owned by Oldtown Group
Approximate Date of Description and Land Area/ Age of Audited Net Revaluation/ Existing Use/ Built up Area Building Book Value *Date of Title/Location Number of storey (Sq feet) Tenure (Years) (RM) Acquisition 1 A-5-4, Fairville Apartment, Apartment used as Built-up Freehold 13 years 138,380 07.01.2011* Jalan USJ 22/1, accommodation area : 818 47630 UEP Subang Jaya, for factory staff Selangor Darul Ehsan. This apartment is held under strata title Geran 52283/M1/5/154, Lot No. 49175, District of Petaling, Town of Subang Jaya, State of Selangor. 2 B-4-4, Fairville Apartment, Apartment used as Built-up Freehold 13 years 143,055 03.01.2011* Jalan USJ 22/1, accommodation area : 818 47630 UEP Subang Jaya, for factory staff Selangor Darul Ehsan. This apartment is held under strata title Geran 52283/M1/4/131, Lot No. 49175, District of Petaling, Town of Subang Jaya, State of Selangor. 3 C-3-7, Fairville Apartment, Apartment used as Built-up Freehold 13 years 154,275 25.01.2011* Jalan USJ 22/1, accommodation area : 818 47630 UEP Subang Jaya, for factory staff Selangor Darul Ehsan. This apartment is held under strata title Geran 52283/M1/3/108, Lot No. 49175, District of Petaling, Town of Subang Jaya, State of Selangor. 4 C-5-3, Fairville Apartment, Apartment used as Built-up Freehold 13 years 201,242 06.12.2012* Jalan USJ 22/1, accommodation area : 818 47630 UEP Subang Jaya for factory staff Selangor Darul Ehsan. This apartment is held under strata title Geran 52283/M1/5/186, Lot No. 49175 District of Petaling, Town of Subang Jaya, State of Selangor. 5 C-8-8, Fairville Apartment, Apartment used as Built- up Freehold 13 years 144,925 04.01.2011* Jalan USJ 22/1, accommodation area : 818 47630 UEP Subang Jaya, for factory staff Selangor Darul Ehsan. This apartment is held under strata title Geran 52283/M1-B/8/229, Lot No. 49175, District of Petaling, Town of Subang Jaya, State of Selangor. 6 C-8-10, Fairville Apartment, Apartment used as Built-up Freehold 13 years 144,925 04.01.2011* Jalan USJ 22/1, accommodation area: 818 47630 UEP Subang Jaya, for factory staff Selangor Darul Ehsan. This apartment is held under strata title Geran 52283/M1-B/8/231, Lot No. 49175, District of Petaling, Town of Subang Jaya, State of Selangor.
135 List of OLDTOWN BERHAD (797771-M) Properties (Incorporated in Malaysia) Owned by Oldtown Group
Date of Description and Land Area/ Approximate Audited Net Revaluation/ Existing Use/ Built up Area Age of Building Book Value *Date of Title/Location Number of storey (Sq feet) Tenure (Years) (RM) Acquisition 7 No. 21, Lebuh Bercham (S) 2/8, Factory and office / 2,399 / Leasehold of 17 years 227,565 10.02.2009* Kawasan Perindustrian Bercham, 1 storey 2,400 60 years, 31400 Ipoh, Perak Darul Ridzuan . expiring on 29.03.2052 The 1 storey factory and office is held under individual title PN 287301, Lot 195649 (previously held under H.S.(D) 70419 PT 115157) in the Mukim of Hulu Kinta, District of Kinta, State of Perak Darul Ridzuan. 8 No. 19, Lebuh Bercham (S) 2/8, Factory and office / 2,399 / Leasehold of 17 years 210,598 04.05.2006* Kawasan Perindustrian Bercham, 1 storey 2,400 60 years, 31400 Ipoh, Perak Darul Ridzuan. expiring on 29.03.2052 The 1 storey factory and office is held under individual title PN 287302, Lot 195650 (previously held under H.S.(D) 70420 PT115158) in the Mukim of Hulu Kinta, District of Kinta, State of Perak Darul Ridzuan. 9 Lot 212152 (previously known as PT The land is vacant. Land area: Leasehold of N/A 367,488 18.08.2006* 126279), Persiaran Tasek Timur 7, A portion of the 21,466 99 years, Taman Medan Bercham, 31400 Ipoh, land was leased to expiring on Perak Darul Ridzuan. Tenaga Nasional 17.04.2093 Berhad for a period The vacant land is held under individual of 30 years expiring title PN346134 Lot 212152 (previously on 14.02.2026 held under H.S.(D) 33231, PT 126279) in the Mukim of Hulu Kinta, District of Kinta, State of Perak Darul Ridzuan. 10 PT77647, Kampung Batu 13 1/2 Puchong, This land is vacant Land area: Leasehold of N/A 6,061,047 18.05.2010* 47150 Puchong, Selangor Darul Ehsan. 59,656 99 years, expiring on This property which is held under individual 09.12.2107 title H.S.(M) 30242, PT 77647 Kampung Batu 13 Puchong in the Mukim and District of Petaling, State of Selangor Darul Ehsan. 11 No. 166, Jalan Labrooy, Taman Merdeka, A double storey 5,595 / Leasehold of 8 years 680,000 31.03.2014 30100 Ipoh, Perak, held under land issue bungalow rented to 4,064 999 years, document of title described as Pajakan a Children Home expiring on Negeri No. Hakmilik 145225 for Lot 8053U for RM1 per month / 28.09.2894 in Bandar Ipoh (U), Daerah Kinta, 2 storeys Negeri Perak. 12 No.72, Solok Pendamar Indah 1, Tmn The ground floor 2,830 / Freehold 5 years 1,347,202 15.10.2009 Pendamar Indah, 42000 Port Klang, of the 3 storey 8,365 Selangor Darul Ehsan. shop office is used to operate an The 3 storey shop office is held under OLDTOWN WHITE individual title GRN 279149, Lot 123298 COFFEE cafe outlet. (previously held under H.S.(D) 113157, PT The first and second 114925), in the Mukim of Klang, floors of the 3 District of Klang, storeys shop office State of Selangor Darul Ehsan. are rented to a private entity / 3 storeys
136 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Date of Description and Land Area/ Approximate Audited Net Revaluation/ Existing Use/ Built up Area Age of Building Book Value *Date of Title/Location Number of storey (Sq feet) Tenure (Years) (RM) Acquisition 13 No. 70, Solok Pendamar Indah 1, The ground, first and 1,399 / Freehold 5 years 1,000,000 31.03.2014 Tmn Pendamar Indah, 42000 Port Klang, second floors of the 4,168 Selangor Darul Ehsan. 3 storey shop office are rented to private The 3 storey shop office is held under entities / individual title GRN 279150, Lot 123299 3 storeys (previously held under H.S (D) 113158, PT 114926), in the Mukim of Klang, District of Klang, State of Selangor Darul Ehsan. 14 No. 55, 55-1, and 55-2, The ground and first 4,767/ Leasehold of 5 years 3,218,642 30.04.2009 Jalan Rampai Niaga 5, Medan Niaga floor of the 3 storey 12,854 of 99 years Rampai, 53300 Kuala Lumpur. shop office are used expiring on to operate OLDTOWN 28.03.2106 The 3 storey shop office is held under WHITE COFFEE cafe individual title Pajakan Negeri (WP) No. outlet. The second Hakmilik : 49982 Lot 200210 (formerly floor is for general use known as H.S.(D) 117765 PT No 9138) and storage purposes in the Mukim of Setapak, District of Kuala in relation to the Lumpur, Negeri Wilayah Persekutuan KL. operation of the said cafe outlet / 3 storeys 15 No. 34 & 34A, Persiaran Kuala Kangsar 1, As at 31.03.2014, Built-up Leasehold of Less than 1,562,980 21.09.2012* Taman Wing Onn, Kuala Kangsar Road, the shop office was area : 999 years, 1 year 30010 Ipoh, Perak. under construction. 4,147 expiring on It is planned to be 30.12.2896 The double storey shoplot forms part of used to operate an a shop/commercial building development OLDTOWN WHITE which is situated under the master titles COFFEE cafe outlet / PN 286717 Lot 6102U; 2 storeys PN 286720 Lot 6103U; PN 286721 Lot 6104U; PN 286723 Lot 6105U; PN 286725 Lot 6106U; PN 286731 Lot 6107U; PN 286733 Lot 6108U; PN 286991 Lot 6142U; PN 286992 Lot 6143U; PN 286993 Lot 6144U; Part of PN 286735 Lot 6109U and Part of PN 286994 Lot 6145U all in Bandar Ipoh (U) Daerah Kinta, Negeri Perak. 16 No. 32 & 32A, Persiaran Kuala Kangsar 1, As at 31.03.2014, Built-up Leasehold of Less than 887,210 21.09.2012* Taman Wing Onn, Kuala Kangsar Road, the shop office was area: 999 years, 1 year 30010 Ipoh, Perak. under construction. 3,160 expiring on It is planned to be 30.12.2896 The double storey shoplot forms part of rented out / a shop/commercial building development 2 storeys which is situated under the master titles PN 286717 Lot 6102U; PN 286720 Lot 6103U; PN 286721 Lot 6104U; PN 286723 Lot 6105U; PN 286725 Lot 6106U; PN 286731 Lot 6107U; PN 286733 Lot 6108U; PN 286991 Lot 6142U; PN 286992 Lot 6143U; PN 286993 Lot 6144U; Part of PN 286735 Lot 6109U and Part of PN 286994 Lot 6145U all in Bandar Ipoh (U) Daerah Kinta, Negeri Perak. 137 List of OLDTOWN BERHAD (797771-M) Properties (Incorporated in Malaysia) Owned by Oldtown Group
Date of Description and Land Area/ Approximate Audited Net Revaluation/ Existing Use/ Built up Area Age of Building Book Value *Date of Title/Location Number of storey (Sq feet) Tenure (Years) (RM) Acquisition 17 No. 2, Jalan Portland, Office, 391,923 / Leasehold of 1 year 50,769,824 09.01.2013 Kawasan Perindustrian Tasek, recreation block 207,549 99 years 31400 Ipoh, Perak Darul Ridzuan. and canteen, expiring on factory, 01.07.2072 The Industrial Complex consisting of warehouse / a 3 storey detached office, a 2 storey 3 storeys recreation block and canteen, a 2½ storey 2 storeys detached factory, a single storey detached 2½ storeys warehouse and some ancillary structures, 1 storey is held under individual title Pajakan Negeri No. Hakmilik 2864, Lot No. 60178 in the Mukim of Hulu Kinta, State of Perak Darul Ridzuan. 18 No. 11, Persiaran Industri Rapat 2, Factory and office / 10,491 / Leasehold of 17 years 760,000 31.03.2014 Kawasan Perindustrian Sri Rapat, 1½ storeys 9,770 99 years, 31350 Ipoh, Perak Darul Ridzuan. expiring on 04.07.2094 The 1½ storey semi-detached factory and office is held under individual title PN 350435 Lot 221579 (formerly known as H.S(D) 41503, PT 132753), in the Mukim of Hulu Kinta, District of Kinta, State of Perak Darul Ridzuan. 19 No. 13, Persiaran Industri Rapat 2, Factory 10,491 / Leasehold of 17 years 730,000 31.03.2014 Kawasan Perindustrian Sri Rapat, and office / 7,780 99 years, 31350 Ipoh, Perak Darul Ridzuan. 1½ storeys expiring on 04.07.2094 The 1½ storey semi-detached factory and office is held under individual title PN 350434 Lot 221578 (formerly known as H.S(D) 41502, PT 132752), in the Mukim of Hulu Kinta, District of Kinta, State of Perak Darul Ridzuan. 20 No. 1, Persiaran Tasek Timur 6, The factory was 10,168 / Leasehold of 22 years 1,253,164 27.07.2005* Taman Medan Bercham, 31400 Ipoh, vacant in April 2014 40,507 99 years, Perak Darul Ridzuan. since relocation of expiring on all its operation to 27.04.2088 The 4 storey factory and office is held the new Factory under the following individual titles: in Tasek Ipoh and a) PN 296889, Lot 179748 has since been (previously held under H.S(D) 3733); used for storage of b) PN 296887, Lot 179747 machinery / (previously held under H.S(D) 3732); 4 storeys c) PN 296890, Lot 179749 (previously held under H.S(D) 3734); d) PN 296891, Lot 179750 (previously held under H.S(D) 3735); and e) PN 296892, Lot 179751 (previously held under H.S(D) 3736) All in the Mukim of Hulu Kinta, District of Kinta, State of Perak Darul Ridzuan.
138 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Date of Description and Land Area/ Approximate Audited Net Revaluation/ Existing Use/ Built up Area Age of Building Book Value *Date of Title/Location Number of storey (Sq feet) Tenure (Years) (RM) Acquisition
21 No. 1, Jalan Tasek Lama, Taman Tasek, Used as Staff 2,830 / Leasehold of 2 years 251,767 28.06.2012* 31400 Ipoh, Perak Darul Ridzuan. Accommodation 2,482 99 years, expiring on This double storey terrace house is held 22.05.2089 under individual title Pajakan Negeri 127287, Lot 177851, in the Mukim of Hulu Kinta, Daerah Kinta, Negeri Perak Darul Ridzuan. 22 No. 3, Jalan Tasek Lama, Taman Tasek, Used as Staff 1,539 / Leasehold of 2 years 195,877 16.01.2012* 31400 Ipoh, Perak Darul Ridzuan. Accommodation 1,859 99 years, expiring on This double storey terrace house is held 22.05.2089 under individual title Pajakan Negeri 127285, Lot 177852,in the Mukim of Hulu Kinta, Daerah Kinta, Negeri Perak Darul Ridzuan. 23 No. 5, Jalan Tasek Lama, Taman Tasek, Used as Staff 1,539 / Leasehold of 2 years 195,877 16.01.2012* 31400 Ipoh, Perak Darul Ridzuan. Accommodation 1,859 99 years, expiring on This double storey terrace house is held 22.05.2089 under individual title Pajakan Negeri 127286, Lot 177853, in the Mukim of Hulu Kinta, Daerah Kinta, Negeri Perak Darul Ridzuan. 24 No. 7, Jalan Tasek Lama, Taman Tasek, Used as Staff 1,539 / Leasehold of 2 years 195,877 16.01.2012* 31400 Ipoh, Perak Darul Ridzuan. Accommodation 1,859 99 years, expiring on This double storey terrace house is held 22.05.2089 under individual title Pajakan Negeri 127287, Lot 177854, in the Mukim of Hulu Kinta, Daerah Kinta, Negeri Perak Darul Ridzuan. 25 Lot No. 3A-G-26, Kompleks Bukit Jambul, The shop lot is Built up area: Freehold 17 years 720,000 31.03.2014 Jalan Rumbia, 11900 Bayan Lepas, rented out to a 600 Penang. private entity / 1 storey The 1 storey shop lot, forms part of a complex known as Kompleks Bukit Jambul, which is situated under parent lot title GRN 61275, Lot 9954 in the Mukim 13, District of Timor Laut, State of Penang. The property has yet to be issued with an individual strata title.
139 OLDTOWN BERHAD (797771-M) Analysis of (Incorporated in Malaysia) Shareholdings as at 10 July 2014
SHARE CAPITAL Authorised Share Capital RM500,000,000 Issued and paid-up share capital RM453,597,242 Class of Shares Ordinary shares of RM1.00 each Voting rights One (1) vote per ordinary share
ANALYSIS OF SHAREHOLDINGS Size of No of No of % of Issued Share Shareholdings Shareholders % Shares Held Capital* Less than 100 89 2.19 3,797 0.00 100 to 1,000 487 12.00 276,923 0.06 1,001 to 10,000 2,577 63.52 10,397,874 2.30 10,001 to 100,000 741 18.26 19,586,477 4.32 100,001 to 22,649,111 160 3.94 175,034,396 38.64 (less than 5% of the issued share capital) 22,649,112 ( 5% of the issued shares) and above 3 0.07 247,682,775 54.68 Total 4,057 100 452,982,242 100.00
SUBSTANTIAL SHAREHOLDERS As per the Register of Substantial Shareholders Direct Interest Indirect Interest No of % of Issued No of % of Issued Name Shares Held Share Capital* Shares Held Share Capital* Old Town International Sdn Bhd 197,258,500 43.55 - - Lee Siew Heng 6,250,000 1.38 197,258,500 (1) 43.55 Goh Ching Mun 375,000 0.08 197,258,500 (1) 43.55 Lee Siew Ming - - 197,296,000 (2) 43.55 Franklin Resources, Inc 32,276,600 7.13 - - Mawer Investment Management Ltd. 30,137,050 6.65 - - Artisan International Small Cap Fund 24,169,725 5.34 - - Matthews International Capital Management, LLC 23,527,950 5.19 - -
DIRECTORS’ INTEREST IN SHARES As per the Register of Directors’ Shareholdings
Direct Interest Indirect Interest No of % of Issued No of % of Issued Name Shares Held Share Capital* Shares Held Share Capital* Datuk Dr. Ahmed Tasir Bin Lope Pihie 25,000 0.01 - - Lee Siew Heng 6,250,000 1.38 197,258,500 (1) 43.55 Mark Wing Kong 62,500 0.01 - - Clarence D’Silva A/L Leon D’Silva 125,000 0.03 - - Goh Ching Mun 375,000 0.08 197,258,500 (1) 43.55 Tan Say Yap 465,937 0.10 - -
Notes:- 1) Deemed interested by virtue of their shareholdings in Old Town International Sdn Bhd , pursuant to Section 6A of the Companies Act, 1965 2) Deemed interested by virtue of their shareholdings in Old Town International Sdn Bhd, Conneczone Puchong Sdn Bhd and Carefree Avenue Sdn Bhd pursuant to Section 6A of the Companies Act, 1965 * Calculated based on 452,982,242 shares, which does not include 615,000 treasury shares
140 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
Top Thirty Security Account Holders (without aggregating the securities from different securities accounts belonging to the same Depositor )
No of % of Issued NAME Shares Held Share Capital* 1 OLD TOWN INTERNATIONAL SDN. BHD. 189,886,000 41.92
2 CARTABAN NOMINEES (ASING) SDN BHD 33,627,050 7.42 EXEMPT AN FOR RBC INVESTOR SERVICES TRUST (CLIENTS ACCOUNT)
3 DB (MALAYSIA) NOMINEE (ASING) SDN BHD 24,169,725 5.34 SSBT FUND A56A FOR ARTISAN INTERNATIONAL SMALL CAP FUND
4 HSBC NOMINEES (ASING) SDN BHD 10,911,250 2.41 EXEMPT AN FOR JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (U.S.A.)
5 HSBC NOMINEES (ASING) SDN BHD 10,322,275 2.28 EXEMPT AN FOR JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (NORGES BK)
6 HSBC NOMINEES (ASING) SDN BHD 9,908,125 2.19 BBH AND CO BOSTON FOR MATTHEWS ASIA GROWTH FUND
7 HSBC NOMINEES (ASING) SDN BHD 7,800,125 1.72 BBH AND CO BOSTON FOR MATTHEWS ASIA SMALL COMPANIES FUND
8 OLD TOWN INTERNATIONAL SDN. BHD. 7,372,500 1.63
9 HSBC NOMINEES (ASING) SDN BHD 7,000,000 1.55 EXEMPT AN FOR JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (SWEDEN)
10 LEE SIEW HENG 6,250,000 1.38
11 HSBC NOMINEES (ASING) SDN BHD 5,669,200 1.25 EXEMPT AN FOR J.P. MORGAN BANK LUXEMBOURG S.A.
12 DB (MALAYSIA) NOMINEE (ASING) SDN BHD 4,731,000 1.04 STATE STREET LUXEMBOURG FUND OD85 FOR ABN AMRO MULTI-MANAGER FUNDS
13 DB (MALAYSIA) NOMINEE (ASING) SDN BHD 4,636,475 1.02 SSBT FUND A73A FOR ARTISAN GLOBAL SMALL CAP FUND
14 AMANAHRAYA TRUSTEES BERHAD 4,328,375 0.96 PUBLIC SMALLCAP FUND
15 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 4,288,600 0.95 EMPLOYEES PROVIDENT FUND BOARD (F TEMPLETON)
16 UOBM NOMINEES (ASING) SDN BHD 4,000,000 0.88 BANQUE DE LUXEMBOURG FOR BL EMERGING MARKETS
17 HSBC NOMINEES (ASING) SDN BHD 3,516,650 0.78 TNTC FOR DRIEHAUS EMERGING MARKET SMALL CAP GROWTH FUND
18 CIMSEC NOMINEES (TEMPATAN) SDN BHD 3,453,200 0.76 CIMB BANK FOR GOH SIN BONG (MP0081)
19 CITIGROUP NOMINEES (ASING) SDN BHD 3,019,400 0.67 CBLDN FOR POHJOLA BANK PLC (CLIENT AC-EUR)
20 HONG LEONG ASSURANCE BERHAD 3,000,000 0.66 AS BENEFICIAL OWNER (UNITLINKED GF)
141 OLDTOWN BERHAD (797771-M) Analysis of (Incorporated in Malaysia) Shareholdings as at 10 July 2014
Top Thirty Security Account Holders (without aggregating the securities from different securities accounts belonging to the same Depositor )
No of % of Issued Share NAME Shares Held Capital*
21 HSBC NOMINEES (ASING) SDN BHD 2,836,025 0.63 TNTC FOR LOCKHEED MARTIN CORPORATION MASTER RETIREMENT TRUST
22 DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD 2,711,800 0.60 EXEMPT AN FOR KUMPULAN SENTIASA CEMERLANG SDN BHD (TSTAC/CLNT)
23 CITIGROUP NOMINEES (ASING) SDN BHD 2,684,300 0.59 CBNY FOR FORWARD INTERNATIONAL DIVIDEND FUND
24 HSBC NOMINEES (ASING) SDN BHD 2,126,875 0.47 SG NANTES FOR THE W & W SOUTH EAST ASIAN EQUITY FUND
25 DB (MALAYSIA) NOMINEE (ASING) SDN BHD 2,020,362 0.45 SSBT FUND W4B0 FOR WASATCH INTERNATIONAL OPPORTUNITIES FUND
26 CITIGROUP NOMINEES (ASING) SDN BHD 2,013,628 0.44 CBNY FOR FORWARD SELECT EM DIVIDEND FUND
27 AMANAHRAYA TRUSTEES BERHAD 1,956,200 0.43 AFFIN SELECT GROWTH FUND
28 DB (MALAYSIA) NOMINEE (ASING) SDN BHD 1,901,500 0.42 STATE STREET MUNICH FUND U7OM FOR DEUTSCHE ASSET AND WEALTH MANAGEMENT INVESTMENT GMBH FOR OP EAST ASIA
29 DB (MALAYSIA) NOMINEE (ASING) SDN BHD 1,875,000 0.41 SSBT FUND W4A9 FOR WASATCH MICRO CAP VALUE FUND
30 HLB NOMINEES (TEMPATAN) SDN BHD 1,842,500 0.41 PLEDGED SECURITIES ACCOUNT FOR LEE CHIAH CHEANG
Total 369,858,140 81.65
142 OLDTOWN BERHAD (797771-M) OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) (Incorporated in Malaysia) Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Sixth (6th) Annual General Meeting (“AGM”) of Oldtown Berhad (“Oldtown” or “the Company”) will be held at Impiana Hotel, Ballroom 1 & 2, 18 Jalan Raja Dr Nazrin Shah, 30250 Ipoh, Perak Darul Ridzuan on Wednesday, 10 September 2014 at 10.30 a.m. to transact the following businesses:-
Agenda
As Ordinary Business
1. To receive the Audited Financial Statements for the financial year ended 31 March (Please refer to Explanatory Note 1) 2014 together with the Reports of the Directors and Independent Auditors thereon.
2. To approve the payment of a final dividend of 3 sen per share under the single-tier Ordinary Resolution 1 system in respect of the financial year ended 31 March 2014.
3. To approve the payment of Directors’ fees of RM153,000 for the financial year Ordinary Resolution 2 ended 31 March 2014.
4. To re-elect the following Directors who retire pursuant to Article 84 of the Company’s Articles of Association:-
(a) Datuk Dr. Ahmed Tasir Bin Lope Pihie Ordinary Resolution 3
(b) Lee Siew Heng Ordinary Resolution 4
(c) Goh Ching Mun Ordinary Resolution 5
5. To re-elect Dato’ Wong Guang Seng who retires pursuant to Article 91 of the Ordinary Resolution 6 Company’s Articles of Association.
6. To re-appoint Messrs Deloitte as Auditors of the Company and to authorise the Ordinary Resolution 7 Directors to fix their remuneration.
As Special Business:
To consider and if thought fit, to pass the following resolutions:-
7. AUTHORITY TO ALLOT AND ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965
“THAT subject always to the Companies Act, 1965 (“the Act”), the Articles of Ordinary Resolution 8 Association of the Company and the approvals of the relevant governmental/ regulatory authorities, the Directors be and are hereby empowered pursuant to Section 132D of the Act, to allot and issue shares in the capital of the Company from time to time at such price, upon such terms and conditions, for such purposes and to such person or persons whomsoever the Directors may in their absolute discretion deem fit provided that the aggregate number of shares to be issued pursuant to this Resolution does not exceed ten percent (10%) of the total issued share capital of the Company for the time being, AND THAT the Directors be and are hereby also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad (“Bursa Securities”) AND THAT such authority shall continue to be in force until the conclusion of the next AGM of the Company.”
143 OLDTOWN BERHAD (797771-M) Notice of (Incorporated in Malaysia) Annual General Meeting
8. PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE AND PROPOSED NEW SHAREHOLDERS’ MANDATE FOR THE COMPANY AND/OR ITS SUBSIDIARIES TO ENTER INTO RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE WITH RELATED PARTIES (“PROPOSED RRPT MANDATES”)
“THAT subject to Paragraph 10.09 Part E of the Main Market Listing Requirements Ordinary Resolution 9 of Bursa Securities, approval be and is hereby given to the Company and/or its subsidiaries to enter into recurrent related party transactions (“RRPT”) of a revenue or trading nature with the Related Parties as set out in Appendix II and Appendix III of the Circular to Shareholders dated 19 August 2014, subject to the following:
(i) the RRPT are: (a) necessary for the day-to-day operations; (b) undertaken in the ordinary course of business and at arm’s length basis and are on terms not more favourable to the related parties than those generally available to the public; and (c) are not detrimental to the minority shareholders of the Company; and (ii) the disclosure is made in the Annual Report of the Company of the aggregate value of the RRPT based on the type of transactions, the names of the Related Parties and their relationships with the Company pursuant to the Proposed RRPT Mandates during the financial year and in the Annual Report of the Company in the subsequent years during which the Proposed RRPT Mandates is in force; and (iii) the Proposed RRPT Mandates is subject to annual renewal and will continue to be in full force until: (a) the conclusion of the next AGM of the Company following this AGM at which such Proposed RRPT Mandates was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; (b) the expiration of the period within which the next AGM after that date is required to be held pursuant to Section 143(1) of the Act (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or (c) revoked or varied by a resolution passed by the shareholders in general meeting, whichever is earlier.
AND THAT the Directors of the Company be authorised to complete and do all such acts and things as they may consider expedient or necessary (including executing all such documents as may be required) to give effect to the RRPT contemplated and/or authorised by this resolution.”
144 OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia)
9. PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR THE AUTHORITY TO THE COMPANY TO PURCHASE ITS OWN SHARES OF UP TO TEN PER CENT (10%) OF THE ISSUED AND PAID-UP SHARE CAPITAL (“PROPOSED SBB RENEWAL”) “THAT subject to the Act, the Articles of Association of the Company, the Main Market Ordinary Resolution 10 Listing Requirements of Bursa Securities and all other applicable laws, regulations and guidelines, the Company be and is hereby authorised to purchase such number of ordinary shares of RM1.00 each in the Company as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company, provided that: (i) the aggregate number of ordinary shares purchased and/or held by the Company as treasury shares shall not exceed ten percent (10%) of the issued and paid-up ordinary share capital of the Company at any point in time; (ii) the funds allocated by the Company for the purpose of purchasing its shares shall not exceed the total retained profits and share premium account of the Company;
THAT upon completion of the purchase by the Company of its own shares, the Directors of the Company be authorised to deal with the shares purchased in their absolute discretion in the following manner:- (i) cancel all the shares so purchased; and/or (ii) retain the shares so purchased in treasury for distribution as dividend to the shareholders and/or resell on the market of Bursa Securities; and/or (iii) retain part thereof as treasury shares and cancel the remainder.
THAT such authority conferred by this resolution shall commence upon the passing of this resolution and shall continue to be in force until: (i) the conclusion of the next AGM of the Company following this AGM at which such resolution was passed, at which time it will lapse, unless by an ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; (ii) the expiration of the period within which the next AGM is required by law to be held; or (iii) revoked or varied by an ordinary resolution passed by the shareholders of the Company in general meeting, whichever occurs first.
AND THAT the Directors of the Company be authorised to give effect to the Proposed SBB Renewal with full power to assent to any modifications and/or amendments as may be required by the relevant authorities.”
10. To consider any other business of which due notice shall have been given in accordance with the Act.
By Order Of The Board
CHAN CHEE KHEONG (MAICSA 0810287) WONG WAI FOONG (MAICSA 7001358) Company Secretaries Kuala Lumpur 19 August 2014 145 OLDTOWN BERHAD (797771-M) Notice of (Incorporated in Malaysia) Annual General Meeting
NOTES:
1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint more than two (2) proxies to attend and vote in his/her stead at the same meeting. A proxy may but need not be a member of the Company and Section 149(1)(a) and (b) of the Act shall not apply to the Company.
2. Where a member appoints two (2) or more proxies, the appointment shall be invalid unless the member specifies the proportion of his shareholdings to be represented by each proxy. Each proxy appointed, shall represent a minimum of 100 shares held by the member.
3. Where a member of the Company is an authorized nominee as defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”), it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.
4. Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“Omnibus Account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Account it holds. An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA.
5. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or if the appointor is a corporation, either under its common seal or under the hand of its attorney duly authorised.
6. The instrument appointing a proxy shall be deposited at the Share Registrar of the Company at Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur not less than forty-eight (48) hours before the time appointed for holding the meeting or at any adjournment thereof.
7. For the purpose of determining a member who shall be entitled to attend the meeting, the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd., in ac- cordance with Article 60(c) of the Company’s Articles of Association and Section 34(1) of the SICDA to issue a General Meeting Record of Depositors as at 2 September 2014. Only a depositor whose name appears on the General Meeting Record of Depositors as at 2 September 2014 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote in his/her stead.
EXPLANATORY NOTES
1. Item 1 of The Agenda - The Audited Financial Statements for The Financial Year Ended 31 March 2014 and The Reports of The Directors and Independent Auditors Thereon
This agenda item is meant for discussion only, as the provision of Section 169(1) of the Act does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting.
2. Ordinary Resolution 8 - Authority to Allot and Issue Shares pursuant to Section 132D of The Companies Act, 1965
The proposed Ordinary Resolution 8 is a renewal of the general mandate for issuance of shares by the Company under Section 132D of the Companies Act, 1965. The Ordinary Resolution, if passed, will empower the Directors of the Company, from the date of the above AGM, to allot and issue new shares of the Company up to an amount not exceeding in total ten percent (10%) of the issued share capital of the Company for the time being for such purposes as the Directors consider would be in the best interest of the Company. This authority, unless earlier revoked or varied by the Company at a general meeting, will expire at the next AGM of the Company.
The authority to issue shares pursuant to Section 132D of the Companies Act, 1965 will provide flexibility and expediency to the Company for any possible fund raising activities involving the issuance or placement of shares to facilitate business expansion or strategic merger and acquisition opportunities involving equity deals or part equity or to fund future investment project(s) or for working capital requirements, which the Directors of the Company consider to be in the best interest of the Company. The approval is sought to avoid any delay and cost in convening a general meeting to approve such issuance of shares.
As at the date of this Notice, the Company did not issue any new shares pursuant to Section 132D of the Companies Act, 1965 under the general mandate which was approved at the Fifth AGM of the Company held on 26 September 2013 and which will lapse at the conclusion of the Sixth AGM. A renewal of this authority is being sought at the Sixth AGM.
3. Ordinary Resolution 9 - Proposed RRPT Mandates
The proposed Ordinary Resolution 9, if passed, will provide the Company and/or its subsidiaries a mandate to enter into RRPT of a revenue or trading nature with the Related Parties in compliance with the Main Market Listing Requirements of Bursa Securities. The mandate, unless revoked or varied by the Company at a general meeting, will expire at the next AGM of the Company.
Detailed information of the Proposed RRPT Mandates is set out in Appendix II and Appendix III of the Circular to Shareholders dated 19 August 2014 circulated together with this Annual Report.
4. Ordinary Resolution 10 - Proposed SBB Renewal
The proposed Ordinary Resolution 10, if passed, will give the Directors of the Company the authority to purchase the Company’s own shares up to an amount not exceeding in total ten per cent (10%) of its issued share capital at any point in time upon such terms and conditions as the Directors may deem fit in the interest of the Company. This authority, unless revoked or varied by the Company at a general meeting, will expire at the next AGM of the Company. Further information on the Proposed SBB Renewal is set out in Section 3 of the Circular to Shareholders dated 19 August 2014 circulated together with this Annual Report.
STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING (Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad) There were no Directors standing for election at the forthcoming Sixth Annual General Meeting. 146 OLDTOWN BERHAD (797771-M) CDS Account No. of authorised nominee (Incorporated in Malaysia)
OLDTOWN BERHAD (797771-M) (Incorporated in Malaysia) PROXY FORM SIXTH (6TH) ANNUAL GENERAL MEETING
I/We, (Full name in block capitals) NRIC No./Company No. of (Address) being a Member of OLDTOWN BERHAD, hereby appoint (Full name in block capitals)
NRIC No. of (Address)
or failing him/her, (Full name in block capitals)
NRIC No. of (Address) or failing him/her, *the Chairman of the meeting as *my/our proxy to vote for *me/us and on *my/our behalf at the Sixth (6th) Annual General Meeting of the Company, to be held at Impiana Hotel, Ballroom 1 & 2, 18 Jalan Raja Dr Nazrin Shah, 30250 Ipoh, Perak Darul Ridzuan on Wednesday, 10 September 2014, at 10.30 a.m. and, at every adjournment thereof. *My/Our proxy is to vote as indicated below:
RESOLUTIONS FOR AGAINST Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 Ordinary Resolution 4 Ordinary Resolution 5 Ordinary Resolution 6 Ordinary Resolution 7 Ordinary Resolution 8 Ordinary Resolution 9 Ordinary Resolution 10
Please indicate with an “X” in the spaces provided above how you wish your vote The proportions of shareholdings to be represented by *my/*our proxies are as follows:- to be casted. If no specific direction as to the voting is given, the proxy will vote or abstain from voting at his/her discretion. No. of shares Percentage ( * Strike out whichever is not desired) Total shares held 100% Proxy 1 Signed this day of 2014 Proxy 2
NOTES:
1. A member of the Company entitled to attend and vote at the meeting 5. The instrument appointing a proxy shall be in writing under the hand is entitled to appoint more than two (2) proxies to attend and vote in of the appointor or of his attorney duly authorised in writing or if the Signature/Common Seal of Member his/her stead at the same meeting. A proxy may but need not be a appointor is a corporation, either under its common seal or under the member of the Company and Section 149(1)(a) and (b) of the Act shall hand of its attorney duly authorised. not apply to the Company. 6. The instrument appointing a proxy shall be deposited at the Share 2. Where a member appoints two (2) or more proxies, the appointment Registrar of the Company at Level 17, The Gardens North Tower, shall be invalid unless the member specifies the proportion of his Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur not less shareholdings to be represented by each proxy. Each proxy appointed, than forty-eight (48) hours before the time appointed for holding the shall represent a minimum of 100 shares held by the member. meeting or at any adjournment thereof. Telephone Number of Member 3. Where a member of the Company is an authorized nominee as 7. For the purpose of determining a member who shall be entitled defined under the Securities Industry (Central Depositories) Act 1991 to attend the meeting, the Company shall be requesting Bursa (“SICDA”), it may appoint at least one (1) proxy in respect of each Malaysia Depository Sdn. Bhd., in accordance with Article 60(c) of securities account it holds with ordinary shares of the Company the Company’s Articles of Association and Section 34(1) of the SICDA standing to the credit of the said securities account. to issue a General Meeting Record of Depositors as at 2 September 2014. Only a depositor whose name appears on the General Meeting 4. Where a member of the Company is an exempt authorised nominee Record of Depositors as at 2 September 2014 shall be entitled to which holds ordinary shares in the Company for multiple beneficial attend the said meeting or appoint proxies to attend and/or vote in owners in one securities account (“Omnibus Account”), there is no his/her stead. limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Account it holds. An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of 147 subsection 25A(1) of SICDA. Please fold this flap for sealing
Affix RM0.80 Stamp
The Company Secretary
OLDTOWN BERHAD (797771-M) c/o Tricor Investor Services Sdn Bhd Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur.
Please fold this flap for sealing “ The measure of intelligence is the ability to change.”
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ANNUAL REPORT OLDTOWN BERHAD (797771-M) 2014