FINANCIAL STATEMENTS
Directors’ Report 42 - 47
Statement by Directors 48
Statutory Declaration 48
Report of the Auditors 49 - 50 41
Balance Sheets 51 - 52
Income Statements 53
Consolidated Statement of Changes in Equity 54 - 55
Company Statement of Changes in Equity 56
Consolidated Cash Flow Statement 57 - 58
Company Cash Flow Statement 59 - 60
Notes to the Financial Statements 61 - 134
ANNUAL REPORT 2005 DIRECTORS’ REPORT
The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 January 2005.
PRINCIPAL ACTIVITIES
The principal activities of the Company are provision of management services, investment holding and property development.
The principal activities of the subsidiaries are described in Note 51 to the financial statements.
There have been no significant changes in the nature of the principal activities during the financial year other than those activities that ceased consequent to the disposal and deregistration of subsidiaries as disclosed in Note 51 to the financial statements.
RESULTS
Group Company RM’000 RM’000
Profit after taxation 83,645 8,673 Minority interests 8,376 –
Net profit attributable to shareholders 92,021 8,673
42 There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the statement of changes in equity.
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.
DIVIDENDS
On 25 October 2004, the Company paid a final dividend of 5% less taxation on 594,219,322 ordinary shares of RM1.00 each less 5,112,500 treasury shares of RM1.00 each amounting to RM21,207,849 in respect of the previous financial year ended 31 January 2004.
On 1 January 2005, the Company paid a yearly dividend of 5% net of taxation on 260,524,616 irredeemable convertible preference shares of RM0.10 each amounting to RM1,302,624.
At the forthcoming Annual General Meeting, a final dividend in respect of the current financial year ended 31 January 2005 of 4% less taxation based on the issued and paid-up capital as at 31 January 2005 amounting to 598,844,934 ordinary shares of RM1.00 each amounting to RM17,246,734 have been proposed for shareholders' approval. The financial statements for the current financial year do not reflect the proposed dividend.
Such dividend, if approved by the shareholders, will be accounted for in shareholders' equity as an appropriation of retained profits in the financial year ending 31 January 2006.
TALAM CORPORATION BERHAD (1120-H) DIRECTORS’ REPORT (Cont’d)
DIRECTORS
The names of the directors of the Company in office since the date of the last report and at the date of this report are:
Tan Sri Dato’ (Dr.) Ir. Chan Ah Chye @ Chan Chong Yoon YAM Tengku Sulaiman Shah Al-Haj Ibni Al-Marhum Sultan Salahuddin Abdul Aziz Shah Al-Haj Datuk Ab Rauf bin Yusoh Lai Moo Chan Sulaiman Hew bin Abdullah Tsen Keng Yam Mohd. Alkaf bin Mohd. Kahar (resigned on 15 April 2005)
DIRECTORS’ BENEFITS
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate.
Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by directors as shown in Note 35 to 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 any director or with a firm of which he is a member or with a company in which he has a substantial financial interest, other than those benefits which may deemed to have arisen by virtue of those contracts, agreements and transactions entered into in the ordinary course of business between the Company and its subsidiaries and companies in which the directors are deemed to have substantial financial interest and as disclosed in Note 44 to the financial statements. 43
DIRECTORS’ INTERESTS
According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in ordinary shares, warrants and irredeemable convertible preference shares in the Company and its related corporations during the financial year were as follows:
< ———————Number of Ordinary Shares of RM1.00 Each——————— > 1 February 31 January 2004 Bought Conversion Sold 2005
The Company
Direct Interest
Tan Sri Dato’ (Dr.) Ir Chan Ah Chye @ Chan Chong Yoon 75,254,762 2,707,800 12,230,806 (53,200,000) 36,993,368 YAM Tengku Sulaiman Shah Al-Haj Ibni Al-Marhum Sultan Salahuddin Abdul Aziz Shah Al-Haj 500 – – – 500 Mohd. Alkaf bin Mohd. Kahar 41,166 – – (36,100) 5,066 Lai Moo Chan 46,641 – – – 46,641 Sulaiman Hew bin Abdullah 42,906 – – – 42,906
ANNUAL REPORT 2005 DIRECTORS’ REPORT (Cont’d)
DIRECTORS’ INTERESTS (Cont’d)
< ———————Number of Ordinary Shares of RM1.00 Each——————— > 1 February 31 January 2004 Bought Conversion Sold 2005
The Company
Indirect Interest
Tan Sri Dato’ (Dr.) Ir Chan Ah Chye (1) @ Chan Chong Yoon 325,898,643 50,000 1,699,134 (25,944,500) 301,703,277
Mohd. Alkaf (2) bin Mohd. Kahar 125,000 – – – 125,000
(1) Deemed interested through his spouse, Puan Sri Datin Thong Nyok Choo and his daughter, Chan Siu Wei and by virtue of his direct and indirect interest in Kumpulan Europlus Berhad, Pengurusan Projek Bersistem Sdn. Bhd., Faircrest Sdn. Bhd. (In Liquidation) and Prosperous Inn Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965.
(2) Deemed interested through his spouse, Lailatool Badriah Bt Mahmood and his daughters, Farah Marliza Bt Mohd Alkaf and Farah Azlina Bt Mohd Alkaf.
< —————————5-Year 5% Irredeemable Convertible————————— > Preference Shares (“ICPS”) 1 February 31 January 2004 Bought Conversion Sold 2005 44 The Company
Direct Interest
Tan Sri Dato’ (Dr.) Ir. Chan Ah Chye @ Chan Chong Yoon 208,187,545 – (122,308,083) – 85,879,462 Mohd. Alkaf bin Mohd. Kahar 147,916 – – – 147,916 Lai Moo Chan 110,307 – – – 110,307
Indirect Interest
Tan Sri Dato’ (Dr.) Ir. Chan Ah Chye (3) @ Chan Chong Yoon 59,267,338 3,017,000 (16,991,352) (7,361,250) 37,931,736
Mohd. Alkaf (4) bin Mohd. Kahar 312,500 – – – 312,500
(3) Deemed interested through his interest in Pengurusan Projek Bersistem Sdn. Bhd. and Faircrest Sdn. Bhd. (In Liquidation) pursuant to Section 6A of the Companies Act, 1965.
(4) Deemed interested through his spouse, Lailatool Badriah Bt Mahmood and his daughters, Farah Marliza Bt Mohd Alkaf and Farah Azlina Bt Mohd Alkaf.
Tan Sri Dato’ (Dr.) Ir. Chan Ah Chye @ Chan Chong Yoon, by virtue of his interests in shares of the Company is also deemed interested in shares of all the Company’s subsidiaries to the extent the Company has an interest.
None of the other directors in office at the end of the financial year had any interest in shares, warrants and ICPS in the Company or its related corporations during the financial year.
TALAM CORPORATION BERHAD (1120-H) DIRECTORS’ REPORT (Cont’d)
ISSUE OF SHARES
During the financial year, the Company increased its issued and paid-up share capital from RM607,913,678 to RM624,398,262 by way of issuance of the following:
(i) 16,478,584 ordinary shares of RM1.00 each amounting to RM16,478,584 pursuant to the conversion of 7% Irredeemable Convertible Unsecured Loan Stocks ("ICULS") 2003/2005 as disclosed in Note 26; and
(ii) 6,000 ordinary shares of RM1.00 each amounting to RM6,000 pursuant to the conversion of 7% ICULS 2003/2006 as disclosed in Note 26.
The new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company except that they are not entitled to any dividends, allotments and/or other distributions unless the allotment of the new ordinary shares is made on or prior to the entitlement date of such dividends, rights, allotments and/ or other distributions.
SHARE BUY BACK
During the financial year, the Company:
(a) repurchased its issued ordinary shares from the open market which were financed by internally generated funds. The number of ordinary shares repurchased during the financial year was 5,092,500 ordinary shares at prices ranging from RM1.07 to RM1.40 per share. The total consideration for the shares repurchased during the year including transaction costs was RM5,700,790. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965. 45
(b) sold the entire treasury shares held of 5,112,500 ordinary shares in the open market at prices ranging from RM1.12 to RM1.15 per share for a total consideration of RM5,862,000 thereby resulting in a gain of RM138,000 to the Company.
The details of the Share Buy Back are as follows:
Number of Ordinary Shares of RM1.00 Each Amount ‘000 RM’000
At 1 February 2004 20 23 Repurchased during the year 5,092 5,701 Less : Sold during the year (5,112) (5,724)
At 31 January 2005 – –
EMPLOYEES’ SHARE OPTION SCHEME
The main features of Employees’ Share Option Scheme are as disclosed in Note 48 to the financial statements.
WARRANTS
The main features of Warrants 2000/2005 are as disclosed in Note 49 to the financial statements.
ANNUAL REPORT 2005 DIRECTORS’ REPORT (Cont’d)
5-YEAR 5% ICPS
The main features of the ICPS are as disclosed in Note 50 to the financial statements.
ICULS
The main features of the ICULS are as disclosed in Note 26 to the financial statements.
OTHER STATUTORY INFORMATION
(a) Before the balance sheets and income statements of the Group and of the Company were made out, the directors took reasonable steps:
(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and
(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise other than the recovery of certain receivables as disclosed in Note 14(a)(i) to the financial statements.
(b) At the date of this report, the directors are not aware of any circumstances which would render:
(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and 46 (ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.
(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.
(e) As at the date of this report, there does not exist:
(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or
(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.
(f) In the opinion of the directors:
(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and
(ii) 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 the operations of the Group or of the Company for the financial year in which this report is made.
TALAM CORPORATION BERHAD (1120-H) DIRECTORS’ REPORT (Cont’d)
SIGNIFICANT EVENTS
The significant events during the financial year are as disclosed in Note 42 to the financial statements.
SUBSEQUENT EVENTS
The subsequent events are as disclosed in Note 43 to the financial statements.
AUDITORS
The auditors, Ernst & Young, have indicated their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the directors
TAN SRI DATO’ (DR.) IR. CHAN AH CHYE LAI MOO CHAN @ CHAN CHONG YOON
Kuala Lumpur, Malaysia 47 31 May 2005
ANNUAL REPORT 2005 STATEMENT BY DIRECTORS PURSUANT TO SECTION 169 (15) OF THE COMPANIES ACT, 1965
We, TAN SRI DATO’ (DR.) IR. CHAN AH CHYE @ CHAN CHONG YOON and LAI MOO CHAN, being two of the directors of TALAM CORPORATION BERHAD, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 51 to 134 are drawn up in accordance with applicable Malaysian Accounting Standards Board Approved Accounting Standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as at 31 January 2005 and of their results and their cash flows for the year then ended.
Signed on behalf of the Board in accordance with a resolution of the directors
TAN SRI DATO’ (DR.) IR. CHAN AH CHYE LAI MOO CHAN @ CHAN CHONG YOON
Kuala Lumpur, Malaysia
31 May 2005
48 STATUTORY DECLARATION PURSUANT TO SECTION 169 (16) OF THE COMPANIES ACT, 1965
I, LEOW CHI LIH, being the officer primarily responsible for the financial management of TALAM CORPORATION BERHAD, do solemnly and sincerely declare that the accompanying financial statements set out on pages 51 to 134 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.
Subscribed and solemnly declared by the abovenamed LEOW CHI LIH at Kuala Lumpur in the Federal Territory on 31 May 2005 LEOW CHI LIH
Before me,
LIM JIT KIOW (W 290) Commissioner for Oaths
TALAM CORPORATION BERHAD (1120-H) REPORT OF THE AUDITORS TO THE MEMBERS OF TALAM CORPORATION BERHAD (INCORPORATED IN MALAYSIA)
We have audited the financial statements set out on pages 51 to 134. These financial statements are the responsibility of the Company's directors.
It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report.
We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
In our opinion:
(a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable Malaysian Accounting Standards Board Approved Accounting Standards in Malaysia so as to give a true and fair view of:
(i) the financial position of the Group and of the Company as at 31 January 2005 and of the results and the cash flows of the Group and the Company for the year then ended; and
(ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and
(b) the accounting and other records and the registers required by the Act to be kept by the Company and 49 by its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
We have considered the financial statements and the auditors’ reports thereon of the subsidiaries of which we have not acted as auditors, as indicated in Note 51, being financial statements that have been included in the consolidated financial statements.
We are satisfied that the financial statements 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 consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.
The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification material to the consolidated financial statements and in respect of subsidiaries incorporated in Malaysia, did not include any comment required to be made under Section 174(3) of the Act other than those indicated in Note 51(a) to the financial statements.
Without qualifying our opinion, we draw attention to:
(a) Note 14(a)(i) to the financial statements which discloses that the Group is engaged in a legal suit to recover certain deposit and instalment payments made to a third party and Note 40(b) to the financial statements which quantifies the contingent loss which would arise if the Group is unable to secure a favourable outcome from the said legal suit.
The ultimate outcome of the matters mentioned in the preceding paragraph cannot be presently determined and accordingly, the financial statements do not include any adjustment which may be necessary on resolution of the said uncertainty.
ANNUAL REPORT 2005 REPORT OF THE AUDITORS (Cont’d) TO THE MEMBERS OF TALAM CORPORATION BERHAD (INCORPORATED IN MALAYSIA)
(b) Notes 2(a) and 28(b) to the financial statements which disclose that the timing of cash flows anticipated from property development activities of the Group do not match the cash flows required to meet borrowing obligations. These notes further disclosed that discussions have taken place with various existing lenders for the restructuring and deferment of repayment obligations. The directors have expressed their confidence that the Group will be successful in obtaining the required financing arrangements.
The financial statements of the Group and of the Company do not include any adjustments relating to the amounts and classification of assets and liabilities that might be necessary should the Group and the Company be unsuccessful in obtaining the required financing arrangements.
ERNST & YOUNG WONG KANG HWEE AF: 0039 No. 1116/01/06(J) Chartered Accountants Partner
Kuala Lumpur, Malaysia 31 May 2005
50
TALAM CORPORATION BERHAD (1120-H) BALANCE SHEETS AS AT 31 JANUARY 2005
Group Company Note 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
NON-CURRENT ASSETS
Property, plant and equipment 3 252,852 275,225 2,937 2,733 Land held for property development 4 971,596 758,540 18,126 18,126 Investment properties 5 162,454 168,303 – – Subsidiaries 6 – – 499,238 514,782 Associates 7 – – – – Other investment 8 76,332 76,332 – – Sinking funds held by trustees 9 21,833 70,569 – 29,962 Loans and financing receivables – 4,647 – – Deferred tax assets 30 5,801 10,245 – – Goodwill 10 819 3,178 – –
1,491,687 1,367,039 520,301 565,603
CURRENT ASSETS
Property development costs 4 1,907,323 2,391,476 47,713 48,322 Inventories 11 80,163 131,748 – – Due from subsidiaries 12 – – 520,616 498,734 Trade receivables 13 80,516 297,154 – – 51 Other receivables 14 196,713 254,386 12,731 13,471 Cash and bank balances 15 202,615 310,456 1,481 1,769
2,467,330 3,385,220 582,541 562,296
CURRENT LIABILITIES
Provision for liabilities 16 99,930 109,802 – – Short term borrowings 17 333,450 294,181 56,549 60,537 Due to subsidiaries 19 – – 228,649 122,761 Trade payables 20 349,055 995,114 – – Other payables 21 535,306 745,992 12,500 15,968 Deferred progress billings 28 349,231 322,259 – – Taxation 214,808 179,302 1,210 660
1,881,780 2,646,650 298,908 199,926
NET CURRENT ASSETS 585,550 738,570 283,633 362,370
2,077,237 2,105,609 803,934 927,973
ANNUAL REPORT 2005 BALANCE SHEETS (Cont’d) AS AT 31 JANUARY 2005
Group Company Note 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
FINANCED BY:
Share capital 22 619,868 600,290 619,868 600,290 Treasury shares 23 – (23) – (23) Reserves 461,706 405,751 178,236 205,590
Shareholders’ equity 1,081,574 1,006,018 798,104 805,857 Minority interests 2,575 11,226 – –
1,084,149 1,017,244 798,104 805,857
Irredeemable Convertible Unsecured Loan Stocks 26 1,020 3,850 1,020 3,850 Long term borrowings 17 540,864 359,114 4,531 7,987 Bonds 27 – 110,000 – 110,000 Deferred progress billings 28 137,599 372,965 – – Other long term payables 29 302,012 231,173 – – Deferred tax liabilities 30 11,593 11,263 279 279
Non-current liabilities 993,088 1,088,365 5,830 122,116
52 2,077,237 2,105,609 803,934 927,973
The accompanying notes form an integral part of the financial statements.
TALAM CORPORATION BERHAD (1120-H) INCOME STATEMENTS FOR THE YEAR ENDED 31 JANUARY 2005
Group Company Note 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Revenue 31 1,002,052 911,985 12,626 66,384 Cost of sales 32 (739,457) (738,878) (606) (815)
Gross profit 262,595 173,107 12,020 65,569 Other operating income 40,168 17,302 2,592 9,344 Administration and operating expenses (156,608) (142,256) (8,243) (35,229) (Loss)/gain on disposal of subsidiaries (921) 28,966 11,800 –
Profit from operations 33 145,234 77,119 18,169 39,684 Finance costs, net 36 (14,488) (10,265) (6,136) (4,075) Share of results of associates – 4,245 – –
Profit before taxation 130,746 71,099 12,033 35,609 Taxation: Company and subsidiaries (47,101) (19,721) (3,360) (7,616) Associates – (648) – –
37 (47,101) (20,369) (3,360) (7,616)
Profit after taxation 83,645 50,730 8,673 27,993 Minority interests 8,376 3,303 – – 53
Net profit attributable to shareholders 92,021 54,033 8,673 27,993
Earnings per share (sen) Basic 38 15.83 18.29 Diluted 38 14.86 15.14
The accompanying notes form an integral part of the financial statements.
ANNUAL REPORT 2005 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JANUARY 2005
< ————Non-Distributable Reserves———— > Distributable Foreign Equity Reserve Share Treasury Capital Share Exchange Component Retained Capital Shares Reserve Premium Reserve of ICULS Profits Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 (Note 22) (Note 23) (Note 24) (Note 26)
At 31 January 2003 215,300 (120) 11,901 158,400 11,782 – 177,874 575,137 Issuance of ordinary shares 219,314 – – – – – – 219,314 Exercise of Warrants 2000/2005 54,439 – – – – – – 54,439 Conversion of 7% ICULS 2003/2005 9,674 – – – – – – 9,674 Issuance of RCPS # 500 – – 49,500 – – – 50,000 Conversion of RCPS 49,500 – – (49,500) – – – – Issuance of ICPS 59,187 – – – – – – 59,187 Liability component of ICPS (7,624) – – – – – – (7,624) Shares repurchased held as treasury shares, at cost – (80) – – – – – (80) Treasury shares sold – 177 – – – – – 177 Distribution of non-property related companies via cancellation of share premium – – – (33,849) – – – (33,849) Realisation of bonus issue arising from disposal of a subsidiary – – (700) – – – 700 – 54 Equity component of ICULS – – – – – 31,816 – 31,816 Currency translation differences, representing net loss not recognised in the income statement – – – – (9) – – (9) Net profit for the year – – – – – – 54,033 54,033 Dividends (Note 39) – – – – – – (6,197) (6,197)
At 31 January 2004 600,290 (23) 11,201 124,551 11,773 31,816 226,410 1,006,018
# Redeemable Convertible Preference Shares
TALAM CORPORATION BERHAD (1120-H) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Cont’d) FOR THE YEAR ENDED 31 JANUARY 2005
< ————Non-Distributable Reserves———— > Distributable Foreign Equity Reserve Share Treasury Capital Share Exchange Component Retained Capital Shares Reserve Premium Reserve of ICULS Profits Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 (Note 22) (Note 23) (Note 24) (Note 26)
At 31 January 2004 600,290 (23) 11,201 124,551 11,773 31,816 226,410 1,006,018 Conversion of 7% ICULS 2003/2005 16,479 – – – – – – 16,479 Conversion of 7% ICULS 2003/2006 6 – – – – – – 6 Liability component of ICPS 3,093 – – – – – – 3,093 Shares repurchased held as treasury shares, at cost – (5,701) – – – – – (5,701) Treasury shares sold – 5,724 – – – – – 5,724 Gain on disposal of treasury shares – – – – – – 138 138 Conversion of ICULS – – – – – (13,655) – (13,655) Currency translation differences, representing net loss not recognised in the income statement – – – – (39) – – (39) Net profit for the year – – – – – – 92,021 92,021 Dividends (Note 39) – – – – – – (22,510) (22,510)
At 31 January 2005 619,868 – 11,201 124,551 11,734 18,161 296,059 1,081,574 55
The accompanying notes form an integral part of the financial statements.
ANNUAL REPORT 2005 COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 JANUARY 2005
Non-Distributable Reserves Distributable Equity Reserve Share Treasury Share Component Retained Capital Shares Premium of ICULS Profits Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 (Note 22) (Note 23) (Note 26)
At 31 January 2003 215,300 (120) 158,400 – 27,427 401,007 Issuance of ordinary shares 219,314 – – – – 219,314 Exercise of Warrants 2000/2005 54,439 – – – – 54,439 Conversion of 7% ICULS 2003/2005 9,674 – – – – 9,674 Issuance of RCPS 500 – 49,500 – – 50,000 Conversion of RCPS 49,500 – (49,500) – – – Issuance of ICPS 59,187 – – – – 59,187 Liability component of ICPS (7,624) – – – – (7,624) Shares repurchased held as treasury shares, at cost – (80) – – – (80) Treasury shares sold – 177 – – – 177 Distribution of non-property related companies via cancellation of share premium – – (33,849) – – (33,849) Equity component of ICULS – – – 31,816 – 31,816 Net profit for the year – – – – 27,993 27,993 Dividends (Note 39) – – – – (6,197) (6,197)
At 31 January 2004 600,290 (23) 124,551 31,816 49,223 805,857 56
At 31 January 2004 600,290 (23) 124,551 31,816 49,223 805,857 Conversion of 7% ICULS 2003/2005 16,479 – – – – 16,479 Conversion of 7% ICULS 2003/2006 6 – – – – 6 Liability component of ICPS 3,093 – – – – 3,093 Shares repurchased held as treasury shares, at cost – (5,701) – – – (5,701) Treasury shares sold – 5,724 – – – 5,724 Gain on disposal of treasury shares – – – – 138 138 Equity components of ICULS – – – (13,655) – (13,655) Net profit for the year – – – – 8,673 8,673 Dividends (Note 39) – – – – (22,510) (22,510)
At 31 January 2005 619,868 – 124,551 18,161 35,524 798,104
The accompanying notes form an integral part of the financial statements.
TALAM CORPORATION BERHAD (1120-H) CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 JANUARY 2005
2005 2004 RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 130,746 71,099 Adjustment for: Amortisation of discount on deferred progress billings 43,544 17,204 Amortisation of goodwill 68 429 Bad debts written off 7 216 Depreciation 9,916 10,178 Gain on disposal of property, plant and equipment (63) (40) Goodwill written off 2,291 – Interest expenses 22,992 20,740 Interest income (8,504) (10,475) Inventories written off – 2 Loss/(gain) on disposal of subsidiaries 921 (28,966) Property, plant and equipment written off 69 612 Provision for doubtful debts 9,020 4,796 Reversal of provision for doubtful debts (17) (688) Provision for liabilities 2,350 17,567 Share of results of associates – (4,245)
Operating profit before working capital changes 213,340 98,429 Decrease in property development costs 288,001 918,996 Increase in inventories (24,505) (50,274) Decrease/(increase) in receivables 92,315 (34,629) 57 (Decrease)/increase in payables (398,525) 89,658
Cash generated from operations 170,626 1,022,180 Income taxes paid (5,222) (29,667) Interest paid (67,398) (66,293) Interest received 8,504 10,475 Payment for liquidated ascertained damages (12,222) (5,070)
Net cash generated from operating activities 94,288 931,625
CASH FLOWS FROM INVESTING ACTIVITIES
Amount paid to land vendors (156,800) (94,844) Proceeds from disposal of investment properties 5,849 – Development expenditure on land held for property development (33,795) (47,152) Purchases of property, plant and equipment (9,836) (6,337) Proceeds from disposal of property, plant and equipment 2,306 582 Disposal/(acquisition) of subsidiaries 16,231 (24,531)
Net cash used in investing activities (176,045) (172,282)
ANNUAL REPORT 2005 CONSOLIDATED CASH FLOW STATEMENT (Cont’d) FOR THE YEAR ENDED 31 JANUARY 2005
2005 2004 RM’000 RM’000
CASH FLOWS FROM FINANCING ACTIVITIES
Net withdrawal from sinking funds held by trustees 48,736 246,806 Net repayment of term loans and bridging loans (15) (35,279) Net drawdown/(repayment) of hire purchase and lease financing 1,320 (659) Net drawdown/(repayment) of block discounting 1,131 (2,561) Proceeds from exercise of warrants – 54,439 Withdrawal/(placement) with an Escrow account 73,505 (168,117) Redemption of bonds (110,000) – Repurchase of treasury shares (5,701) (80) Proceeds from disposal of treasury shares 5,862 177 Issuance/(redemption) of BaIDs 140,000 (900,000) Net drawdown of Islamic financing facilities 71,172 – Net drawdown of short term borrowings 124,166 3,353 Repayment of deferred progress billings (251,938) (17,204) Dividends paid (22,510) (6,197)
Net cash generated from/(used in) financing activities 75,728 (825,322)
NET DECREASE IN CASH AND CASH EQUIVALENTS (6,029) (65,979) EFFECTS OF EXCHANGE RATE CHANGES (39) (9) CASH AND CASH EQUIVALENTS AT BEGINNING 58 OF FINANCIAL YEAR 102,133 168,121
CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR (NOTE 15) 96,065 102,133
The accompanying notes form an integral part of the financial statements.
TALAM CORPORATION BERHAD (1120-H) COMPANY CASH FLOW STATEMENT FOR THE YEAR ENDED 31 JANUARY 2005
2005 2004 RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 12,033 35,609 Adjustment for: Bad debts written off – 17 Depreciation 536 526 Gain on disposal of investment in subsidiaries (11,800) – Property, plant and equipment written off 174 – Waiver of subsidiary’s debts – 5 Waiver of debts by subsidiaries – (9,000) Interest expenses 7,112 6,350 Interest income (976) (2,275) Dividend income (12,000) (39,500)
Operating cash flows before working capital changes (4,921) (8,268) (Increase)/decrease in property development costs (17) 789 Decrease in receivables 1,366 8,038 Net changes in related companies balances 84,006 (67,227) (Decrease)/increase in payables (3,941) 4,740
Cash generated from/(used in) operations 76,493 (61,928) Income taxes paid – (2,242) Interest paid (6,089) (4,552) Interest received 976 2,275 59
Net cash generated from/(used in) operating activities 71,380 (66,447)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of subsidiaries 27,408 – Dividend received 8,640 31,884 Purchases of property, plant and equipment (914) (574) Additional investment in a subsidiary (64) –
Net cash generated from investing activities 35,070 31,310
ANNUAL REPORT 2005 COMPANY CASH FLOW STATEMENT (Cont’d) FOR THE YEAR ENDED 31 JANUARY 2005
2005 2004 RM’000 RM’000
CASH FLOWS FROM FINANCING ACTIVITIES
Net withdrawal from/(placement) into sinking funds held by trustees 29,962 (10,442) Net repayment of term loans (2,324) (1,652) Net repayment of hire purchase and lease payables (978) (461) Net repayment of short term borrowings (1,125) (1,175) Redemption of bonds (110,000) – Repurchase of treasury shares (5,701) (80) Proceeds from disposal of treasury shares 5,862 177 Proceed from exercise of warrants – 54,439 Dividends paid (22,510) (6,197)
Net cash (used in)/generated from financing activities (106,814) 34,609
NET DECREASE IN CASH AND CASH EQUIVALENTS (364) (528)
CASH AND CASH EQUIVALENTS AT BEGINNING OF FINANCIAL YEAR (8,042) (7,514)
CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR (NOTE 15) (8,406) (8,042)
60
The accompanying notes form an integral part of the financial statements.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS 31 JANUARY 2005
1. CORPORATE INFORMATION
The principal activities of the Company are provision of management services, investment holding and property development.
The principal activities of the subsidiaries are described in Note 51 to the financial statements.
There have been no significant changes in the nature of the principal activities during the financial year other than those activities that ceased consequent to the disposal and deregistration of subsidiaries as disclosed in Note 51 to the financial statements.
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 ("Bursa Malaysia"). The registered office of the Company is located at Suite 2.05, Level 2, Menara Maxisegar, Jalan Pandan Indah 4/2, Pandan Indah, 55100 Kuala Lumpur.
The number of employees in the Group and the Company at the end of the financial year were 1,016 (2004: 1,162) and 7 (2004: 356) respectively.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 31 May 2005.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Preparation 61 The financial statements of the Group and of the Company have been prepared under the historical cost convention and comply with the provisions of the Companies Act, 1965 and applicable Malaysian Accounting Standards Board ("MASB") Approved Accounting Standards in Malaysia.
The financial statements of the Group and of the Company have been prepared on a going concern basis. The timing of the anticipated cash flows from the property development activities of the Group do not match the cash flows required to meet the obligations under Assets-Backed Securitisation ("ABS") in accordance with existing terms of the repayment. The Group is in an advanced stage of discussion with the lenders to restructure and defer its repayment of certain obligations under ABS which is due in the next 12 months as disclosed in Note 28(b). The directors are confident that the said obligations will be successfully restructured and deferred.
The financial statements of the Group and the Company do not include any adjustments relating to the amounts and classification of assets and liabilities that might be necessary should the Group and the Company be unsuccessful in obtaining the required financing arrangements.
During the financial year ended 31 January 2005, the Group and the Company adopted the MASB Standard 32: Property development activities for the first time. The adoption of MASB 32 has not given rise to any adjustments to the opening balances of retained profits of the prior year and current year or to changes in comparatives, other than changes in presentation of certain comparative figures as disclosed in Note 45.
(b) Basis of Consolidation
(i) Subsidiaries
The consolidated financial statements include the financial statements of the Company and all its subsidiaries. Subsidiaries are those entities in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(b) Basis of Consolidation (Cont’d)
(i) Subsidiaries (Cont’d)
Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of subsidiaries acquired or disposed of during the financial year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal as appropriate. The assets and liabilities of the subsidiaries are measured at their fair values at the date of acquisition. The difference between the cost of an acquisition and the fair value of the Group’s share of the net assets of the acquired subsidiary at the date of acquisition is included in the consolidated balance sheet as goodwill or negative goodwill arising on consolidation.
Intra-group transactions, balances and resulting unrealised gains are eliminated on consolidation and the consolidated financial statements reflect external transactions only. Unrealised losses are eliminated on consolidation unless costs cannot be recovered.
The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share of its net assets together with any unamortised balance of goodwill and exchange differences.
Minority interests in the consolidated balance sheet consist of the minorities’ share of the fair value of the identifiable assets and liabilities of the acquiree as at acquisition date and the minorities’ share of movements in the acquiree’s equity since then.
(ii) Associates 62 Associates are those entities in which the Group exercises significant influence but not control, through participation in the financial and operating policy decisions of the entities.
Investments in associates are accounted for in the consolidated financial statements by the equity method of accounting based on the audited or management financial statements of the associates. Under the equity method of accounting, the Group’s share of profits less losses of associates during the financial year is included in the consolidated income statement. The Group’s interest in the associates is carried in the consolidated balance sheet at cost plus the Group’s share of post-acquisition retained profits or accumulated losses and other reserves.
Unrealised gains on transactions between the Group and the associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are eliminated unless cost cannot be recovered.
(iii) Jointly Controlled Entities
A jointly controlled entity is an entity in which the Group has joint control over its economic activity established under a contractual arrangement.
Investments in jointly controlled entities are accounted for in the consolidated financial statements by the equity method of accounting based on the audited or management financial statements of the jointly controlled entities. Under the equity method of accounting, the Group’s share of profits less losses of jointly controlled entities during the financial year is included in the consolidated income statement. The Group’s interest in jointly controlled entities is carried in the consolidated balance sheet at cost plus the Group’s share of post- acquisition retained profits or accumulated losses and other reserves.
Unrealised gains on transactions between the Group and its jointly controlled entities are eliminated to the extent of the Group’s interest in the jointly controlled entities. Unrealised losses are eliminated unless cost cannot be recovered.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(c) Goodwill
Goodwill represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition.
Goodwill is stated at cost less accumulated amortisation and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2(q). Goodwill arising on the acquisition of subsidiaries is presented separately in the balance sheet while goodwill arising on the acquisition of associates and jointly controlled entities is included within the carrying amount of investment in associates and jointly controlled entities.
Goodwill is amortised on a straight-line basis over the shorter of its estimated useful life or 20 years.
Negative goodwill represents the excess of the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition over the cost of acquisition.
Negative goodwill, not exceeding the fair values of the non-monetary assets acquired, is recognised in the income statement over the weighted average useful life of those assets. Negative goodwill in excess of the fair values of the non-monetary assets acquired is recognised immediately in the income statement.
To the extent that negative goodwill relates to expectation of future losses and expenses that are 63 identified in the plan of acquisition and can be measured reliably, but which are not identifiable liabilities at the date of acquisition, that portion of negative goodwill is recognised in the income statement when the future losses and expenses are recognised.
(d) Revenue Recognition
Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably.
(i) Sale of properties
Revenue from sale of properties is accounted for by the stage of completion method as described in Note 2(i) and is recognised net of discount.
(ii) Construction contracts
Revenue from construction contracts is accounted for by the stage of completion method as described in Note 2(h).
(iii) Provision of financing facilities
Interest income from provision of financing facilities are recognised using the sum-of- digits method. Interest income on loans and other financing facilities are recognised on accrual basis. Where an account becomes non-performing, interest is suspended and is recognised on a cash basis. Customers’ accounts are deemed to be non-performing when repayments are in arrears for more than six months.
Service charges and other related fees on financing facilities extended to customers are recognised on inception of such transactions.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(d) Revenue Recognition (Cont’d)
(iv) Sale of goods
Revenue relating to sale of goods is recognised net of sales taxes and discounts upon the transfer of risks and rewards.
(v) Management fees
Management fees are net of service taxes and are recognised on accrual basis.
(vi) Tuition fees
Tuition fees are recognised on accrual basis whereas non-refundable registration and enrolment fees are recognised on receipt basis.
(vii) Interest income
Interest income is recognised on a time proportion basis that reflects the effective yield on the asset.
(viii) Dividend income
Dividend income is recognised when the right to receive payment is established.
(ix) Revenue from hotel operations
64 Revenue from rental of hotel rooms, sale of food and beverage and other related income are recognised on accrual basis.
(x) Rental income
Rental income are recognised on accrual basis.
(e) Property, Plant and Equipment and Depreciation
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2(q).
Hotel building is not depreciated. It is the Group's practice to maintain the building at a high standard and condition such that residual values are at least equal to its book value and consequently, depreciation would be insignificant. Accordingly, no depreciation is provided on the hotel building.
Leasehold land is depreciated over the period of the respective leases which ranges from 25 years to 99 years.
Depreciation of other property, plant and equipment is provided for on a straight line basis to write off the cost of each asset to its residual value over the estimated useful life at the following annual rates:
Buildings 1% - 2% Renovation 10% Plant and machinery, tools and equipment, crockery and kitchenware 10% - 33.33% Office equipment, furniture and fittings 10% - 50% Motor vehicles 20% - 25%
Upon the disposal of an item of property, plant or equipment, the difference between the net disposal proceeds and the carrying amount is recognised in the income statement.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(f) Investments in Subsidiaries and Associated Companies
The investments in subsidiaries, associates, jointly controlled entities and unquoted loan stocks are stated at cost less impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2(q).
On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised in the income statement.
(g) Investment Properties
Investment properties consist of investments in land and buildings that are not substantially occupied for use by, or in the operations, of the Group. Investment properties are stated at cost less impairment losses which include cost of land, all direct building costs and other related construction costs including borrowing costs incurred during the period of construction. The policy for the recognition and measurement of impairment losses is in accordance with Note 2(q).
Upon the disposal of an investment property, the difference between the net disposal proceeds and the carrying amount is recognised in the income statement.
(h) Construction Contracts
When the outcome of a construction contract could be estimated reliably, contract revenue and contract costs were recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the balance sheet date. The stage of completion was measured 65 by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.
Where the outcome of a construction contract could not be estimated reliably, contract revenue was recognised to the extent of contract costs incurred that it was probable would be recoverable. Contract costs are recognised as expenses in the period in which they were incurred.
When it was probable that total contract costs would exceed total contract revenue, the expected loss was recognised as an expense immediately.
When costs incurred on construction contracts plus recognised profits (less recognised losses) exceeded progress billings, the balance was shown as amount due from customers on contracts. When progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance was shown as amount due to customers on contracts.
(i) Land Held for Property Development and Property Development Costs
(i) Land held for property development
Land held for property development consists of land where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Such land is classified within non-current assets and is stated at cost less any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2(q).
Land held for property development is reclassified as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(i) Land Held for Property Development and Property Development Costs (Cont’d)
(ii) Property development costs
Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities.
When the financial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in the income statement by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.
Where the financial outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on properties sold are recognised as an expense in the period in which they are incurred.
Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised as an expense immediately.
Property development costs not recognised as an expense are recognised as an asset, which is measured at the lower of cost and net realisable value.
66 (j) Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing, selling and distribution. Cost of inventories are determined as follows:
Raw materials - first-in first-out basis Work-in-progress - weighted average basis Finished goods and consumables - weighted average basis Properties held for sale - specific identification basis
The cost of raw materials consists of the cost of purchase plus the cost of bringing the inventories to the present location. Cost of finished goods and work-in-progress includes cost of raw materials used, direct labour, other direct costs and appropriate production overheads. The cost of unsold properties comprises cost associated with the acquisition of land, direct costs and appropriate proportions of common costs.
(k) Foreign Currencies
(i) Foreign currency transactions
Transactions in foreign currencies are initially recorded in Ringgit Malaysia at rates of exchange ruling at the date of the transaction. At each balance sheet date, foreign currency monetary items are translated into Ringgit Malaysia at exchange rates ruling at that date. Non-monetary items initially denominated in foreign currencies, which are carried at historical cost are translated using the historical rate as of the date of acquisition and non-monetary items which are carried at fair value are translated using the exchange rate that existed when the values were determined.
All exchange rate differences are taken to the income statement.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(k) Foreign Currencies (Cont’d)
(ii) Foreign entities
Financial statements of foreign consolidated subsidiaries are translated at year-end exchange rates with respect to the assets and liabilities, and at exchange rates at the dates of the transactions with respect to the income statement. All resulting translation differences are included in the foreign exchange reserve in shareholders' equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the reporting entity and translated at the exchange rate ruling at the date of transaction.
The principal exchange rates used for every unit of foreign currency ruling at balance sheet date are as follows:
2005 2004
United States Dollar 3.80 3.80 Chinese Renminbi 0.46 0.46 Hong Kong Dollar 0.49 0.49 Singapore Dollar 2.22 2.22
(l) Income Tax
Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date. 67 Deferred taxation is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statement. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.
Tax penalties have been provided based on assessment received. No provision has been made for potential tax penalties until they crystallise.
(m) Leases
A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incident to ownership. All other leases are classified as operating leases.
(i) Finance leases
Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the balance sheet as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Company's incremental borrowing rate is used.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(m) Leases (Cont’d)
(i) Finance leases (Cont’d)
Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised as an expense in the income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.
The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in Note 2(e).
(ii) Operating leases
Operating lease payments are recognised as an expense in the income statement on a straight- line basis over the term of the relevant lease.
(n) Provisions for Liabilities
Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.
68 (o) Cash and Cash Equivalents
For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and at banks and deposits at call, (excluding sinking funds held by trustees for the redemption of financing facilities) net of outstanding bank overdrafts.
(p) Employee Benefits
(i) Short term 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. 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. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occurs.
(ii) Defined contribution plans
As required by law, companies in Malaysia make contributions to the Employees Provident Fund ("EPF"). Some of the Group's foreign subsidiaries make contributions to their respective countries' statutory pension schemes. Such contributions are recognised as an expense in the income statement as incurred.
(q) Impairment of Assets
At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any indication of impairment. If any such indication exists, impairment is measured by comparing the carrying values of the assets with their recoverable amounts. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted future cash flows.
An impairment loss is recognised as an expense in the income statement immediately. Reversal of impairment losses recognised in prior years is recorded when the impairment losses recognised for the asset no longer exist or have decreased.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(r) Financial Instruments
Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument.
Financial instruments are classified as liabilities or equity in accordance with the substance and intention of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.
(i) Other non-current investments
Non-current investments other than investments in subsidiaries, associates, jointly controlled entities and investment properties are stated at cost less impairment losses. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in the income statement.
(ii) Receivables
Receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date. 69 (iii) Payables
Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received.
(iv) Interest-bearing borrowings
Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction 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 capitalised as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. The amount of borrowing costs eligible for capitalisation is determined by applying a capitalisation rate which is the weighted average of the borrowing costs applicable to the Group's borrowings that are outstanding during the financial year, other than borrowings made specifically for the purpose of acquiring another qualifying asset. For borrowings made specifically for the purpose of acquiring a qualifying asset, the amount of borrowing costs eligible for capitalisation is the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of funds drawndown from that borrowing facility.
All other borrowing costs are recognised as an expense in the income statement in the period in which they are incurred.
(v) Deferred progress billings
Deferred progress billings are stated at cost, which is the fair value of the consideration to be paid in the future for the contractual obligations entered into under the Islamic Assets Backed Securitisation arrangement.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(r) Financial Instruments (Cont’d)
(vi) Ordinary shares
Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.
The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided.
The consideration paid, including attributable transaction costs on repurchased ordinary shares of the Company that have not been cancelled, are classified as treasury shares and presented as a deduction from equity. Shares repurchased are held as treasury shares and are accounted for using the treasury stock method. Under the treasury stock method, the shares repurchased are not cancelled but are held as treasury shares. The treasury shares are carried at cost.
Where treasury shares are distributed as share dividends, the cost of the treasury shares will be applied in the reduction of the share premium account or the distributable reserves, or both, where appropriate.
Where treasury shares are reissued by re-sale in the open market, the difference between the sales consideration and the carrying amount of the treasury shares will be shown as a movement in equity. 70 (vii) Warrants
Warrants issued pursuant to the issuance of Bonds in financial year ended 31 January 2000 are not recognised on the date of issue. The issue of ordinary shares upon exercise of the warrants are treated as new subscription of ordinary shares for the consideration equivalent to the exercise price of the warrants.
(viii) Convertible Instruments
Convertible instruments are regarded as compound instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for a similar non-convertible instrument. The difference between the proceeds of issue of the convertible instruments and the fair value assigned to the liability component, representing the conversion option is included in shareholders’ equity. The liability component is subsequently stated at amortised cost using the effective interest rate method until extinguished on conversion or redemption whilst the value of the equity component is not adjusted in subsequent periods. Attributable transaction costs are apportioned and deducted directly from the liability and equity component based on their carrying amounts at the date of issue.
Under the effective interest rate method, the interest expense on the liability component is calculated by applying the prevailing market interest rate for a similar non-convertible instrument. The difference between this amount and the interest paid is added to the carrying value of the convertible instrument.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
3. PROPERTY, PLANT AND EQUIPMENT
Plant and Machinery, Tools and Office Equipment, Equipment, *Land and Crockery and Furniture Motor Buildings Kitchenware and Fittings Vehicles Total RM’000 RM’000 RM’000 RM’000 RM’000
Group
Cost
At 1 February 2004 263,616 40,371 21,731 12,218 337,936 Additions 7,670 1,278 669 219 9,836 Disposals (2,056) (660) (222) (642) (3,580) Write-offs (320) (56) (67) – (443) Disposal of subsidiaries (2,086) (6,421) (332) (53) (8,892) Transfers (16,227) – – – (16,227)
At 31 January 2005 250,597 34,512 21,779 11,742 318,630
Accumulated Depreciation
At 1 February 2004 18,659 18,945 14,600 10,507 62,711 71 Charge for the year 2,524 4,339 1,900 1,153 9,916 Disposals (275) (411) (9) (642) (1,337) Write-offs (352) (14) (8) – (374) Disposal of subsidiaries (142) (4,728) (230) (38) (5,138)
At 31 January 2005 20,414 18,131 16,253 10,980 65,778
Net Book Value
At 31 January 2005 230,183 16,381 5,526 762 252,852
At 31 January 2004 244,957 21,426 7,131 1,711 275,225
Depreciation charge for 2004 2,382 3,414 3,614 768 10,178
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
3. PROPERTY, PLANT AND EQUIPMENT (Cont’d)
* Land and Buildings
Long Term Short Term Hotel Buildings Freehold Leasehold Leasehold and Other Under Land Land Land Buildings Renovation Construction Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Cost
At 1 February 2004 1,425 14,094 17,141 207,130 13,616 10,210 263,616 Additions – 5,013 – 481 2,176 – 7,670 Disposals – (2,049) – – (7) – (2,056) Write-offs – – – – (320) – (320) Disposal of subsidiaries – – – (2,032) (54) – (2,086) Transfers – – – (6,017) – (10,210) (16,227)
At 31 January 2005 1,425 17,058 17,141 199,562 15,411 – 250,597
Accumulated Depreciation
At 1 February 2004 137 2,401 686 6,941 8,494 – 18,659 72 Charge for the year 35 381 – 921 1,187 – 2,524 Disposals – (275) – – – – (275) Write-offs – – – (227) (125) – (352) Disposal of subsidiaries – – – (88) (54) – (142)
At 31 January 2005 172 2,507 686 7,547 9,502 – 20,414
Net Book Value
At 31 January 2005 1,253 14,551 16,455 192,015 5,909 – 230,183
At 31 January 2004 1,288 11,693 16,455 200,189 5,122 10,210 244,957
Depreciation charge for 2004 9 262 – 759 1,352 – 2,382
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
3. PROPERTY, PLANT AND EQUIPMENT (Cont’d)
* Land and Buildings (Cont’d)
Office Equipment Long Term and Leasehold Furniture Motor Land and Fittings Renovation Vehicles Total RM’000 RM’000 RM’000 RM’000 RM’000
Company
Cost
At 1 February 2004 1,107 411 4,156 1,288 6,962 Additions – – 914 – 914 Disposal – – – (642) (642) Write-offs – – (243) – (243)
At 31 January 2005 1,107 411 4,827 646 6,991
Accumulated Depreciation
At 1 February 2004 333 164 2,444 1,288 4,229 Charge for the year 28 82 426 – 536 Disposal – – – (642) (642) Write-offs – – (69) – (69) 73 At 31 January 2005 361 246 2,801 646 4,054
Net Book Value
At 31 January 2005 746 165 2,026 – 2,937
At 31 January 2004 774 247 1,712 – 2,733
Depreciation charge for 2004 28 82 416 – 526
(a) Net book values of property, plant and equipment held under hire purchase and finance lease arrangements are as follows:
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Plant, machinery, tools and equipment 72 – – – Office equipment and furniture and fittings 434 247 164 247 Motor vehicles 1,817 266 – –
2,323 513 164 247
(b) In the previous financial year, the Group and the Company acquired property, plant and equipment by means of hire purchase and finance leases amounting to approximately RM522,000 and RM411,000 respectively.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
3. PROPERTY, PLANT AND EQUIPMENT (Cont’d)
(c) The net book values of property, plant and equipment pledged to financial institutions for borrowings as disclosed in Notes 17 and 27 are as follows:
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Freehold land – 1,425 – – Short term leasehold land 16,455 16,455 – – Long term leasehold land 826 856 746 774 Buildings 184,679 198,316 – –
201,960 217,052 746 774
(d) In the previous year, borrowing costs for the year capitalised for building under construction for the Group amounted to RM261,000 (Note 36).
4. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS
(a) Land Held for Property Development
Freehold Leasehold Development Land Land Costs Total RM‘000 RM‘000 RM‘000 RM‘000
74 Group
At 31 January 2005
Cost At 1 February 2004 211,290 137,066 410,184 758,540 Additions – 5,500 28,295 33,795 Transfer from property development costs 17,926 – 161,335 179,261
Carrying amount at 31 January 2005 229,216 142,566 599,814 971,596
At 31 January 2004
Cost At 1 February 2003 93,996 366,000 116,109 576,105 Additions – 39,000 28,661 67,661 Acquisition of subsidiaries 112,877 86,779 465,640 665,296 Transfer from/(to) property development costs 4,417 (354,713) (200,226) (550,522)
Carrying amount at 31 January 2004 211,290 137,066 410,184 758,540
Company
At 31 January 2005/2004
Cost Carrying amount at 31 January 2005/2004 17,987 139 – 18,126
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
4. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS (Cont’d)
(b) Property Development Costs
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Property developments costs at 1 February 2004/2003: - Freehold land 321,253 318,139 82,844 82,844 - Leasehold land 1,086,089 532,970 – – - Development costs 5,903,143 2,577,539 35,253 34,351
7,310,485 3,428,648 118,097 117,195
Acquisition of subsidiaries during the year: - Freehold land – 78,603 – – - Leasehold land – 215,460 – – - Development costs – 3,942,128 – –
– 4,236,191 – –
Disposal of subsidiaries 75 during the year: - Freehold land (45,870) – – – - Leasehold land – (478) – – - Development costs (27,823) (213,437) – –
(73,693) (213,915) – –
Reversal in development costs of completed projects during the year: - Freehold land (1,897) (113,327) – – - Leasehold land – (11,080) – – - Development costs (3,306) (1,114,892) – –
(5,203) (1,239,299) – –
Costs incurred during the year: - Freehold land 627 842 – – - Leasehold land – 3,638 – – - Development costs 275,445 628,941 (3) 902
276,072 633,421 (3) 902
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
4. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS (Cont’d)
(b) Property Development Costs (Cont’d)
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Costs recognised in income statement: - At 1 February 2004/2003 (4,956,109) (2,492,501) (69,775) (68,960) - Acquisition of subsidiaries during the year – (3,287,300) – – - Disposal of subsidiaries during the year – 213,464 – – - Adjustments to completed projects during the year 166,417 1,239,666 – – - Recognised during the year (640,393) (629,438) (606) (815)
- At 31 January 2005/2004 (5,430,085) (4,956,109) (70,381) (69,775)
Transfers: - (To)/from land held for property development (179,261) 550,522 – – - From property, plant and equipment 10,210 – – – - To inventories (361) (47,139) – – 76 (169,412) 503,383 – –
Foreseeable losses: - At 1 February 2004/2003 (844) (754) – – - Reversed/(recognised) during the year 3 (90) – –
- At 31 January 2005/2004 (841) (844) – –
Property development costs at 31 January 2005/2004 1,907,323 2,391,476 47,713 48,322
(c) The following are pledged as security for borrowings of the Group as disclosed in Notes 17 and 27.
Group 2005 2004 RM’000 RM’000
Freehold land 464,508 507,457 Leasehold land 1,169,835 1,044,716 Development expenditure 1,010,841 1,127,259
2,645,184 2,679,432
(d) Certain proceeds from sales of development properties of a subsidiary of the Group has been sold to a third party under the Islamic Assets Backed Securitisation ("ABS") arrangement as disclosed in Note 28.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
4. LAND HELD FOR PROPERTY DEVELOPMENT AND PROPERTY DEVELOPMENT COSTS (Cont’d)
(e) Certain proceeds from sales of development properties of a subsidiary of the Group has been assigned to a third party under the Bai Bithaman Ajil Islamic Debt Securities ("BaIDS") as disclosed in Note 17.
(f) Certain title deeds in respect of the land are not registered under the subsidiaries' names as these title deeds will be transferred directly to house buyers upon sale of the properties.
(g) Included in the development costs for the year are:
(i) construction costs charged by the following related parties:
Group 2005 2004 RM’000 RM’000
Perkhidmatan Sanjung (M) Sdn. Bhd. – 1,348 Project 33 Construction Sdn. Bhd. 12,203 5,541 Agrocon (M) Sdn. Bhd. 16,721 32,229 Kumpulan Europlus Bhd (“KEB”) and its subsidiaries (“KEB Group”) 131,826 7,568
The nature of the relationship with the related parties are disclosed in Note 44.
(ii) interest capitalised during the financial year for the Group amounting to approximately 77 RM44,406,000 (2004: RM24,175,000) (Note 36).
(iii) ABS discount on deferred progress billings capitalised during the financial year for the Group amounting to approximately RM7,843,000 (2004: RM3,921,000) (Note 28).
(h) During the year, the development activities of certain projects have been deferred whereby they are not expected to be completed within the normal operating cycle. Accordingly, the respective development costs of approximately RM179,261,000 has been reclassified as non-current assets.
5. INVESTMENT PROPERTIES
Group 2005 2004 RM’000 RM’000
At cost:
Freehold land 4,900 4,900 Leasehold land 1,449 1,449 Buildings 156,105 161,954
162,454 168,303
Investment properties have been pledged for borrowings as disclosed in Notes 17 and 27.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
6. SUBSIDIARIES
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Unquoted shares, at cost – 332 502,012 519,556 Accumulated impairment losses – (332) (2,774) (4,774)
– – 499,238 514,782
(a) Details of the subsidiaries are disclosed in Note 51.
(b) The investment in a subsidiary of the Group costing RM332,000 represents a subsidiary which was placed under members' voluntary winding up pursuant to Section 254(1)(b) of the Companies Act, 1965 on 17 January 1997. The subsidiary had been dissolved during the year. Accordingly, the investment cost had been written off against impairment losses during the year.
(c) Acquisition of subsidiaries during the year
During the year, Ample Zone Berhad (formerly known as Ample Zone Sdn. Bhd.) and Wira Profit Sdn. Bhd. became subsidiaries as disclosed in Note 42.
The effect of the acquisition on the financial results of the Group from the date of acquisition to 31 January 2005 are as follows: 78 2005 RM’000
Loss before taxation (41) Taxation –
Net loss after taxation (41)
The effect of the acquisition on the financial position of the Group as at 31 January 2005 are as follows:
2005 RM’000
Net liabilities assumed: Deposit held by trustee 12,167 Sundry receivables 30,411 Cash and bank balances 1 Sundry payables (42) Borrowings (150,000)
(107,463)
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
6. SUBSIDIARIES (Cont’d)
(d) Disposal and deconsolidation of subsidiaries during the year
During the year, the Company completed the disposal of Talam Trading Sdn. Bhd. and its subsidiaries, Talam Leasing Sdn. Bhd. and Ambang Vista Sdn. Bhd. and its subsidiary as disclosed in Note 42(i).
The effect of the disposals and deconsolidation of the said subsidiaries of the Group for the financial period up to the date of disposals and deconsolidation are as follows:
(i) On the results of the Group
Financial period up to date of disposals/ deconsolidation RM’000
Profit before taxation 3,802 Taxation (750)
Profit after taxation 3,052
(ii) On the financial position of the Group
At disposals/ 79 deconsolidation date RM’000
Property, plant and equipment (Note 3) 3,754 Property development costs 73,692 Inventories 403 Trade and other receivables 149,920 Cash and bank balances 69 Trade and other payables (138,463) Borrowings (68,051) Minority interests (274) Taxation (2,278)
Fair value of total net assets 18,772 Loss on disposal to the Group (921)
17,851
Satisfied by: Cash 16,300
Net cash outflow arising on disposal, representing cash and cash equivalents of subsidiaries disposed 16,231
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
6. SUBSIDIARIES (Cont’d)
(e) In the previous year, pursuant to the implementation of the approved merger exercise between the Company, Europlus Berhad ("Europlus") and KEB ("the Merger"),
(i) the Company acquired the entire equity interest in Europlus for a total consideration of RM328,500,322 which consists of the issuance of 219,313,524 new ordinary shares of RM1.00 each of the Company at an issue price of RM1.00 per share, 50,000,000 RCPS of RM0.01 each at RM1.00 per share and 591,867,978 ICPS of RM0.10 each at par. Following the acquisition of the entire equity interest in Europlus, the associates below became subsidiaries of the Group:
Equity Interest Principal Activities %
Pandan Indah Medical Management 100 Property development and Sdn. Bhd. investment holding
Larut Talam International 99.88 Dormant Management Services Limited
Pulau Kembar Sdn. Bhd. 99.99 Property development
Tenaga Gagah Sdn. Bhd. 98.99 Property development
Noblepace (M) Sdn. Bhd. 99.99 Investment holding
PPB Investment (HK) Limited 99.99 Dormant 80 Talam Medical Centre Sdn. Bhd. 99.99 Dormant
(ii) the Group completed the distribution of its non-property related companies to KEB based on the carrying cost of investments of RM33,849,000 via cancellation of share premium. The non-property related companies are as follows:
Equity Interest Principal Activities %
KEB Builders Sdn. Bhd. 100 Construction contracting (formerly known as Talam Builders Sdn. Bhd.)
KEB Plantations Holdings Sdn. Bhd. 100 Investment holding (formerly known as Talam Plantations Holdings Sdn. Bhd.)
Asian Resinated Felt Sdn. Bhd. 83 Manufacturing and distribution of resinated felt
Kekwa Indah Sdn. Bhd. 80 Manufacture and sale of granular and powder activated carbon and its related products
Ice Masters Sdn. Bhd. 100 Manufacturing and retailing of ice
Konsortium LPB Sdn. Bhd. 40 Designing, constructing, developing the West Coast Expressway and managing the toll operations
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
6. SUBSIDIARIES (Cont’d)
(f) Effect of acquisition of subsidiaries in the previous year
(i) The effect of the acquisition on the financial results of the Group from the date of acquisition to 31 January 2004 was as follows:
2004 RM’000
Revenue 126,719 Cost of sales (117,976)
Gross profit 8,743 Operating income 21,435 Operating costs (3,371)
Net profit from operation 26,807 Taxation (4,578)
Profit after taxation 22,229
(ii) The effect of the acquisition on the financial position of the Group as at 31 January 2004 was as follows:
2004 81 RM’000
Net assets acquired: Property, plant and equipment 14,821 Associates 44,005 Investment properties 28,482 Other investment 76,332 Deposit held by trustee 41,407 Property development costs 1,422,357 Inventories 54,839 Trade and other receivables 429,850 Cash and bank balances 13,364 Trade and other payables (1,019,865) Taxation (115,324) Borrowings (337,939) Long term and deferred liabilities (120,442)
Fair value of total net assets 531,887 Less: Minority interests (55,769)
476,118
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
6. SUBSIDIARIES (Cont’d)
(f) Effect of acquisition of subsidiaries in the previous year (Cont’d)
(iii) The fair value of the assets acquired and liabilities assumed from the acquisition of the subsidiaries was as follows:
3.11.2003 RM’000
Net assets acquired: Property, plant and equipment 15,347 Associates 44,005 Investment properties 29,167 Deposit held by trustee 21,997 Property development costs 1,432,532 Inventories 35,101 Trade and other receivables 338,113 Cash and bank balances 7,165 Trade and other payables (837,666) Taxation (116,999) Borrowings (362,553) Long term and deferred liabilities (96,241)
Fair value of total net assets 509,968 Less: Minority interests (56,079) 82 453,889 Fair value adjustments included in land held for development (80,049)
373,840
Satisfied by: Shares issued 328,500 Irredeemable Convertible Unsecured Loan Stock 45,340
373,840
Cash and bank balances 7,165 Overdrafts (26,959)
Net cash outflow arising on acquisition, representing cash and cash equivalents of subsidiary acquired (19,794)
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
6. SUBSIDIARIES (Cont’d)
(g) Effect of distribution of non-property related companies in the previous year
(i) The revenue, results and cash flows of these companies were as follows:
Financial Financial period ended year ended 3.11.2003 31.1.2003 RM’000 RM’000
Revenue 35,843 68,399 Operating income 2,434 1,217 Operating costs (40,000) (67,153)
(Loss)/profit from operations (1,723) 2,463 Finance costs (330) (439)
(Loss)/profit before taxation (2,053) 2,024 Taxation (384) (283)
(Loss)/profit after taxation (2,437) 1,741 Minority interests (314) (66)
Net (loss)/profit attributable to shareholders (2,751) 1,675
Cash flows from operating activities (1,077) 2,270 Cash flows from investing activities (532) (174) Cash flows from financing activities 154 (1,652) 83 Total cash flows (1,455) 444
(ii) The net assets of these companies were as follows:
3.11.2003 31.1.2003 RM’000 RM’000
Net assets disposed: Property, plant and equipment 22,486 22,954 Goodwill 3,626 3,833 Associates 9,310 9,310 Inventories 4,945 4,619 Trade and other receivables 35,305 18,713 Cash and bank balances 2,130 3,585 Trade and other payables (39,307) (22,027) Taxation (217) (425) Borrowings (9,043) (8,890) Long term and deferred liabilities (326) (326)
Fair value of total net assets 28,909 31,346 Minority interest (3,503) (3,189)
The Group’s share of total net assets 25,406 28,157 Gain on disposal to the Group 8,443
Total consideration 33,849
Satisfied by: Distribution by way of cancellation of share premium 33,849
Net cash outflow arising on disposal, representing cash and cash equivalents of subsidiaries disposed (2,130)
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
6. SUBSIDIARIES (Cont’d)
(h) On 10 December 2003, the Group completed the disposal of a subsidiary as follows:
Equity Interest Principal Activity %
Dirga Niaga (Selangor) Sdn. Bhd. 100 Property development, property investment and contracting income
(i) The revenue, results and cash flows of the company were as follows:
Date of acquisition to 10.12.2003 RM’000
Revenue 28,389 Operating income 19 Operating costs (34,894)
Loss from operations (6,486) Finance costs (14)
Loss before taxation (6,500) 84 Taxation 1,273
Loss after taxation (5,227)
Cash flows from operating activities 15,693 Cash flows from investing activities 230 Cash flows from financing activities (15,259)
Total cash flows 664
(ii) The net assets of this company was as follows:
10.12.2003 RM’000
Net assets disposed: Property, plant and equipment 40 Development properties 451 Inventories 6,664 Trade and other receivables 36,867 Cash and bank balances 2,608 Trade and other payables (61,634) Taxation (5,518)
Fair value of total net assets (20,522) Gain on disposal to the Group 20,523
1
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
6. SUBSIDIARIES (Cont’d)
10.12.2003 RM’000
Satisfied by: Cash 1
Net cash outflow arising on disposal, representing cash and cash equivalents of subsidiaries disposed (2,607)
7. ASSOCIATES
Group 2005 2004 RM’000 RM’000
Cost 7,219 7,219 Addition – * – Less: Accumulated impairment losses (7,219) (7,219)
––
Represented by: Share of net assets 7,219 7,219 Share of post acquisition losses (7,219) (7,219)
––85
* Denote RM1
Details of associates are disclosed in Note 52.
8. OTHER INVESTMENT
Group 2005 2004 RM’000 RM’000
1% Irredeemable Convertible Unsecured Loan Stock (“ICULS”) 76,332 76,332
The ICULS nominal value at RM1.00 each, are constituted by a Trust Deed dated 8 November 2003 between Venue Venture Sdn. Bhd. ("VVSB") and the trustee for the holders of ICULS.
The main features of the ICULS are as follows:
(a) The ICULS shall be for a period of five years from the date of issue.
(b) The ICULS shall not be redeemable for cash. All outstanding ICULS shall be converted into new VVSB shares on the maturity date.
(c) The ICULS may, at the holder's option, be converted into new VVSB Shares at the Conversion Price during the tenure of ICULS. Upon maturity, any ICULS not converted shall be converted automatically into new VVSB shares at the conversion price.
(d) The new VVSB Shares to be issued pursuant to the conversion of the ICULS shall, upon allotment and issue, rank pari passu in all respects with the existing VVSB Shares except that they shall not be entitled to any dividends, rights, allotments and/or other distributions the entitlement date of which precedes the date of allotment of the new VVSB Shares.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
9. SINKING FUNDS HELD BY TRUSTEES
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Murabahah Notes Issuance Facility (“MUNIF”) (Note 17) 8,793 41,407 – – BaIDS (Note 17) 873 – – – Sukuk Al-Ijarah (Note 17) 12,167 – – – Bonds (Note 27) – 29,162 – 29,962
21,833 70,569 – 29,962
The sinking funds are held by trustees for the redemption of financing facilities, as disclosed in Notes 17 and 27.
10. GOODWILL
Group 2005 2004 RM’000 RM’000
Goodwill arising on consolidation 4,882 10,908 86 Goodwill arising on acquisition of business 2,250 2,250 Reserve on consolidation (1,331) (1,331)
At 1 February 2004/2003 5,801 11,827 Distribution of non-property related companies – (6,026)
5,801 5,801
Less: Cumulative amortisation At 1 February 2004/2003 2,623 5,190 Distribution of non-property related companies – (2,996) Goodwill written off 2,291 – Amortisation of goodwill 68 429
4,982 2,623
At 31 January 819 3,178
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
11. INVENTORIES
Group 2005 2004 RM’000 RM’000
At cost:
Completed properties held for sale 78,855 130,215 Finished goods and consumables 1,308 1,533
80,163 131,748
(a) The cost of inventories sold and expensed during the year amounted to RM72,825,000 (2004: RM46,943,000).
(b) Completed properties held for sale of the Group costing approximately RM14,279,000 (2004: RM14,279,000) have been pledged for facilities taken by certain contractors as security for trade payables owing by the Group to the said contractors. The properties have been discharged subsequent to the year end.
(c) Completed properties held for sale of the Group costing approximately RM11,203,000 (2004: RMNil) have been pledged together with a third party's properties ("the pool properties") for financing facilities offered to the Group and the said third party which are jointly secured by the pool properties. The facilities offered to the Group amounts to RM80 million. The said completed properties held for sales have been discharged pursuant to the settlement of the financing facilities subsequent to the year end. 87
12. DUE FROM SUBSIDIARIES
Company 2005 2004 RM’000 RM’000
Non-trade - interest free 455,460 459,746 - bearing interest of 5% per annum 78,018 51,850
533,478 511,596 Less: Provision for doubtful debts (12,862) (12,862)
520,616 498,734
The amounts due from subsidiaries are unsecured and have no fixed terms of repayment.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
13. TRADE RECEIVABLES
Group 2005 2004 RM’000 RM’000
Progress billing receivables 67,137 171,307
Loans and financing facilities Lease receivables – 1 Hire purchase – 8,820 Term loans – 4,349 Revolving credits – 47,424 Trust receipts – 4,517 Others – 188
– 65,299 Unearned interest income – (1,628)
– 63,671 Maturing between one to five years – (4,647)
– 59,024
Trading – 48,113 Less: Interest in suspense – (5,639)
88 – 42,474 Property investments, manufacturing, education and hotel operations 15,315 26,503
15,315 68,977
Total trade receivables 82,452 299,308 Less: Provision for doubtful debts (1,936) (2,154)
80,516 297,154
(a) Included in trade receivables are amounts due from related parties as follows:
Group 2005 2004 RM’000 RM’000
Pengurusan Projek Bersistem Sdn. Bhd. – 6,852 Perkhidmatan Sanjung (M) Sdn. Bhd. – 54 Project 33 Construction Sdn. Bhd. – 14,856 KEB Group 1,060 1,361
The nature of the relationships with the above related parties are disclosed in Note 44.
(b) The Group’s normal trade credit term ranges from 14 days to 60 days. Other credit terms are assessed and approved on a case-by-case basis.
The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
14. OTHER RECEIVABLES
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Deposits 41,818 23,965 69 79 Prepayments 784 1,003 35 79 Tax recoverable 1,901 6,221 – – Sundry receivables 166,507 228,500 12,627 13,424
211,010 259,689 12,731 13,582 Less: Provision for doubtful debts (14,297) (5,303) – (111)
196,713 254,386 12,731 13,471
(a) Included in sundry receivables of the Group are:
(i) An amount of RM42,071,000 (2004: RM42,071,000), representing deposit and instalment paid to a third party for a proposed purchase of land by a subsidiary, Maxisegar Sdn. Bhd. (“MSSB”). MSSB has filed a legal suit against the said third party to recover the amount as MSSB could not obtain a loan to complete the Sale and Purchase Agreement due to frustrating events intervening.
Judgement was delivered in favour of the third party together with interest and cost as disclosed in Note 40(b). MSSB appealed to the Court of Appeal against the said judgment 89 and on 5 May 2005, the Court of Appeal has dismissed the Appeal.
On 24 May 2005, the Company has instructed Messrs Shahrizat Rashid & Lee, the new solicitors, to file the motion for leave to appeal to the Federal Court. The said solicitors retained by the Company have advised that the Company has a strong case in its appeal to the Federal Court. The said solicitors had premised their advice based upon the grounds of Judgment of the High Court as well as the evidence of the parties compiled in the Record of Appeal and lodged with the Court of Appeal. Having perused the various documents stated above, the said solicitors are of the view that both the High Court and the Court of Appeal had failed and/or ignored to address various fundamental principles of law in arriving at its decision(s), which if considered in light of the evidence before the Court may have had a bearing on the Court’s decision favourable to the Company. In the meantime, MSSB has filed an application for a stay of execution at the Court of Appeal.
No provision for doubtful recovery of RM42,071,000 and the interest expenses and costs of RM35,362,000 as mentioned in Note 40(b) have been made as the directors, based on the advice of the said solicitors, are confident that MSSB will succeed in its appeal;
(ii) Deposits of RM9,938,000 (2004: RM9,952,000) paid to a land owner for a proposed acquisition of the land. The Group is currently negotiating the terms and conditions of the proposed acquisition;
(iii) Due from Venue Venture Sdn. Bhd. of RM31,207,000 (2004: RM78,516,000) arising from the reorganisation of Europlus pursuant to the merger; and
(iv) Due from a third party of RM27,899,000 (2004: RMNil) pursuant to the issuance of Sukuk Al-Ijarah which is secured by the third party's property as disclosed in Note 42(m)(B)(i).
(b) The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors other than as disclosed above.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
15. CASH AND CASH EQUIVALENTS
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Housing development accounts 8,220 29,545 – – Cash on hand and bank balances 6,054 13,583 1,081 1,769 Deposits with: licensed banks 1,467 2,580 400 – licensed discount house 92,262 96,631 – – Deposit in Escrow accounts 94,612 168,117 – –
Cash and bank balances 202,615 310,456 1,481 1,769 Less: Bank overdrafts (Note 17) (11,938) (40,206) (9,887) (9,811) Deposit in Escrow accounts (94,612) (168,117) – –
Cash and cash equivalents 96,065 102,133 (8,406) (8,042)
(a) The housing development accounts of the Group are held pursuant to Section 7A of the Housing Development (Control and Licensing) Act, 1966 and therefore restricted from use in other operations. Housing development accounts of the Group amounting to approximately RM6,231,000 (2004: RM7,167,000) have been pledged for financing facilities as disclosed in Note 17.
(b) The following are pledged to financial institutions for financing facilities granted to the Group as disclosed in Note 17:
Group 90 2005 2004 RM’000 RM’000
Bank balances 934 1,453 Deposits with licensed bank 492 –
1,426 1,453
(c) The deposits with discount house amounting to RM90,000,000 (2004: RM90,000,000) are restricted to finance the construction of Universiti Industri Selangor (“UNISEL”). Details of the UNISEL project are disclosed in Note 29(a).
(d) The deposit in Escrow accounts with a financial institution is restricted to finance the construction of certain development property projects of a subsidiary pursuant to the ABS arrangement as disclosed in Note 28.
16. PROVISION FOR LIABILITIES
Group 2005 2004 RM’000 RM’000
At 1 February 2004/2003 109,802 11,213 Arising from acquisition of subsidiaries – 86,092 Additional provision during the year 2,350 17,567 Utilisation of provision during the year (12,222) (5,070)
At 31 January 99,930 109,802
Provision for liabilities comprise mainly of provision for construction obligations to the government and provision for liquidated ascertained damages in respect of projects undertaken by certain subsidiaries.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
17. BORROWINGS
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
(a) Short term borrowings:
(i) Secured:
Revolving credits 91,678 93,209 36,400 36,400
(ii) Unsecured:
Bank overdrafts (Note 15) 11,938 40,206 9,887 9,811 Revolving credits 30,750 20,969 6,750 7,875 Bankers’ acceptances and trust receipts – 27,820 – –
42,688 88,995 16,637 17,686
Included in revolving credits of the Group is an amount of RM15,000,000 (2004: RMNil) facilities obtained from Pengurusan Projek Bersistem Sdn. Bhd., a related party. The nature of the said related party is as disclosed in Note 44. 91 (iii) Long term liabilities due within 12 months
Secured: Revolving credits 6,500 7,000 – – BaIDS 15,000 – – – Bridging At-Tamwil Overdraft (“BIOD”) 8,172 13,000 – – MUNIF* – – – – Term and bridging loans 166,144 87,345 3,381 5,705 Sukuk Al-Ijarah 2,500 – – – Block discounting – 4,398 – –
198,316 111,743 3,381 5,705
Hire purchase and lease payables (Note 18) 768 234 131 746
Total 333,450 294,181 56,549 60,537
* The MUNIF has been restructured during the current financial year.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
17. BORROWINGS (Cont’d)
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
(b) Long term borrowings:
(i) Secured:
BaIDS 140,000 – – – Due within 12 months (15,000) – – –
125,000 – – –
MUNIF 196,000 270,000 – – Due within 12 months – – – –
196,000 270,000 – –
Revolving credits 10,500 10,900 – – Due within 12 months (6,500) (7,000) – –
4,000 3,900 – –
92 Term and bridging loans 228,853 160,153 3,381 5,705 Due within 12 months (166,144) (87,345) (3,381) (5,705)
62,709 72,808 – –
Sukuk Al-Ijarah 150,000 – – – Due within 12 months (2,500) – – –
147,500 – – –
Block discounting – 10,155 – – Interest in suspense – (1,252) – –
– 8,903 – – Due within 12 months – (4,398) – –
– 4,505 – –
(ii) Unsecured
Liability component of ICPS (Note 22) 4,531 7,624 4,531 7,624
Hire purchase and lease payables due after 12 months (Note 18) 1,124 277 – 363
Total 540,864 359,114 4,531 7,987
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
17. BORROWINGS (Cont’d)
(c) The range of effective interest rates or purchase yield during the financial year for borrowings are as follows:
Group Company 2005 2004 2005 2004 %%%%
Revolving credits 6.50 - 13.50 3.81 - 9.30 6.50 - 8.50 6.50 - 8.90 Bankers’ acceptances and trust receipts – 7.75 - 8.50 – – MUNIF 5.75 5.75 – – Bank overdrafts 7.25 - 8.00 7.75 - 8.55 7.50 - 8.00 8.00 - 8.50 Term and bridging loans 7.75 - 12.00 6.90 - 10.50 8.00 8.00 - 8.40 Block discounting – 5.40 - 8.70 – – BaIDS 7.00 - 7.50 – – – BIOD 7.00 7.00 – – Sukuk Al-Ijarah 5.20 - 9.30 – – –
(d) The Company has provided corporate guarantees for unsecured bank overdrafts and revolving credits of the subsidiaries.
The long term portion of the revolving credits of the Group is repayable in the financial year ending 2006.
The secured revolving credits of the Group and of the Company are secured by fixed and floating charges over certain assets of the Group and of the Company as disclosed in Notes 3 and 4.
(e) The MUNIF of the Group is originally repayable in financial year ending 2006. Pursuant to the approval from the authorities on 29 December 2004, the facility tenure of the MUNIF has been 93 extended to 3 October 2006.
The MUNIF of the Group is secured by the following:
(i) Memorandum of Charge over the operating accounts (including Housing Development Accounts) of certain subsidiaries.
(ii) Assignment of proceeds from sale of the development properties of certain subsidiaries.
(iii) Debentures creating a fixed and floating charge over assets of certain subsidiaries.
(iv) Third party first legal charge on certain subsidiaries' operating accounts (including Housing Development Accounts) as referred to in Note 15.
An amount of RM8,793,000 (2004: RM41,407,000) has been maintained in the sinking fund held by trustees in accordance with the MUNIF granted to a subsidiary as disclosed in Note 9. The amount is deposited to meet the redemption of maturing notes.
(f) The BIOD of the Group is repayable in financial year ending 2006.
(g) The term and bridging loans are repayable as follows:
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Financial year ending 31 January
2005 – 95,551 – 5,705 2006 166,144 58,626 3,381 – 2007 39,617 5,976 – – 2008 23,092 – – –
228,853 160,153 3,381 5,705
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
17. BORROWINGS (Cont’d)
The term and bridging loans are secured by the following:
(i) First and third legal charge over the freehold land and buildings of certain subsidiaries as disclosed in Notes 3 and 4;
(ii) Assignment of sales, rental and end finance proceeds from an investment property of a subsidiary;
(iii) Subordination deed executed by a subsidiary;
(iv) Fixed and floating charge over all the assets, revenue, rights and benefits on the property development properties of certain subsidiaries; and
(v) Corporate guarantee by the Company and certain subsidiaries.
(h) During the financial year, a subsidiary, Maxisegar Sdn. Bhd. ("MSSB") issued RM140,000,000 nominal value of BaIDS.
The BaIDS shall be payable upon maturity as follows:
Group 2005 2004 RM’000 RM’000
94 Financial year ending 31 January
2006 10,000 – 2007 30,000 – 2008 50,000 – 2009 50,000 –
140,000 –
The BaIDS is secured inter-alia by the following:
(i) Charges over certain operating accounts of MSSB (including Housing Development Accounts).
(ii) Assignments of sale proceeds from certain development properties of MSSB;
(iii) A charge over certain development properties of MSSB; and
(iv) Debentures over the fixed and floating assets of MSSB.
An amount of RM873,000 (2004: RMNil) has been maintained in the sinking fund held by trustees in accordance with the BaIDS granted to MSSB as disclosed in Note 9. The amount is deposited to meet the terms of redemption requirement of maturing notes.
(i) During the financial year, a subsidiary, Ample Zone Berhad (formerly known as Ample Zone Sdn Bhd) ("Ample Zone") issued RM150,000,000 nominal value of Sukuk Al-Ijarah ("Sukuk") as disclosed in Note 42(l), (m) and (n).
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
17. BORROWINGS (Cont’d)
The Sukuk shall be payable upon maturity as follows:
Group 2005 2004 RM’000 RM’000
Financial year ending 31 January
2007 2,500,000 – 2008 4,000,000 – 2009 4,500,000 – 2010 4,500,000 – 2011 4,500,000 – 2012 130,000,000 –
150,000,000 –
The Sukuk is secured inter-alia by the following:
(i) Debenture over the fixed and floating charge over all assets and properties and undertakings both present and future of Ample Zone; and
(ii) Memorandum of charge over fixed charge on various designated accounts. 95 (j) In the previous year, the block discounting was secured by assignment of hire purchase and lease agreements of a subsidiary engaged in the hire purchase, lease financing, letter of credit, money lending and factoring business.
The block discounting was payable upon maturity as follows:
Group 2005 2004 RM’000 RM’000
Financial year ending 31 January
2005 – 4,398 2006 – 1,987 2007 – 1,429 2008 – 784 2009 – 305
– 8,903
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
18. HIRE PURCHASE AND LEASE PAYABLES
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Minimum lease payment:
Not later than 1 year 1,048 271 168 940 Later than 1 year and not later than 5 years 1,259 327 – 465
2,307 598 168 1,405 Less: Future finance charges (415) (87) (37) (296)
Present value of finance lease liabilities 1,892 511 131 1,109
Representing hire purchase and lease payables:
Not later than 1 year (Note 17) 768 234 131 746 Later than 1 year and not later than 5 years (Note 17) 1,124 277 – 363
96 1,892 511 131 1,109
The hire purchase and lease payables of the Group and of the Company bear interest of between 4.2% to 9.0% (2004: 4.2% to 9.0%) and 4.2% to 8.0% (2004: 4.2% to 8.0%) respectively per annum.
19. DUE TO SUBSIDIARIES
The amounts due to subsidiaries are unsecured, interest free, have no fixed terms of repayment and are non-trade in nature.
20. TRADE PAYABLES
Group 2005 2004 RM’000 RM’000
Trade payables 67,723 422,030 Progress billings in respect of property development costs 58,072 364,107 Retention sum 223,260 208,977
349,055 995,114
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
20. TRADE PAYABLES (Cont’d)
(a) Included in trade payables and retention sum are amounts due to related parties as follows:
Group 2005 2004 RM’000 RM’000
Perkhidmatan Sanjung (M) Sdn. Bhd. - Trade payables 80 – - Retention sums 135 135
Project 33 Construction Sdn. Bhd. - Trade payables 811 – - Retention sums 29,158 9,943
Agrocon (M) Sdn. Bhd. - Trade payables 9,660 4,688 - Retention sums 23,119 24,813
KEB Group - Trade payables 18,795 106,570 - Retention sums 25,305 17,595
The nature of the relationship with the above related parties are disclosed in Note 44. 97 (b) The normal trade credit terms granted to the Group ranges from 30 days to 90 days.
21. OTHER PAYABLES
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Amount payable for acquisition of land 51,840 70,525 – – Obligation arising from acquisition of land (Note 29) 132,000 345,276 – – Accruals 93,730 89,135 4,462 4,282 Sundry payables 257,736 241,056 8,038 11,686
535,306 745,992 12,500 15,968
(a) Included in accruals of the Group and of the Company are:
(i) Accrued interest of RM18,978,000 (2004: RM2,005,000) and RM7,112,000 (2004: RM224,000) respectively; and
(ii) Amount payable to authorities and utility companies in relation to development projects of RM53,564,000 (2004: RM57,554,000).
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
21. OTHER PAYABLES (Cont’d)
(b) Included in sundry payables of the Group are:
(i) Refundable deposits of RM30,928,000 (2004: RM40,934,000) received from purchasers of properties and tenants of complexes;
(ii) Advances from minority shareholders of subsidiaries amounting to RM1,273,000 (2004: RM1,238,000), out of which RM1,009,000 (2004: RM1,238,000) bear interest at the rate of 8% while the balance is interest free. The advances are unsecured and have no fixed terms of repayment;
(iii) Renovation costs payable for a hotel building of approximately RM2,976,000 (2004: RM5,114,000); and
(iv) Progress billings billed in advance of RM85,113,000 (2004: RM 46,972,000).
22. SHARE CAPITAL
Group and Company Number of Shares Amount 2005 2004 2005 2004 ’000 ’000 RM’000 RM’000
Authorised 98 Ordinary shares of RM1.00 each At 1 February 2004/2003 939,000 500,000 939,000 500,000 Created during the year – 439,000 – 439,000
At 31 January 939,000 939,000 939,000 939,000
Redeemable convertible preference shares (“RCPS”) of RM0.01 each At 1 February 2004/2003 100,000 – 1,000 – Created during the year – 100,000 – 1,000
At 31 January 100,000 100,000 1,000 1,000
5% Irredeemable convertible preference shares (“ICPS”) of RM0.10 each At 1 February 2004/2003 600,000 – 60,000 – Created during the year – 600,000 – 60,000
At 31 January 600,000 600,000 60,000 60,000
Total 1,639,000 1,639,000 1,000,000 1,000,000
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
22. SHARE CAPITAL (Cont’d)
Group and Company Number of Shares Amount 2005 2004 2005 2004 ’000 ’000 RM’000 RM’000
Issued and fully paid
(a) Ordinary shares of RM1.00 each At 1 February 2004/2003 548,747 215,300 548,747 215,300 Issued and paid up during the year – 219,314 – 219,314 Exercise of warrants – 54,439 – 54,439 Conversion of ICULS 2003/2005 16,479 9,674 16,479 9,674 Conversion of ICULS 2003/2006 6 – 6 – Conversion of RCPS – 50,000 – 50,000 Conversion of ICPS 33,613 20 33,613 20
At 31 January 598,845 548,747 598,845 548,747
(b) Redeemable convertible preference shares (“RCPS”) of RM0.01 each At 1 February 2004/2003 – – – – Created during the year – 50,000 – 50,000 Less: Converted during the year – (50,000) – (50,000) 99
At 31 January – – – –
(c) 5% Irredeemable convertible preference shares (“ICPS”) of RM0.10 each At 1 February 2004/2003 591,668 – 59,167 – Created during the year – 591,868 – 59,187 Less: Converted during the year (336,135) (200) (33,613) (20)
At 31 January 255,533 591,668 25,554 59,167
Total 854,378 1,140,415 624,399 607,914
Less: Liability component of ICPS (Note 17) (4,531) (7,624)
Total 619,868 600,290
(a) The Company executed the Warrants 2000/2005, which was constituted by a Deed Poll dated 31 October 2000. The main features of the Warrants 2000/2005 are disclosed in Note 49.
(b) During the financial year, the Company increased its issued and paid-up share capital from RM607,913,678 to RM624,398,262 by way of issuance of the following:
(i) 16,478,584 ordinary shares of RM1.00 each amounting to RM16,478,584 pursuant to the conversion of 7% ICULS 2003/2005 as disclosed in Note 26;
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
22. SHARE CAPITAL (Cont’d)
(ii) 6,000 ordinary shares of RM1.00 each amounting to RM6,000 pursuant to the conversion of 7% ICULS 2003/2006 as disclosed in Note 26; and
(iii) 336,134,762 preference shares of RM0.10 each amounting to RM33,613,469 pursuant to the conversion of 5% ICPS.
The new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company except that they are not entitled to any dividends, allotments and/or other distributions unless the allotment of the new ordinary shares is made on or prior to the entitlement date of such dividends, right, allotments and/or other distributions.
(c) The ICPS have been split between the liability component and the equity component, representing the fair value of the conversion component. The main features of the ICPS are disclosed in Note 50.
23. TREASURY SHARES
During the financial year, the Company:
(a) repurchased its issued ordinary shares from the open market which were financed by internally generated funds. The number of ordinary shares repurchased during the financial year was 5,092,500 ordinary shares at prices ranging from RM1.07 to RM1.40 per share. The total consideration for the shares repurchased during the year including transaction costs was RM5,700,790. The shares 100 repurchased were held as treasury shares in accordance with Section 67A of the Companies Act, 1965.
(b) sold the entire treasury shares held of 5,112,500 ordinary shares in the open market at prices ranging from RM1.12 to RM1.15 per share for a total consideration of RM5,862,000 thereby resulting in a gain of RM138,000 to the Company.
The details of the Share Buy Back are as follows:
Group and Company Number of Ordinary Shares of RM1 Each Amount ‘000 RM’000
At 1 February 2003 142 120 Repurchased during the year 90 80 Less: Sold during the year (212) (177)
At 31 January 2004 20 23 Repurchased during the year 5,092 5,701 Less: Sold during the year (5,112) (5,724)
At 31 January 2005 – –
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
24. CAPITAL RESERVE
2005 2004 RM’000 RM’000
Capital reserve of the Group are in respect of the following:
Capitalisation of retained profits for bonus issue of ordinary shares by subsidiaries 6,392 7,092 Redemption of preference shares to ordinary shares – (700)
6,392 6,392 Realisation of bonus issue arising from disposal of a subsidiary 4,809 4,809
At 31 January 11,201 11,201
25. RETAINED PROFITS
As at 31 January 2005, the Company has tax exempt profits available for distribution of approximately RM22,884,000 (2004: RM22,884,000), subject to the agreement of the Inland Revenue Board.
The Company has sufficient tax credit under Section 108 of the Income Tax Act, 1967 and the balance in the tax exempt income account to frank the payment of dividends out of its entire retained profits as at 31 January 2005.
101 26. IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)
Group and Company 2005 2004 RM’000 RM’000
7% ICULS 2003/2005 At 1 February 2004/2003 34,975 – Created during the year – 44,649 Less: Converted during the year (16,479) (9,674)
At 31 January 18,496 34,975
7% ICULS 2003/2006 At 1 February 2004/2003 691 – Created during the year – 691 Less: Converted during the year (6) –
685 691
TOTAL 19,181 35,666 Less : Equity component of ICULS (18,161) (31,816)
Liability component as at 31 January 1,020 3,850
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
26. IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”) (Cont’d)
In the previous financial year, pursuant to the Merger, the Company issued:
(i) RM44,649,336 7% Irredeemable Convertible Unsecured Loan Stock 2003/2005 ("7% ICULS 2003/ 2005") at nominal value for the acquisition of the Europlus Berhad's RM44,649,336 7% Irredeemable Convertible Unsecured Loan Stock 2000/2005.
The salient features of 7% ICULS 2003/2005 issued are as follows:
(a) The principal amount of the ICULS 2003/2005 which consist of unsecured notes of the Company in registered form in multiples of RM1.00 each issued pursuant to acquisition of Europlus ICULS 2000/2005, bearing a coupon rate of 7% per annum on the principal amount. The Loan Stock is designated as "7% ICULS 2003/2005".
(b) The 7% ICULS 2003/2005 are constituted by a Trust Deed executed by the Company and a Trustee on 3 November 2003.
(c) The 7% ICULS 2003/2005 will be irredeemable and shall be convertible into new ordinary shares, at the holder's option, at the conversion price during the tenure of the ICULS. All outstanding 7% ICULS 2003/2005 shall be automatically converted into new ordinary shares of RM1.00 each on the maturity date, 19 July 2005.
(d) The new ordinary shares of RM1.00 each to be issued pursuant to the conversion of the 7% 2003/2005 ICULS shall, upon allotment and issue, rank pari passu in all respect with existing shares in issue at the conversion date, except that they will not be entitled to any dividends, 102 rights, allotments and/or other distributions the entitlement date of which precedes the date of allotment of the new ordinary shares.
(ii) RM690,640 7% Irredeemable Convertible Unsecured Loan Stock 2003/2006 ("7% ICULS 2003/ 2006") at nominal value for the acquisition of the Europlus RM690,640 7% Irredeemable Convertible Unsecured Loan Stock 2001/2006.
The salient features of 7% ICULS 2003/2006 issued are as follows:
(a) The principal amount of the ICULS 2003/2006 which consist of unsecured notes of the Company in registered form in multiples of RM1.00 each issued pursuant to acquisition of Europlus ICULS 2001/2006, bearing a coupon rate of 7% per annum on the principal amount. The Loan Stock is designated as "7% ICULS 2003/2006".
(b) The 7% ICULS 2003/2006 are constituted by a Trust Deed executed by the Company and a Trustee on 3 November 2003.
(c) The 7% ICULS 2003/2006 will be irredeemable and shall be convertible into new ordinary shares, at the holder's option, at the conversion price during the tenure of the ICULS. All outstanding 7% ICULS 2003/2006 shall be automatically converted into new ordinary shares of RM1.00 each on the maturity date, 19 April 2006.
(d) The new ordinary shares of RM1.00 each to be issued pursuant to the conversion of the 7% 2003/2006 ICULS shall, upon allotment and issue, rank pari passu in all respect with existing shares in issue at the conversion date, except that they will not be entitled to any dividends, rights, allotments and/or other distributions the entitlement date of which precedes the date of allotment of the new ordinary shares.
The ICULS have been split between the liability component and the equity component, representing the fair value of the conversion option.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
27. BONDS
Group and Company 2005 2004 RM’000 RM’000
5% Secured Serial Bonds (“Bonds”) – 110,000
The Bonds, at nominal value of RM1.00 each were constituted by a Trust Deed dated 31 October 2000 and Supplementary Trust Deed dated 19 September 2001 made between the Company and the Trustee for the holders of the Bonds. The main features of the Bonds were as follows:
(a) The Bonds are issued together with 107,650,000 detachable Warrants 2000/2005 structured on a “bought deal” basis.
(b) Fixed coupon rate of 5% per annum of the Bond shall be payable semi-annually in arrears, until the maturity date.
(c) The Bonds shall, unless previously called or purchased and cancelled, be redeemed at 100% of their principal amount together with interest accrued to the maturity date.
(d) The Bonds are secured against the following:
(i) A third party first legal fixed charge on leasehold land of a subsidiary;
(ii) A third party first legal fixed charge on an office building owned by a subsidiary; 103
(iii) A third party deed of assignment in respect of the rights, titles and interests over the land and a shopping complex owned by a subsidiary;
(iv) A third party debenture incorporating a fixed and floating charge over the entire assets, both present and future of certain subsidiaries;
(v) A third party specific debenture incorporating a fixed and floating charge over an office building and its asset thereon, both present and future, owned by a subsidiary;
(vi) A third party assignment of rental derived from an office building and shopping complex owned by certain subsidiaries and sale proceeds derived from a property development project of a subsidiary; and
(vii) A first party assignment of the redemption fund, warrant conversion and coupon servicing accounts.
The Bonds have been fully redeemed on 28 January 2005.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
28. DEFERRED PROGRESS BILLINGS
Group 2005 2004 RM’000 RM’000
Deferred progress billings 1,073,392 1,073,392 Less: Billed (509,481) (249,700)
563,911 823,692 Less: Short term portion (349,231) (322,259)
214,680 501,433
Discount of deferred progress billings 154,161 154,161 Less: Discount capitalised in property development costs (Note 4) (11,764) (3,921) Amortisation charged to income statement (65,316) (21,772)
77,081 128,468
Total 137,599 372,965
104 (a) Deferred progress billings relates to an Islamic Assets Backed Securitisation ("ABS") arranged by a subsidiary. The ABS arrangement encompasses the sale of the subsidiary's right to bill under certain Sale and Purchase Agreements of certain phases of two development projects to a special purpose vehicle for a net cash purchase consideration of approximately RM919,231,000.
(b) The timing of the anticipated cash flows from the property development activities of the Group do not match the cash flows required to meet the obligations under ABS in accordance with existing terms of repayment. The Group is in an advanced stage of discussion with the lenders to restructure and defer up to approximately RM270 million of its repayment obligations which is due in the next 12 months. The directors are confident that the said obligations will be successfully restructured and deferred.
29. OTHER LONG TERM PAYABLES
Group 2005 2004 RM’000 RM’000
Obligation arising from acquisition of land (Note (a)) 323,531 450,276 Less: Short term portion (Note 21) (132,000) (345,276)
191,531 105,000 Amount payable for acquisition of land (Note (b)) 83,465 94,835 Loan from a minority shareholder of a subsidiary (Note (c)) 13,770 18,092 Amount payable for acquisition of building (Note (d)) 13,246 13,246
302,012 231,173
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
29. OTHER LONG TERM PAYABLES (Cont’d)
(a) The obligation arising from acquisition of land is in respect of obligations arising from the Universiti Industri Selangor ("UNISEL") project, whereby the Selangor State Government had alienated three parcels of land to the Group in consideration for the development of UNISEL.
Maxisegar Sdn. Bhd. ("MSSB"), a wholly owned subsidiary, entered into an agreement with the State Government of Selangor for the financing and construction of the main campus of UNISEL on 572.16 acres of land at Berjuntai Bestari, Selangor Darul Ehsan for a total value of RM750 million. In return, the State Government of Selangor had alienated 3 parcels of leasehold land to MSSB as follows:
Acres RM’000
Batang Berjuntai 3,000 345,000 Taman Puncak Jalil 801 337,500 Saujana Damansara 110 67,500
3,911 750,000
(b) The amount payable for acquisition of land is payable in accordance with the terms and conditions of the Sale and Purchase Agreements. The amounts are not repayable within 12 months from the end of the financial year.
(c) Loan from a minority shareholder of a subsidiary is interest free, unsecured and has no fixed terms of repayment.
(d) The amount payable for acquisition of building is in relation to an agreement entered into with a 105 third party in the year 1999 for sale of four floors of a building owned by a subsidiary. The agreement provides an option for the subsidiary to re-acquire those floors within ten years from the date of agreement at the market value on the date of exercise of the option. The directors have the intention to exercise the option and therefore the transaction was not recognised as a disposal.
30. DEFERRED TAXATION
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
At 1 February 2004/2003 1,018 3,950 279 279 Recognised in the income statement (Note 37) 4,967 (6,333) – – Reversal on disposal of subsidiaries (193) (326) – – Acquisition of subsidiaries – 3,972 – – Reversal of over provision in previous year – (245) – –
At 31 January 5,792 1,018 279 279
Presented after appropriate offsetting as follows:
Deferred tax assets (5,801) (10,245) – – Deferred tax liabilities 11,593 11,263 279 279
5,792 1,018 279 279
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
30. DEFERRED TAXATION (Cont’d)
The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:
Deferred Tax Liabilities of the Group:
Accelerated Capital Allowances Others Total RM’000 RM’000 RM’000
At 1 February 2004 3,163 8,665 11,828 Recognised in the income statement 69 698 767 Disposal of subsidiaries (199) – (199)
At 31 January 2005 3,033 9,363 12,396
At 1 February 2003 1,774 3,293 5,067 Recognised in the income statement 1,753 1,645 3,398 Reduction of tax rate understated in prior year – (245) (245) Acquisition of subsidiaries – 3,972 3,972 Disposal of subsidiaries (364) – (364)
At 31 January 2004 3,163 8,665 11,828
106 Deferred Tax Assets of the Group:
Tax Losses and Unabsorbed Capital Other Allowances Payables Others Total RM’000 RM’000 RM’000 RM’000
At 1 February 2004 (10,268) (5) (537) (10,810) Recognised in the income statement 4,200 – – 4,200 Disposal of subsidiaries – 6 – 6
At 31 January 2005 (6,068) 1 (537) (6,604)
At 1 February 2003 (627) (58) (432) (1,117) Recognised in the income statement (9,641) 15 (105) (9,731) Disposal of subsidiaries – 38 – 38
At 31 January 2004 (10,268) (5) (537) (10,810)
Deferred Tax Liabilities of the Company:
Accelerated Capital Allowances RM’000
At 31 January 2005/2004 279
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
30. DEFERRED TAXATION (Cont’d)
Deferred tax assets have not been recognised in respect of the following items:
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Unused tax losses 86,004 88,003 – – Unabsorbed capital allowances 30,272 17,105 – – Other deductible temporary differences 8,238 8,242 – 197
124,514 113,350 – 197
The unused tax losses and unabsorbed capital allowances are available indefinitely for offset against future taxable profits of the respective subsidiaries.
31. REVENUE
Revenue of the Group and of the Company consist of the following:
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000 107
Gross dividends from subsidiaries – – 12,000 39,500 Management fees from subsidiaries – – – 26,042 Revenue from development properties and construction 889,776 814,170 626 842 Sales of goods 65,797 56,960 – – Rental income 20,961 18,581 – – Revenue from hotel operations 20,057 15,579 – – Interest income received from financing facilities provided 4,760 4,867 – – Tuition and education fees 701 1,828 – –
1,002,052 911,985 12,626 66,384
(a) Included in interest income of the Group is amount received or receivable from the following related parties:
Group 2005 2004 RM’000 RM’000
Pengurusan Projek Bersistem Sdn. Bhd. 385 626 Perkhidmatan Sanjung (M) Sdn. Bhd. 15 8 Project 33 Construction Sdn. Bhd. 77 149
The nature of the relationship with the above related parties are disclosed in Note 44.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
32. COST OF SALES
Cost of sales of the Group and of the Company consist of the following:
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Cost of development properties and construction 640,393 664,719 606 815 Cost of inventories sold 72,825 46,943 – – Cost of rental 14,273 16,018 – – Cost of sales for hotel operations 7,254 6,246 – – Cost of sales for financing facilities provided 4,712 4,952 – –
739,457 738,878 606 815
Cost of sales for financing facilities provided represent interest expense.
33. PROFIT FROM OPERATIONS
Profit from operations is stated after charging/(crediting):
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000 108 Amortisation of goodwill 68 429 – – Auditors’ remuneration: - current year provision 448 370 60 60 - under provision in prior years – – – 2 - Others 250 160 250 160 Bad debts written off 7 216 – 17 Depreciation 9,916 10,178 536 526 Amortisation of discount on deferred progress billings 43,544 17,204 – – Inventories written off – 2 – – Loss/(gain) on disposal of investment in subsidiaries 921 – (11,800) – Goodwill written off 2,291 – – – Gain on disposal of property, plant and equipment (63) (40) – – Property, plant and equipment written off 69 612 174 – Provision for doubtful debts 9,020 4,796 – – Provision for impairment loss of a subsidiary – – – 1,000 Provision for liabilities 2,350 17,567 – – Rental paid and payable to: - subsidiaries – – – 1,811 - Agrocon (M) Sdn. Bhd. (Note 44) 118 258 – – - others – 877 – – Rental of complex 2,500 7,015 – – Realised gain on foreign exchange – (105) – – Rental income (2,066) (4,032) – – Reversal of provision for doubtful debts (17) (688) – – Staff costs (Note 34) 32,346 40,233 1,045 20,655 Waiver of debts by subsidiaries – – – (9,000)
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
34. STAFF COSTS
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Wages and salaries 25,924 31,575 1,045 16,886 Social security costs 210 200 – 108 Defined contribution costs 2,664 2,665 – 1,608 Other staff related expenses 3,548 5,793 – 2,053
32,346 40,233 1,045 20,655
Included in the staff costs of the Group and of the Company are executive directors' remuneration amounting to RM2,995,000 (2004: RM2,783,000) and RM305,000 (2004: RM245,000) respectively as further disclosed in Note 35.
35. DIRECTORS’ REMUNERATION
Included in staff costs are directors’ remuneration as follows:
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Directors of the Company
Executive: Fees 305 245 305 245 109 Non-Executive: Fees 208 334 208 334 Salaries 453 – – – Defined contribution 31 – – – Benefit-in-kind 10 – – –
702 334 208 334
Other Directors of Subsidiaries of the Company
Executive of the subsidiaries: Salaries 2,111 2,012 – – Fees 310 12 – – Bonus – 235 – – Defined contribution costs 220 209 – – Other emoluments 49 70 – –
2,690 2,538 – –
Non-Executive of the subsidiaries: Fees – 18 – –
3,697 3,135 513 579
Excluded from remuneration of directors of subsidiary of the Company are the following:
Benefits-in-kind Executive 196 106 – –
Total 3,893 3,241 513 579
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
35. DIRECTORS’ REMUNERATION (Cont’d)
The number of directors of the Company whose total remuneration during the financial year fall within the following bands is as follows:
Number of Directors 2005 2004
Executive directors RM350,000 - RM400,000 1 1
Non-Executive directors Below RM50,000 5 5 RM100,001 - RM150,000 1 1
77
36. FINANCE COSTS, NET
Included in finance costs, net are:
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Interest expense 67,398 45,176 7,112 6,350 Interest income (8,504) (10,475) (976) (2,275) 110 58,894 34,701 6,136 4,075
Less: Amount capitalised in - Land held for property development/ property development costs (44,406) (24,175) – –
- Property, plant and equipment – (261) – –
14,488 10,265 6,136 4,075
37. TAXATION
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Tax expense for the year 41,154 29,849 3,360 7,616 Under/(over) provision in prior years 980 (3,147) – –
Deferred tax: Relating to origination and reversal of temporary differences (Note 30) 4,967 (6,333) – –
47,101 20,369 3,360 7,616
Income tax is calculated at the Malaysian statutory tax rate of 28% (2004: 28%) of the estimated assessable profit for the year. Taxation for small and medium scale subsidiaries with paid-up capital of RM2,500,000 and below are calculated at the rate of 20% on chargeable income of up to RM500,000. For chargeable income in excess of RM500,000, the statutory tax rate of 28% is applicable.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
37. TAXATION (Cont’d)
A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company are as follows:
2005 2004 RM’000 RM’000
Group
Profit before taxation 130,746 71,099
Taxation at Malaysian statutory tax rate of 28% (2004: 28%) 36,609 19,908 Effect of different tax rate for small and medium scale subsidiaries of 20% for the first chargeable income of RM500,000 (496) (455) Effect of different tax rates in other countries – (151) Income not subject to tax (6,937) (6,770) Expenses not deductible for tax purposes 13,744 16,558 Utilisation of previously unrecognised tax losses, unabsorbed capital allowances and unabsorbed reinvestment allowances (2,207) (10,688) Deferred tax assets not recognised during the year 5,408 2,904 Underprovision of deferred tax in prior year – 2,210 Under/(over) provision of income tax expense in prior years 980 (3,147)
Tax expense for the year 47,101 20,369 111
2005 2004 RM’000 RM’000
Company
Profit before taxation 12,033 35,609
Taxation at Malaysian statutory tax rate of 28% (2004: 28%) 3,369 9,971 Income not subject to tax (3,304) (6,274) Expenses not deductible for tax purposes 3,295 3,919
Tax expense for the year 3,360 7,616
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Tax savings recognised during the financial year are as follows:
Utilisation of previously unrecognised tax losses, unabsorbed capital allowances and unabsorbed reinvestment allowances 2,207 10,377 – –
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
38. EARNINGS PER SHARE
(a) Basic
Basic earnings per share is calculated by dividing the net profit for the year by the weighted average number of ordinary shares in issue during the financial year, excluding treasury shares held by the Company.
2005 2004
Net profit for the year (RM’000) 92,021 54,033 Weighted average number of shares (’000) 581,133 295,428
Basic earnings per share (sen) 15.83 18.29
(b) Diluted
For the purpose of calculating diluted earnings per share, the net profit for the year and the weighted average number of ordinary shares in issue during the financial year have been adjusted for the effects of dilutive potential ordinary shares from conversion of 7% ICULS 2003/2005, 7% ICULS 2003/2006 and 5% ICPS. The amount of net profit for the year is adjusted by the after-tax effect of interest expense recognised during the financial year which would have been saved on conversion of the outstanding ICULS into ordinary shares. The adjusted weighted average number of ordinary shares is the weighted average number of ordinary shares which would be issued on the conversion of the outstanding ICULS and ICPS into ordinary shares. The ICULS and ICPS are deemed to have 112 been converted into ordinary shares at the date of issuance.
The effects of dilutive potential ordinary shares from assumed conversion of warrants is anti- dilutive and as such have been excluded from the computation of diluted earnings per share.
Group 2005 2004
Net profit for the year (RM’000) 92,021 54,033 Adjustments for: After-tax effects of interest on ICULS (RM’000) 967 5,042
Adjusted net profit for the year (RM’000) 92,988 59,075
Weighted average number of ordinary shares in issue (‘000) 581,133 295,428 Adjustment for assumed conversion of ICULS (‘000) 19,181 35,666 Adjustment for assumed conversion of ICPS (‘000) 25,553 59,167
Adjusted weighted average number of ordinary shares in issue and issuable (‘000) 625,867 390,261
Diluted earnings per share (sen) 14.86 15.14
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
39. DIVIDENDS
Amount Dividend per share 2005 2004 2005 2004 RM’000 RM’000 Sen Sen
Year 2004/2003 final ordinary shares dividend of 5% (2003: 4%) less taxation 21,208 6,197 3.6 2.9 Year 2004 ICPS dividend of 5% (net of taxation) 1,302 – 5.0 –
22,510 6,197
40. CONTINGENT LIABILITIES/LOSSES (unsecured)
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
(a) Guarantees
Guarantees given to financial institutions for facilities granted to subsidiaries – – 162,943 147,433 Guarantees given to third parties – 21,700 – –
(b) The Group has taken legal action as disclosed in Note 14(a)(i) for the recovery of deposit and 113 instalment paid for a proposed acquisition of land. In the same suit, the Group is contingently liable subject to the outcome of the appeal as disclosed in Note 14(a)(i) to the extent of approximately RM77,433,000 made up as follows:
RM’000
Deposit and instalment 42,071 Interest expenses 33,362 Cost 2,000
77,433
No provision for the above amounts has been made as the directors are confident that MSSB will succeed in its appeal. Details of the legal suit are disclosed in Note 14(a)(i).
(c) On 14 July 2003, a third party, Perspektif Perkasa Sdn. Bhd. ("PPSB") obtained Islamic financing in the form of MUNIF for a total amount of RM188 million. The MUNIF facility was arranged by Abrar Discount Berhad ("Abrar"), who also acts as the security agent. PPSB has entered into a management agreement with a subsidiary of the Company to manage the development of a piece of land owned by PPSB. In connection with the management agreement, the Company entered into an option agreement with Abrar which requires the Company, at any time during the option period, to acquire the entire issued and paid-up share capital of PPSB at an option price equivalent to the total outstanding MUNIF. As at 31 January 2005, the total outstanding MUNIF was approximately RM158 million.
(d) Pursuant to the sales and purchase agreements entered into between the Company and KEB as further disclosed in Note 42(i), the Company gave a warranty that all trade receivables due to Talam Trading Sdn. Bhd. and Talam Leasing Sdn. Bhd. as at the completion date ("the Guaranteed Debts") shall be recovered in full within two years from the completion date ("the Warranty Period"). In this connection, the completion date was mutually agreed as 31 January 2005. The Company undertook to pay KEB any guaranteed debts which are not recovered within 30 days of the expiry of the said warranty period. As at 31 January 2005, the guaranteed debts amounted to approximately RM82,049,000 and RM67,646,000 respectively.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
41. COMMITMENTS
Group 2005 2004 RM’000 RM’000
(a) Lease rental commitments – 2,005 Purchase consideration of a land 81,000 –
(b) Ample Zone, a subsidiary has entered into an asset sales and lease-back transaction under the issuance of Sukuk of RM150 million as stated in Note 42(l). As security for the due compliance of all obligations of the issuer and the other security party under the Sukuk and the other financing documents, the Company has irrevocably and unconditionally granted to the issuer an option in respect of the assets whereby the Company will on request by the Security Trustee purchase the assets or any part thereof from the issuer at the relevant exercise price after the occurrence of an Event of Default.
42. SIGNIFICANT EVENTS
During the financial year,
(a) On 18 February 2004, a wholly-owned subsidiary, Ideal Synergy Sdn. Bhd., entered into a Joint Venture Agreement with ISY Holdings Sdn. Bhd. for the development of land, measuring 260 acres held under Bukit Baja, Mukim Dengkil, Daerah Sepang, Selangor Darul Ehsan 114 (b) On 1 March 2004, the Foreign Investment Committee ("FIC") approved an extension of time to 31 December 2004 for the Company and Expand Factor Sdn. Bhd. to increase their Bumiputera equity content to at least 30%.
(c) On 11 May 2004, a subsidiary, Perwira Indra Sakti Sdn. Bhd., entered into a Sale and Purchase Agreement with Agresif Gemilang Sdn. Bhd. to dispose of a parcel of land comprising 2 contiguous units of 4 storey shops/office at the Mukim of Ampang in the District of Ulu Langat for a total consideration of RM2,200,000.
(d) On 22 May 2004, a subsidiary, Seaview Plantations Sdn. Bhd., acquired two ordinary shares of RM1.00 each representing the entire issued and paid-up share capital of Wira Profit Sdn. Bhd. ("WPSB") for a total cash consideration of RM2.
(e) On 24 May 2004, WPSB entered into a Share Sale Agreement to acquire 1,000,000 ordinary shares of RM1.00 each ("the Share Sale") representing the entire issued and paid-up share capital of Bintang Dian Sdn. Bhd. ("BDSB") for a total consideration of RM12,200,000. On 23 July 2004, the Share Sale has been mutually terminated at the request of the vendors.
(f) On 24 May 2004, a subsidiary, Ideal Synergy Sdn. Bhd., entered into a sale and purchase agreement to acquire 40,002 ordinary shares of RM1 each representing the entire issued and paid-up share capital of Rupa Sempurna Sdn Bhd ("RSSB") for a total cash consideration of RM4,000,000. The sale and purchase agreement has not been completed during the financial year pending fulfillment of certain conditions.
(g) On 21 July 2004, the Company announced that the Liquidator of Peri Sentosa Sdn. Bhd. ("PSSB") had on 15 July 2004 convened a final meeting to conclude the Members' Voluntary Liquidation of PSSB. A return by Liquidator relating to final meeting was lodged with the Companies Commission of Malaysia and with the Official Receiver on 21 July 2004 and on the expiration of 3 months after the said lodgement date, i.e. 21 October 2004, PSSB shall be dissolved.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
42. SIGNIFICANT EVENTS (Cont’d)
(h) On 12 August 2004, a wholly-owned subsidiary, Maxisegar Sdn. Bhd. ("MSSB") has entered into a Shareholders' Agreement with IJM Properties Sdn. Bhd. ("IJM") to establish a 50:50 joint venture company, Astaka Tegas Sdn. Bhd. ("ATSB"). ATSB is formed to purchase and develop a parcel of land measuring approximately 1,748 acres which forms part of 5,439 acres of leasehold land located at Mukim Tanjung Dua Belas and Mukim Teluk Panglima Garang in the District of Kuala Langat, Selangor.
On the same date, ATSB has entered into a Sale and Purchase Agreement with Canal City Construction Sdn. Bhd. ("CCCSB"), a subsidiary of Kumpulan Europlus Berhad ("KEURO"), to purchase a parcel of land measuring 1,748 acres of leasehold land held under Mukim Tanjung Dua Belas and Mukim Teluk Panglima Garang in the District of Ulu Langat, Selangor, from CCCSB for a total consideration of RM587,400,000.
Pursuant to the Shareholders' Agreement, ATSB will have an initial authorised share capital of RM12,000,000 comprising ordinary shares of RM1.00 each. The shareholders of ATSB are Maxisegar and IJM.
(i) On 30 August 2004, the Company entered into three (3) separate Sale and Purchase Agreements for the disposals of the following wholly-owned companies to KEURO:
(i) the entire issued and paid-up capital of Talam Trading Sdn. Bhd. ("TTSB"), comprising 500,000 ordinary shares of RM1 each in TTSB, for a disposal consideration of RM6,684,993;
(ii) the entire issued and paid-up capital of Talam Leasing Sdn. Bhd. ("TLSB"), comprising 6,000,000 ordinary shares of RM1 each in TLSB, for a disposal consideration of RM9,615,001; 115 and
(iii) the entire issued and paid-up capital of Ambang Vista Sdn. Bhd. ("AVSB"), comprising 2 ordinary shares of RM1 each in TTSB, for a disposal consideration of RM1
(collectively, the “Proposals”)
The Proposals were approved by the Foreign Investment Committee on 18 October 2004 and by the Shareholders of the Company at the Extraordinary General Meeting held on 8 December 2004.
The Proposals have become unconditional with all conditions precedent met on 8 December 2004. Notwithstanding the above and in accordance with the provision of the Sale and Purchase Agreements, Talam and KEURO have agreed that the completion of the Proposals shall be at 31 January 2005.
(j) On 1 September 2004, a subsidiary, Larut Management Services Sdn. Bhd., acquired two ordinary shares of RM1.00 each representing the entire issued and paid-up share capital of Ample Zone for a total cash consideration of RM2.
(k) On 16 September 2004, a subsidiary, Kolej Aman Berhad, entered into a Sale and Purchase Agreement with Lotus Tiara Sdn. Bhd. to dispose of the Batu Pahat Branch for a total consideration of RM400,000.
(l) On 4 January 2005, the Company announced that the Securities Commission had approved its subsidiary, Ample Zone's proposed Sukuk Al-Ijarah Issuance ("Sukuk Issuance") of RM150,000,000 on 30 December 2004. Ample Zone will use the proceeds of the Sukuk Issuance to purchase four assets [as stated below in Note 43(m)(B)] and lease back the assets to the sellers which consist of certain subsidiaries of the Company and a third party.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
42. SIGNIFICANT EVENTS (Cont’d)
(m) On 11 January 2005, the Company announced that on 10 January 2005 that:
(A) the Company has entered into an Option Agreement with Malaysian Trustees Berhad ("MTB") and Ample Zone for the Sukuk Issuance, and
(B) the Company has proposed to grant in favour of MTB as security trustee for the holders of Sukuk to be issued pursuant to the Sukuk Issuance, a right to require the Company to purchase the following
(i) Midpoint Shopping Complex owned by the third party mentioned in Note 42(l) having a postal address at Jalan Pandan Indah 1/25, Pandan Indah, 55100 Kuala Lumpur held under title No. H.S.(M) 29326 PT 28944 Mukim of Empang, District of Ulu Langat, State of Selangor;
(ii) Menara Maxisegar Commercial Building owned by a subsidiary having a postal address at Jalan Pandan Indah 4/2, Pandan Indah, 55100 Kuala Lumpur held under Title No Pajakan Mukim 3861 (Formerly H.S.(M) 32689) Lot No 261 Town of Ampang, District of Hulu Langat, State of Selangor;
(iii) Pandan Kapital Shopping Complex owned by a subsidiary having a postal address at Jalan Pandan Utama, Pandan Indah, 55100 Kuala Lumpur erected on part of parcel A, one of the four (4) plots of alienated state land held under Master title HSD 68435 Lot No PT 3515 located within Mukim of Ampang, District of Hulu Langat, State of Selangor; and 116 (iv) Wisma Talam owned by a subsidiary having a postal address at Jalan Perubatan 1, Pandan Indah, 55100 Kuala Lumpur held under Lot 2374 Title P.M. 1038 Section 15, Mukim of Empang, District of Hulu Langat, State of Selangor.
(n) On 28 January 2005, Ample Zone completed the Sukuk Issuance as stated on above Note 42(l)
43. SUBSEQUENT EVENTS
Subsequent to the financial year,
(a) the Company increased its issued and fully paid-up capital from RM624,398,262 to RM626,768,595 by way of issuance of the following:
(i) 2,370,333 ordinary shares of RM1.00 each amounting to RM2,370,333 pursuant to the conversion of 7% ICULS 2003/2005; and
(ii) 4,993,759 preference shares of RM0.10 each amounting to RM499,375 pursuant to the conversion of 5% ICPS.
(b) on 3 February 2005, the Company announced an early redemption of the entire outstanding balance of the RM150,000,000 nominal value of 5% Secured Serial Bonds made on 28 January 2005.
(c) the Company repurchased its issued ordinary shares from the open market using its internally generated funds. The number of ordinary shares repurchased subsequent to the financial year was 876,000 ordinary shares at prices ranging from RM0.82 to RM1.14 per share. The total consideration for the shares repurchased subsequent to the financial year including transaction costs was RM829,053. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
43. SUBSEQUENT EVENTS (Cont’d)
(d) on 18 February 2005, the Company announced that its wholly-owned subsidiary, Maxisegar Sdn. Bhd. has entered into a Share Sales Agreement with Bumi Dua Corporation Sdn. Bhd. to acquire 144,000 ordinary shares of RM1.00 each representing 12% of the equity interest of Abra Development Sdn. Bhd. for a consideration of RM12,000,000.
(e) on 3 March 2005, the Foreign Investment Committee ("FIC") approved an extension of time to 31 December 2005 for the Company to increase their Bumiputra equity content to at least 30%.
(f) on 4 April 2005, the Company announced that a subsidiary, Terang Tanah Sdn. Bhd. ("Terang Tanah"), and Star Base Sdn. Bhd. ("Star Base") have mutually agreed on even date to rescind and revoke the Joint Venture Agreement entered into on 21 October 2003 at the request of Star Base. All monies paid by Terang Tanah to Star Base under the said Joint Venture Agreement have been refunded by Star Base to Terang Tanah and the parties are released of all respective obligations under the said Joint Venture Agreement.
(g) on 6 April 2005, the Company announced that a wholly-owned subsidiary, Expand Factor Sdn. Bhd., has subscribed 900,000 ordinary shares of RM1.00 each representing the 90% issued and paid-up share capital of Star Base Sdn. Bhd. for a total cash consideration of RM900,000.
(h) on 8 April 2005, the Company announced that:
(i) two of its subsidiaries, Terang Tanah Sdn. Bhd. ("Terang Tanah") and Star Base Sdn. Bhd. ("Star Base") and IJM Properties Sdn. Bhd. ("IJM") have signed a Memorandum of Agreement on even date to jointly develop a parcel of land, measuring approximately 90 acres, held under Pajakan Negeri 7358 Lot 15687, Mukim Ulu Kelang, Daerah Gombak, Selangor Darul 117 Ehsan ("Project Land") registered in the name of Star Base.
Terang Tanah and IJM will enter into a 50:50 joint venture agreement to jointly develop the Project Land with Star Base. Terang Tanah and IJM have paid in equal share of a deposit of RM16,000,000 to Star Base, and will pay up to RM80,000,000 for the Project Land in the course of its development; and
(ii) a wholly-owned subsidiary, Expand Factor Sdn. Bhd. ("Expand Factor") have entered into an agreement with IJM Properties Sdn. Bhd. ("IJM") on even date to dispose three (3) parcels of land, measuring approximately 43.03 acres, which formed part of a parcel of land held under HS(D) 143296 PT 50610, Mukim Petaling, Daerah Petaling, Selangor Darul Eshan ("the said Land") for a total consideration of RM33,000,000.
IJM has paid a deposit of RM6,600,000 to Expand Factor, with the balance to be paid upon receipt of the approvals from the Foreign Investment Committee and the State Authority, according to the agreed schedule of payments.
Expand Factor will be entitled to a 30% profit entitlement (based on an agreed formula) from the development of the said Land.
(i) on 22 April 2005, a subsidiary, Terang Tanah Sdn Bhd acquired one ordinary share of RM1.00 representing 50% of the issued and paid-up share capital of Acme Pact Sdn Bhd for a cash consideration of RM1.00.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
44. SIGNIFICANT RELATED PARTY TRANSACTIONS
Group Company 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000
Construction costs incurred with the following companies: - Perkhidmatan Sanjung (M) Sdn. Bhd. – 1,348 – – - Project 33 Construction Sdn. Bhd. 12,203 5,541 – – - Agrocon (M) Sdn. Bhd. 16,721 32,229 – – - KEB Group. 131,826 7,568 – – A financing facility obtained from Pengurusan Projek Bersistem Sdn.Bhd. 15,000 – – –
Rental income received and receivable from the following companies: - Agrocon (M) Sdn. Bhd. 106 108 – – Rental paid and payable to the following companies: - Agrocon (M) Sdn. Bhd. 118 258 – –
Interest income received and 118 receivable from the following companies: - Pengurusan Projek Bersistem Sdn. Bhd. 385 576 – – - Perkhidmatan Sanjung (M) Sdn. Bhd. 15 10 – – - Project 33 Construction Sdn. Bhd. 77 149 – –
Gross dividends from subsidiaries – – 12,000 39,500
Management fees received from subsidiaries – – – 26,042
Office rental paid and payable to a subsidiary – – – 1,811
Waiver of debts by subsidiaries – – – (9,000)
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
44. SIGNIFICANT RELATED PARTY TRANSACTIONS (Cont’d)
The nature of the relationship with the related parties is as follows:
Related Parties Nature of Relationship
Pengurusan Projek Bersistem Sdn. Bhd. - Corporate shareholder (“PPBSB”) - Tan Sri Dato’ (Dr.) Ir. Chan Ah Chye @ Chan Chong Yoon (“TSDCAC”), a director and substantial shareholder of the Company, has substantial financial interest in PPBSB.
Perkhidmatan Sanjung (M) Sdn. Bhd. - TSDCAC has substantial financial interest in (“PSMSB”) PSMSB through PPBSB.
Project 33 Construction Sdn. Bhd. - Chee Soo Meng and Wong Chiew Peng, major (“P33”) shareholders of a subsidiary of the Group are also directors and major shareholders of P33. Chee Soo Meng is also a director of a subsidiary of the Group. Chee Soo Meng resigned as director on 4 August 2003. Chee Soo Meng and Wong Chiew Peng also ceased to be the shareholders of a subsidiary of the Group on 8 July 2004.
Agrocon (M) Sdn. Bhd. - The sister of TSDCAC, a director and (“AMSB”) substantial shareholder of AMSB, has 119 substantial financial interest in AMSB.
Kumpulan Europlus Berhad and its subsidiaries - Kumpulan Europlus Berhad is a corporate (“KEB Group”) shareholder.
- TSDCAC, a director and substantial shareholder of the Company has substantial financial interest in KEB Group.
The directors are of the opinion that all the transactions above have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.
45. COMPARATIVE FIGURES
The following comparative figures for 31 January 2004 have been reclassed to conform with the current year's presentation:
As previously As restated stated RM’000 RM’000
Group
Assets
Property Development Costs 2,391,476 1,991,534
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
45. COMPARATIVE FIGURES (Cont’d)
As previously As restated stated RM’000 RM’000
Liabilities
Short term borrowings 294,181 411,181 Trade payables 995,114 631,007 Other payables 745,992 746,033 Long term borrowings 359,114 242,114 Provision for liabilities 109,802 73,926
46. FINANCIAL INSTRUMENTS
(a) Financial Risk Management Objectives and Policies
The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Company's business whilst managing its interest rate, market, credit, liquidity and cash flow risks. The Company operates within clearly defined guidelines that are approved by the Board and the Company's policy is not to engage in speculative transactions.
(b) Currency Risk 120 The Group operates internationally and is exposed to foreign currency transactions in Chinese Renminbi, Singapore Dollars and Hong Kong Dollars. The Group’s policy is to minimise the exposure of overseas operating subsidiaries to transaction risk by matching local currency income with local currency costs.
The net unhedged financial liabilities of the Group companies that are not denominated in their functional currencies are as follows:
Chinese Renminbi RM’000
At 31 January 2005
Short term borrowings 10,944
At 31 January 2004
Short term borrowings 11,409
(c) Interest Rate Risk
The Group’s policy is to borrow principally on a floating rate basis but retain a proportion of fixed rate debt. The objectives for the mix between fixed and floating rate borrowings are set to reduce the impact of an upward change in interest rates while enabling benefits to be enjoyed if interest rates fall.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
46. FINANCIAL INSTRUMENTS (Cont’d)
(d) Credit Risk
Credit risks are minimised and monitored via strictly limiting our associations to business partners with high creditworthiness. Trade receivables mainly arises from development properties projects and are supported by the end-financier.
(e) Liquidity Risk
The Group seeks to achieve a balance between certainty of funding even in difficult times for the markets of the Group and a flexible, cost-effective borrowings structure. The policy, therefore, seeks to ensure that, at a minimum, all projected net borrowing needs are covered by committed facilities. Also, the objective for debt maturities is to ensure that the amount of debt maturing in any one year is not beyond the Group’s means to repay and refinance.
(f) Fair Values
The carrying amounts of the financial assets and financial liabilities approximate their fair values due to the relatively short term maturities except for the followings:
Group Company Carrying Carrying Amount Fair Value Amount Fair Value Note RM’000 RM’000 RM’000 RM’000
At 31 January 2005 121
Financial Assets Other investment 8 76,332 * – –
Financial Liabilities Hire purchase and lease payables 18 1,892 1,733 131 122 Term and bridging loans 17 228,853 227,993 3,381 3,131 Revolving credits 17 10,500 10,270 – – ICULS 26 19,181 19,136 19,181 19,136 Other long term payables: 29 - Obligation arising from acquisition of land 191,531 – – - Amount payable for acquisition of land 83,465 – – - Amount payable for acquisition of building 13,246 – – - Loan from a minority shareholder of a subsidiary 13,770 ** – –
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
46. FINANCIAL INSTRUMENTS (Cont’d)
(f) Fair Values (Cont’d)
Group Company Carrying Carrying Amount Fair Value Amount Fair Value Note RM’000 RM’000 RM’000 RM’000
At 31 January 2004
Financial Assets Hire purchase receivables 13 8,820 8,402 – – Term loans receivables 13 4,349 4,322 – – Other investment 8 76,332 * – –
Financial Liabilities Hire purchase and lease payables 18 511 534 1,110 1,090 Term and bridging loans 17 160,153 151,200 5,705 5,705 Block discounting 17 8,903 8,008 – – Bonds - 5% Secured Serial Bonds 27 110,000 104,481 110,000 104,481 Revolving credit 17 10,900 10,167 – – ICULS 26 35,666 33,290 35,666 33,290 Other long term payables: 29 - Obligation arising 122 from acquisition of land 105,000 – – - Amount payable for acquisition of land 94,835 – – - Amount payable for acquisition of building 13,246 – – - Loan from a minority shareholder of a subsidiary 18,092 ** – –
* It is not practical to estimate the fair values of the unquoted other investment because of the lack of quoted market prices and the inability to estimate fair value without incurring excessive costs.
** It is not practical to estimate the fair values of loan from a minority shareholder of a subsidiary due principally to a lack of fixed repayment term entered into by the parties involved and without incurring excessive costs.
It is not practical to estimate the fair values of obligation arising from acquisition of land, amount payable for acquisition of land and amount payable for acquisition of building due principally to a lack of fixed repayment terms (as terms of repayment is subject to the timing of fulfilment of condition precedence) entered into by the parties involved and without incurring excessive costs.
It is not practical to estimate the fair values of amounts due from/to related companies as disclosed in Notes 12 and 19 due principally to a lack of fixed repayment terms entered into by the parties involved and without incurring excessive costs. The directors are of the opinion that the carrying amounts recorded at the balance sheet date does not differ significantly from the values that would eventually be received or settled.
∆ It is not practicable to estimate the fair value of contingent liabilities reliably as disclosed in Note 40 due to the uncertainties of timing, costs and eventual outcome.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
46. FINANCIAL INSTRUMENTS (Cont’d)
(f) Fair Values (Cont’d)
The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments:
(i) Cash and cash equivalents, Trade and Other Receivables/Payables
The carrying amounts approximate fair values due to the relatively short term maturity at these financial instruments.
(ii) Borrowings
The fair value of borrowings is estimated by discounting the expected future cash flows using the current interest rates for liabilities with similar risk profiles.
47. SEGMENTAL INFORMATION
(a) Analysis by business segments
2005
Property Investment, Total Development Hotel & Before & Construction Credit Trading Education Recreation Elimination Elimination Consolidated RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue 123 External sales 910,737 4,760 65,797 701 20,057 1,002,052 – 1,002,052 Inter-segment sales 33,582 1,302 16,147 1,054 – 52,085 (52,085) –
Total revenue 944,319 6,062 81,944 1,755 20,057 1,054,137 (52,085) 1,002,052
Result Profit before interest and tax 99,952 671 5,519 (2,083) 2,006 106,065 39,119 145,184 Interest income 9,458 – 51 4 – 9,513 (1,009) 8,504 Interest expenses (18,928) – (2,414) (322) (3,253) (24,917) 1,975 (22,942)
Segment result 90,482 671 3,156 (2,401) (1,247) 90,661 40,085 130,746 Taxation (47,101)
Profit after taxation 83,645
Other Information Segment assets 3,755,954 – – 36,561 160,563 3,953,078 – 3,953,078 Unallocated corporate assets 5,939
Consolidated total assets 3,959,017
Segment liabilities 2,531,991 – – 6,713 108,788 2,647,492 – 2,647,492 Unallocated corporate liabilities 226,401
Consolidated total liabilities 2,873,893
Capital expenditure 6,826 3 205 84 2,718 9,836 – 9,836 Depreciation 5,420 15 832 855 2,794 9,916 – 9,916 Non-cash expenses other than depreciation 907 3 – 69 387 1,366 – 1,366
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
47. SEGMENTAL INFORMATION (Cont’d)
(a) Analysis by business segments (Cont’d)
2004
Property Investment, Total Development Hotel & Before & Construction Credit Manufacturing Trading Education Recreation Elimination Elimination Consolidated RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue External sales 832,751 4,867 14,010 42,950 1,828 15,579 911,985 – 911,985 Inter-segment sales 842 1,859 – 20,137 1,505 – 24,343 (24,343) –
Total revenue 833,593 6,726 14,010 63,087 3,333 15,579 936,328 (24,343) 911,985
Result Profit before interest and tax 74,328 803 2,532 3,231 (2,353) (607) 77,934 (815) 77,119 Interest income 16,057 – – 535 92 7 16,691 (6,216) 10,475 Interest expenses (24,167) – (179) (2,530) (484) (3,063) (30,423) 9,683 (20,740)
Segment result 66,218 803 2,353 1,236 (2,745) (3,663) 64,202 2,652 66,854 124 Share of results of associates 4,245 – – – – – 4,245 – 4,245
71,099 Taxation (20,369)
Profit after taxation 50,730
Other Information Segment assets 4,364,007 77,239 19,065 63,699 50,080 167,924 4,742,014 – 4,742,014 Unallocated corporate assets 10,245
Consolidated total assets 4,752,259
Segment liabilities 3,212,909 57,785 24,767 56,543 71,909 120,537 3,544,450 – 3,544,450 Unallocated corporate liabilities 190,565
Consolidated total liabilities 3,735,015
Capital expenditure 5,009 8 – 54 34 1,232 6,337 – 6,337 Depreciation 4,026 23 1,018 867 1,310 2,934 10,178 – 10,178 Non-cash expenses other than depreciation (14,541) – 2,772 – (18) – (11,787) – (11,787)
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
47. SEGMENTAL INFORMATION (Cont’d)
(b) Analysis by geographical segments
Additions to Sales Revenue by Carrying Amount Property, Plant and Geographical Market of Segment Assets Equipment 2005 2004 2005 2004 2005 2004 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Malaysia 981,995 896,406 3,719,846 4,515,532 7,118 5,105 The People’s Republic of China 20,057 15,579 239,171 236,727 2,718 1,232
1,002,052 911,985 3,959,017 4,752,259 9,836 6,337
The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from that obtainable in transactions with unrelated parties.
48. EMPLOYEES’ SHARE OPTION SCHEME
The Talam Corporation Berhad Employees’ Share Option Scheme (“ESOS”) was approved by the shareholders at the Extraordinary General Meeting on 10 October 2000. The main features of the ESOS 125 which is constituted under a by-laws are as follows:
(a) Eligible persons are the employees of the Company and its non-listed subsidiaries (including full time executive directors) who have been confirmed in the employment and have served at least twelve (12) months before the date of offer. The eligibility of participation in the ESOS shall be at the discretion of the Option Committee appointed by the Board of Directors.
(b) The aggregate number of shares to be allotted pursuant to the ESOS shall not exceed 10% of the issued share capital of the Company at any point of time during the duration of the ESOS, which shall be in force for a period of five years from 11 May 2001 to 10 May 2006.
(c) No option shall be granted for less than 1,000 shares nor more than 500,000 shares to any eligible employee.
(d) The Option Price for each ordinary share shall be based on the average of the mean market quotation of the shares of the Company as shown in the Daily Official List issued by Bursa Malaysia for the five (5) market days immediately preceding the respective date of offer less 10% or at par value of the shares of the Company, whichever is the higher.
(e) The new shares to be allotted upon any exercise of the option shall rank pari passu in all respects with the existing shares of the Company except that the shares so issued will not rank for any dividend or other distributions declared, made or paid to the shareholders prior to the allotment of the shares pursuant to the exercise of the option.
As at the balance sheet date, no option is offered to eligible employees.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
49. WARRANTS 2000/2005
The Warrants 2000/2005 are constituted by a Deed Poll dated 31 October 2000 and a supplemental Deed Poll dated 11 July 2003 executed by the Company. The warrants were listed on Bursa Malaysia on 13 March 2001. On 21 November 2003, an additional 7,983,512 Warrants 2000/2005 were listed on the Main Board of Bursa Malaysia due to the adjustments made to the number of Warrants pursuant to the Talam Non-Property Distribution. The main features of the Warrants 2000/2005 are as follows:
(a) Each warrant will entitle its registered holder during the exercise period to subscribe for one (1) new ordinary share at the exercise price, subject to adjustment in accordance with the provision of the Deed Poll.
(b) The exercise price of each warrant has been fixed at RM1.00, which is a premium of 7.53% over the volume weighted average market price of the Company shares for five (5) trading days prior to the price-fixing date on 9 October 2000 of RM0.93 subject to adjustments under certain circumstances in accordance with the provision of the Deed Poll.
(c) The warrants may be exercised at any time on or before the date of falling five (5) years from the date of issue of the rights to allotment of warrants of 9 November 2000. Warrants not exercised during the exercise period will thereafter lapse and cease to be valid.
(d) The new ordinary shares of RM1.00 each to be issued pursuant to the exercise of the warrants will rank parri passu in all respects with the then existing issued ordinary shares of the Company except that they shall not be entitled to any dividends, rights, allotments and/or other distributions, the record date of which is on or before the date of allotment and issue of the new Company shares pursuant to the exercise of the warrants. 126 For the purpose hereof, record date means the date as at the close of business on which the shareholders must be registered as members of the Company in order to participate in any dividends, rights, allotments or any other distributions.
Unexercised Warrants 2000/2005 2005 2004 ’000 ’000
As at 1 February 2004/2003 61,194 107,650 Adjustment pursuant to Talam Non-Property Distribution – 7,983 Exercise of Warrants 2000/2005 during the financial year – (54,439)
As at 31 January 61,194 61,194 Exercise of Warrants 2000/2005 subsequent to the financial year – –
Unexercised Warrants 2000/2005 as at date of report 61,194 61,194
50. 5-YEAR 5% IRREDEEMABLE CONVERTIBLE PREFERENCE SHARES
The main features of the 5-Year 5% Irredeemable Convertible Preference Shares of RM0.10 ("ICPS") each are as follows:
(a) The ICPS shall mature upon the expiry of the five year period from the date of issue.
(b) The ICPS will not be irredeemable for cash. All outstanding ICPS will be converted into new ordinary shares on the Maturity Date.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
50. 5-YEAR 5% IRREDEEMABLE CONVERTIBLE PREFERENCE SHARES (Cont’d)
(c) The ICPS may be converted into new ordinary shares, at the holder's option, at the Conversion Price during the tenure of the ICPS. Upon maturity, any ICPS not converted shall automatically be converted into new ordinary shares at the Conversion Price of RM1.00 per Talam share.
(d) Dividends payable to holder of ICPS shall rank in priority to all dividends payable to holders of RCPS and shareholders. In the event of the winding up or liquidation of the Company, the ICPS shall rank ahead of ordinary shares but shall rank pari passu in all respects with the RCPS.
(e) The new ordinary shares to be issued pursuant to the conversion of the ICPS shall, upon allotment and issue, rank pari passu in all respects with the ordinary shares then in issue except that they shall not be entitled to any dividends, rights, allotments and/or other distributions the entitlement date of which precedes the date of allotment of the new ordinary shares.
51. DETAILS OF SUBSIDIARIES
Effective interest Name of Company 2005 2004 Principal activities %%
Incorporated in Malaysia
Abra Development Sdn. Bhd. 88 88 Property development and investment holding 127 Alam Johan Sdn. Bhd. 99.99 99.99 Property development and investment holding
Ambang Vista Sdn. Bhd. – 100 Property investment and development
Ample Zone Berhad 99.99 – Investment holding and provision of asset (formerly known as management services Ample Zone Sdn. Bhd.)
Beautiful Peninsular Sdn. Bhd. 69.99 69.99 Property development
Biltradex Sdn. Bhd. 99.99 99.99 Property development and investment
Bukit Beruntung Golf & 99.99 99.99 Dormant Academy Sdn. Bhd.
Bukit Beruntung Golf & 99.99 99.99 Golf resort, club management and Country Club Sdn. Bhd. investment holding
Bukit Beruntung Nurseries 99.99 99.99 Horticulturists, agriculturists and Sdn. Bhd. landscaping designers and contractors
Capital Advance Corporation 99.99 99.99 Investment holding Sdn. Bhd.
Cekap Mesra Development 50.01 50.01 Property development Sdn. Bhd.
Classic Fortune Sdn. Bhd. 99.99 99.99 Property development and investment holding
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
51. DETAILS OF SUBSIDIARIES (Cont’d)
Effective interest Name of Company 2005 2004 Principal activities %%
Incorporated in Malaysia
Daya Kreatif Sdn. Bhd. 99.99 99.99 Property development and investment holding
Eminent Sun Sdn. Bhd. 99.99 99.99 Dormant
Era-Casa Sdn. Bhd. 100 100 Investment holding
Europlus Berhad (b) 99.99 99.99 Property development and investment holding
Europlus Construction 99.99 99.99 Housing contractors and Sdn. Bhd. property development
Europlus Corporation 99.99 99.99 Property development, investment Sdn. Bhd. (b) holding and construction activities
Expand Factor Sdn. Bhd. 100 100 Property development and investment holding
Expand Superior Sdn. Bhd. 98.99 98.99 Dormant 128 Galian Juta Sdn. Bhd. 100 100 Property development and investment
Gallant Impact Sdn. Bhd. 62 62 Investment holding
Gemapantas Sdn. Bhd. 51 51 Investment holding
G.L. Development Sdn. Bhd. 100 100 Property investment and development
Hexacity Sdn. Bhd. 100 99.99 Dormant
Ideal Synergy Sdn. Bhd. 100 100 Property investment, management and property development
Inti Johan Sdn. Bhd. 100 100 Property investment
Juara Tiasa Sdn. Bhd. (b) 100 79.80 Property investment
Kagum Semarak Sdn. Bhd. 99.99 99.99 Dormant
Kelina Sdn. Bhd. 59.99 59.99 Investment holding
Kenshine Corporation 99.99 99.99 Property development Sdn. Bhd.
Kolej Aman Bhd. 54 54 Provision of higher educational programmes
Lambang Wira Sdn. Bhd. 99.99 99.99 Investment holding
Lansuniaga Sdn. Bhd. 100 100 Investment holding
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
51. DETAILS OF SUBSIDIARIES (Cont’d)
Effective interest Name of Company 2005 2004 Principal activities %%
Incorporated in Malaysia
Larut Leisure Enterprise 99.99 99.99 Investment holding Sdn. Bhd.
Larut Management Services 99.99 99.99 Investment holding Sdn. Bhd.
Larut Overseas Ventures 99.99 99.99 Investment holding Sdn. Bhd.
L.C.B Management Sdn. Bhd. 100 99.99 Provision of management services
Lestari Puchong Sdn. Bhd. 99.99 99.99 Property development
Layang Realty Sdn. Bhd. 99.99 99.99 In liquidation (In Liquidation)
Layatama Sdn. Bhd. 100 100 Investment holding
Master Waves Sdn. Bhd. 51 51 Investment holding
Maxdale (M) Sdn. Bhd. 100 74.76 Investment holding 129 * Maximix Sdn. Bhd. – 100 Manufacturing and trading of ready mix concrete
Maxisegar Construction 100 100 Property investment and development Sdn. Bhd.
Maxisegar Education 60 60 Investment holding Sdn. Bhd.
* Maxisegar Realty Sdn. Bhd. 100 100 Dormant
Maxisegar Sdn. Bhd. (c) 100 100 Property development and investment holding
Melombong & Perumahan 92.20 92.20 Property development Sdn. Bhd.
Mudi Angkasa Development 51 51 Property development Sdn. Bhd. and investment holding
New Court Properties 98.04 98.04 Dormant Sdn. Bhd.
Noblepace (M) Sdn. Bhd. 100 99.99 Investment holding
Noble Rights Sdn. Bhd. 60 60 Property investment and development
Pandan Indah Medical 100 50 Property development Management Sdn. Bhd. and investment holding
Peninsular Properties (M) 99.99 99.99 Property management Sdn. Bhd.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
51. DETAILS OF SUBSIDIARIES (Cont’d)
Effective interest Name of Company 2005 2004 Principal activities %%
Incorporated in Malaysia
Peninsular Properties 99.99 99.99 Provision of property Management Sdn. Bhd. management services
Perkasa Jati Holdings – 70 Manufacturing and trading Sdn. Bhd. in ready mix concrete
+ Peri Sentosa Sdn. Bhd. – 63.75 Dormant (Dissolved)
* Perwira Indra Sakti 99.99 99.99 Property management Management Services Sdn. Bhd.
Perwira Indra Sakti 99.99 99.99 Property development and Sdn. Bhd. property investment
* PIS Properties Management 99.99 99.99 Property management Services Sdn. Bhd.
Pulau Kembar Sdn. Bhd. 99.99 99.99 Property development 130 ∆ Ratus Prestij Sdn. Bhd. – 100 Property development
Regobase Sdn. Bhd. 100 100 Investment holding
Seaview Plantations 99.99 99.99 Dormant Sdn. Bhd.
Sentosa Restu (M) Sdn. Bhd. 99.99 99.99 Property development
Talam Beverage Sdn. Bhd. 99.77 99.77 Investment holding
Talam General Foods 100 100 Dormant Sdn. Bhd.
Talam Industries Sdn. Bhd. 100 79.80 Property development and investment holding
Talam Leasing Sdn. Bhd. – 100 Hire purchase, lease financing, letter of credit, money lending and factoring
Talam Leisure Development 100 100 Property development Sdn. Bhd. and investment holding
Talam Management Services 100 100 Dormant Sdn. Bhd.
Talam Manufacturing 100 100 Investment holding Sdn. Bhd.
Talam Medical Centre 100 50 Dormant Sdn. Bhd.
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
51. DETAILS OF SUBSIDIARIES (Cont’d)
Effective interest Name of Company 2005 2004 Principal activities %%
Incorporated in Malaysia
Talam Plantations Sdn. Bhd. 100 100 Investment holding
Talam Properties Sdn. Bhd. 100 100 Property development
Talam Refrigeration 99.77 99.77 Investment holding Sdn. Bhd.
Talam Premium Development 100 100 Provision of management Sdn. Bhd. and secretarial services (formerly known as Talam Secretarial Services Sdn. Bhd.)
Talam Tractors Sdn. Bhd. 100 100 Dormant
Talam Trading Sdn. Bhd. – 100 Trading of building materials
TCB Resources Sdn. Bhd. 100 100 Investment holding and provision of management and consultancy services 131 Tenaga Gagah Sdn. Bhd. 99.99 99.99 Property development
Terang Tanah Sdn. Bhd. 99.99 99.99 Property development
Trans Liberty Sdn. Bhd. 99.99 99.99 Property development and investment holding
Ukay Land Sdn. Bhd. (b) 99.99 99.99 Property development
Ulu Yam Golf And Country 60 60 Dormant Club Sdn. Bhd.
United Axis Sdn. Bhd. 99.99 99.99 Property development and investment
Vision Reach Sdn. Bhd. 100 100 Investment holding
Winax Engineering Sdn. Bhd. 100 100 Investment holding
Wira Profit Sdn. Bhd. 99.99 – Dormant
Zillion Development 100 100 Property investment and development Sdn. Bhd. (b)
888 Linear Production 98.99 98.99 Dormant Sdn. Bhd.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
51. DETAILS OF SUBSIDIARIES (Cont’d)
Effective interest Name of Company 2005 2004 Principal activities %%
Incorporated in Hong Kong
* Agriresources International 65 65 Dormant (HK) Limited
#* Birchwood Enterprises 99.99 99.99 Investment holding Limited
* HPC Development (HK) 99.99 78 Investment holding Limited
@* Korwin Company Limited – 100 Investment holding
#* Larut Consolidated (HK) 99.99 – Investment holding Limited
#* Larut Leisure Enterprise 99.99 – Investment holding (Hong Kong) Limited
* Larut Talam International 99.88 49.94 Dormant Management Services Limited
132 * Malim Enterprise (HK) 100 100 Investment holding Limited
* Noble House Investments 100 100 Investment holding Limited
* Parkgrove Limited 100 100 Investment holding
* PPB Investment (HK) 99.99 99.99 Dormant Limited
* Talam Corporation (HK) 100 100 Investment holding Limited
* Talam Resources (HK) 100 100 Investment holding Limited
Incorporated in Singapore
* Crystal Ace Pte. Ltd. 100 100 Dormant
Incorporated in The People’s Republic of China
* Jilin Province Maxcourt 85 85 Operating and managing a hotel Hotel Limited
* Jilin Dingtai Enterprise 59.99 59.99 Property development Development Co. Limited (formerly known as Jilin Larut Development Co. Limited) (a)
TALAM CORPORATION BERHAD (1120-H) NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
51. DETAILS OF SUBSIDIARIES (Cont’d)
* Audited by a firm of auditors other than Ernst & Young.
+ The subsidiary was placed under members' voluntary winding up pursuant to Section 254(1)(b) of the Companies Act, 1965 on 17 January 1997. The company has been dissolved during the year.
@ Subsidiaries deregistered pursuant to Section 291AA(9) of the Companies Ordinance.
^ The subsidiary was struck off from Register of Companies Registry, Hong Kong during the year.
# Certain shares of the companies are held in trust by certain directors for Larut Overseas Ventures Sdn. Bhd.
5,100 ordinary shares out of the 353,514,870 shares are held by individuals after the Merger.
Subsidiary of Talam Trading Sdn. Bhd., which have been disposed during the year as disclosed in Note 42(i).
∆ Subsidiary of Ambang Vista Sdn. Bhd. which have been disposed during the year as disclosed in Note 42(i).
Company submitted for strike off.
(a) The auditors' report of the subsidiary contain an "Except for" qualification whereby the external auditors reported that they are unable to verify the completeness of the development costs of a 133 development property amounting to RMB110,080,000 (equivalent to RM50,494,000) as the construction of the said development property is incomplete.
The directors based on the available market information are of the opinion that there is no diminution in the value of the above development properties.
(b) The auditors' report of the subsidiary contain an emphasis of matter as follows:
The outcome of the negotiation between the company and its lenders to restructure the terms of repayment of certain borrowings/obligations of the company cannot be presently determined and accordingly, the financial statements of the company do not include any adjustment relating to the amounts and classification of assets and liabilities that might result from these uncertainties.
(c) The auditors' report of the subsidiary contain emphasis of matters as follows:
(i) The company is engaged in a legal suit to recover certain deposit and instalments made to a third party and is exposed to a quantified contingent loss if the company is unable to secure a favourable outcome from the said legal suit. As the ultimate outcome of the said legal suit cannot be presently determined, the financial statements of the company do not include any adjustment which may be necessary on resolution on the said uncertainty.
(ii) The outcome of the negotiation between the company and its lenders to restructure the terms of repayment of certain borrowings/obligations of the company cannot be presently determined and accordingly, the financial statements of the company do not include any adjustment relating to the amounts and classification of assets and liabilities that might result from these uncertainties.
(d) The effects of disposal and deregistration of subsidiaries marked "@" and " " are disclosed in Note 6.
ANNUAL REPORT 2005 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 31 JANUARY 2005
52. DETAILS OF ASSOCIATED COMPANIES
Financial Effective interest Name of Company year end 2005 2004 Principal activities %%
Incorporated in Malaysia
Beruntung Transport City 31 January 30.60 30.60 Dormant Sdn. Bhd.
Astaka Tegas Sdn. Bhd. 31 March 50 – Property development
Incorporated in Cambodia
Cambodia Resources 31 January 49 49 Dormant Import-Export Company Limited
Parkgrove (Cambodia) 31 January 49 49 Dormant Pte. Ltd.
Noble House Investment 31 January 49 49 Dormant (Cambodia) Pte. Ltd.
134
TALAM CORPORATION BERHAD (1120-H) LIST OF PROPERTIES @ 31 JANUARY 2005
@ Joint Venture Date of Net book + Registered Land/ Description/ Acquisition/ Approximate value as at # Beneficial Built up Remaining Title proposed Joint Venture/ Age of the 31 January Owner area acreage No. development Completion Tenure Expiry Building 2005
Talam Corporation + 1.635 – Geran 23384 lot 7073; Taman Setia Land 11.12.1986 Freehold N/A N/A 18,126 Berhad acres Geran 23284 lot 7207; Bungalow lots sold Geran 23285 lot 7208; on piecemeal basis Geran 23286 lot 7209; Geran 23287 lot 7210; Geran 23288 lot 7211; Geran 23369 lot 7410; Geran 23370 lot 7424; Geran 23371 lot 7425; Geran 23372 lot 7426; Geran 23373 lot 7427; Mukim Setapak Daerah Gombak.
+ 993.99 400 H.S.(D) 11254 P.T. 8557; Bukit Sentosa III 29.10.1994 Freehold N/A N/A 235,795 acres acres H.S.(D) 30066 to 30361 - Development in P.T. 15683 to15978; progress for industrial, H.S(D)13223 to14812- residential and P.T. 12171 to 13760; commercial development H.S.(D)33755 to 34750 P.T. 15979 to 16974; H.S.(D)34751 to 35606 P.T. 16979 to 17834 Mukim Serendah 135 Daerah Hulu Selangor.
GL Development + 0.355 0.355 Geran 2522 & Geran 2523 Melaka land 9.1.1982 Freehold N/A N/A 179 Sdn Bhd acres Lot 875 & 876 Proposed development Bandar Bukit Baru of 16 units of Daerah Melaka Tengah 3-bedroom apartments
Maxisegar + 801 260 H.S.(D) 146408 P.T. 51440; Puncak Jalil 17.1.2001 99 years 2.7.2100 N/A 156,351 Sdn Bhd acres acres H.S.(D) 201972 to 201983 Leasehold P.T. 58673; P.T.58674; P.T. 58490; P.T.58491; P.T. 59170; P.T. 60220; P.T. 60226; P.T. 60227; P.T. 61372; P.T. 62420; P.T. 62355; P.T.62357 Mukim Petaling Daerah Petaling.
+ 110 2 H.S.(D)146805 to 147704 Saujana Damansara 17.1.2001 99 years 16.8.2100 N/A 23,963 acres acres P.T. 42401 to 43300 Leasehold Mukim Sungai Buluh Daerah Petaling
+ 3,000 3,000 H.S.(D)5740 to 5750 Batang Berjuntai 17.1.2001 99 years 21.1.2101 N/A 350,212 acres acres P.T. 830 to 840 Leasehold Mukim Ulu Tinggi Daerah Kuala Selangor H.S.(D) 5704 to 5718 P.T. 5616 to 5630 Mukim Batang Berjuntai Daerah Kuala Selangor
ANNUAL REPORT 2005 LIST OF PROPERTIES (Cont’d) @ 31 JANUARY 2005
@ Joint Venture Date of Net book + Registered Land/ Description/ Acquisition/ Approximate value as at # Beneficial Built up Remaining Title proposed Joint Venture/ Age of the 31 January Owner area acreage No. development Completion Tenure Expiry Building 2005
Abra Development # & @ 24.744 – H.S.(D) 45175 to 45307 Saujana Templer 18.10.2000 99 years 18.7.2093 N/A 4,859 Sdn Bhd acres P.T.66 to 198; H.S.(D) Leasehold 49485 to 49520 P.T. 817 to 852 Pekan Templer Daerah Gombak
# & @ 398.01 3 H.S.(D) 191082 to 191365 Jalil Heights 14.4.2001 99 years 16.3.2096 N/A 21,415 acres acres P.T. 53360 to 56219 Leasehold Mukim Petaling Daerah Petaling
# & @ 9,400 2.16 H.S.(D) 251609 P.T. 20405 Larkin Centre, 30.5.1995 99 years 30.7.2095 N/A 36,716 sq m acres Bandar Johor Bahru Johor Bahru Leasehold Daerah Johor Bahru.
Melombong and + 7.42 – P.M. 1264 Lot 41702; Development of 31.10.1986 99 years 9.9.2092 N/A – Perumahaan acres P.M. 1265 Lot 41977 commercial and Leasehold Sdn Bhd Mukim Ampang residential buildings Daerah Hulu Langat. under progress 136 - Bandar Baru Ampang
Talam Industries + 807.81 67 H.S.(D)4334 to 6980 Bukit Sentosa I 20.6.1991 Freehold N/A N/A 37,396 Sdn Bhd acres acres P.T. 4453 to 7099; H.S.(D)11315 to 12694 P.T. 7173 to 8552; Mukim Serendah Daerah Hulu Selangor.
Noble Rights + 529 58 H.S.(D) 22650 to 22654 Bukit Sentosa II 15.8.1994 Freehold N/A N/A 32,123 Sdn Bhd acres acres P.T. 1089 to 1093; H.S.(D) 22873 to 22888 P.T. 1312 to 1327; H.S.(D) 23411 to 23416 P.T. 1850 to 1855 H.S.(D) 24088 to 24092 P.T. 2484 to 2488 Mukim Serendah Daerah Hulu Selangor
Ulu Yam Golf and # 199.7 199.7 H.S.(D) 4103 P.T. 2730 Ulu Yam secondary 26.5.1994 99 years 1.9.2093 N/A 3,175 Country Club acres acres Mukim Ulu Yam forest Leasehold Sdn Bhd Daerah Hulu Selangor Proposed golf course and residential development
TALAM CORPORATION BERHAD (1120-H) LIST OF PROPERTIES (Cont’d) @ 31 JANUARY 2005
@ Joint Venture Date of Net book + Registered Land/ Description/ Acquisition/ Approximate value as at # Beneficial Built up Remaining Title proposed Joint Venture/ Age of the 31 January Owner area acreage No. development Completion Tenure Expiry Building 2005
Zillion # 763.74 763.74 Geran 39954 lot 2324; Tanjung 12 23.12.1994 Freehold N/A N/A 50,084 Development acres acres Geran 41084 lot 8379; Future development Geran 55361 lot 12164; H.S.(D) 5379 P.T. 6341 Mukim Tanjung 12 Daerah Kuala Langat.
+ 36.25 36.25 H.S.(D) 5667 P.T. 2699 Tanjung 12 23.12.1994 99 years 14.10.2095 N/A acres acres H.S.(D) 5668 P.T. 2697 Future development Leasehold Mukim Tanjung 12 Daerah Kuala Langat.
Expand Factor + 423.27 80 H.S.(D) 143294 to143297 Saujana Puchong 12.4.1999 99 years 12.6.2091 N/A 110,068 Sdn Bhd acres acres P.T. 50608 to 50611 Mukim Petaling Dearah Petaling
Mudi Angkasa + 32.16 7 H.S.(D) 66843 P.T.2924 Bukit Pandan Bistari 26.11.1999 99 years 31.5.2100 N/A 13,841 Development acres acres Bandar Ampang Leasehold Sdn Bhd Daerah Hulu Langat.
Cekap Mesra # & @ 427.5 100 H.S.(D) 2488 P.T. 6251 Development in 24.6.1998 99 years 19.10.2093 N/A 48,197 137 Development acres acres H.S.(D) 2490 P.T. 6253 progress of Leasehold Sdn Bhd H.S.(D) 2492 P.T.6255 residential and Mukim Dengkil commercial buildings Daerah Sepang. - Danau Putra
Talam Leisure # & @ 401.01 401.01 H.S.(D) 4105 P.T. 2732 Ulu Yam land 26.5.1994 99 years 1.9.2093 N/A 34,998 Development acres acres H.S.(D) 4093 P.T. 2720 Proposed development Leasehold Sdn Bhd Mukim Ulu Yam of residential and Daerah Hulu Selangor. commercial buildings
Ideal Synergy # & @ 107.79 88 H.S.(M) 6500 to 6878 Kajang Land 10.7.2001 99 years 7.8.2100 N/A 23,534 Sdn Bhd acres acres P.T. 16442 to 16820 Proposed development Leasehold Mukim Semenyih of residential and Daerah Hulu Langat commercial buildings
Galian Juta # & @ 200 120 P.N. 1211 Lot 20407 Proposed development 9.1.2001 99 years 5.2.2094 N/A 52,295 Sdn Bhd acres acres Mukim Tanjung 12 of residential and Leasehold Daerah Kuala Langat. commercial buildings - Saujana Putra
Talam Properties # & @ 1,494.16 – P.M. 11566 to 11791 Pandan Indah 2.3.1992 99 years 6.9.2100 N/A 545 Sdn Bhd sq m Lot 44948 to 45174 Commercial Park Leasehold Bandar Ampang Daerah Hulu Langat.
ANNUAL REPORT 2005 LIST OF PROPERTIES (Cont’d) @ 31 JANUARY 2005
@ Joint Venture Date of Net book + Registered Land/ Description/ Acquisition/ Approximate value as at # Beneficial Built up Remaining Title proposed Joint Venture/ Age of the 31 January Owner area acreage No. development Completion Tenure Expiry Building 2005
Europlus Corporation + 29.66 – H.S.(D) 9358 P.T. 8512; Town ship Development 18.12.1991 Freehold N/A N/A 510,421 Sdn Bhd acres H.S.(D) 9376 P.T. 8530; Bukit Beruntung H.S(D)9395 P.T. 8549; H.S.(D) 9437 P.T. 8591; H.S(D)9464 P.T. 8618; H.S.(D) 9763 P.T.8917; H.S.(D) 9764 P.T.8918; H.S.(D) 9765 P.T. 8919; H.S.(D) 10154 P.T. 9308; H.S.(D) 10155 P.T. 9309; H.S.(D) 9762 P.T. 8916; H.S.(D)9862 P.T. 9016; H.S.(D)9850 P.T.9006; H.S.(D) 9838 P.T. 8992; H.S.(D) 10345 P.T. 9499; H.S.(D)9531 P.T. 8685; H.S.(D) 9555 P.T. 8709; H.S.(D)9714 P.T. 8868; H.S.(D) 9603 P.T. 8757; H.S.(D) 9746 P.T. 8900; H.S.(D) 9671 P.T. 8825; H.S.(D) 9686 P.T. 8840; H.S.(D) 9780 P.T. 8934 H.S.(D)9812 P.T. 8966; H.S(D) 9930 P.T. 9084; 138 H.S.(D)9946 P.T. 9100; H.S.(D) 9991 P.T. 9145; H.S.(D) 10022 P.T. 9176; H.S.(D) 10049 P.T. 9203; H.S.(D) 10091 P.T. 9245; H.S.(D) 10146 P.T. 9300; H.S.(D) 10169 P.T. 9323; H.S.(D) 10194 P.T. 9348 H.S.(D) 10421 P.T. 9575; H.S.(D) 10270 P.T. 9424; H.S.(D) 10220 P.T. 9374; H.S.(D) 10294 P.T.9448; H.S.(D) 10370 P.T. 9524; H.S.(D) 9478 P.T. 8632 Mukim Serendah Daerah Hulu Selangor.
+ 64.90 – HS(D) 17588 PT 102 Town ship Development 18.12.1991 Freehold N/A N/A acres HS(D) 17635 PT 149 Bukit Beruntung HS(D)17963 PT 477 HS(D) 17965 PT 479 HS(D) 17966 PT 480 HS(D) 17967 PT 481 HS(D) 17968 PT 482 HS(D) 17969 PT 483 HS(D) 18043 PT 557 HS(D) 18059 PT 573 HS(D) 18248 PT 762 HS(D) 18249 PT 763 HS(D)18250 PT 764 HS(D) 17961 PT 475 HS(D) 17962 PT 476 HS(D) 17964 PT 478 HS(D) 18247 PT 761 Mukim of Serendah Tambahan
TALAM CORPORATION BERHAD (1120-H) LIST OF PROPERTIES (Cont’d) @ 31 JANUARY 2005
@ Joint Venture Date of Net book + Registered Land/ Description/ Acquisition/ Approximate value as at # Beneficial Built up Remaining Title proposed Joint Venture/ Age of the 31 January Owner area acreage No. development Completion Tenure Expiry Building 2005
Europlus Corporation + 5.95 – HS(D) 8179 PT 7101 Town ship Development 18.12.1991 Freehold N/A N/A Sdn Bhd acres HS(D) 8189 PT 7111 Bukit Beruntung HS(D) 8135 PT 7157 HS(D) 8144 PT 7166 HS(D) 10553 PT 7213 HS(D) 10530 PT 7230 HS(D) 10571 PT 7231 HS(D) 10573 PT 7233 HS(D) 10574 PT 7234 HS(D) 10618 PT 7278 HS(D) 10673 PT 7333 HS(D) 10691 PT 7352 HS(D) 8349 PT 7502 HS(D) 8370 PT 7523 HS(D) 8544 PT 7697 HS(D) 8854 PT 8007 HS(D) 9050 PT 8203 HS(D) 9254 PT 8407 HS(D) 9287 PT 8440 HS(D) 9329 PT 8483 HS(D) 9330 PT 8484 HS(D) 10447 PT 9601 139 Mukim of Serendah
+ 525.60 – HS(D) 31307 PT 61 Town ship Development 18.12.1991 Freehold N/A N/A acres HS(D) 31328 PT 82 Bukit Beruntung HS(D) 31690 PT 5148 HS(D) 31274 PT 5327 HS(D) 31496 PT 5328 to HS(D) 31565 PT 5397 HS(D) 31640 PT 5453 HS(D) 31641 PT 5458 HS(D) 31727 PT 5571 HS(D) 31581 PT 5630 HS(D) 31582 PT 5673 HS(D) 31584 PT 5675 HS(D) 31355 PT 5676 HS(D) 31495 PT 5816 HS(D) 31728 PT 5913 HS(D) 31801 PT 5986 HS(D) 33733 PT 5987 to HS(D) 33754 PT 6049 HS(D) 7581 PT 2499 to HS(D) 7602 PT 2520 HS(D) 7573 PT 2491 to HS(D) 7579 PT 2497 Mukim of Serendah
ANNUAL REPORT 2005 LIST OF PROPERTIES (Cont’d) @ 31 JANUARY 2005
@ Joint Venture Date of Net book + Registered Land/ Description/ Acquisition/ Approximate value as at # Beneficial Built up Remaining Title proposed Joint Venture/ Age of the 31 January Owner area acreage No. development Completion Tenure Expiry Building 2005
Europlus Corporation + 1,322.42 2,500 Lot 1995 CT 11502 & Lot Town ship Development 18.12.1991 Freehold N/A N/A Sdn Bhd acres acres 2018 Grant 12274 Bukit Beruntung Mukim of Serendah Lot 2006 Grant 40124 Lot 2067 PN 5282 Lot 3243 HS(D) 8160 Mukim of Hulu Yam
+ 192.40 – Lot 15070 G. 45084 Town ship Development 18.12.1991 Freehold N/A N/A acres Lot 15071 G. 45083 Bukit Beruntung HS(D) 18256 PT 770 HS(D) 18257 PT 771
+ 399.89 – Lot 15207 G.54344 Town ship Development 18.12.1991 Freehold N/A N/A acres Lot 15754 G. 54346 Bukit Beruntung Lot 15753 G. 54345 HS(D) 30363 PT 3917 HS(D) 30364 PT 3918
+ 70.49 – HS(D) 26076 PT 6161 Town ship Development 18.12.1991 Freehold N/A N/A acres HS(D) 26231 PT 6316 Bukit Beruntung 140 HS(D) 26326 PT 6411 HS(D) 26327 PT 6412 HS(D) 26537 PT 6622 HS(D) 26669 PT 6754 HS(D) 26670 PT 6755 HS(D) 26739 PT 6824 HS(D) 26859 PT 6944 HS(D) 27095 PT 7180 HS(D) 27429 PT 7514 To HS(D) 27434 PT 7519 HS(D) 27445 PT 7530 HS(D) 27483 PT 7560 to HS(D) 27475 PT 7568
+ 99.93 – HS(D) 26001 PT 6086 to Town ship Development 18.12.1991 Freehold N/A N/A acres HS(D) 27474 PT 7559 Bukit Beruntung HS(D) 26075 PT 6161 HS(D) 26231 PT6316 HS(D) 26326 PT 6411 HS(D) 26327 PT 6412 HS(D) 26537 3 PT 6622 HS(D) 26669 PT 6754 HS(D) 26670 PT 6755 HS(D) 26739 PT 6824 HS(D) 26859 PT 6944 HS(D) 27095 PT 7180 HS(D) 27429 PT 7514 to HS(D) 27434 PT 7519 HS(D) 27445 PT 7530 HS(D) 27475 PT 7560 to HS(D) 27483 PT 7568
TALAM CORPORATION BERHAD (1120-H) LIST OF PROPERTIES (Cont’d) @ 31 JANUARY 2005
@ Joint Venture Date of Net book + Registered Land/ Description/ Acquisition/ Approximate value as at # Beneficial Built up Remaining Title proposed Joint Venture/ Age of the 31 January Owner area acreage No. development Completion Tenure Expiry Building 2005
Europlus Berhad + 50.71 35 HS(D) 33034 PT 4912 Town ship 14.5.1996 Freehold N/A N/A 108,276 acres acres HS(D) 33213 PT 5094 Development HS(D) 33231 PT 5112 Prima Beruntung HS(D) 33232 PT 5113 HS(D) 33233 PT 10034 HS(D) 33605 PT 10407 HS(D) 33709 PT 10511
Perwira Indra Sakti # 717.6 500 HS(D) 18284 PT 4227 Residential, industrial 18.12.1991 Freehold N/A N/A 232,251 Sdn Bhd acres acres HS(D) 22309 PT 8285 and commercial development - Bukit Beruntung III
Ukay Land + 345.0 40 H.S.(M)12050 to 12459 Township Development 17.1.1989 99 years 20.9.2100 N/A 80,831 Sdn Bhd acres acres P.T.37 to 443; - Ukay Perdana Leasehold Bandar Ulu Kelang Daerah Gombak
+ 12.5 16 H.S.(D) 13164 P.T. 17014 Proposed mix 8.9.1994 Freehold N/A N/A 2,657 acres acres H.S.(D) 13165 P.T. 17015 development of shops Mukim Bentong and terrace factories. Daerah Bentong. - Bentong land 141
Terang Tanah @ 90.55 90.55 P.N. 7358 Lot 15687 Development of 21.10.2003 99 years 28.12.2096 N/A 45,810 Sdn Bhd acres acres Mukim Ulu Kelang medium cost residential Leasehold Daerah Gombak. and commercial units - Sierra Ukay
Tenaga Gagah + 47.75 7 H.S.(D) 148053 to Development of 2.11.1989 99 years 6.9.2100 N/A 18,784 Sdn Bhd acres acres H.S.(D) 148055 P.T.2 to 4 residential and Leasehold Pekan Penaga commercial units Daerah Petaling - Lagoon Perdana
Pulau Kembar + 100 50 P.N. 10896 to 11027 Twin island 31.10.1994 99 years 9.11.2096 N/A 137,149 Sdn Bhd acres acres Lot 2 to 133; P.N. 11029 development of Leasehold to11074 Lot135 to180 residential, commercial Bandar Melaka and tourism Daerah Melaka Tengah related development - Pulau Melaka
Sentosa Restu + 45.25 10 H.S.(D) 137566 P.T. 44O Mix development of 3.9.1997 99 years 8.6.2099 N/A 37,777 Sdn Bhd acres acres Pekan Puchong Jaya residential, commercial Leasehold Daerah Petaling and corporate park. - Kinrara 3
Lestari Puchong + 496.731 80 H.S.(D) 142201 to 142202 Mix development of 24.7.2000 99 years 12.6.2091 N/A 130,697 Sdn Bhd acres acres P.T. 50602 to 50603 residential, commercial Leasehold Mukim Petaling and corporate park. Daerah Petaling - Lestari Puchong
ANNUAL REPORT 2005 LIST OF PROPERTIES (Cont’d) @ 31 JANUARY 2005
@ Joint Venture Date of Net book + Registered Land/ Description/ Acquisition/ Approximate value as at # Beneficial Built up Remaining Title proposed Joint Venture/ Age of the 31 January Owner area acreage No. development Completion Tenure Expiry Building 2005
Jilin Larut # 6,665 1.5 No. 19, Xian Road Development of 9.8.1994 50 years 24.2.2043 N/A 20,819 Enterprise sq m acres Changchun, Jilin Province 35 storey commercial Leasehold Development Ltd People’s Republic complex plus 2 storey of China, 130061 of basement levels Yin Hai Commercial Complex
Kenshine @ 600 200 H.S.(D)2479 to 2484 Development of 28.9.1995 99 years 19.10.2093 N/A 173,987 Corporation acres acres P.T. 6256 to 6261 residential and Leasehold Sdn Bhd Mukim Dengkil commercial properties Daerah Sepang
Europlus # & @ 79.01 30 H.S.(D)12517 to12852 Development of 22.1.2001 99 years 5.3.2091 N/A 19,052 Construction acres acres P.T. 24802 to 25137 residential properties Leasehold Sdn Bhd Mukim Dengkil Lestari Permai Daerah Sepang
# & @ 3.50 – H.S.(D) 12809 P.T. 20187 Development of 26.9.2003 99 years 5.3.2091 N/A acres Mukim Dengkil residential properties Leasehold Daerah Sepang Lestari Permai
Juara Tiasa + 42 N/A Geran 44761 Lot 9012 Kolej Aman 12.4.1998 Freehold N/A 7 30,982 Sdn Bhd acres Bandar Serendah 142 Daerah Hulu Selangor
Abra Development + 0.96 N/A P.M. 3861 Lot 261 Menara Maxisegar 9.11.1987 99 years 3.4.2094 10 68,371 Sdn Bhd acres/ Bandar Ampang 24-storey commercial Leasehold 3,901.4 Daerah Hulu Langat complex sq M
Jilin Province + 5,995 N/A No. 19, Xian Road A 4 star 24 storey 20.9.1993 30 years 29.12.2023 6 140,179 Maxcourt Hotel sq m Changchun, Jilin Province hotel building Leasehold Limited 41,584 People’s Republic sq m
Pandan Indah + 4.81 N/A P.M. 1038 Lot 2374 Pandan Indah Medical – 99 years 7.7.2092 7 40,049 Medical acres Bandar Ampang Centre 6 storey of Leasehold Management 20,343.60 Daerah Hulu Langat private medical centre Sdn Bhd sq m with 3 storey medical office building annexe
Perwira Indra Sakti + 64,998 N/A P.M. 489 Lot 34342 Perdana Business Centre 16.9.1994 99 years 16.4.2089 11 22,058 Sdn Bhd sq ft Bandar Ampang Commercial complex Leasehold Daerah Hulu Langat.
Europlus Berhad + 7,888 N/A H.S.(D) 102431 P.T. 26057 Semi-detached workshop 6.8.1992 Freehold N/A 14 598 sq ft Bandar Johor Bahru 7 Jalan Sri Purnama 2, Daerah Johor Bahru Kangkar Tebrau, 81100 Johor Bahru.
+ 10,591 N/A H.S.(D)102432 P.T. 26058 Semi-detached workshop 6.8.1992 Freehold N/A 14 655 sq ft Bandar Johor Bahru 2 Jalan Sri Purnama 2/3, Daerah Johor Bahru Kangkar Tebrau, 81100 Johor Bahru.
TALAM CORPORATION BERHAD (1120-H) LIST OF PROPERTIES (Cont’d) @ 31 JANUARY 2005
@ Joint Venture Date of Net book + Registered Land/ Description/ Acquisition/ Approximate value as at # Beneficial Built up Remaining Title proposed Joint Venture/ Age of the 31 January Owner area acreage No. development Completion Tenure Expiry Building 2005
Perwira Indra Sakti + 3,122 N/A H.S.(D) 216745 P.T.20023 A-22-P08 Pangsapuri 28.8.1999 Leasehold 21.4.2093 6 576 Sdn Bhd sq feet Bandar Johor Bahru Larkin Utama Daerah Johor Bahru Jalan Tun Abdul Razak Susur 5 80350 Johor Baru
LCB Management + 559 N/A H.S.(D) KA 27100 1 unit shop-office 23.7.2002 99 years 14.6.2092 3 58 Sdn Bhd sq ft P.T. 123928 - Metro Ipoh Leasehold Mukim Hulu Kinta Daerah Kinta
+ 1,833 N/A H.S.(D) KA 27103 1 unit of business lot 23.7.2002 99 years 14.6.2092 3 372 sq feet P.T. 123931 - Metro Ipoh Leasehold Mukim Hulu Kinta Daerah Kinta
+ 1,234 N/A H.S.(D) KA 27103 1 unit of business lot 23.7.2002 99 years 14.6.2092 3 227 sq feet P.T. 123931 - Metro Ipoh Leasehold Mukim Hulu Kinta Daerah Kinta
Inti Johan # 17,739.63 N/A H.S.(D) 68435 P.T.3515 Pandan Kapital 30.1.1999 99 years 24.3.2101 9 68,789 143 Sdn Bhd sq m Bandar Ampang Shopping Mall Leasehold Daerah Hulu Langat
Talam Corporation + 2.401 N/A P.N. 142 Lot 174 Cameron Highland 11.12.1986 Freehold N/A 63 746 Berhad acres Mukim Tanah Rata 2-storey bungalow Daerah Cameron Highlands
ANNUAL REPORT 2005 STATEMENT ON DIRECTORS’ INTERESTS AS AT 3 JUNE 2005
THE COMPANY
A. ORDINARY SHARES (Based on Register of Directors’ shareholdings as at 3 June 2005)
No. of Ordinary Shares of RM1.00 each Direct %*3 Deemed %*3 Interest Interest
The Company
1. Tan Sri Dato’ (Dr) Ir Chan 33,977,418 5.66 298,994,033 *1 49.76 Ah Chye @ Chan Chong Yoon
2. Y.A.M. Tengku Sulaiman 500 *2 –– Shah Al-Haj Ibni Al-Marhum Sultan Salahuddin Abdul Aziz Shah Al-Haj
3. Lai Moo Chan 46,641 0.01 – –
4. Sulaiman Hew Bin Abdullah 42,906 0.01 – –
Notes:
*1 Deemed interest through his spouse, PSDTNC, his daughter, Chan Siu Wei and by virtue of his interests in Pengurusan Projek Bersistem Sdn Bhd, Prosperous Inn Sdn Bhd, Sze Choon Holdings 144 Sdn Bhd and Kumpulan Europlus Berhad pursuant to Section 6A of the Companies Act, 1965 (“the Act”).
*2 Less than 0.005%.
*3 % shareholding based on voting share capital as at 3 June 2005 of 600,838,042.
Tan Sri Dato’ (Dr) Ir Chan Ah Chye @ Chan Chong Yoon, by virtue of his interest in shares of the Company is also deemed interested in shares of all the Company’s subsidiaries to the extent of the Company having an interest.
B. IRREDEEMABLE CONVERTIBLE PREFERENCE SHARES (“ICPS”) (Based on Register of Directors’ shareholdings as at 3 June 2005)
No. of ICPS of RM0.10 each Direct %*2 Deemed %*2 Interest Interest
The Company
1. Tan Sri Dato’ (Dr) Ir Chan 85,879,462 34.28 32,527,836 *1 12.98 Ah Chye @ Chan Chong Yoon
Notes:
*1 Deemed interest by virtue of his interests in Pengurusan Projek Bersistem Sdn Bhd and Sze Choon Holdings Sdn Bhd pursuant to Section 6A of the Companies Act, 1965 (“the Act”).
*2 % shareholding based on outstanding ICPS as at 3 June 2005 of 250,539,457.
TALAM CORPORATION BERHAD (1120-H) STATEMENT ON DIRECTORS’ INTERESTS (Cont’d) AS AT 3 JUNE 2005
SUBSIDIARY COMPANIES
Other than disclosed above, Tan Sri Dato’ (Dr) Ir Chan Ah Chye @ Chan Chong Yoon and Puan Sri Datin Thong Nyok Choo have interests in the following subsidiary company:-
Number of Ordinary Shares of RM1.00 each Tan Sri Dato’ (Dr) Ir Chan Ah Chye Puan Sri Datin @ Chan Chong Yoon Thong Nyok Choo*1 Direct Deemed Direct Deemed Interest % Interest % Interest % Interest %
Master Waves – – 52 *2 49.0 – – 52 *2 49.0 Sdn Bhd
Notes:
*1 Spouse of Tan Sri Dato’ (Dr) Ir Chan Ah Chye @ Chan Chong Yoon
*2 Deemed interest through Pengurusan Projek Bersistem Sdn Bhd pursuant to Section 6A of the Companies Act, 1965
Tan Sri Dato’ (Dr) Ir Chan Ah Chye @ Chan Chong Yoon and Puan Sri Datin Thong Nyok Choo, by virtue of their interests in the shares of Master Waves Sdn Bhd (“MWSB”) are also deemed interested in the shares of all the subsidiary companies of MWSB to the extent MWSB having an interest.
Save as disclosed, none of the Directors of the Company have any interests in the shares of the Company and 145 its related corporations as at 3 June 2005.
ANNUAL REPORT 2005 ANALYSIS OF SHAREHOLDINGS
SHARE CAPITAL As At 3 June 2005
Authorised share capital : RM1,000,000,000.00 divided into 939,000,000 ordinary shares of RM1.00 each, 100,000,000 redeemable convertible preference shares of RM0.01 each and 600,000,000 irredeemable convertible preference shares of RM0.10 each. Issued and paid-up capital : RM626,768,595 divided into 601,714,642 ordinary shares of RM1.00 each and 250,539,457 irredeemable convertible preference shares of RM0.10 each. Voting Rights : There is only one class of ordinary shares with voting rights in the paid-up share capital of the Company. Each share entitles the holder to one vote. Shares Buy Back : The Company had purchased 876,600 ordinary shares and the shares purchased was retained as treasury shares.
DISTRIBUTION OF ORDINARY SHAREHOLDINGS (Based on Record of Depositors as at 3 June 2005)
No. of % of No. of % of Ordinary Ordinary Ordinary Ordinary Size of Holdings Shareholders Shareholders Shares Held Shares Held
Less than 100 650 4.04 24,783 0.00 100 - 1,000 7,543 46.85 4,820,427 0.80 1,001 - 10,000 6,431 39.94 23,706,996 3.95 10,001 - 100,000 1,200 7.45 35,501,976 5.91 100,001 - 30,041,901*1 275 1.71 288,312,560 47.99 146 30,041,902 and above *2 3 0.02 248,471,300 41.35
TOTAL 16,102 100.00 600,838,042 100.00
Notes:
*1 Less than 5% of the voting share capital *2 5% and above of the voting share capital
THIRTY LARGEST ORDINARY SHAREHOLDERS (Based on Record of Depositors as at 3 June 2005)
No. of Ordinary Name Shares Held %
1) EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD 137,000,000 22.80 Pledged Securities Account for Kumpulan Europlus Berhad (JTR)
2) CIMB NOMINEES (TEMPATAN) SDN BHD 74,971,300 12.48 Pledged Securities Account for Kumpulan Europlus Berhad
3) SOUTHERN NOMINEES (TEMPATAN) SDN BHD 36,500,000 6.07 Pledged Securities Account for Kumpulan Europlus Berhad
4) TASEC NOMINEES (TEMPATAN) SDN BHD 20,000,000 3.33 TA First Credit Sdn Bhd for Kumpulan Europlus Berhad
5) ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 19,839,800 3.30 PHEIM Asset Management Sdn Bhd for Employees Provident Fund
TALAM CORPORATION BERHAD (1120-H) ANALYSIS OF SHAREHOLDINGS (Cont’d)
THIRTY LARGEST ORDINARY SHAREHOLDERS (Cont’d) (Based on Record of Depositors as at 3 June 2005)
No. of Ordinary Name Shares Held %
6) CIMB NOMINEES (TEMPATAN) SDN BHD (TPSB) 12,609,800 2.10 Commerce International Merchant Bankers Berhad
7) HSBC NOMINEES (ASING) SDN BHD 10,359,600 1.72 BNY Brussels for The Great Eastern Life Assurance Co Ltd
8) TA NOMINEES (TEMPATAN) SDN BHD 8,655,277 1.44 Pledged Securities Account for Chan Ah Chye @ Chan Chong Yoon
9) SCOTIA NOMINEES (TEMPATAN) SDN BHD 7,333,600 1.22 Pledged Securities Account for Kumpulan Europlus Berhad
10) AMSEC NOMINEES (TEMPATAN) SDN BHD 7,292,500 1.21 Amfinance Berhad for Chan Ah Chye @ Chan Chong Yoon
11) TA NOMINEES (TEMPATAN) SDN BHD 7,041,627 1.17 Pledged Securities Account for Intelbest Sdn Bhd
12) TASEC NOMINEES (TEMPATAN) SDN BHD 7,000,000 1.17 TA First Credit Sdn Bhd for Pengurusan Projek Bersistem Sdn Bhd 147 13) HSBC NOMINEES (TEMPATAN) SDN BHD 7,000,000 1.17 HSBC-FS for Dresdner RCM Oriental Income Fund Limited
14) PUBLIC NOMINEES (TEMPATAN) SDN BHD 5,568,968 0.93 Pledged Securities Account for Chan Ah Chye @ Chan Chong Yoon (JHL)
15) EMPLOYEES PROVIDENT FUND BOARD 5,355,050 0.89 Seksyen Depositori Pusat
16) AMANAH RAYA NOMINEES (TEMPATAN) SDN BHD 5,000,000 0.83 Skim Amanah Saham Bumiputera Permodalan Nasional Berhad
17) HLB NOMINEES (TEMPATAN) SDN BHD 4,989,062 0.83 Pledged Securities Account for Tan Sri Dato’ (Dr) Ir Chan Ah Chye @ Chan Chong Yoon (HLFSMF440)
18) LEMBAGA TABUNG ANGKATAN TENTERA 4,300,000 0.72
19) MINISTER OF FINANCE 4,300,000 0.72 Akaun Jaminan Pinjaman Kerajaan Persekutuan
20) TASEC NOMINEES (TEMPATAN) SDN BHD 4,291,389 0.71 TA First Credit Sdn Bhd for Kumpulan Europlus Berhad (A/C No 2)
21) HSBC NOMINEES (ASING) SDN BHD 4,119,000 0.69 TNTC for DBS Malaysia Equity Fund
22) HSBC NOMINEES (TEMPATAN) SDN BHD 3,972,125 0.66 HSBC (M) Trustee Bhd for Hwang-DBS Select Small Caps Fund
ANNUAL REPORT 2005 ANALYSIS OF SHAREHOLDINGS (Cont’d)
THIRTY LARGEST ORDINARY SHAREHOLDERS (Cont’d) (Based on Record of Depositors as at 3 June 2005)
No. of Ordinary Name Shares Held %
23) CIMSEC NOMINEES (TEMPATAN) SDN BHD 3,453,471 0.57 CIMB for Intelbest Corporation Sdn Bhd (Banking)
24) TA NOMINEES (TEMPATAN) SDN BHD 3,087,500 0.51 Pledged Securities Account for Ling Kok Wah
25) ONG BEE LIAN 3,081,200 0.51
26) MAYBAN NOMINEES (TEMPATAN) SDN BHD 3,025,000 0.50 Mayban Trustees Berhad for RHB Dynamic Fund (N14011200188)
27) TASEC NOMINEES (TEMPATAN) SDN BHD 3,000,300 0.50 Tiah Thee Kian
28) HSBC NOMINEES (TEMPATAN) SDN BHD 2,711,250 0.45 HSBC (M) Trustee Bhd for the Hwang-DBS Select Opportunity Fund
29) PAB NOMINEE (TEMPATAN) SDN BHD 2,650,125 0.44 Pledged Securities Account for Pengurusan Projek Bersistem Sdn Bhd (4403024079)
30) EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD 2,564,687 0.43 Pledged Securities Account for 148 Chan Ah Chye @ Chan Chong Yoon (BB)
421,072,631 70.07
MAJOR SHAREHOLDERS (Based on Register of Substantial Shareholders as at 3 June 2005)
Direct Interest Deemed Interest No. of No. of Name of major shareholders Shares %*3 Shares %*3
1. Tan Sri Dato’ (Dr) Ir Chan 33,977,418 5.66 298,994,033 *1 49.76 Ah Chye @ Chan Chong Yoon (“TSDCAC”)
2. Puan Sri Datin Thong Nyok 281,250 0.05 332,690,201 *2 55.37 Choo (“PSDTNC”)
3. Kumpulan Europlus Berhad 283,431,389 47.17 – –
Notes:
*1 Deemed interest through his spouse, PSDTNC, his daughter, Chan Siu Wei and by virtue of his interests in Pengurusan Projek Bersistem Sdn Bhd, Prosperous Inn Sdn Bhd, Sze Choon Holdings Sdn Bhd and Kumpulan Europlus Berhad pursuant to Section 6A of the Companies Act, 1965 (“the Act”).
*2 Deemed interest through her spouse, TSDCAC, her daughter, Chan Siu Wei and by virtue of her interests in Pengurusan Projek Bersistem Sdn Bhd, Prosperous Inn Sdn Bhd, Sze Choon Holdings Sdn Bhd and Kumpulan Europlus Berhad pursuant to Section 6A of the Act.
*3 % shareholding based on voting share capital as at 3 June 2005 of 600,838,042.
TALAM CORPORATION BERHAD (1120-H) ANALYSIS OF IRREDEEMABLE CONVERTIBLE PREFERENCE SHAREHOLDINGS (ICPS) AS AT 3 JUNE 2005
No. of ICPS Issued : 591,867,978 No. of ICPS Outstanding : 250,539,457 Conversion Period : 12 January 2004 to 2 January 2009 Conversion Rights : Each registered holder of ICPS shall be entitled to convert the ICPS held into new shares of RM1.00 each in the Company at the ICPS Conversion Price of RM1.00. For the avoidance of any doubt, the ICPS Conversion Price shall be deemed to be satisfied by tendering and surrendering the ICPS with an aggregate par value equivalent to the ICPS Conversion Price and no cash monies shall be payable for the ICPS conversion.
DISTRIBUTION OF ICPS HOLDINGS
Size of Holdings No. of ICPS % of ICPS No. of ICPS % of ICPS Holders Holders Held Held
Less than 100 167 2.55 7,267 0.00 100 - 1,000 494 7.54 454,174 0.18 1,001 - 10,000 4,507 68.77 18,976,488 7.57 10,001 - 100,000 1,240 18.92 35,419,801 14.14 100,001 - 12,526,971*1 144 2.20 89,505,716 35.73 12,526,972 and above*2 2 0.03 106,176,011 42.38
Total 6,554 100.00 250,539,457 100.00
149 Notes:
*1 - Less than 5% of outstanding ICPS *2 - 5% and above of outstanding ICPS
THIRTY LARGEST ICPS HOLDERS
Name No. of ICPS %
1) M & A NOMINEE (TEMPATAN) SDN BHD 73,648,212 29.40 Insas Credit & Leasing Sdn Bhd for Chan Ah Chye @ Chan Chong Yoon
2) PENGURUSAN PROJEK BERSISTEM SDN BHD 32,527,799 12.98
3) AMSEC NOMINEES (TEMPATAN) SDN BHD 12,231,250 4.88 AMFinance Berhad for Chan Ah Chye @ Chan Chong Yoon
4) LEMBAGA TABUNG ANGKATAN TENTERA 10,750,000 4.29
5) ONG BEE LIAN 10,324,100 4.12
6) EMPLOYEES PROVIDENT FUND BOARD 5,500,625 2.20
7) RHB NOMINEES (TEMPATAN) SDN BHD 2,999,000 1.20 RHB Asset Management Sdn Bhd for Citibank M’sian Branches Staff Retirement Plan
8) MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 2,125,000 0.85 Great Eastern Life Assurance (Malaysia) Berhad (Par 1)
ANNUAL REPORT 2005 ANALYSIS OF IRREDEEMABLE CONVERTIBLE PREFERENCE SHAREHOLDINGS (ICPS) (Cont’d) AS AT 3 JUNE 2005
THIRTY LARGEST ICPS HOLDERS (Cont’d)
Name No. of ICPS %
9) TA NOMINEES (TEMPATAN) SDN BHD 1,980,000 0.79 Pledged Securities Account for Intelbest Sdn Bhd
10) ONN KOK PUAY (WENG GUOPEI) 1,966,500 0.78
11) ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 1,640,000 0.65 PHEIM Asset Management Sdn Bhd for Employees Provident Fund
12) P.I.S. HOLDINGS SDN BHD 1,553,341 0.62
13) LOW CHU MOOI 1,504,250 0.60
14) LIM KEW @ LIM KON FOONG 1,335,022 0.53
15) LIAM OOI SUAH 1,063,000 0.42
16) AMSEC NOMINEES (TEMPATAN) SDN BHD 1,004,000 0.40 Pledged Securities Account for Ho Gah
17) TAN SOON LAI 1,000,000 0.40
18) LEE KWEE CHOO 914,300 0.36 150 19) GOH KIM MOI 807,500 0.32
20) BEY LEANG SENG 700,000 0.28
21) GOH CHIEW AI 678,900 0.27
22) WONG SIN KIEW 643,500 0.26
23) SPRINT PROPERTY ENTERPRISES SDN BHD 645,571 0.26
24) HLG NOMINEE (ASING) SDN BHD 600,000 0.24 HLG Asset Management Sdn Bhd for John Edwin Dixon (1081)
25) SAI YEE @ SIA SAY YEE 588,000 0.23
26) HLG NOMINEE (TEMPATAN) SDN BHD 500,000 0.20 Pledged Securities Account for Paul Lim Chee Ping
27) HSBC NOMINEES (ASING) SDN BHD 493,100 0.20 BBH AMD Co Boston for Matthew F. Dobbs
28) CHAN HING THONG 485,000 0.19
29) CITICORP NOMINEES (ASING) SDN BHD 437,500 0.17 CBHK PBGSGP for Annur Limited
30) PERBADANAN NASIONAL BERHAD 433,875 0.17
171,084,345 68.26
TALAM CORPORATION BERHAD (1120-H) ANALYSIS OF WARRANT HOLDINGS AS AT 3 JUNE 2005
No. of Warrants Issued : 107,650,000 No. of Warrants Unexercised : 61,194,356 Exercise Period : From 9 November 2000 to 9 November 2005 Exercise Rights : Each warrant entitles the holder to subscribe for one new ordinary share of RM1.00 in the Company at any time during the Exercise Period
DISTRIBUTION OF WARRANT HOLDINGS
Size of Holdings No. of Warrant % of Warrant No. of Warrants % of Warrants Holders Holders Held Held
Less than 100 540 21.54 36,341 0.06 100 - 1,000 171 6.82 91,611 0.15 1,001 - 10,000 1,260 50.26 4,308,046 7.04 10,001 - 100,000 421 16.79 14,078,110 23.01 100,001 - 3,059,716*1 114 4.55 39,045,460 63.81 3,059,717 and above*2 1 0.04 3,634,788 5.94
Total 2,507 100.00 61,194,356 100.00
Notes:
*1 - Less than 5% of warrants unexercised *2 - 5% and above of warrants unexercised 151
THIRTY LARGEST WARRANT HOLDERS
Name No. of Warrants %
1) TANG KEE HIONG 3,634,788 5.94
2) PUBLIC NOMINEES (TEMPATAN) SDN BHD 2,432,900 3.98 Pledged Securities Account for Soh Chong Wan (E-SS2/RWG)
3) TANG KAM KEW 1,770,900 2.89
4) OSK NOMINEES (TEMPATAN) SDN BERHAD 1,337,700 2.19 Pledged Securities Account for Wong Tow Fock
5) GOH TEN FOOK 1,016,600 1.66
6) TANG KEE WONG 1,000,018 1.63
7) HDM NOMINEES (TEMPATAN) SDN BHD 1,000,000 1.63 UOB Kay Hian Pte Ltd for Teh Kee Hong
8) PUBLIC NOMINEES (TEMPATAN) SDN BHD 1,000,000 1.63 Pledged Securities Account for Yee Hee Shin (E-SS2)
9) PUBLIC NOMINEES (TEMPATAN) SDN BHD 1,000,000 1.63 Pledged Securities Account for Yee Hee Shin (E-SS2)
10) MAYBAN NOMINEES (TEMPATAN) SDN BHD 970,000 1.59 Pledged Securities Account for Lim Peng Heng (188AJ3521)
ANNUAL REPORT 2005 ANALYSIS OF WARRANT HOLDINGS (Cont’d) AS AT 3 JUNE 2005
THIRTY LARGEST WARRANT HOLDERS (Cont’d)
Name No. of Warrants %
11) LIM SIEW MEI 710,000 1.16
12) TAM YONG SIANG 705,800 1.15
13) TAN KIN SENG 700,000 1.14
14) TAN HOU YONG 659,400 1.08
15) HLB NOMINEES (TEMPATAN) SDN BHD 651,000 1.06 Pledged Securities Account for Kwang Say Yoon
16) JULIAN JAMES ARMSTRONG 609,972 1.00
17) TAN LEE CHIN 594,913 0.97
18) MAYBAN NOMINEES (TEMPATAN) SDN BHD 506,200 0.83 Pledged Securities Account for Soon Lay Hee (07161PR5010)
19) MAYBAN NOMINEES (TEMPATAN) SDN BHD 500,000 0.82 Pledged Securities Account for Ong Kha Guan
20) NG ENG HOWE 500,000 0.82 152 21) YEE SENG KENG 500,000 0.82
22) LEE CHEE HO 500,000 0.82
23) PREMIER ADVISORY SERVICES SDN BHD 500,000 0.82
24) ECM LIBRA SECURITIES NOMINEES (ASING) SDN BHD 500,000 0.82 ECM Libra Securities Limited for Asia New Economy Fund
25) WONG SUI KAW 488,634 0.80
26) HDM NOMIEES (ASING) SDN BHD 487,000 0.80 DBS Vickers Secs (S) Pte Ltd for Ho Thiam Teck Thomas
27) MAYBAN NOMINEES (TEMPATAN) SDN BHD 415,200 0.68 Pledged Securities Account for Chung Teik Keong (14570MZ0072)
28) TEOH KOK KUAM 400,083 0.65
29) CHIEW LAI KHIM 396,900 0.65
30) TAM CHUN HWEE, VINCENT (CHEM JUNHUI, VINCENT) 381,709 0.62
25,869,717 42.28
TALAM CORPORATION BERHAD (1120-H) ANALYSIS OF IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCK HOLDINGS AS AT 3 JUNE 2005
1. ANALYSIS OF 7% 2003/2005 IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCK HOLDINGS (7% 2003/2005 ICULS )
No. of 7% 2003/2005 ICULS Issued : 44,649,336 No. of 7% 2003/2005 ICULS Outstanding : 16,126,218 Conversion Period : 17 November 2003 to 19 July 2005 Conversion Price : Each 7% 2003/2005 ICULS is convertible into new Talam shares at RM1.00 per share Conversion Rights : Each registered holder of the 7% 2003/2005 ICULS has the right to convert such amount of the 7% 2003/2005 ICULS held (being RM1.00 nominal value of such 7% 2003/2005 ICULS or multiple thereof) into fully paid ordinary shares in the Company at the Conversion Price.
DISTRIBUTION OF 7% 2003/2005 ICULS HOLDINGS
Size of Holdings No. of 7% % of 7% No. of 7% % of 7% 2003/2005 2003/2005 2003/2005 2003/2005 ICULS ICULS ICULS ICULS Holders Holders Held Held
Less than 100 11 1.87 524 0.00 100-1,000 155 26.41 135,090 0.84 1,001-10,000 308 52.47 1,321,689 8.20 10,001-100,000 95 16.18 2,512,315 15.58 153 100,001-806,309*1 13 2.21 2,089,600 12.96 806,310 and above*2 5 0.85 10,067,000 62.43
587 100.00 16,126,218 100.00
Notes:
*1 - Less than 5% of outstanding 7% 2003/2005 ICULS *2 - 5% and above of outstanding 7% 2003/2005 ICULS
THIRTY LARGEST 7% 2003/2005 ICULS HOLDERS
No. of 7% Name 2003/2005 ICULS %
1) POS MALAYSIA BERHAD 3,879,000 24.05
2) LEE KIM POH 3,000,000 18.60
3) CARTABAN NOMINEES (TEMPATAN) SDN BHD 1,200,000 7.44 Amanah SSCM Nominees (Tempatan) Sdn Bhd for Malaysian Community & Education Foundation (Bonds-JP400B)
4) ONG BEE LIAN 1,109,000 6.88
5) ONN KOK PUAY (WENG GUOPEI) 879,000 5.45
6) KOTA BHARU MANAGEMENT SERVICES SDN BHD 300,000 1.86
ANNUAL REPORT 2005 ANALYSIS OF IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCK HOLDINGS (Cont’d) AS AT 3 JUNE 2005
THIRTY LARGEST 7% 2003/2005 ICULS HOLDERS (Cont’d)
No. of 7% Name 2003/2005 ICULS %
7) CHUA ENG KIAT 253,600 1.57
8) LIM KE ENG 200,000 1.24
9) SIM SWEE LIANG 200,000 1.24
10) MUNSHIR BIN ABDULLAH 162,000 1.00
11) HSBC NOMINEES (TEMPATAN) SDN BHD 138,600 0.86 HSBC (M) Trustee Bhd for the Hwang-DBS Select Opportunity Fund (3969)
12) YAP CHIN KIT 138,000 0.86
13) CHUA AH MOI @ CHUA MIN CHOO 133,000 0.82
14) WONG WOON KHUAN 120,000 0.74
15) MAYBAN NOMINEES (TEMPATAN) SDN BHD 119,000 0.74 Pledged Securities Account for Tan Lok Kui (178AW0016)
16) LIM JIT HAI 109,400 0.68
17) TASEC NOMINEES (ASING) SDN BHD 109,000 0.68 154 TA Securities (HK) Ltd for Jimmy Yap Chee Wan
18) MRS INDRANEE MUTHURAJAH 107,000 0.66
19) HSBC NOMINEES (TEMPATAN) SDN BHD 100,000 0.62 Pledged Securities Account for Liew Shou Kong (302-055959-089)
20) PM NOMINEES (TEMPATAN) SDN BHD 85,000 0.53 PCB Asset Management Sdn Bhd for Mary Tan @ Tan Hui Ngoh (SBAN)
21) ONN SOO ENG (WENG SHUYING) 83,000 0.51
22) LING ENG KEE 81,000 0.50
23) CIMSEC NOMINEES (TEMPATAN) SDN BHD 78,000 0.48 CIMB for Mohammed Amin Bin Mahmud (Margin-MM1004)
24) ONG AH KIM 71,000 0.44
25) LAU HENG NIN 70,000 0.43
26) R M MUTHURAJAH 63,000 0.39
27) NGE TOO FONG @ WU THO FONG 60,000 0.37
28) LIM TEIK BEE @ LIM TEIK MEI 60,000 0.37
29) CLIFFORD WINTHROP WONG 55,000 0.34
30) HO LEE SOONG 50,000 0.31
13,012,600 80.66
TALAM CORPORATION BERHAD (1120-H) ANALYSIS OF IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCK HOLDINGS (Cont’d) AS AT 3 JUNE 2005
2. ANALYSIS OF 7% 2003/2006 IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCK HOLDINGS (7% 2003/2006 ICULS)
No. of 7% 2003/2006 ICULS Issued : 690,640 No. of 7% 2003/2006 ICULS Outstanding : 684,640 Conversion Period : 17 November 2003 to 19 April 2006 Conversion Price : Each 7% 2003/2006 ICULS is convertible into new Talam shares at RM1.00 per share. Conversion Rights : Each registered holder of the 7% 2003/2006 ICULS has the right to convert such amount of the 7% 2003/2006 ICULS held (being RM1.00 nominal value of such 7% 2003/2006 ICULS or multiple thereof) into fully paid ordinary shares in the Company at the Conversion Price.
DISTRIBUTION OF 7% 2003/2006 ICULS HOLDINGS
Size of Holdings No. of 7% % of 7% No. of 7% % of 7% 2003/2006 2003/2006 2003/2006 2003/2006 ICULS ICULS ICULS ICULS Holders Holders Held Held
Less than 100 0 0.00 0 0.00 100 - 1,000 142 96.60 51,700 7.55 1,001 - 10,000 4 2.72 15,500 2.26 10,001 – 34,231 0 0.00 0 0.00 155 34,232 and above*2 1 0.68 617,440 90.18
Total 147 100.00 684,640 100.00
Notes:
*1 - Less than 5% of outstanding 7% 2003/2006 ICULS *2 - 5% and above of outstanding 7% 2003/2006 ICULS
THIRTY LARGEST 7% 2003/2006 ICULS 2 HOLDERS
No. of 7% Name 2003/2006 ICULS %
1) AZHANI BIN ABDUL WAHAB 617,440 90.18
2) AZHANI BIN ABDUL WAHAB 7,600 1.11
3) MAYBAN NOMINEES (TEMPATAN) SDN BHD 3,000 0.44 Pledged Securities Account for Koh Soo Wee (888AF0682)
4) TEOH SIEW LIAN @ TEOH SUI LIAN 2,900 0.42
5) LEE SEA WA 2,000 0.29
6) ABDUL GHAFUR BIN MAIDIN 1,000 0.15
7) ALDRAGEN A/L PACKINI @ NADARAJAN A/L PACKRI 1,000 0.15
ANNUAL REPORT 2005 ANALYSIS OF IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCK HOLDINGS (Cont’d) AS AT 3 JUNE 2005
THIRTY LARGEST 7% 2003/2006 ICULS 2 HOLDERS
No. of 7% Name 2003/2006 ICULS %
8) CHAN WENG CHUEN 1,000 0.15
9) CHIN BIH YUN 1,000 0.15
10) FOO NYOON KIM 1,000 0.15
11) GHAZI BIN MD OMAR 1,000 0.15
12) GOH BEE LANG 1,000 0.15
13) HENG YANG POO 1,000 0.15
14) HO KEH MING 1,000 0.15
15) JUNAIDAH BINTI BASRI 1,000 0.15
16) KAMAL EZANY BIN AB RASHID 1,000 0.15
17) KAMAROLZAMAN BIN HARON 1,000 0.15
18) KOK FOOK WAH 1,000 0.15 156 19) LAU KOK KHEONG 1,000 0.15
20) LEE KWEE HOON 1,000 0.15
21) LEE MOOI FAH 1,000 0.15
22) LEE WEI KEIN 1,000 0.15
23) LIEW SHOU KONG 1,000 0.15
24) LIM LAY HONG 1,000 0.15
25) MAK KAM WAN 1,000 0.15
26) MOHD AMIN BIN MOHD SURA 1,000 0.15
27) MOHD KHALID BIN SALLEH 1,000 0.15
28) MOHD SALLEH BIN DAUD 1,000 0.15
29) NG GEOT KEH 1,000 0.15
30) NORILAH BINTI MIAN 1,000 0.15
657,940 96.10
TALAM CORPORATION BERHAD (1120-H) NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the 80th Annual General Meeting of TALAM CORPORATION BERHAD will be held at Perdana Ballroom, Pandan Lake Club, Lot 28, Jalan Perdana 3/8, Pandan Perdana, 55300 Kuala Lumpur on Friday, 29 July 2005 at 10.30 a.m. for the following purposes:-
AGENDA
1. To receive and adopt the Audited Financial Statements of the Company for the year (Resolution 1) ended 31 January 2005 and the Reports of the Directors and Auditors thereon.
2. To declare a final dividend of 4% less 28% Income Tax for the year ended 31 (Resolution 2) January 2005.
3. To approve the payment of Directors’ fees for the year ended 31 January 2005. (Resolution 3)
4. To re-elect the following Directors who retire in accordance with Article 97 of the Articles of Association of the Company:-
4.1 Tan Sri Dato’ (Dr) Ir Chan Ah Chye @ Chan Chong Yoon (Resolution 4) 4.2 Lai Moo Chan (Resolution 5)
5. To re-appoint Messrs Ernst & Young as Auditors and to authorise the Directors to (Resolution 6) fix their remuneration.
6. AS SPECIAL BUSINESS
To consider and if thought fit to pass the following Ordinary Resolutions:- 157 6.1 Ordinary Resolution (Resolution 7) - Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965
“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and they are hereby authorised to issue shares in the Company at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit, provided that the aggregate number of shares to be issued does not exceed 10 percent of the issued share capital of the Company for the time being, subject always to the approval of all the relevant regulatory bodies being obtained for such allotments and issues.”
6.2 Ordinary Resolution (Resolution 8) - Authority to allot and issue shares pursuant to Employees’ Share Option Scheme
“THAT pursuant to the Company’s Employees’ Share Option Scheme (“the Scheme”) which was approved at the Extraordinary General Meeting of the Company held on 10 October 2000, the Directors of the Company are empowered pursuant to Section 132D of the Companies Act, 1965 to allot and issue shares of the Company from time to time in accordance with the Scheme.”
ANNUAL REPORT 2005 NOTICE OF ANNUAL GENERAL MEETING (Cont’d)
6.3 Ordinary Resolution (Resolution 9) - Proposed shareholders’ mandate for Talam Corporation Berhad and its subsidiaries (“Talam Group”) to enter into recurrent transactions of a revenue or trading nature with related parties (“Proposed Shareholders’ Mandate I”)
“THAT, the Talam Group be and is hereby authorised to enter into all arrangements and/or transactions with Abra Development Sdn Bhd, Agrocon (M) Sdn Bhd, Mudi Angkasa Development Sdn Bhd and Perkhidmatan Sanjung (M) Sdn Bhd (“Related Parties”), the nature of which is set out in Section 2.1.3 of the Circular to Shareholders dated 6 July 2005 provided that such arrangements and/or transactions are:-
(i) recurrent transactions of a revenue or trading nature;
(ii) necessary for the day-to-day operations;
(iii) carried out in the ordinary course of business on normal commercial terms which are not more favourable to the Related Parties than those generally available to the public (where applicable); and
(iv) are not to the detriment of the minority shareholders;
AND THAT such approval shall continue to be in force until:-
(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company (and will be subject to annual renewal) unless by a resolution 158 passed at an AGM whereby the authority is renewed;
(ii) the expiration of the period within which the next AGM of the Company subsequent to the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (“Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or
(iii) revoked or varied by resolution passed by the shareholders in an AGM or extraordinary general meeting;
whichever is earlier;
AND THAT the breakdown of the aggregate value of the transactions of the Proposed Shareholders’ Mandate I conducted during the financial year will be disclosed in the Annual Report of the Company on the information of the type of the recurrent related party transactions made and the names of the related parties involved in each type of the recurrent related party transactions made and their relationship with the Company for the said financial year;
AND THAT the Directors of the Company be and are hereby authorised to complete and take all such steps and do all acts and things in such manner as the Directors of the Company may deem fit or expedient or necessary to give effect to the Proposed Shareholders’ Mandate I.”
TALAM CORPORATION BERHAD (1120-H) NOTICE OF ANNUAL GENERAL MEETING (Cont’d)
6.4 Ordinary Resolution (Resolution 10) - Proposed shareholders’ mandate for Talam Corporation Berhad and its subsidiaries (“Talam Group”) to enter into recurrent transactions of a revenue or trading nature with related parties (“Proposed Shareholders’ Mandate II”)
“THAT, the Talam Group be and is hereby authorised to enter into all arrangements and/or transactions with Angsana Mestika Sdn Bhd, Dirga Niaga (Selangor) Sdn Bhd, Ice Masters Sdn Bhd, KEB Builders Sdn Bhd, KEB Management Sdn Bhd, KEURO Leasing Sdn Bhd (formerly known as Talam Leasing Sdn Bhd), KEURO Trading Sdn Bhd (formerly known as Talam Trading Sdn Bhd) and Konsortium LPB Sdn Bhd (“Related Parties”), the nature of which is set out in Section 2.1.3 of the Circular to Shareholders dated 6 July 2005 provided that such arrangements and/or transactions are:-
(i) recurrent transactions of a revenue or trading nature;
(ii) necessary for the day-to-day operations;
(iii) carried out in the ordinary course of business on normal commercial terms which are not more favourable to the Related Parties than those generally available to the public (where applicable); and
(iv) are not to the detriment of the minority shareholders;
AND THAT such approval shall continue to be in force until:-
(i) the conclusion of the next AGM of the Company (and will be subject to 159 annual renewal) unless by a resolution passed at an AGM whereby the authority is renewed;
(ii) the expiration of the period within which the next AGM of the Company subsequent to the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (“Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or
(iii) revoked or varied by resolution passed by the shareholders in an AGM or extraordinary general meeting;
whichever is earlier;
AND THAT the breakdown of the aggregate value of the transactions of the Proposed Shareholders’ Mandate II conducted during the financial year will be disclosed in the Annual Report of the Company on the information of the type of the recurrent related party transactions made and the names of the related parties involved in each type of the recurrent related party transactions made and their relationship with the Company for the said financial year;
AND THAT the Directors of the Company be and are hereby authorised to complete and take all such steps and do all acts and things in such manner as the Directors of the Company may deem fit or expedient or necessary to give effect to the Proposed Shareholders’ Mandate II.”
ANNUAL REPORT 2005 NOTICE OF ANNUAL GENERAL MEETING (Cont’d)
6.5 Ordinary Resolution (Resolution 11) - Proposed shareholders’ mandate for Pulau Kembar Sdn Bhd, a subsidiary of Talam Corporation Berhad to enter into recurrent transactions of a revenue or trading nature with related parties (“Proposed Shareholders’ Mandate III”)
“THAT, Pulau Kembar Sdn Bhd be and is hereby authorised to enter into all arrangements and/or transactions with Dirga Niaga (Selangor) Sdn Bhd, KEB Builders Sdn Bhd and KEURO Leasing Sdn Bhd (formerly known as Talam Leasing Sdn Bhd) (“Related Parties”), the nature of which is set out in Section 2.1.3 of the Circular to Shareholders dated 6 July 2005 provided that such arrangements and/or transactions are:-
(i) recurrent transactions of a revenue or trading nature;
(ii) necessary for the day-to-day operations;
(iii) carried out in the ordinary course of business on normal commercial terms which are not more favourable to the Related Parties than those generally available to the public (where applicable); and
(iv) are not to the detriment of the minority shareholders;
AND THAT such approval shall continue to be in force until:-
(i) the conclusion of the next AGM of the Company (and will be subject to annual renewal) unless by a resolution passed at an AGM whereby the 160 authority is renewed;
(ii) the expiration of the period within which the next AGM of the Company subsequent to the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (“Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or
(iii) revoked or varied by resolution passed by the shareholders in an AGM or extraordinary general meeting;
whichever is earlier;
AND THAT the breakdown of the aggregate value of the transactions of the Proposed Shareholders’ Mandate III conducted during the financial year will be disclosed in the Annual Report of the Company on the information of the type of the recurrent related party transactions made and the names of the related parties involved in each type of the recurrent related party transactions made and their relationship with the Company for the said financial year;
AND THAT the Directors of the Company be and are hereby authorised to complete and take all such steps and do all acts and things in such manner as the Directors of the Company may deem fit or expedient or necessary to give effect to the Proposed Shareholders’ Mandate III.”
TALAM CORPORATION BERHAD (1120-H) NOTICE OF ANNUAL GENERAL MEETING (Cont’d)
6.6 Ordinary Resolution (Resolution 12) - Proposed renewal of authorisation to enable Talam Corporation Berhad to purchase up to 10% of the issued and paid-up ordinary share capital of the Company pursuant to Section 67A of the Companies Act, 1965 (“Proposed Renewal”)
“THAT subject to the Companies Act, 1965 (as may be amended, modified or re-enacted from time to time) (“Act”), the provisions of the Memorandum and Articles of Association of the Company, the requirements of the Bursa Malaysia Securities Berhad (“Bursa Securities”) and the approvals of all relevant governmental and/or regulatory authorities (if any), the Company be and is hereby authorized, to the fullest extent permitted by law, to purchase such amount of ordinary shares of RM1.00 each in the Company (“Proposed Renewal”) as may be determined by the Directors of the Company from time to time through the 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 shares purchased pursuant to this Resolution does not exceed ten percent (10%) of the total issued and paid-up ordinary share capital of the Company;
(ii) an amount not exceeding the Company’s total retained profits of RM296,059,000.00 and the share premium of RM124,551,000.00 based on the audited financial statements of the Company as at 31 January 2005 be allocated by the Company for the Proposed Renewal; and 161 (iii) the Directors of the Company may decide either to cancel the shares so purchased; to retain the shares so purchased as treasury shares (as defined in Section 67A of the Act); to retain part of the shares so purchased as treasury shares and cancel the remainder and to deal with the shares so purchased in such other manner as may be permitted and prescribed by the Act, rules, regulations, guidelines, requirements and/ or orders pursuant to the Act and/or the rules, regulations, guidelines, requirements and/or orders of the Bursa Securities and any other relevant authorities for the time being in force;
AND THAT the authority conferred by this Resolution shall continue to be in force until:-
(i) the conclusion of the next AGM of Talam following the general meeting at which such resolution was passed at which time it shall lapse unless by 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 after that date is required by law to be held; or
(iii) revoked or varied by ordinary resolution passed by the shareholders in general meeting;
whichever is earlier.
Such authority shall not prejudice the completion of purchase(s) by the Company or any person before that aforesaid expiry date and in any event, in accordance with the provisions of the Listing Requirements by the Bursa Securities or any other relevant authorities.”
ANNUAL REPORT 2005 NOTICE OF ANNUAL GENERAL MEETING (Cont’d)
6.7 Ordinary Resolution (Resolution 13) - Authority pursuant to Section 132E of the Companies Act, 1965
“THAT pursuant to Section 132E of the Companies Act, 1965, authority be and is hereby given for the Company and each of its subsidiaries to enter into any arrangement or transaction with any Director of the Company or any person connected with such Director to acquire from or dispose to such Director or person connected with such Director any non-cash assets of requisite value that is less than 5% of the total net tangible assets of the Group at the time of such acquisition or disposal.
AND THAT such authority shall continue to be in force until:-
(i) the conclusion of the next Annual General Meeting of the Company; or
(ii) the expiration of the period within which the next Annual General Meeting of the Company is required to be tabled pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Companies Act, 1965); or
(iii) revoked or varied by resolution passed by the shareholders in a general meeting;
whichever is earlier.”
7. To transact any ordinary business which due notice shall have been given.
162 NOTICE OF BOOK CLOSURE
NOTICE IS ALSO HEREBY GIVEN THAT subject to the approval of the shareholders at the Annual General Meeting, a final dividend of 4% less 28% Income Tax, will be paid on 12 October 2005 to shareholders in the Record of Depositors on 20 September 2005.
A depositor shall qualify for entitlement only in respect of:-
a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 20 September 2005 in respect of ordinary transfers; and
b) Shares bought on the Bursa Malaysia Securities Berhad (“Bursa Securities”) on a cum entitlement basis according to the Rules of the Bursa Securities.
Warrant holders, Irredeemable Convertible Preference Shareholders and 7% 2003/2006 Irredeemable Convertible Unsecured Loan Stock Holders are reminded to lodge with the Company’s Registrar, Securities Services (Holdings) Sdn Bhd of Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur, their Subscription Form/Form of Notice of Conversion and the exercise price (if applicable) for subscription/conversion of new shares together with administrative charges on or before 5.00 p.m. on 1 September 2005 to qualify for the above dividend entitlement.
BY ORDER OF THE BOARD
LIM MEI YOONG Secretary
Kuala Lumpur 6 July 2005
TALAM CORPORATION BERHAD (1120-H) NOTICE OF ANNUAL GENERAL MEETING (Cont’d)
NOTES:
1. A member of the Company entitled to attend and vote at the meeting may appoint one (1) proxy to attend and vote instead of him. A proxy need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
2. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation under its common seal or the hand of its attorney.
3. All proxy forms should be deposited at the Company’s Registered Office at Suite 2.05, Level 2, Menara Maxisegar, Jalan Pandan Indah 4/2, Pandan Indah, 55100 Kuala Lumpur not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.
EXPLANATORY NOTES TO THE SPECIAL BUSINESSES
4. The Ordinary Resolution no. (7) if passed, will give the Directors of the Company the authority to issue shares in the Company up to an amount not exceeding in total 10% of the issued share capital of the Company for such purposes as the Directors consider would be in the interest of the Company. This would avoid any delay and costs involved in convening general meeting to specifically approve such an issue of shares. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company.
5. The Ordinary Resolution no. (8), if passed, will give the Directors of the Company the authority to offer and grant options and issue shares in the Company pursuant to the Scheme approved at the Extraordinary General Meeting of the Company held on 10 October 2000.
6. For further information on the Ordinary Resolution no. (9) pertaining to the Proposed renewal of shareholders’ mandate for Talam Corporation Berhad and its subsidiaries (“Talam Group”) to enter into recurrent transactions of a revenue or trading nature with related parties (“Proposed Shareholders’ Mandate I”), please refer to the Circular to Shareholders dated 6 July 2005 enclosed together with the Company’s 163 2005 Annual Report.
7. For further information on the Ordinary Resolution no. (10) pertaining to the Proposed renewal of shareholders’ mandate for Talam Corporation Berhad and its subsidiaries (“Talam Group”) to enter into recurrent transactions of a revenue or trading nature with related parties (“Proposed Shareholders’ Mandate II”), please refer to the Circular to Shareholders dated 6 July 2005 enclosed together with the Company’s 2005 Annual Report.
8. For further information on the Ordinary Resolution no. (11) pertaining to the Proposed renewal of shareholders‘ mandate for Talam Corporation Berhad and its subsidiaries (“Talam Group”) to enter into recurrent transactions of a revenue or trading nature with related parties (“Proposed Shareholders’ Mandate III”), please refer to the Circular to Shareholders dated 6 July 2005 enclosed together with the Company’s 2005 Annual Report.
9. For further information on the Ordinary Resolution no. (12) pertaining to the Proposed renewal of authorisation to enable Talam Corporation Berhad to purchase up to 10% of the issued and paid-up ordinary share capital of the Company pursuant to Section 67A of the Companies Act, 1965, please refer to the Circular to Shareholders dated 6 July 2005 and the Shares Buy-Back Statement dated 6 July 2005 enclosed together with the Company’s 2005 Annual Report.
10. Resolution pursuant to Section 132E of the Companies Act, 1965
Section 132E of the Companies Act, 1965 prohibits a company or its subsidiaries from entering into any arrangement or transaction with its directors or persons connected with such directors in respect of the acquisition from or disposal to such directors or connected persons of any non-cash assets of the requisite value without prior approval of the Company in general meeting. According to the Companies Act, 1965, a non-cash asset is considered to be of the requisite value, if at the time of arrangement or transaction, its value is greater than RM250,000.00 or 10% of the Company’s net assets, whichever is the lesser, subject to a minimum of RM10,000.00.
The proposed Ordinary Resolution no. (13), if passed, will authorise the Company and each of its subsidiaries to enter into any arrangement or transaction with a Director of the Company or with a person connected with such a Director to acquire from or dispose to such a Director or person any non-cash assets of the requisite value that is less than 5% of the total net tangible assets of the Group at the time of such acquisition or disposal.
ANNUAL REPORT 2005 STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING
1. Directors standing for re-election at the 80th Annual General Meeting of the Company
The Directors retiring by rotation and standing for re-election pursuant to Article 97 of the Articles of Association of the Company are as follows:-
* Tan Sri Dato’ (Dr) Ir Chan Ah Chye @ Chan Chong Yoon * Lai Moo Chan
The profile of each of the above-named Directors is set out in the section entitled “Profile of Board of Directors” on pages 6 to 11 of this Annual Report.
Their securities holdings in the Company and its related corporations are set out in the section entitled “Statement of Directors’ Interests on pages 144 to 145 of this Annual Report.
2. Attendance of Board of Directors’ Meetings
There were six (6) Board Meetings held during the financial year ended 31 January 2005. Details of attendance of the Directors are set out in the Statement of Corporate Governance appearing on page 24 of this Annual Report.
3. Place, date and time of the 80th Annual General Meeting
The place, date and time of the 80th Annual General Meeting are as follows:-
Date Time Place
164 Friday, 29 July 2005 10.30 a.m. Perdana Ballroom Pandan Lake Club Lot 28, Jalan Perdana 3/8 Pandan Perdana 55300 Kuala Lumpur
TALAM CORPORATION BERHAD (1120-H) PROXY FORM NO. OF SHARES HELD
I/We ______(NRIC No. ______) (Name in full and in block letters)
of ______(Full address) being a member/members of TALAM CORPORATION BERHAD (1120-H) hereby appoint ______
______(NRIC No. ______)
of ______(Full address) or failing him, the Chairman of the Meeting as my/our proxy to vote on my/our behalf at the 80th Annual General Meeting of the Company to be held at the Perdana Ballroom, Pandan Lake Club, Lot 28, Jalan Perdana 3/8, Pandan Perdana, 55300 Kuala Lumpur on Friday, 29 July 2005 at 10.30 a.m. and at any adjournment thereof, on the following resolutions referred to in the notice of the Annual General Meeting. My/our proxy is to vote as indicated below:
NO. RESOLUTIONS FOR AGAINST 1 To receive and adopt the Audited Financial Statements of the Company for the year ended 31 January 2005 and the Reports of the Directors and Auditors thereon.
2 To declare a final dividend of 4% less 28% Income Tax for the year ended 31 January 2005. 3 To approve the payment of Directors’ Fees for the year ended 31 January 2005.
4 To re-elect the Director, Tan Sri Dato’ (Dr) Ir Chan Ah Chye @ Chan Chong Yoon who retire in accordance with Article 97 of the Articles of Association of the Company. 5 To re-elect the Director, Lai Moo Chan who retire in accordance with Article 97 of the Articles of Association of the Company.
6 To re-appoint Messrs Ernst & Young as Auditors and to authorize the Directors to fix their remuneration. 7 As Special Business Ordinary Resolution Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965. 8 As Special Business Ordinary Resolution Authority to allot and issue shares pursuant to Employees’ Share Option Scheme. 9 As Special Business Ordinary Resolution Proposed shareholders’ mandate for Talam Corporation Berhad and its subsidiaries to enter into recurrent transactions of a revenue or trading nature with related parties (“Proposed Shareholders’ Mandate I”).
10 As Special Business Ordinary Resolution Proposed shareholders’ mandate for Talam Corporation Berhad and its subsidiaries to enter into recurrent transactions of a revenue or trading nature with related parties (“Proposed Shareholders’ Mandate II”).
11 As Special Business Ordinary Resolution Proposed shareholders’ mandate for Talam Corporation Berhad and its subsidiaries to enter into recurrent transactions of a revenue or trading nature with related parties (“Proposed Shareholders’ Mandate III”). 12 As Special Business Ordinary Resolution Proposed renewal of authorisation to enable Talam Corporation Berhad to purchase up to 10% of the issued and paid-up ordinary share capital of the Company pursuant to Section 67A of the Companies Act, 1965.
13 As Special Business Ordinary Resolution Authority pursuant to Section 132E of the Companies Act, 1965.
(Please indicate with an “X” in the appropriate spaces how you wish your vote to be casted. If you do not indicate how you wish your proxy to vote on any resolution, the proxy shall vote as he thinks fit, or at his discretion, abstains from voting).
Signed this ______day of ______2005
Signature/Common Seal of Shareholder(s) Notes:- 1. A member of the Company entitled to attend and vote at the meeting may appoint a proxy to attend and vote instead of him. A proxy need not be a member of the Company and the provision of Section 149 (1)(b) of the Companies Act, 1965 shall not apply to the Company. 2. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation under its common seal or the hand of its attorney. 3. All forms of proxy must be deposited at the Registered Office of the Company situated at Suite 2.05, Level 2, Menara Maxisegar, Jalan Pandan Indah 4/2, Pandan Indah, 55100 Kuala Lumpur not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. ✄ Please fold here
Stamp
The Company Secretary TALAM CORPORATION BERHAD (1120-H) Suite 2.05, Level 2, Menara Maxisegar Jalan Pandan Indah 4/2 Pandah Indah 55100 Kuala Lumpur
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