We also hope to contribute further to the Malaysian government's ETP, especially given the Group's involvement in most of the 12 national key economic areas. I would like to point out that this is our highest revenue performance to date in the history of the Boustead Group.
P LANTATION
Important external factors adversely affected CPO prices, including the strengthening of the US dollar as well as the emergence of the Eurozone debt crisis and the resulting slowdown in the global economy. This was due to the consistent performance in our primary areas of mature estates averaging 21.3 MT per year. ha, as well as an improvement in yield from our Sarawak and Indonesian estates.
PROFIT
To streamline the operations and management control of our palm oil mills, we are upgrading the computerised weighbridge systems to integrate with our marketing systems in the coming year. However, we are of the view that global palm oil demand is largely being driven by consumption in China and India, where we see a relatively smaller risk of economic slowdown in these countries in 2012.
P ROPERTY
With this we expect higher footfall to the Curve and e@Curve and this will bode well for The Royale Bintang Curve and The Royale Bintang Damansara hotels. The completion of The Royale Bintang Damansara Hotel in 2012 will increase occupancy rates and meet the increasing demand for hotel rooms.
P HARMACEUTICAL
With the signing of the Concession Agreement (CA) with the MOH, the final condition precedent was met and as a result we took over control of Pharmaniaga in April 2011. We are aware of the fact that this is our key revenue generator and as such, we have gone to great lengths to deliver above and beyond the expectations of the MOH.
H EAVY INDUSTRIES
With the completion and delivery of the first six Coastal Patrol Vessels to the Royal Malaysian Navy (RMN) and setting a benchmark, we are delighted to have been awarded the contract to build six SGPVs. This included the potential procurement of services and materials from Malaysian companies with the hope of a multiplier effect for the domestic maritime economy.
MANUFACTURING
Boustead Petroleum Marketing Sdn Bhd (BHPetrol) recorded a profit of RM95 million for the year under review (2010: RM72 million). Boustead Building Materials Sdn Bhd posted lower profits due to general market conditions.
INVESTMENT
Affin Investment Bank Berhad (AIBB) recorded a pre-tax profit of RM89 million compared to RM87 million the previous year. AFMB also launched the Affin Quantum Fund, which increased its total assets under management to RM855 million, an 11% increase from the previous year's RM770 million.
RESPONSIBILITY CORPORATE
HUMAN CAPITAL
COMMUNITY
Together with Islamic Relief Malaysia, we helped raise funds for the victims of the Pakistani floods that killed hundreds and left countless more homeless. In addition, we supported Viva Palestina Malaysia's efforts to provide emergency medical aid and employment opportunities for the Palestinian people.
EDUCATION
ENVIRONMENT
CHANGES IN ACCoUNTING PoLICIES
All payments to buy a business are recorded at fair value at the time of acquisition, with contingent payments classified as debt and subsequently remeasured through the statement of comprehensive income.
CHANGES IN ACCoUNTING PoLICIES (CoNT’D.)
STANDARDS ISSUED BUT NoT YET EFFECTIVE
STANDARDS ISSUED BUT NoT YET EFFECTIVE (CoNT’D.)
SIGNIFICANT ACCoUNTING ESTIMATES AND JUDGEMENTS
SIGNIFICANT ACCoUNTING ESTIMATES AND JUDGEMENTS (CoNT’D.) (c) Impairment of biological assets and property, plant and equipment
SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGMENTS (CONT.)(c) Depreciation of biological assets and property, plant and equipment.
SIGNIFICANT ACCoUNTING ESTIMATES AND JUDGEMENTS (CoNT’D.) (f) Construction contracts
REVENUE
INTEREST INCoME
FINANCE CoST
INCoME TAX EXPENSE
INCoME TAX EXPENSE (CoNT’D.)
EARNINGS PER SHARE
DIVIDENDS
PRoPERTY, PLANT AND EQUIPMENT
- PRoPERTY, PLANT AND EQUIPMENT (CoNT’D.)
- BIoLoGICAL ASSETS
- INVESTMENT PRoPERTIES
- INVESTMENT PRoPERTIES (CoNT’D.)
- DEVELoPMENT PRoPERTIES
- PREPAID LAND LEASE PAYMENTS
- LoNG TERM PREPAYMENTS
- DEFERRED TAXATIoN
- DEFERRED TAXATIoN (CoNT’D.)
- SUBSIDIARIES
- SUBSIDIARIES (CoNT’D.)
- ASSoCIATES
- INVESTMENTS
- INTANGIBLE ASSETS
- INTANGIBLE ASSETS (CoNT’D.)
- INVENToRIES
- PRoPERTY DEVELoPMENT IN PRoGRESS
- DUE FRoM/To CUSToMERS oN CoNTRACTS
- RECEIVABLES
- RECEIVABLES (CoNT’D.)
- RECEIVABLES (CoNT’D.) Receivables that are impaired
- DEPoSITS, CASH AND BANK BALANCES
- DISPoSAL GRoUP HELD FoR SALE
- DISPoSAL GRoUP HELD FoR SALE (CoNT’D.)
- SHARE CAPITAL
- NoN-DISTRIBUTABLE RESERVES
- RETAINED EARNINGS
- BoRRoWINGS
- BoRRoWINGS (CoNT’D.)
- PAYABLES
- SEGMENTAL INFoRMATIoN
- SEGMENTAL INFoRMATIoN (CoNT’D.)
- CoNTINGENT LIABILITIES
- FINANCIAL RISK MANAGEMENT oBJECTIVES AND PoLICIES
- FINANCIAL RISK MANAGEMENT oBJECTIVES AND PoLICIES (CoNT’D.) Interest rate risk (cont’d.)
Goodwill expenditure right offer Total RM Million RM Million RM Million RM Million RM Million. The discount rate applied to the cash flow projections is derived from the CGU's weighted average pre-tax cost of capital plus a reasonable risk premium at the CGU's assessment date. As of December 31, 2011, no impairment loss was required as the recoverable amounts exceeded the carrying amount of the remaining goodwill.
None of the Group's trade receivables that are neither overdue nor impaired were renegotiated during the financial year. Lawyers have been appointed to handle this matter and the Group, in consultation with the lawyers, believes that BNS has a good defense to Meridien's claim. WAEIR or less years years 5 years Total Group Note % RM Million RM Million RM Million RM Million RM Million As of December 31, 2011.
December 2010 Fixed rate
- FINANCIAL RISK MANAGEMENT oBJECTIVES AND PoLICIES (CoNT’D.) Liquidity risk
- FINANCIAL RISK MANAGEMENT oBJECTIVES AND PoLICIES (CoNT’D.) Liquidity risk (cont’d.)
- FINANCIAL RISK MANAGEMENT oBJECTIVES AND PoLICIES (CoNT’D.) Credit risk (cont’d.)
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICY (CONTINUED) Interest rate risk (continued) Interest rate risk (continued). WAEIR or less years year Total Company Note % RM Million RM Million RM Million RM Million On 31 December 2011. If interest rates on the reporting date were 50 basis points lower/higher, with all other variables held constant, the Group and the Company's profit will deduction of tax would have been Rm16.2 million and Rm6.1 million higher/lower respectively, mainly due to lower/higher interest expenses on floating rate loans and borrowings, higher/lower interest income from floating rate fixed deposits and lower/higher positive fair value of an interest rate swap.
At the reporting date, the maximum exposure of the Group and the Company to credit risk is reflected by the carrying amount of each class of financial assets included in the statements of financial position, including derivatives with a positive fair value. As at 31 December 2011, the Group has a significant concentration of credit risk in the form of outstanding claims on the Government of Malaysia, representing approximately 56.3%. Information on trade and other receivables that are neither past due nor impaired is disclosed in Note 26.
December 2010
- FINANCIAL RISK MANAGEMENT oBJECTIVES AND PoLICIES (CoNT’D.) Foreign currency risk (cont’d.)
- FAIR VALUE oF FINANCIAL INSTRUMENTS Determination of fair value
- FAIR VALUE oF FINANCIAL INSTRUMENTS (CoNT’D.) Determination of fair value (cont’d.)
- FAIR VALUE oF FINANCIAL INSTRUMENTS (CoNT’D.) Fair value hierarchy (cont’d.)
Deposits with banks and other financial institutions, investment securities and derivatives that are not overdue or impaired are entered into or placed with reliable financial institutions or companies with high credit ratings and no history of default. Information regarding financial assets that are either overdue or impaired is disclosed in Note 26. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICY (CONTINUED) Foreign Exchange Risk (continued) Foreign Exchange Risk (continued).
The impact resulting from a reasonably possible change in the exchange rates of the US dollar, the euro and the Indonesian rupiah of 5% against the respective functional currencies of the Group entities would be insignificant. If the FtSE Bursa malaysia KlCI had been 5% higher/lower at the reporting date, with all other variables held constant, the impact on the Group's remaining equity reserve would be insignificant. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued) Determination of Fair Value (Continued) Determination of Fair Value (Continued). the carrying amounts of these financial assets and liabilities are a reasonable approximation of fair value, either because of their short-term nature or because they are floating rate instruments that are repriced at or around the reporting date based on market interest rates. the carrying amount of the current portion of the loans is a reasonable approximation of fair value due to the insignificant impact of discounting. the fair value of current loans and borrowings is estimated by discounting the expected future cash flows at the market incremental lending rate for comparable types of loans or borrowing agreements at the reporting date. the fair value of amounts owed by/to subsidiaries, amounts owed by/to associates and fixed rate bank loans are estimated by discounting the expected future cash flows at the market interest rate for similar types of loans or loan agreements at the reporting date. the fair value of listed equity instruments is determined directly based on their published market closing price on the reporting date. Currency forward contracts and interest rate swap contracts are valued using a valuation technique with inputs observable in the market. the most commonly used valuation techniques include forward pricing and swap models, which use discounted cash flow calculations. the models include various inputs, including spot and forward foreign currency rates and interest rate curves. Below are the classified financial instruments of the Group and the Company at fair value according to the level of the following fair value measurement hierarchy: i) level 1 - Unadjusted quoted prices in an active market for an identical financial instrument (ii) level 2 - Inputs other than quoted prices that are directly or indirectly observable (iii) Level 3 - Inputs that are not based on observable market data.
Level 2 Total RM Million RM Million RM Million
- FAIR VALUE oF FINANCIAL INSTRUMENTS (CoNT’D.) Derivatives
- FAIR VALUE oF FINANCIAL INSTRUMENTS (CoNT’D.) Derivatives (cont’d.)
- CAPITAL MANAGEMENT
- CoMMITMENTS
- oPERATING LEASE oBLIGATIoN Group as a lessee
- oPERATING LEASE oBLIGATIoN (CoNT’D.) Group as a lessee (cont’d.)
- SIGNIFICANT RELATED PARTY DISCLoSURES
- SIGNIFICANT RELATED PARTY DISCLoSURES (CoNT’D.)
- SIGNIFICANT AND SUBSEQUENT EVENTS
- SIGNIFICANT AND SUBSEQUENT EVENTS (CoNT’D.)
- HoLDING CoRPoRATIoN
- AUTHoRISATIoN FoR ISSUANCE oF FINANCIAL STATEMENTS
- DISCLoSURE oF REALISED AND UNREALISED PRoFITS
As disclosed in note 5 to the financial statements, the group recognized a gain of Rm23.2 million (2010: Rm1.2 million) arising from changes in the fair value of assumed liabilities. In relation to the bank loans that the Group has with certain financial institutions, the Group is committed to ensure that the upper limit of the leverage ratio is 1.5 times, calculated by dividing the amount of the loans (note 32) by the total capital owned by the shareholders and non-controlling interests are respected at all times. Explanations to the financial statements. Boustead Holdings Berhad Annual Report 2011 RM Million Rm Million RM Million Rm Million Approved and Contracted. BUSINESS LEASE OBLIGATION Group as lessee Group as lessee. The Group has an operating lease obligation arising from the following sale and leaseback arrangements:. a) On 21 March 2011, the Group sold its beneficial rights, title and interest in tRP Estate, trong Oil mill and Sutera Estate to Al-Hadharah Boustead REIt (Boustead REIt). Following the disposal, the Group entered into several Ijarah agreements with the trustee of Boustead REIt to lease these plantation assets for an irrevocable period from 1 April 2011 to 31 December 2012. The lease is further renewable for a maximum period of 27 years. b) On 11 December 2008, the Group sold its beneficial rights, title and interest in Bebar Estate and Malakoff Estate to Boustead REIt. Following the disposal, the Group entered into several Ijarah agreements with the trustee of Boustead REIt to lease these plantation assets for an irrevocable period of four years commencing on 1 January 2009.
At the reporting date, the Group has exercised two of the Call Options to purchase certain plantation assets and the applicable Ijarah Agreements had expired. SIGNIFICANT AND SUBSEQUENT EVENTS (CONTINUED). k) On 11 January 2012, Bounty Crop Sdn Bhd (Bounty Crop), a wholly-owned subsidiary of Boustead Plantations Berhad, which in turn is a wholly-owned subsidiary of the Company, and Supriadi Zainal entered into a sale and purchase agreement ( SPA ) with Pt Agro Investama Gemilang (PtAIG) for the disposal of 712,576 shares of Pt Dendymarker Indahlestari (PtDI) with a nominal value of Rp 1,000,000 per share representing 95% of the expanded issued and paid-up capital after share capital of PtDI and intercompany loans, for a total disposal value of US or Rm 119.5 million) in cash. the amount of 4 million dollars was received with the signing of the SPA. the sale is conditioned by: i) Submitting and/or obtaining the approval of Badan Koordinasi Penanaman modal (BKPm) regarding the change of shareholders of PtDI and receiving from PtDI the approval of BKPm together with the recommendation from the Department of Agriculture for the change of shares of PtDI. ii) Completion of the verification exercise by PtAIG to the satisfaction of PtAIG. Group Company Group Company RM Million RM Million Rm Million Rm Million total retained earnings of the Company.
