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Financial Statement

77 Financial calendarKalendar Kewangan

78 Statement on Directors’ ResponsibilitiesPenyata tanggungjawab Pengarah

79 Directors’ Report 83 Statement by Directors 84 Statutory Declaration 85 independent auditors’ Report 87 Statements of comprehensive income 88 Statements of Financial Position 90 Statements of changes in equity 92 Statements of cash Flows 94 notes to the Financial Statements 147 Supplementary information

77l a P O R a n t a H U n a n 2 0 1 1 a n n U a l R e P O R t

Financial calenDaRKalenDaR KeWanGan

2011

2012

24 November 24 Novemberannouncement of the unaudited results for the third Quarter ended 30 September 2011Pengumuman keputusan yang belum diaudit bagi Suku Ketiga berakhir 30 September 2011

13 June 13 JunFirst annual General meetingmesyuarat agung tahunan Pertama

23 June 23 Junannouncement of the unaudited results for the First Quarter ended 31 march 2011Pengumuman keputusan yang belum diaudit bagi Suku Pertama berakhir 31 mac 2011

17 August 17 Ogosannouncement of the unaudited results for the Second Quarter ended 30 June 2011Pengumuman keputusan yang belum diaudit bagi Suku Kedua berakhir 30 Jun 2011

28 June 28 Junlisting of mSm malaysia Holdings Berhad on the main market of Bursa malaysia Securities BerhadPenyenaraian mSm malaysia Holdings Berhad di Pasaran Utama Bursa malaysia Securities Berhad

20 February 20 Februariannouncement of the unaudited results for the Fourth Quarter ended 31 December 2011Pengumuman keputusan yang belum diaudit bagi Suku Keempat berakhir 31 Disember 2011

7 May 7 Meiannouncement of the unaudited results for the First Quarter ended 31 march 2012Pengumuman keputusan yang belum diaudit bagi Suku Pertama berakhir 31 mac 2012

22 May 22 Meinotice of the First annual General meeting, notice of Dividend entitlement and issuance of annual Reportnotis mesyuarat agung tahunan Pertama, notis Kelayakan Dividen dan penerbitan laporan tahunan

19 April 19 Aprilannouncement of the annual audited accounts for the Financial Year ended 31 December 2011Pengumuman akaun tahunan yang telah diaudit bagi tahun kewangan berakhir 31 Disember 2011

1 December 1 Disembernotice of Book closure for determining the entitlement of single tier interim dividend of 0.08 sen per share for the Financial Year ended 31 December 2011notis Penutupan Buku bagi menentukan kelayakan dividen interim satu peringkat berjumlah 0.08 sen sesaham bagi tahun Kewangan Berakhir 31 Disember 2011

78 M S M M A L A Y S I A H O L D I N G S B E R H A D

the companies act, 1965 requires the Directors to prepare financial statements (which include the consolidated statements of financial position and the consolidated statements of comprehensive income of the Group) for each financial year in accordance with malaysian accounting Standards Board (maSB) approved accounting standards in malaysia for entities other than private entities and the provisions of the companies act, 1965 and the main market listing Requirements of Bursa malaysia Securities Berhad (Bursa malaysia), and to lay these before the company at its annual General meeting.

incorporated on pages 87 to 146 of this annual Report, are the financial statements of the company and the Group for the financial year ended 31 December 2011. the companies act, 1965 places responsibility on the Directors to ensure that the consolidated statements of financial position provides a true and fair view of the state of affairs of the Group as at 31 December 2011 and the consolidated statement of comprehensive income provides a true and fair view of the results of the Group for the financial year ended 31 December 2011.

in undertaking the responsibility placed upon them by law, the Directors have relied upon the Group’s system of internal control to provide them with reasonable grounds to believe that the Group’s accounting records, as well as other relevant records, have been maintained by the Group in a manner that enables them to sufficiently explain the transactions and financial position of the Group. this also enables the Directors to ensure that a true and fair consolidated statements of financial position and statement of comprehensive income and documents required by the companies act, 1965 to be attached are prepared for the financial year to which these financial statements relate.

the companies act, 1965 also requires the Directors to cause the company to keep such accounting and other records in such manner that enables the Directors to sufficiently explain the transactions and financial position of the company and the Group, and to prepare a true and fair statements of comprehensive income and statements of financial position and any documents required to be attached, as well as to enable such accounting records to be audited conveniently and properly.

the Directors also have general responsibilities for taking such steps that are reasonably available to them to safeguard the assets of the Group and of the company and to prevent and detect fraud and other irregularities.

akta Syarikat, 1965 menghendaki para Pengarah menyediakan penyata kewangan (termasuk penyata gabungan kedudukan kewangan dan penyata gabungan pendapatan menyeluruh Kumpulan) untuk setiap tahun kewangan sejajar dengan piawaian perakaunan yang diluluskan di malaysia untuk entiti selain entiti swasta oleh malaysian accounting Standards Board (maSB) dan peruntukan dalam akta Syarikat, 1965 serta keperluan Penyenaraian Pasaran Utama Bursa malaysia Securities Berhad (Bursa malaysia), dan membentangkan penyata tersebut kepada Syarikat di mesyuarat agung tahunannya.

terkandung dalam mukasurat 149 hingga 216 laporan tahunan ini adalah penyata kewangan Syarikat dan Kumpulan bagi tahun kewangan berakhir 31 Disember 2011. akta Syarikat, 1965 memberi tanggungjawab kepada para Pengarah untuk memastikan bahawa penyata gabungan kedudukan kewangan memberikan gambaran yang benar dan saksama mengenai keadaan hal ehwal Kumpulan setakat 31 Disember 2011 dan bahawa penyata gabungan pendapatan menyeluruh memberikan gambaran yang benar dan saksama mengenai hasil Kumpulan bagi tahun kewangan berakhir 31 Disember 2011.

Dalam melaksanakan tanggungjawab yang diberikan kepada mereka oleh undang-undang, para Pengarah bergantung kepada sistem kawalan dalaman Kumpulan untuk menyediakan mereka dengan asas yang wajar untuk mempercayai bahawa rekod perakaunan Kumpulan serta lain-lain rekod yang berkaitan telah disimpan oleh Kumpulan dalam cara yang membolehkan mereka menjelaskan dengan selengkapnya mengenai urusniaga dan kedudukan kewangan Kumpulan. ini juga membolehkan para Pengarah memastikan bahawa penyata gabungan kedudukan kewangan dan penyata pendapatan menyeluruh yang adil dan saksama seperti yang dikehendaki oleh akta Syarikat, 1965 telah disediakan bagi tahun kewangan yang mana berkaitan dengan penyata kewangan tersebut.

akta Syarikat, 1965 juga menghendaki para Pengarah memastikan bahawa Syarikat menyimpan rekod perakaunan dan lain-lain rekod dalam cara yang membolehkan para Pengarah menjelaskan dengan selengkapnya mengenai urusniaga dan kedudukan kewangan Syarikat dan Kumpulan, dan menyediakan penyata pendapatan menyeluruh dan penyata kedudukan kewangan yang adil dan saksama serta dokumen-dokumen lain yang diperlukan, bagi membolehkan rekod perakaunan tersebut diaudit dengan mudah dan teratur.

Para Pengarah juga bertanggungjawab mengambil langkah-langkah yang sewajarnya untuk melindungi aset-aset Kumpulan dan Syarikat serta mengelak dan mengesan penipuan dan lain-lain kepincangan.

Statement On DiRectORS’ ReSPOnSiBilitieSPenYata tanGGUnGJaWaB PenGaRaH


DiRectORS’ RePORt

the Directors have pleasure in submitting their directors’ report to the members together with the audited financial statements of the Group and the company for the financial year and period ended 31 December 2011.

INCORPORATION

the company was incorporated on 10 march 2011. the company was set up as the listing vehicle in connection with the listing of the Sugar Business (refer to note 1) on the main market of Bursa malaysia Securities Berhad.

PRINCIPAL ACTIVITIES

the principal activity of the company is of investment holding. the principal activities of the subsidiaries are set out in note 17 of the financial statements. this is the first set of financial statements of the Group and company and the basis of preparation of these financial statements is stated in note 2 to the financial statements.

there have been no significant changes in the nature of these activities of the Group and the company during the financial year and period.

FINANCIAL RESULTS

Group Company RM’000 RM’000

Profit attributable to owners of the company 263,397 57,917non-controlling interest 419 –

Profit for the financial year and period 263,816 57,917

DIVIDENDS

Dividends on ordinary shares paid or declared by the company since incorporation were as follows:

RM’000

in respect of the financial period ended 31 December 2011:interim tax exempt dividend of 8 sen per share, paid on 28 December 2011 56,238

the Board of Directors are recommending the payment of a final single tier dividend of 11.0 sen per share amounting to Rm75.7 million which is not taxable in the hands of the shareholders pursuant to paragraph 12B of Schedule 6 of the income tax act 1967, subject to the approval of the shareholders at the forthcoming annual General meeting of the company.

RESERVES AND PROVISIONS

all material transfers to and from reserves or provisions during the financial year and period are shown in the financial statements.


ISSUE OF SHARES

at date of incorporation, the company had an authorised share capital of Rm100,000 comprising 200,000 ordinary shares of Rm0.50 each. On 20 may 2011, the company increased its authorised share capital by Rm499,900,000 by the creation of 999,800,000 ordinary shares of Rm0.50 each.

at date of incorporation, the company issued 200 ordinary subscribers’ shares of Rm0.50 each totaling Rm100 for cash.

On 20 may 2011, the company issued 577,979,800 new ordinary shares with par value of Rm0.50 each at Rm3.50 per share totaling Rm2,022,929,300 (note 17) for the purpose of the acquisition of entire equity interests in malayan Sugar manufacturing company Berhad and Kilang Gula Felda Perlis Sdn Bhd.

On 24 June 2011, the company issued 96,880,000 and 28,120,000 new ordinary shares with par value of Rm0.50 each to the public at Rm3.50 and Rm3.38 per share respectively for gross total proceeds of Rm434,125,600 less share issue expenses of Rm8,235,000 (note 27).

Subsequently, the entire issued share capital of 702,980,000 ordinary share of Rm0.50 per share was listed on the main market of Bursa malaysia Securities Berhad on 28 June 2011.

DIRECTORS

the Directors who have held office since incorporation are as follows:

YB tan Sri mohd isa Haji abdul Samad (appointed on 25 march 2011)YBhg Dato’ Sabri ahmad (appointed on 10 march 2011)YBhg Dato’ Dzulkifli abd. Wahab (appointed on 10 march 2011)YBhg Datuk R. Sharifuddin Hizan R. Zainal abidin (appointed on 25 march 2011)YBhg Dato’ lim chee Wah (appointed on 25 march 2011)YBhg Dato’ Zainal Haji ismail (appointed on 25 march 2011)Ym Raja anuar Raja abu Hassan (appointed on 25 march 2011) YBhg Dato’ Hajah Rosni Haji Zahari (appointed on 25 march 2011)

in accordance with article 93 of the company’s articles of association, YBhg Dato’ Sabri ahmad and YBhg Dato’ Dzulkifli abd. Wahab retire by rotation at the forthcoming annual General meeting, and being eligible will offer themselves for re-election at the annual General meeting.

in accordance with Section 129 of the companies act, 1965, YBhg Dato’ lim chee Wah shall retire from the Board at the forthcoming annual General meeting, and being eligible will offer himself for re-election at the annual General meeting.

DIRECTORS’ BENEFITS

During and at the end of the financial period, no arrangements subsisted to which the company is a party, being arrangements with the object or objects of enabling Directors of the company to acquire benefits by means of the acquisition of shares in, or debentures of, the company or any other body corporate.

Since the date of incorporation of the company, no Director has received or become entitled to receive a benefit (other than as disclosed in note 10 to the financial statements) by reason of a contract made by the company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

DiRectORS’ RePORt


DIRECTORS’ INTEREST IN SHARES AND DEBENTURES

according to the Register of Director’s Shareholdings, the Directors who held office at the end of the financial period and their interests in shares of the company are as follows:

Number of ordinary shares of RM0.50 each At date of Granted/ incorporation acquired Disposed At 31.12.11

YB tan Sri mohd isa Haji abdul Samad – 20,000 – 20,000YBhg Dato’ Sabri ahmad – 20,000 – 20,000YBhg Dato’ Dzulkifli abd. Wahab – 20,000 – 20,000YBhg Datuk R. Sharifuddin Hizan R. Zainal abidin – 30,000 – 30,000YBhg Dato’ lim chee Wah – 20,000 – 20,000YBhg Dato’ Zainal Haji ismail – 20,000 – 20,000Ym Raja anuar Raja abu Hassan – 20,000 – 20,000YBhg Dato’ Hajah Rosni Haji Zahari – 20,000 – 20,000

none of the directors held any interests in shares or debentures of the related companies and the ultimate holding body.

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

Before the income statements and statement of financial positions of the Group and the company were made out, the Directors took reasonable steps:

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the Group and the company had been written down to an amount which they might be expected so to realise.

at the date of this report, the Directors are not aware of any circumstances:

(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and the company inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and the company misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and the company misleading or inappropriate.


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 and period which, in the opinion of the Directors, will or may affect the ability of the Group or the company to meet their obligations when they fall due.

at the date of this report, there does not exist:

(a) any charge on the assets of the Group and the company which has arisen since the end of the financial year and period which secures the liability of any other person; or

(b) any contingent liability of the Group and the company which has arisen since the end of the financial year and period.

at the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading.

in the opinion of the Directors,

(a) the results of the Group’s and the company’s operations during the financial year and period were not substantially affected by any item, transaction or event of a material and unusual nature; and

(b) there has not arisen in the interval between the end of the financial year and period and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group or the company for the financial year and period in which this report is made.

ULTIMATE HOLDING COMPANY

the Directors regard lembaga Kemajuan tanah Persekutuan (FelDa), a statutory body corporate set up under the land Development act, 1956, as the ultimate holding body.

AUDITORS

the auditors, Pricewaterhousecoopers, have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with a resolution dated 24 February 2012.

TAN SRI MOHD ISA HAJI ABDUL SAMAD DATO’ SABRI BIN AHMADcHaiRman DiRectOR

Kuala lumpur

DiRectORS’ RePORt


We, tan Sri mohd isa Bin Hj abdul Samad and Dato’ Sabri Bin ahmad, two of the Directors of mSm malaysia Holdings Berhad, state that, in the opinion of the Directors, the financial statements set out on pages 87 to 146 are drawn up so as to give true and fair view of the state of affairs of mSm malaysia Holdings Berhad as at 31 December 2011 and of the results and cash flows of mSm malaysia Holdings Berhad of the Group and the company for the financial year and period then ended in accordance with the provisions of the companies act 1965 and maSB approved accounting Standards in malaysia for entities Other than Private entities.

the supplementary information set out in note 39 on page 147 have been prepared in accordance with the Guidance on Special matter no.1, Determination of Realised and Unrealised Profits or losses in the context of Disclosure Pursuant to Bursa malaysia Securities Berhad listing Requirements, as issued by the malaysian institute of accountants.

Signed on behalf of the Board of Directors in accordance with a resolution dated 24 February 2012.

TAN SRI MOHD ISA HAJI ABDUL SAMAD DATO’ SABRI BIN AHMADDiRectOR DiRectOR

Kuala lumpur

Statement BY DiRectORS


i, Raja Faridah Binti Raja ahmad, the officer primarily responsible for the financial management of mSm malaysia Holdings Berhad, do solemnly and sincerely declare that the financial statements set out on pages 87 to 146 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.

RAJA FARIDAH BINTI RAJA AHMAD

Subscribed and solemnly declared before me by the above named Raja Faridah Binti Raja ahmad at Kuala lumpur on 24 February 2012, before me.

COMMISSIONER FOR OATHS

StatUtORY DeclaRatiOn


inDePenDent aUDitORS’ RePORt to the members of mSm malaysia Holdings Berhad

(incorporated in malaysia) (company no. 935722 K)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of mSm malaysia Holdings Berhad on pages 87 to 146 which comprise the statements of financial position as at 31 December 2011 of the Group and of the company, and the statements of comprehensive income, changes in equity and cash flows of the Group and of the company for the year and period then ended, and a summary of significant accounting policies and other explanatory notes, as set out on notes 1 to 38.

Directors’ Responsibility for the Financial Statements

the directors of the Group and the company are responsible for the preparation of financial statements that give a true and fair view in accordance with maSB approved accounting Standards in malaysia for entities Other than Private entities and the companies act, 1965, and for such internal control as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in malaysia. those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. the procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. in making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. an audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

in our opinion, the financial statements have been properly drawn up in accordance with maSB approved accounting Standards in malaysia for entities Other than Private entities and 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 of 31 December 2011 and of their financial performance and cash flows for the year and period then ended.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

in accordance with the requirements of the companies act, 1965 in malaysia, we also report the following:

(a) in our opinion, the accounting and other records and the registers required by the act to be kept by the company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the act.

(b) We have considered the accounts and the auditors’ report of the subsidiary of which we have not acted as auditors, which is indicated in note 17 to the financial statements.

(b) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(c) the audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the act.


OTHER REPORTING RESPONSIBILITIES

the supplementary information set out in note 39 on page 147 is disclosed to meet the requirement of Bursa malaysia Securities Berhad and is not part of the financial statements. the directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special matter no. 1, Determination of Realised and Unrealised Profits or losses in the context of Disclosure Pursuant to Bursa malaysia Securities Berhad listing Requirements, as issued by the malaysian institute of accountants (mia Guidance) and the directive of Bursa malaysia Securities Berhad. in our opinion, the supplementary information is prepared, in all material respects, in accordance with the mia Guidance and the directive of Bursa malaysia Securities Berhad.

OTHER MATTERS

this report is made solely to the members of the company, as a body, in accordance with Section 174 of the companies act, 1965 in malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

PRICEWATERHOUSECOOPERS THAYAPARAN A/L S. SANGARAPILLAI(no. aF-1146) (no. 2085/09/12 (J))chartered accountants chartered accountant

Kuala lumpur24 February 2012

inDePenDent aUDitORS’ RePORt to the members of mSm malaysia Holdings Berhad(incorporated in malaysia) (company no. 935722 K)


Group Company Period from Year ended Year ended 10.3.2011 to Notes 31.12.2011 31.12.2010 31.12.2011 RM’000 RM’000 RM’000

Revenue 6 2,299,554 2,168,598 56,528cost of sales (1,845,576) (1,746,054) –

Gross profit 453,978 422,544 56,528Other operating income 7 742 805 –Other losses – net 8 (1,494) (29,574) –Selling and distribution expenses (54,312) (49,279) –administrative expenses (38,421) (33,693) (4,328)Other operating expenses (355) – –

Profit from operations 360,138 310,803 52,200Finance income 9 11,538 3,494 6,833Finance costs 9 (12,303) (8,565) –

Profit before taxation 10 359,373 305,732 59,033taxation 11 (95,557) (72,866) (1,116)

Profit for the financial year/period 263,816 232,866 57,917Other comprehensive income – – –

total comprehensive income for the financial year/period 263,816 232,866 57,917

Profit for the financial year and total comprehensive income attributable to: Owners of the company 263,397 224,466non-controlling interest 419 8,400

263,816 232,866

Basic earnings per share attributable to equity holders of the company (sen) 12 41.09 38.84

StatementS OF cOmPReHenSiVe incOmefor the financial year ended 31 December 2011


Group Company As at As at As at Notes 31.12.2011 31.12.2010 31.12.2011 RM’000 RM’000 RM’000

ASSETS

Non-current assetsProperty, plant and equipment 14 407,050 419,156 53Prepaid lease payments 15 786 859 –intangible assets 16 655,821 659,046 –Biological assets 19 622 – –investment in subsidiaries 17 – – 2,022,929

total non-current assets 1,064,279 1,079,061 2,022,982

Current assetsinventories 18 279,954 330,844 –Biological assets 19 11,198 7,434 –Receivables, deposits and prepayments 20 220,757 213,474 8tax recoverable 4,005 690 –amounts due from subsidiaries 21 – – 1,043amounts due from other related parties 22 2,289 2,572 –loans to subsidiaries 23 – – 110,000Derivative financial assets 24 2,053 20,509 –Fixed deposits 25 465,899 63,635 320,040cash and bank balances 25 62,070 23,420 84

total current assets 1,048,225 662,578 431,175

TOTAL ASSETS 2,112,504 1,741,639 2,454,157

StatementS OF Financial POSitiOnas at 31 December 2011


Group Company As at As at As at Notes 31.12.2011 31.12.2010 31.12.2011 RM’000 RM’000 RM’000

EQUITY AND LIABILITIESShare capital 26 351,490 270,889 351,490Share premium 27 366,765 – 366,765Reorganisation deficit 27 (1,039,632) (618,613) –merger relief reserve 27 1,733,939 1,625,331 1,733,939Retained earnings 268,122 60,963 1,679

equity attributable to owners of the company 1,680,684 1,338,570 2,453,873non-controlling interest – 40,271 –

total equity 1,680,684 1,378,841 2,453,873

Non-current liabilitiesDeferred tax liabilities 28 92,919 99,848 –Provision for defined benefits 29 468 1,032 –

total non-current liabilities 93,387 100,880 –

Current liabilitiesPayables and accruals 30 36,343 31,131 74amounts due to other related parties 22 238 34 –amounts due to subsidiaries 21 – – 7Borrowings 31 288,300 217,000 –current tax liabilities 13,552 13,753 203

total current liabilities 338,433 261,918 284

total liabilities 431,820 362,798 284

TOTAL EQUITY AND LIABILITIES 2,112,504 1,741,639 2,454,157


Equity attributable Merger Re- to equity Share relief organisation holders Non- Share premium reserve deficit Retained of the controlling capital (Note 27) (Note 27) (Note 27) earnings Company interest Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group at 1 January 2011 270,889 – 1,625,331 (618,613) 60,963 1,338,570 40,271 1,378,841incorporation of company

(note 26) * – – – – * – *

Transactions with owners:Dividend (note 13) – – – (317,500) (56,238) (373,738) (17,500) (391,238)accretion of interest in KGFP

(note 27) 18,101 – 108,608 (103,519) – 23,190 (23,190) –issuance of shares

(notes 26 and 27) 62,500 375,000 – – – 437,500 – 437,500Share issue expenses

(note 27(i)) – (8,235) – – – (8,235) – (8,235)total comprehensive income

for the year ended 31 December 2011 – – – – 263,397 263,397 419 263,816

at 31 December 2011 351,490 366,765 1,733,939 (1,039,632) 268,122 1,680,684 – 1,680,684

* issued and paid up capital of Rm100 comprising of 200 issued shares at Rm0.50 each

Equity attributable to Merger Re- equity relief organisation holders Non- Share reserve deficit Retained of the controlling capital (Note 27) (Note 27) earnings Company interest Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Groupacquisition of Sugar Business (note 2d) 270,889 1,625,331 (618,613) – 1,277,607 39,709 1,317,316

Transactions with owners:Dividends (note 13) – – – (163,503) (163,503) (7,838) (171,341)total comprehensive income

for the year ended 31 December 2010 – – – 224,466 224,466 8,400 232,866

at 31 December 2010 270,889 1,625,331 (618,613) 60,963 1,338,570 40,271 1,378,841

Statement OF cHanGeS in eQUitYfor the financial year ended 31 December 2011


Merger Share relief Share premium reserve Retained capital (Note 27) (Note 27) earnings Total RM’000 RM’000 RM’000 RM’000 RM’000

Company at 1 January 2011 – – – – –incorporation of company * – – – *

Transactions with owners:Dividend (note 13) – – – (56,238) (56,238)issuance of shares (notes 26 and 27) 351,490 375,000 1,733,939 – 2,460,429Share issue expenses (note 27(i)) – (8,235) – – (8,235)total comprehensive income for the period

ended 31 December 2011 – – – 57,917 57,917

at 31 December 2011 351,490 366,765 1,733,939 1,679 2,453,873

* issued and paid up capital of Rm100 comprising of 200 issued shares at Rm0.50 each



CASH FLOWS FROM OPERATING ACTIVITIESProfit for the financial year 263,816 232,866 57,917

adjustments for:taxation 95,557 72,866 1,116Depreciation of property, plant and equipment 38,821 39,967 5loss on disposal of property, plant and equipment 146 29 –Property, plant and equipment written off 591 164 –amortisation of prepaid lease payments 73 66 –amortisation of intangible assets 3,225 3,226 –Fair value losses on derivatives 1,494 29,574 –interest income (11,538) (3,494) (6,833)interest expense 12,303 8,565 –Provision for retirement benefits 54 106 –Bad debts written off – 15 –impairment on property, plant and equipment 3,656 – –Unrealised gain on foreign exchange (103) (27) –Share based payment 27(i) 3,374 – 3,374

Operating profit before working capital changes 411,469 383,923 55,579inventories 50,890 10,909 –Biological assets (4,386) 8,528 –Receivables 9,782 (103,927) (8)Payables 5,902 (73,631) 74Related party balances 487 2,838 (1,036)

cash generated from operations 474,144 228,640 54,609interest paid – (891) –Retirement benefits paid (618) (520) –tax paid (106,692) (92,944) (913)

net cash generated from operating activities 366,834 134,285 53,696

StatementS OF caSH FlOWSfor the financial year ended 31 December 2011



CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment (31,240) (25,209) (58)Proceeds from disposal of property, plant and equipment 132 21 –interest received 11,538 3,451 6,833increase in fixed deposits pledged (2) (1) –

net cash (used in)/from investing activities (19,572) (21,738) 6,775

CASH FLOWS FROM FINANCING ACTIVITIESloan to subsidiaries, net of repayments – – (110,000)issue of shares 425,891 – 425,891Drawdown of bank borrowings 893,300 552,000 –Repayment of bank borrowings (822,000) (471,500) –Dividends paid (391,238) (251,673) (56,238)interest paid (12,303) (5,511) –

net cash from/(used in) financing activities 93,650 (176,684) 259,653

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 440,912 (64,137) 320,124CASH AND CASH EQUIVALENT AT BEGINNING OF THE FINANCIAL YEAR/PERIOD 87,004 151,141 *

CASH AND CASH EQUIVALENT AT END OF THE FINANCIAL YEAR/PERIOD 25 527,916 87,004 320,124

Significant non-cash transaction during the financial year and period for the Group and company was the issue of 577,979,800 new ordinary shares for the acquisition of entire equity interests in malayan Sugar manufacturing company Bhd and Kilang Gula Felda Perlis Sdn Bhd on 20 may 2011.

* less than Rm1,000


1 GENERAL INFORMATION

the company was incorporated in malaysia under the companies act 1965 on 10 march 2011 as a public limited company. the company was subsequently admitted to the official list of Bursa Securities on 28 June 2011 upon the listing of and quotation for the entire enlarged issued and paid up of share capital of Rm351,490,000 comprising 702,980,000 shares of Rm0.50 each in the main market of Bursa malaysia Securities Berhad.

the principal activity of the company is of investment holding. the principal activities of the subsidiaries are set out in note 17 of the financial statements.

the immediate holding company is Felda Global Ventures Holdings Berhad (FGVH), a company incorporated and domiciled in malaysia. the ultimate holding body is lembaga Kemajuan tanah Persekutuan (FelDa), a statutory body corporate set up by the government of malaysia under the land Development act, 1965.

the address of the registered office of the company is as follows:3rd Floor, Balai FeldaJalan Gurney Satu54000 Kuala lumpur

the address of the principal place of business of the company is as follows:16th Floor, Wisma ace Jerneh38, Jalan Sultan ismail50250 Kuala lumpur

2 BASIS FOR PREPARATION

the following events and transactions relate to the formation of the Group and company:

(a) On 30 October 2009, FGVH entered into an agreement with PPB Group Berhad (PPB) for the acquisition of the Sugar Business of PPB, which consists of the following entities/division for a total purchase consideration of Rm1,292.5 million in cash:

• 100%equityinterestinMalayanSugarManufacturingCompanyBhd(MSMCo.),whichinturnholds100%equityinterestin astakonas Sdn Bhd (astakonas) and mSm Properties Sdn Bhd (mSmP). Subsequently, FGVH nominated Felda Global Ventures Sugar Sdn Bhd (FGVS), a wholly owned subsidiary of FGVH, as a transferee of the agreement; and

• 50%equity interest in KilangGula Felda Perlis Sendirian Berhad (KGFP). The remaining 50%of KGFPwas owned by Felda Holdings Bhd (FHB), an associate of FGVH. Subsequent to the acquisition, KGFP and both shareholders of KGFP (namely FGVH and FHB) regard FGVH as the holding company of KGFP; and

• Chuping Cane Division, the sugar cane plantation division of PPB. Subsequently, FGVH nominated Felda Global Ventures Perlis Sdn Bhd (FGVP), a wholly owned subsidiary of FGVH, as a transferee of the agreement.

the above acquisitions were completed in January 2010.

nOteS tO tHe Financial StatementSfor the financial year ended 31 December 2011


2 BASIS FOR PREPARATION (continued)

(b) in February 2011, the Board of Directors of FGVH approved a corporate reorganisation to list its Sugar Business on the main market of Bursa malaysia Securities Berhad. the corporate reorganisation incorporated the following transactions:

(ii) Declaration of special dividends on 2 march 2011:

– by mSm amounting to Rm300.0 million to its shareholder, FGVS;

– by KGFP amounting to Rm35.0 million to its shareholders, FGVH and FHB;

(ii) incorporation of mSm malaysia Holdings Berhad (mSm or the company) on 10 march 2011 to be the listing vehicle;

(iii) Pre-listing Restructuring on 20 may 2011:

– Sale of chuping cane Division including certain assets and liabilities to KGFP for a purchase consideration of Rm108.0 million, which was satisfied through the issuance of 25.4 million new KGFP shares at an issue price of Rm4.18 per share.FGVPnominatedFGVHtoreceiveKGFP’sshares.Subsequenttothis,FGVHownedaneffective74.5%equityinterest in KGFP

– acquisition of the entire equity interest in mSm and KGFP by mSm (acquisition) for a purchase consideration of Rm1,231.0 million and Rm792.0 million respectively to be satisfied by issuance of a total of 578.0 million new mSm shares at issue price of Rm3.50 per share.

(iv) listing of mSm in Bursa malaysia Securities Berhad on 28 June 2011.

this business combination above involving entities under common control was accounted for using the predecessor accounting method. Under the predecessor method, the assets and liabilities of the combined entities are incorporated into the consolidated financial statements at the pre-combination carrying amounts recorded by the highest entity that has common control for which consolidated financial statements are prepared, without making any further fair value adjustments at the date of the combination. in addition, in applying the predecessor method, these transactions are assumed to have taken place in the consolidated financial statements for the financial year ended 31 December 2010, which represents the earliest set of financial statements presented. the difference between the cost of acquisition and the carrying amounts of the net assets acquired amounting to Rm618,613,000 was taken directly to reorganisation deficit.

(c) as part of the Pre-listing Restructuring undertaken by FGVH, certain selected assets and liabilities of chuping cane Division were not transferred to form part of the Group.

the analysis of the excluded assets and liabilities, which were not transferred, is as follows:

RM’000

Property, plant and equipment 42,985Other assets (1,944)Deferred tax liability (11,342)

excluded net assets 29,699

in accordance with the application of predecessor method, these excluded assets and liabilities are not deemed to be part of the Group from the date of the earliest financial statements presented.



(d) the acquisition mentioned in note 2(a) was accounted for by FGVH as a purchase of business and the purchase price was therefore allocated to the identifiable net assets and liabilities including contingent liabilities acquired based on their fair values at the date of the acquisition.

the total purchase price exceeded the fair value of the identifiable net assets and liabilities and resulted in goodwill on acquisition of Rm576.2 million as indicated below:

Carrying Fair Acquisition of Sugar Business value value RM’000 RM’000

Property, plant and equipment 215,466 484,002Prepaid lease payments 990 925intangible assets – 86,032inventories 315,803 341,742Biological assets 12,643 18,778Receivables 161,808 161,766Derivative financial assets 6,034 6,034cash and cash equivalents 150,793 150,793Payables (198,304) (197,020)current tax liabilities (24,100) (24,100)Borrowings (136,500) (136,500)Provision for defined benefits (1,446) (1,446)Deferred tax liabilities (23,300) (120,231)

total identifiable net assets 770,775non-controlling interest (39,709)

Fair value of identifiable net assets and liabilities acquired 731,066Goodwill on acquisition 576,240Purchase consideration 1,307,306less: excluded net assets as per note 2(c) (29,699)

amount recorded in the Statement of changes in equity 1,277,607

(e) analysis of purchase consideration:

RM’000

– settled in cash 1,292,471– dividends paid to PPB during the financial year ended 31 December 2009 14,835

1,307,306

(f) although mSm malaysia Holdings Berhad was only incorporated on 10 march 2011, the consolidated financial statements have been prepared as if the Group had always been in existence in its current form and the prior period comparative presented accordingly. For the purpose of the preparation of the comparative financial information for the year ended 31 December 2010, the subsidiaries are regarded as a group, which have been carved-out of the historical consolidated financial statements of FGVH, the parent company which controlled the subsidiaries during that period. Refer to note 3(a) for the details of the basis of consolidation of the financial statements of the Group.




(g) the financial statements of the Group and company have been prepared under the historical cost convention unless otherwise indicated in the individual policy statements in note 3 to the financial statements.

(h) the financial statements have been prepared in accordance with the provisions of the companies act, 1965 and Financial Reporting Standards (FRS), the maSB approved accounting Standards in malaysia for entities Other than Private entities.

(i) the preparation of financial statements in conformity with the companies act, 1965 and Financial Reporting Standards, the maSB approved accounting Standards in malaysia for entities Other than Private entities requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. actual results could differ from these estimates.

the preparation of the above financial statements requires the use of certain critical accounting estimates. it also requires management to exercise judgment in the process of applying the Group’s accounting policies. the areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 5.

(i)(i) Standards, amendments to published standards and interpretations adopted by the Group as of 1 January 2011:

• RevisedFRS3BusinessCombinations

• RevisedFRS101PresentationofFinancialStatements

• RevisedFRS127ConsolidatedandSeparateFinancialStatements

• AmendmenttoFRS5Non-currentAssetsHeldforSaleandDiscontinuedOperations

• AmendmenttoFRS7FinancialInstruments:Disclosures

• AmendmenttoFRS132FinancialInstrumentsPresentation:TheClassificationofRightsIssues

• AmendmenttoFRS138IntangibleAssets

• ICInterpretation4DeterminingwhetheranArrangementContainsaLease,and

• ICInterpretation17DistributionofNon-cashAssetstoOwners.

the adoption of the above new/revised standards and interpretations did not have a significant financial impact on the Group and company and did not result in substantial changes in the Group’s and company’s policies except for Revised FRS 101 and amendment to FRS 7. the principal effects resulted from the adoption of Revised FRS 101 and amendment to FRS 7 are discussed below:

• Revised FRS 101 “Presentation of Financial Statements” (effective from 1 January 2011) clarifies that an entity shallpresent an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the financial statements, and

• Amendment toFRS7“Financial Instruments:Disclosures”(effective from1 January2011)enhancedthedisclosureonfair value measurement using three level of fair value hierarchy and reinforces existing principles for disclosure about liquidity risk.

the effects on the financial statements following the adoption of Revised FRS 101 and amendment to FRS 7 are mainly disclosures.



(i)(ii) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group but not yet effective and have not yet been early adopted:

Effective from 1 July 2011

• AmendmentstoICInterpretation14“FRS119–TheLimitonaDefinedBenefitAssets,MinimumFundingRequirementsandtheirInteraction”permitsanentitytorecognisetheprepaymentsofcontributionsasanasset,ratherthananexpenseincircumstances when the entity is subject to a minimum funding requirement and makes an early payment of contributions to meet those requirements.

the Group will apply this standard from financial period beginning 1 January 2012.

• IC Interpretation 19 “Extinguishing Financial Liabilities with Equity Instruments” provides clarificationwhen an entityrenegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity’s shares or other equity instruments to settle the financial liability fully or partially. a gain or loss, being the difference between the carrying value of the financial liability and the fair value of the equity instruments issued, shall be recognised in profit or loss. entities are no longer permitted to reclassify the carrying value of the existing financial liability into equity with no gain or loss recognised in profit or loss.


Effective from 1 January 2012

• RevisedFRS124“RelatedPartyDisclosures”(effectivefrom1January2012)removestheexemptiontodisclosetransactionsbetween government-related entities and the government, and all other government-related entities. the following new disclosures are now required for government related entities:

– the name of the government and the nature of their relationship

– the nature and amount of each individually significant transactions, and

– the extent of any collectively significant transactions, qualitatively or quantitatively.

the adoption of Revised FRS 124 will result in additional disclosure requirement for the Group.


• AmendmenttoFRS112“IncomeTaxes”(effectivefrom1January2012)introducesanexceptiontotheexistingprinciplefor the measurement of deferred tax assets or liabilities arising on investment property measured at fair value. FRS 112 currently requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. it can be difficult and subjective to assess whether recovery will be throughuseor through salewhen the asset ismeasuredusing the fair valuemodel in FRS140 “InvestmentProperty”.Asaresultoftheamendments, ICInterpretation121“Incometaxes–recoveryofrevaluednon-depreciableassets”willnolongerapplytoinvestmentpropertiescarriedatfairvalue.TheamendmentsalsoincorporateintoFRS112the remaining guidance previously contained in ic interpretation 121 which is withdrawn.





(i)(ii) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group but not yet effective and have not yet been early adopted (continued):

Effective from 1 January 2012 (continued)

• AmendmenttoFRS7‘Financialinstruments:Disclosuresontransfersoffinancialassets’(effectivefrom1January2012)promotes transparency in the reporting of transfer transactions and improve users’ understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s financial position, particularly those involving securitisation of financial assets.

the adoption of amendment to FRS 7 will result in additional disclosure requirements for the Group.


Effective from 1 January 2013

in the financial year beginning after 1 January 2013, the Group will be adopting the new iFRS compliant framework, malaysian FinancialReportingStandards(MFRS).MFRS1‘First-timeadoptionofMFRS’providesforcertainoptionalexemptionsandcertainmandatory exceptions for first-time mFRS adopters.

the impact of mFRS 1 is pending assessment by the Directors and will not have a significant impact to the Group based upon mandatory exemptions for first-time mFRS adoptions.

• AmendmenttoMFRS1–FirstTimeAdoptionofFixedDatesandHyperinflation

• AmendmenttoMFRS101–FinancialStatementPresentation

• AmendmenttoMFRS119–EmployeeBenefits

• ICInterpretation20–StrippingCostsinProductionPhaseofaSurfaceMine

• MFRS9–FinancialInstruments–classificationandmeasurementoffinancialassetsandfinancialliabilities

• MFRS10–ConsolidatedFinancialStatements

• MFRS11–JointArrangements

• MFRS12–DisclosuresofInterestsinOtherEntities

• MFRS13–FairValueMeasurement

• MFRS141–Agriculture

• RevisedMFRS127–SeparateFinancialStatements

• RevisedMFRS128–InvestmentsinAssociatesandJointlyControlledEntities





the principal effects resulting from the adoption of mFRS 9, amendment to mFRS 101, amendment to mFRS 119, mFRS 13, mFRS 141, mFRS 10 and Revised mFRS 127 are discussed below:

• MFRS9‘Financialinstruments–classificationandmeasurementoffinancialassetsandfinancialliabilities’(effectivefrom1 January 2013) replaces the multiple classification and measurement models in mFRS 139 with a single model that has only two classification categories: amortised cost and fair value. the basis of classification depends on the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.

the accounting and presentation for financial liabilities and for derecognising financial instruments has been relocated from mFRS 139, without change, except for financial liabilities that are designated at fair value through profit or loss (FVtPl). entities with financial liabilities designated at FVtPl recognise changes in the fair value due to changes in the liability’s credit risk directly in other comprehensive income (Oci). there is no subsequent recycling of the amounts in Oci to profit or loss, but accumulated gains or losses may be transferred within equity.

the guidance in mFRS 9 on impairment of financial assets and hedge accounting continues to apply.

the adoption of mFRS 9 will result in additional disclosure requirements for the Group.

• MFRS13‘FairValueMeasurement’(effectivefrom1January2013)aimstoimproveconsistencyandreducecomplexitybyproviding a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across mFRSs. the requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards. the enhanced disclosure requirements are similartothoseinMFRS7‘Financialinstruments:Disclosures’,butapplytoallassetsandliabilitiesmeasuredatfairvalue,not just financial ones.


• MFRS141‘Agriculture’(effectivefrom1January2013)requiresbiologicalassetsatinitialrecognitionandattheendofeach reporting period, and agricultural produce at the point of harvest, respectively shall be measured at fair value less costs to sell. a gain or loss arising on initial recognition of a biological asset at fair value less costs to sell and from a change in fair value less costs to sell of a biological asset shall be included in profit or loss for the financial period in which it arises.

Upon adoption of mFRS 141 on 1 January 2013, the biological assets will be fair valued and the impact of the fair value adjustment will be accounted for retrospectively by adjusting retained profits. Subsequent changes in fair value after that date of the biological assets shall be included in profit or loss in the financial period in which the change arises.

• Amendment toMFRS101 ‘FinancialStatementPresentation’ (effective from1 July2012) requiresentities toseparateitemspresentedin‘othercomprehensiveincome’(OCI)inthestatementofcomprehensiveincomeintotwogroups,basedon whether or not they may be recycled to profit or loss in the future. the amendments do not address which items are presented in Oci.

the adoption of amendment to mFRS 101 will result in additional disclosure requirements for the Group.






• AmendmenttoMFRS119“Employeebenefits”(effectivefrom1January2013)makessignificantchangestotherecognitionand measurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits. actuarial gains and losses will no longer be deferred using the corridor approach. mFRS 119 shall be withdrawn on application of this amendment. the Group will apply this standard from financial periods beginning on 1 January 2013. the amendment to mFRS 119 will not result in a significant impact to the Group.

• MFRS10“ConsolidatedFinancialStatements”(effectivefrom1January2013)changesthedefinitionofcontrol.Aninvestorcontrols an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. it establishes control as the basis for determining which entities are consolidated in the consolidated financial statements and sets out the accounting requirements for the preparation of consolidated financial statements. it replaces all the guidance on control and consolidation in mFRS 127 “Consolidatedandseparatefinancialstatements”andICInterpretation112”Consolidation–specialpurposeentities”.



• TheRevisedMFRS127“SeparateFinancialStatements”(effectivefrom1January2013)includestheprovisionsonseparatefinancial statements that are left after the control provisions of mFRS 127 have been included in the new mFRS 10.

the adoption of revised mFRS 127 will result in additional disclosure requirements for the Group.



3 SIGNIFICANT ACCOUNTING POLICIES

the principal accounting policies applied in the preparation of financial statements are set out below. these policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of consolidation

the consolidated financial statements include the financial statements of the company and all its subsidiaries made up to the end of year. Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. the existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

the restructuring of the Group during the period involved a share for share exchange, which introduced a new holding company, mSm malaysia Holdings Berhad. the relative rights of the former shareholder, ie FGVH were not altered and this restructuring has been accounted for using the predecessor method of accounting.

Under the predecessor method of accounting, the results of entities or businesses under common control are presented as if the merger had been effected throughout the current and previous financial years or from the date when these entities came under the control of the common controlling party (if shorter). the assets and liabilities combined are accounted for based on the carrying amounts from the perspective of the common control shareholder at the date of transfer. On consolidation, the difference between the carrying value of the investment in the subsidiaries over the nominal value of the shares acquired is taken to merger relief reserve and regarded as a non-distributable reserve. the difference between the cost of acquisition and the carrying amounts of the net assets acquired is taken directly to reorganisation deficit.

although mSm malaysia Holdings Berhad was only incorporated on 10 march 2011, the consolidated financial statements has been prepared as if the Group had always been in existence in its current form and the prior period comparative presented accordingly. For the purpose of the preparation of the comparative financial information for the year ended 31 December 2010, the subsidiaries are regarded as a group, which have been carved-out of the historical consolidated financial statements of FGVH, the parent company which controlled the subsidiaries during that period.

the results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated, unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency with the policies adopted by the Group.

the purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. Under the purchase method of accounting, the cost of an acquisition is measured as the fair value of the assets given up, equity instruments issued and liabilities incurred or assumed at the date of exchange plus costs directly attributable to the acquisition. identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of the non-controlling interests. the excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets of the subsidiary acquired is recorded as goodwill. if the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in profit or loss.

the consideration transferred for acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. the consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. acquisition-related costs are expensed as incurred. identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.



3 SIGNIFICANT ACCOUNTING POLICIES (continued)

(a) Basis of consolidation (continued)

non-controlling interests is the equity in a subsidiary not attributable, directly or indirectly, to a parent. On an acquisition-by-acquisition basis, the Group measures any non-controlling interests in the acquiree at the non-controlling interests’ proportionate share of the acquiree’s identifiable net assets. at the end of reporting period, non-controlling interests consists of amount calculated on the date of combinations and its share of changes in the subsidiary’s equity since the date of combination.

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 as of the date of disposal including the cumulative amount of any exchange differences or other reserves that relate to the subsidiary and is recognised in profit or loss.

all earnings and losses of the subsidiary are attributed to the parent and the non-controlling interests, even if the attribution of losses to the non-controlling interests results in a debit balance in the shareholders’ equity. Profit or loss attributed to non-controlling interests for prior years is not restated.

(b) Investment in subsidiaries

in the company’s financial statements, investments in subsidiaries are shown at cost. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount in accordance with note 3(k).

On disposal of the subsidiaries, the difference between net disposal proceeds and its carrying amount is charged/credited to the profit or loss.

(c) Non-controlling interests

For purchases or disposals from or to non-controlling interests, the accretion or dilution of the Group’s interests is treated as an equity transaction between the subsidiary and its shareholders. the difference between the Group’s share of net assets immediately before and immediately after the change in stake and any consideration received or paid is adjusted to or against the Group’s retained earnings.



(d) Intangible assets

(i) Goodwill

Goodwill represents the excess of the cost of acquisition of subsidiaries, associates and jointly controlled entities over the group’s share of the fair value of their identifiable net assets including contingent liabilities at the date of acquisition. Goodwill on acquisition in respect of a subsidiary is included in the consolidated statement of financial position as intangible assets, or if arising in respect of an associate or jointly controlled entity, is included in investments in associate or jointly controlled entity.

Separately recognised goodwill is tested annually for impairment or if events or circumstances occur indicating that impairment may exist and is carried at cost less accumulated impairment losses. impairment losses on goodwill are not reversed. Gains and losses on disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. the allocation is made to those cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

(ii) Brand name

Theacquiredbrandrelatingtoasugarbrand‘Prai’wasrecognisedatfairvalueattheacquisitiondate.Thebrandhasafinite useful life and is carried at cost less accumulated amortisation. amortisation is calculated using the straight line method over the expected life of the brand of 20 years.

(e) Financial assets

Classification

the Group considers the classification of their financial assets in the following categories: at fair value through profit or loss and loans and receivables. the classification depends on the purpose for which the financial assets were acquired. management determines the classification of its financial assets at initial recognition.

(i) Financial assets at fair value through profit or loss

Derivative financial instruments

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value.

the method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and the nature of the item being hedged. Derivatives that do not qualify for hedge accounting are classified as held for trading.




(e) Financial assets (continued)

(ii) Loans and receivables

loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. they are included in current assets, except for maturities greater than 12 months after the end of the reporting period, which are classified as non-current assets.

Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade-date – the date on which the Group commit to purchase or sell the asset. all financial assets not carried at fair value through profit or loss are initially recognised at fair value plus transaction costs. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. loans and receivables are subsequently carried at amortised cost using the effective interest method.

Gainsorlossesarisingfromchangesinthefairvalueofthe‘financialassetsatfairvaluethroughprofitorloss’categoryarepresentedintheincomestatementwithin‘other(losses)/gains–net’intheperiodinwhichtheyarise.Dividendincomefromfinancial assets at fair value through profit or loss is recognised in the income statement as part of other income when the Group’s right to receive payments is established.

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.



(f) Impairment of financial assets

Assets carried at amortised cost

the Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. a financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a‘lossevent’)andthatlossevent(orevents)hasanimpactontheestimatedfuturecashflowsofthefinancialassetorgroupof financial assets that can be reliably estimated.

the criteria that the Group uses to determine that there is objective evidence of an impairment loss include:

– Significant financial difficulty of the issuer or obligor

– a breach of contract, such as a default or delinquency in interest or principal payments

– the Group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider

– it becomes probable that the borrower will enter bankruptcy or other financial reorganisation

– the disappearance of an active market for that financial asset because of financial difficulties, or

– Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including:

(a) adverse changes in the payment status of borrowers in the portfolio, and

(b) national or local economic conditions that correlate with defaults on the assets in the portfolio.

the Group first assess whether objective evidence of impairment exists. the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. the asset’s carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. if a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. as a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price.

if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in profit or loss.




(g) Financial liabilities

Financial liabilities within the scope of FRS 139 are recognised on the statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the financial instrument.

Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives, directly attributable transactions costs.

Subsequent to initial recognition, all financial liabilities are measured at amortised cost using the effective interest method except for derivatives, if any, which are measured at fair value.

For financial liabilities other than derivatives, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. any gains or losses arising from changes in fair value of derivatives are recognised in profit or loss. net gains or losses on derivatives include exchange differences.

a financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

(h) Property, plant and equipment

Property, plant and equipment are initially stated at cost less accumulated depreciation and impairment losses. the cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. cost also include borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the Group and the costs of the item can be measured reliably. all other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Freehold land is not depreciated as it has an infinite useful life and assets under construction are not depreciated until when the assets are ready for their intended use.

Property, plant and equipment are depreciated a straight line basis to write off the cost of each asset to their residual values over their estimated useful lives.



(h) Property, plant and equipment (continued)

Principal annual rates used are summarised as follows:

leasehold land 66 – 99 yearsBuildings 5 – 20 yearsPlant and machinery 3 – 42 yearsFurniture, fittings, equipment and motor vehicles 3 – 11 years

the assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date.

Depreciation on property, plant and equipment ceases at the earlier of derecognition and classification as held for sale. Depreciation on assets under construction commences when the assets are ready for their intended use.

at each statement of financial position date, the Group assess whether there is any indication of impairment. if such an indication exists, an asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. See significant accounting policies note 3(k) on impairment of non-financial assets. Gains and losses on disposals are determined by comparing proceeds with the carrying amount of the assets and are included in profit or loss.

(i) Biological assets

Planting development costs comprises new planting development costs which are accounted for under the capital maintenance method. Under the capital maintenance method, development costs incurred (for example land clearing and upkeep of trees) up to the maturity period is capitalised and not amortised, and are shown as a non-current asset net of accumulated impairment losses. Replanting expenses are charged to profit or loss in the year in which they are incurred.

When the planted area is replanted with a different crop, the previously capitalised development costs is expensed off in the profit or loss and a new planting development costs in respect of the new crop is capitalised.

Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount. See significant accounting policies note 3(k) on impairment of non-financial assets.

(j) Inventories

inventories which consist of raw sugar, refined sugar, work-in-progress and consumables are stated at lower of cost and net realisable value.

cost is determined on the weighted average cost basis. Raw material cost comprises the landed cost of goods purchased and in the case of work-in-progress and finished goods, includes materials, direct labour, other direct charges and an appropriate proportion of factory overheads. consumables comprise the actual purchase costs.

net realisable value represents the estimated selling price in the ordinary course of business, less selling and distribution costs and all other estimated cost to completion.




(k) Impairment of non-financial assets

assets that have an indefinite useful life including goodwill are not subject to amortisation and are tested annually for impairment, or when events or circumstances occur indicating that impairment may exist. Property, plant and equipment and other non-current assets, including intangible assets with definite useful lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. an impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. the impairment loss is charged to the profit or loss. the recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). impaired assets are reviewed for possible reversal of impairment at each reporting date.

(l) Income taxes

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 statement of financial position date.

Deferred tax is provided on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and unused tax losses can be utilised.

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 the tax rates that have been enacted or substantively enacted at the statement of financial position date. Deferred tax is recognised in the profit or loss, except when it arises from a transaction which is recognised directly in reserve, in which case the deferred tax is also recognised directly in reserve.

Deferred tax liabilities are not recognised for temporary differences that arise from initial recognition of assets and liabilities, at initial recognition or upon subsequent measurement, that at the time of transaction, affect neither accounting profit not taxable profit.

tax benefits from reinvestment allowance are recognised when the tax credit is utilised and no deferred tax asset is recognised when the tax credit is available.

(m) Foreign currencies

Functional and presentation currency

items included in the financial statements of the Group are measured using the currency of the primary economic environment in which the entity operates (the functional currency). the financial statements are presented in Ringgit malaysia (Rm), which is the Group and company’s functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within‘otheroperatingexpenses’.Foreignexchangegainsandlossesrelatedtoforeigncurrencyforwardcontractsarepresentedintheincomestatementwithin‘other(losses)/gains–net’.



(n) Revenue recognition

Revenue comprises the invoiced value for the sale of goods, net of sales taxes, rebates and discounts and after eliminating sales within the Group.

Revenue from sale of goods is recognised upon the delivery of goods, when significant risks and rewards of ownership of the goods are transferred to the buyer.

Subsidy receivable from the Government of malaysia for the goods sold relates to the difference between estimated market price and the controlled price determined by the Government for sale of refined sugar in the domestic market. the subsidy is agreed with the Government on an annual basis and is credited to the income statement and recognised as part of revenue in the accounting period in which the corresponding sales of goods are recognised.

interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continue unwinding the discount as interest income. interest income on impaired loan and receivables are recognised using the original effective interest rate.

Dividend income is recognised when the shareholders’ right to receive is established.

(o) Dividend distribution

Dividends on ordinary shares are recognised as liabilities when proposed or declared before the statement of financial position date. a dividend proposed or declared after the statement of financial position date, but before the financial statements are authorised for issue, is not recognised as a liability at the statement of financial position date.

(p) Cash and cash equivalents

cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

For the purposes of the cash flow statements, cash and cash equivalent are presented excluding fixed deposits pledged to secure banking facilities.

(q) Leases

Operating leases

leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on the straight line basis over the period of the lease period.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

initial direct costs incurred by the Group in negotiating and arranging operating leases are recognised in profit or loss when incurred.

Payment for rights to use land and buildings over a predetermined period, if meets the requirement of an operating lease, is classified as prepaid lease payments and is stated at cost less accumulated amortisation and accumulated impairment losses. the prepaid lease payments are amortised on a straight line basis over lease periods ranging from 15 to 49 years.




(q) Leases (continued)

Finance lease

leases of asset where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases.

assets acquired by way of 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 statement of financial position as finance lease liabilities under term loans. 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 incremental borrowing rate is used.

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 profit or loss 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.

(r) Employee benefits

(i) Short-term employee benefits

Wages, salaries, paid annual leave, paid sick leaves, bonuses and non-monetary benefits are recognised as expenses in the period in which the associated services are rendered by employees. 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 occur.

(ii) Defined contribution plan

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in the profit or loss as incurred.

as required by law, companies in malaysia make such contributions to the employees Provident Fund (ePF).

a subsidiary also provides additional post-employment benefits to factory workers as provided under a collective agreement between the subsidiary and the malayan Sugar manufacturing company Bhd employees’ Union as well as to other employees. contributions are made to the malayan Sugar manufacturing company Bhd Provident Fund, which is a defined contribution plan set up by the subsidiary on the fulfillment of conditions of entitlement. the fund is administered by trustees appointed by the subsidiary. contributions to the fund are charged to the income

financial statement - chartnexusir.chartnexus.com/msmholdings/website_html/attachments/... · 2012....

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