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Takaso Resources Berhad

440503-K

Annual Report 2011

Contents
2 Notice of Annual General Meeting 4 Statement Accompanying The Notice Of Fourteenth Annual General Meeting 5 Corporate Information 6 Corporate Structure 7 Five Year Financial Highlights 8 Board of Directors 11 Additional Compliance Information 14 Audit Committee Report 18 Statement On Corporate Governance 24 Statement Of Internal Control 26 Directors Responsibility Statement 27 Executive Chairmans Statement 30 Export Markets 31 Financial Statements 112 List of Properties 113 Analysis of Shareholdings 116 Analysis Of Warrant A (Takaso-WA) Holdings 118 Analysis Of Warrant B (Takaso-WB) Holdings Proxy Form

Notice of Annual General Meeting


NOTICE IS HEREBY GIVEN THAT the Fourteenth Annual General Meeting of the Company will be held at the Registered Office of the Company at K55 Jalan Kesang, Kawasan Perindustrian Tanjung Agas, 84000 Ledang, Johor Darul Tazim on Wednesday, 21 December 2011, at 2.30 p.m. for the following purposes:AGENDA AS ORDINARY BuSINESS:1. To receive the Audited Financial Statements of the Company and of the Group for the financial year ended 31 July 2011 together with the Directors and Auditors Reports thereon. (Please refer Explanatory Note 1) To approve the payment of Directors fees of RM62,000 for the financial year ended 31 July 2011. (Ordinary Resolution 1) To approve the payment of Directors fees of not exceeding RM150,000 for the financial year ending 31 July 2012. (Ordinary Resolution 2) To re-elect the following Directors who retire in accordance with Article 92 and Article 98 of the Companys Articles of Association and being eligible, offered themselves for re-election:(i) Tee Tze Chern, JP (Article 92) (Ordinary Resolution 3) (ii) Wong Koon Wai (Article 98) (Ordinary Resolution 4) To re-appoint Messrs. BDO as Auditors of the Company for the financial year ending 31 July 2012 and to authorise the Board of Directors to fix their remuneration. (Ordinary Resolution 5) 7. the Company and the approvals of the relevant regulatory authorities, the Directors be and are hereby empowered pursuant to Section 132D of the Companies Act, 1965, to issue new ordinary shares of RM0.25 each in the Company from time to time and upon such terms and conditions to such persons and for such purposes as the Directors may deem fit PROVIDED THAT the aggregate number of new ordinary shares to be issued pursuant to this resolution does not exceed ten percent (10%) of the total issued share capital of the Company and that such authority shall unless revoked or varied by an ordinary resolution by the shareholders of the Company in general meeting, commence upon the passing of this resolution until the conclusion of the next annual general meeting of the Company AND THAT the Directors are further authorised to do all such things and upon such terms and conditions as the Directors may deem fit and expedient in the best interest of the Company to give effect to the issuance of new ordinary shares under this resolution including making such applications to Bursa Malaysia Securities Berhad for the listing of and quotation for the new ordinary shares to be issued pursuant to this resolution. (Ordinary Resolution 6) (Please refer Explanatory Note 2) To transact any other ordinary business where due notice has been given in accordance with the Companies Act, 1965.

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3.

4.

5.

By order of the Board, TAN BEE HWEE (MAICSA 7021024) LAM SOOK CHING (MAICSA 7006942) Secretaries Melaka 29 November 2011

AS SPECIAL BuSINESS:To consider and if thought fit, to pass the following resolution with or without modifications as an Ordinary Resolution:6. Proposed Issuance of New Ordinary Shares of RM0.25 Each Pursuant to Section 132D of the Companies Act, 1965 THAT subject always to the Companies Act, 1965, the Articles of Association of

Takaso Resources Berhad

440503-K

Annual Report 2011

NOTES: 1. A member of the Company who is entitled to attend and vote at the meeting is entitled to appoint more than two (2) proxies to attend and vote instead of him/ her. Where a member appoints two (2) or more proxies, the appointment shall be invalid unless he/she specifies the proportion of his/her shareholdings to be represented by each proxy. A proxy may but need not be a member of the Company and a member may appoint any person to be his/her proxy without limitation and the provisions of Section 149(1)(a),(b),(c) and (d) of the Companies Act, 1965 shall not apply to the Company. 2. Where a member is an authorised nominee, it may appoint more than one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. The instrument appointing a proxy shall be in writing by the appointor or an attorney duly authorised in writing or, if the appointor is a corporation, whether under its seal or by an officer or attorney duly authorised. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the Registered Office of the Company at K55 Jalan Kesang, Kawasan Perindustrian Tanjung Agas, 84000 Ledang, Johor Darul Tazim not less than forty-eight (48) hours before the time for holding the meeting or at any adjournment thereof. In respect of deposited securities, only members whose names appear in the Record of Depositors on 14 December 2011 (General Meeting Record of Depositors) shall be eligible to attend the meeting.

ExPLANATORY NOTES ON ORDINARY AND SPECIAL BuSINESS:1. Item 1 of the Agenda This Agenda item is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting. Item 6 of the Agenda Ordinary Resolution 6 proposed under item 6 of the Agenda is for the purpose of granting a renewal of a general mandate and if passed, will give the Directors authority to issue and allot new ordinary shares of up to an amount not exceeding ten percent (10%) of the issued share capital of the Company for such purposes as the Directors would consider to be in the best interest of the Company. This authority will commence from the date of this Annual General Meeting and, unless earlier revoked or varied by the shareholders of the Company at a subsequent general meeting, will expire at the next annual general meeting of the Company. The mandate will provide flexibility to the Company for the allotment of shares not exceeding ten percent (10%) of its existing paid-up share capital to raise funds for future investments, acquisitions and/or working capital requirements. As at the date of this Notice, no new shares have been issued pursuant to the mandate obtained at the last Annual General Meeting of the Company held on 27 December 2010.

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2011 ANNuAL REPORT OF THE COMPANY:


The 2011 Annual Report of the Company is in CD-ROM format. A printed copy of the Annual Report shall be provided to the shareholders within four (4) market days from the date of receipt of the verbal or written request. Shareholders who wish to receive the printed copy of the Annual Report and who require assistance with viewing the CD-ROM, kindly contact Ms. Lily Tee at Tel. No. 06-9510988 or fax the request form for a printed copy of Annual Report at Fax No. 06-9516333 or send the request form to K55 Jalan Kesang, Kawasan Perindustrian Tanjung Agas, 84000 Ledang, Johor Darul Tazim. You may also e-mail your request to lily_tee@takaso.com for a printed copy of the Annual Report.

Statement Accompanying The Notice Of Fourteenth Annual General Meeting


1. Details of Directors Standing for Re-Election and Re-Appointment Details of the Directors who are retiring and standing for re-election at the Fourteenth Annual General Meeting of the Company are set out in the Directors profile appearing on pages 8 to 10 of this Annual Report. 2. Directors Standing for Re-election and Re-appointment a. Tee Tze Chern, JP (Article 92) b. Wong Koon Wai (Article 98) 3. Details of Attendance of Directors at Board Meetings A total of six (6) Board of Directors Meetings were held during the financial year ended 31 July 2011, details of Directors attendance at Board meetings are set out in the Corporate Governance Statements appearing on page 11 of this Annual Report. 4. Date, Time and Place of the Annual General Meeting Date Time Place : : : Wednesday, 21 December 2011 2.30 p.m. The Registered Office of the Company K55 Jalan Kesang Kawasan Perindustrian Tanjung Agas 84000 Ledang, Johor Darul Tazim

Takaso Resources Berhad

440503-K

Annual Report 2011

Corporate Information
BOARD OF DIRECTORS
Dato Tee How Cut, PIS, DPTJ Chairman
(Resigned w.e.f. 14.12.2010)

REMuNERATION COMMITTEE
Chairman Tee Tze Chern, JP Member Tan Ooi Jin Wong Koon Wai

AuDITORS
BDO (AF0206) Chartered Accountants Suite 18-04, Level 18 Menara MAA No. 15 Jalan Dato Abdullah Tahir 80300 Johor Bahru, Johor Darul Tazim Tel : +607 331 9815 Fax : +607 331 9817

Tee Tze Chern, JP Executive Chairman Chin Boon Kim Executive Director

(Re-designated as Executive Chairman w.e.f. 27.12.2010)

(Appointed w.e.f. 23.09.2010)

Tunku Makhlad Bin Tunku Mohamed Jamil Independent Non-Executive Director Tan Ooi Jin Independent Non-Executive Director
(Appointed w.e.f. 14.09.2010)

REGISTERED OFFICE AND PRINCIPAL PLACE OF BuSINESS


K55 Jalan Kesang Kawasan Perindustrian Tanjung Agas 84000 Ledang, Johor Darul Tazim Tel : +606 9510 988 Fax : +606 9516 333 Email : takaso@takaso.com

PRINCIPAL BANKERS
HSBC Bank Malaysia Berhad Malayan Banking Berhad CIMB Bank Berhad

Alex Ng Khang Hui Independent Non-Executive Director


(Resigned w.e.f. 28.09.2010)

STOCK ExCHANGE LISTING


Main Market Consumer Products Bursa Malaysia Securities Berhad Stock Name and Stock Code : TAKASO (7071) : TAKASO-WA (7071WA) : TAKASO-WB (7071WB)
(Listed on the Malaysian stock exchange since 1999)

To Peng Koon Independent Non-Executive Director


(Resigned w.e.f. 08.06.2011)

SHARE REGISTRAR
Symphony Share Registrars Sdn Bhd Level 6 Symphony House Block D13 Pusat Dagangan Dana 1 Jalan PJU 1A/46, 47301 Petaling Jaya Selangor Darul Ehsan Tel : +603 7841 8000 Fax : +603 7841 8151

Wong Koon Wai Independent Non-Executive Director


(Appointed w.e.f. 29.06.2011)

AuDIT COMMITTEE
Chairman Wong Koon Wai Member Tunku Makhlad Bin Tunku Mohamed Jamil Tan Ooi Jin

WEBSITE
www.takaso.com

COMPANY SECRETARIES
Teo Soon Mei (MAICSA 7018590)
(Resigned w.e.f. 15.04.2011)

INVESTOR RELATIONS
Mr. Tee Tze Chern, JP (Executive Chairman) Tel : +606 9510 988 Fax : +606 9516 333 Email : francis_tee@takaso.com

Tan Bee Hwee (MAICSA 7021024)


(Appointed w.e.f. 15.04.2011)

NOMINATION COMMITTEE
Chairman Tunku Makhlad Bin Tunku Mohamed Jamil Member Tan Ooi Jin Wong Koon Wai

Lam Sook Ching (MAICSA 7006942)


(Appointed w.e.f. 15.04.2011)

Corporate Structure
TAKASO RuBBER PRODuCTS SDN. BHD.
(Company No. 87327-V) Manufacturing of rubber products and baby products and trading in baby accessories, apparels and milk powder.

100%

100%

TAKASO MARKETING SDN. BHD.


(Company No. 413226-A) Marketing of rubber products and baby products.

100%

JAPLO HEALTHCARE SDN. BHD.


(Company No. 499674-H) Distributing and retailing of baby products.

100% 100%
A pioneer manufacturer and exporter of condoms and babycare accessories such as baby feeding bottle, soothers and teats in Malaysia.

TAKASO TRADING SDN. BHD.


(Company No. 499673-M) Dormant.

(Formerly known as Romantic Family Planning Sdn. Bhd.)

TAKASO INTERNATIONAL SDN. BHD.


(Formerly known as Secret Universal Sdn. Bhd.) (Company No. 961749-X) Dormant.

100%

TAKASO INDuSTRIES PTE. LTD.


(Company Registration No. 201133079-W) Trading of industrial cable support system

Takaso Resources Berhad

440503-K

Annual Report 2011

Five Year Financial Highlights


Revenue
(RM000)
36 30

Loss Before Tax


(RM000)
0

Loss For The Financial Year


(RM000)
0

Net Tangible Assets Per Share


(RM)
0.6

Net Loss Per Share


RM (Sen)
0

(2,477)

(2,583)

0.43

(2,163)

(2,163)

28,157

24,523

(1,536)

(1,536)

-5

-5

(709)

21,886

0.41

24 18 12 6 0

(931)

0.4 0.3

19,045

0.35

-20

16,844

0.27

-10

-10

0.32

(3,984)

-30

-15

(4,116)

0.2 0.1 0 -40

-15

-20

-20

-50

07

08

09

10

11

07

08

09

10

11

07

08

09

10

11

07

08

09

10

11

07

(9.67)

08

(2.26)

09

10

(3.73)

2007 Revenue Loss Before Tax Net Loss For The Financial Year Net Tangible Assets Per Share Net Loss Per Share RM000 RM000 RM000 RM RM(sen) 28,157 (4,166) (3,984) 0.43 (9.67)

2008 24,523 (709) (931) 0.41 (2.26)

2009 21,886 (2,583) (2,477) 0.35 (6.01)

2010 19,045 (1,536) (1,536) 0.32 (3.73)

2011 16,844 (2,163) (2,163) 0.27 (5.25)

(5.25) 11

0.5

-10

(6.01)

Board of Directors
TEE TzE CHERN, JP Aged 46, Malaysian Executive Chairman, Chairman of Remuneration Committee CHIN BOON KIM Aged 38, Malaysian Executive Director

Mr. Tee Tze Chern, JP was appointed to the Board as the Managing Director on 22 December 1998 and was re-designated as Executive Chairman on 27 December 2010 following the resignation of Dato Tee How Cut as Chairman of the Board of Directors on 14 December 2010. Mr. Tee is also Chairman of the Remuneration Committee of the Company. Mr. Tee graduated from the Rubber Research Institute with a Diploma in 1992. He has been a member of the

Association of Overseas Technical Scholarship Malaysia since 1990 and a member of the Malaysian Institute of Management since 1992. He has over 19 years of experience in the baby products and condom industry. He has previously been invited to sit in SIRIMs Technical Committee on Standard Specifications under the ISO division in mechanical contraceptive in 1990. Mr. Tee Tze Chern, JP sits on the board of several private limited companies. Trainings attended by Mr. Tee during the financial year ended 31 July 2011 are as follows:- Sustainability Program for Corporate Malaysia. - Seminar Hari Harta Intelek Negara 2011. - Marketing and Branding Conference 2011.

Mr. Chin Boon Kim was appointed to the Board as the Executive Director on 23 September 2010. After completing his secondary education, he began his career with Eli Trading Co. in 1992 and his last posting before leaving the company was as the Operations Manager overseeing to Eli Tradings operations and logistics. During his tenure with Eli Trading, he contributed to the companys expansion and was in charge of its new branch office. Mr. Chin started his own company in 2001 specialising in total nationwide endto-end logistics solutions from transportation to manpower and warehousing and he brings with him a wealth of operational

and management experience with a vast networking resources in its related industries. He does not hold any other directorships in public companies. Trainings attended by Mr. Chin during the financial year ended 31 July 2011 are as follows:- Mandatory Accreditation Programme for Directors of Public Listed Companies conducted by Bursatra Sdn. Bhd. - Half-day Program on the Corporate Governance Guide: Towards Boardroom Excellence in Mandarin.

Takaso Resources Berhad

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Annual Report 2011

TuNKu MAKHLAD BIN TuNKu MOHAMED JAMIL Aged 66, Malaysian Independent Non-Executive Director Member of Audit Committee and Chairman of Nomination Committee

TAN OOI JIN Aged 36, Malaysian Independent Non-Executive Director Member of Audit Committee, Nomination Committee and Remuneration Committee

Tunku Makhlad Bin Tunku Mohamed Jamil was appointed to the Board as an Independent Non-Executive Director on 11 February 2010. He is a member of the Companys Audit Committee and Chairman of the Nomination Committee. Tunku Makhlad is a Graduate member of the Chartered Institute of Transport. He has a diploma in Automobile Engineering in Association with The Institute of Road Transport Engineers, London (U.K.) and a post-diploma in Transport Management from the Willesden College of Technology, London (U.K.). Tunku Makhlad was a Production Executive attached to the Associated Motor Industry Sdn. Bhd. of the Sime Darby Group from 1976 till 1981 before joining Malaysia Airlines Berhad (MAS) as Transport Administrator in 1981. He was promoted to the post of Transport Controller from 1994 until his resignation from MAS in 2000. His last employment was with Jimah Energy Venture Sdn. Bhd. as the Senior Executive overseeing to Public Relations and Protocol at the Jimah Power

Plant in Port Dickson, Negeri Sembilan prior to his retirement in December 2010. He does not hold any other directorships in public companies. Training attended by Tunku Makhlad during the financial year ended 31 July 2011 is as follows:- What Directors Should Know about the Investor Mindset

Mr. Tan Ooi Jin was appointed to the Board as an Independent Non-Executive Director on 14 September 2010. He is a member of the Companys Audit Committee, Nomination Committee and Remuneration Committee. A former ASEAN scholar, he holds a LL.B. (Honours) from the University of Newcastleupon-Tyne, UK. He completed his certificate in legal practice in 2002 and was called to the Bar in November 2003. He has been a member of the Bar Council of Malaysia since 2003. Mr. Tan is currently a partner of Messrs. Feroz & Co., a legal entity that specialises in corporate, commercial, cross-border transactions and ICT matters. He started his legal career in a medium-sized firm with an international affiliation focusing

on corporate and ICT matters. He left the firm as a partner. While there, Mr. Tan gained recognition and was listed in the independent publication Asia Pacific Legal 500 in three practice areas in 2008 which included IT and telecommunications. He also advises the Technopreneurs Association of Malaysia and its members on legal issues. Mr. Tan has been involved in the listing of various companies in Malaysia, London and Hong Kong and is familiar with the rules and requirements of regulators. He currently sits on the Board of Tejari Technologies Berhad and The Media Shoppe Berhad as well as a private company involved in circuit manufacturing and whose ultimate holding company is listed on the NASDAQ, New York, America. Training attended by Mr. Tan during the financial year ended 31 July 2011 is as follows:- Sustainability Program for Corporate Malaysia

Board of Directors

(continued)

WONG KOON WAI Aged 36, Malaysian Independent Non-Executive Director Chairman of Audit Committee, Member of Nomination Committee and Remuneration Committee

Notes:FAMILY RELATIONSHIP
Mr. Tee Tze Chern, JP and Ms. Lily Tee are siblings. Ms. Lily Tee sits on the Board of the following subsidiaries of the Company alongside Mr. Tee Tze Chern:- Takaso Rubber Products Sdn. Bhd. - Takaso Marketing Sdn. Bhd. - Japlo Healthcare Sdn. Bhd. Save as disclosed above, none of the other Directors of the Company has any relationship with any directors or substantial shareholders of the Company.

Mr. Wong Koon Wai was appointed to the Board as an Independent Non-Executive Director on 29 June 2011. He is Chairman of the Companys Audit Committee and a member of both the Nomination Committee and Remuneration Committee of the Company. Mr. Wong Koon Wai graduated from the Royal Melbourne Institute of Technology (RMIT) University in Melbourne, Australia in 1999 with a Bachelor of Business (majoring in Accountancy). He is a member of the Malaysian Institute of Accountants (MIA) and CPA Australia.

He began his career in audit and assurance in 2000. In 2003, he joined Crowe Horwath and was promoted to Senior Manager in 2008. During his eight (8) years service with Crowe Horwath, he was involved in the audit and assurance service for a wide range of industries. He was also involved in special audits, listing exercises, mergers and acquisitions as well as fund-raising exercises. He is currently the financial controller of a private company. He does not hold any other directorships in public companies. Following his appointment to the Board on 29 June 2011 till the end of the financial year, Mr. Wong did not attend any training but has registered himself for the Mandatory Accreditation Programme for Directors of Public Listed Companies conducted by Bursatra Sdn. Bhd.

CONFLICT OF INTEREST
None of the Directors have any conflict of interest with the Company.

CONVICTION OF OFFENCES
A fine of RM100,000.00 was imposed by the Securities Commission (SC) on the following persons for failure to comply with all the relevant requirements relating to the mandatory offer pursuant to Practice Note 2.9.7 of the Malaysian Code on Take-Overs and Mergers 1998 (the Code):a) b) c) d) e) Dato Tee How Cut, PIS, DPTJ (the former Chairman of the Company); Mr. Tee Tze Chern, JP (the Executive Chairman of the Company); Datin Teo Beng Ha (a former Director of the Company); Madam Tee Bee Leng, PJK (a former Director of the Company); and Parties acting in concert with it.

SC had on 22 December 2006 filed a civil suit against Up & Famous Sdn. Bhd. (UFSB), the former substantial shareholder of the Company, and parties acting in concert with it (hereinafter referred to as the Defendants) in KL High Court Originating Motion on D1-25-27-2006, Suruhanjaya Sekuriti v Up & Famous Sdn Bhd & 6 others. The Kuala Lumpur High Court made the following Orders on 7 August 2009:(i) Within 21 days of being ordered to do so, each of the Defendants, whether by themselves or by their servants or agents, circulate the offer and compensation

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Takaso Resources Berhad

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Annual Report 2011

Additional Compliance Information


documents in the form of Exhibit A15 attached to the Affidavit affirmed by Md Noor Bin Abd Rahim and filed in support of the Motion dated 21 December 2006 (subject to updating of current information) to all the shareholders of TRB; (ii) Within 21 days of the deadline imposed in the said offer and compensation document, the Defendants pay the respective portions to all the shareholders of TRB who are entitled to receive proceeds of the compensation scheme as listed in Exhibit A22 attached to the Affidavit affirmed by the said Md Noor Bin Abd Rahim; (iii) In the event any Defendant fails to comply with the Orders referred to in Paragraphs (i) and (ii) above within the specified period, SC be entitled to take execution proceedings under the Rules of the High Court, 1980, and/or seek leave of this Honourable Court to punish such Defendant for contempt of Court for failure to comply with orders of the Court. (iv) The costs of these proceedings shall be borne by the Defendants on the normal basis and such costs to be taxed. Pursuant to the Order of Kuala Lumpur High Court made on 7 August 2009, UFSB, on behalf of itself and the parties acting in concert with it, circulated the Offer and Compensation Document in accordance with Paragraph 1 of the court order made on 28 August 2009 to all the shareholders of the Company. UFSB had on 18 November 2009 and 19 November 2009 respectively to complete the acquisition of 4,500 TRB shares at the price of RM1.06 per share from the qualified shareholders of TRB pursuant to the Restricted Unconditional Mandatory offer by UFSB to qualified shareholders of TRB. Other than as disclosed, none of the other Directors of the Company have been convicted of any offences within the past ten (10) years other than traffic offences, if any. Sanctions and/or Penalties There were no sanctions and/or penalties imposed on the Group and its subsidiaries, Directors or management by any regulatory bodies other than those disclosed in the conviction of offences. Shareholding in the Company and Subsidiaries of the Company. The direct and indirect interest in securities in the Company and subsidiaries of the Company of those who are directors of the Company according to the Register of Directors shareholdings are set out on page 114 of this Annual Report. Board Meetings A total of six (6) Board Meetings were held during the financial year ended 31 July 2011 and the attendance of each Director is as follows:Total no. of Meetings held during Directors Board Member tenure in office Meetings Attended _______________________________________________________________________________ Dato Tee How Cut, PIS, DPTJ
(Resigned w.e.f. 14.12.2010)

3 6 2 5 6 4 5

3 5 2 5 6 3 5

Tee Tze Chern JP

(Re-designated as Executive Chairman w.e.f. 27.12.2010)

Alex Ng Khang Hui To Peng Koon

(Resigned w.e.f. 28.09.2010) (Resigned w.e.f. 08.06.2011)

Tunku Makhlad Bin Tunku Mohamed Jamil


(Appointed w.e.f. 23.09.2010)

Chin Boon Kim

Tan Ooi Jin

(Appointed w.e.f. 14.09.2010)

Wong Koon Wai 1 1 (Appointed w.e.f. 29.06.2011) _______________________________________________________________________________

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Additional Compliance Information

(continued)

Material Contracts There were no material contracts entered into by the Company and its subsidiaries involving Directors and major shareholders interests still subsisting at the end of the financial year. Options, Warrants or Convertible Securities No options were issued by the Company or exercised during the financial year ended 31 July 2011. The Company had issued a total of 5,883,992 Existing Warrants at an exercise price of RM1.00 and as at its financial year end on 31 July 2011, none of the Existing Warrants were exercised and 5,883,992 Existing Warrants were outstanding. Subsequent to the Companys financial year end, the number of Existing Warrants, also referred to as TAKASO-WA, was on 11 August 2011 adjusted to 6,529,131 at an exercise price of RM0.89 in consequent to the Rights Issue of Shares with Warrants Exercise, more information found under Utilisation of Proceeds. Recurrent Related Party Transaction of a Revenue Nature There were no material recurrent related party transaction of a revenue during the financial year other than those disclosed in Note 28 to the financial statements. Share Buy-Backs The Company does not have a share buy-back programme in place. Depository Receipt During the financial year, the Company did not sponsor any depository receipt programme. Profit Guarantee During the financial year, the Company did not provide any profit guarantee.

Variation of Results There were no profit estimates, forecasts or projections or unaudited financial results released by the Company which differed by ten percent (10%) or more from the audited results for the financial year ended 31 July 2011. utilisation of Proceeds Rights Issue - 21 November 2003 A revision in the utilisation of proceeds arising from the rights issue of 5,884,000 new TRB Shares with 5,884,000 free detachable warrants at an issue price of RM1.00 per share has been duly passed and approved at the Extraordinary General Meeting held on 27 December 2004. The construction of two (2) units of logistics warehouses at Tangkak, Johor costing RM2.2 million has been revised to central region of Peninsular Malaysia. The Board of Directors of the Company has approved a further extension of the timeframe for utilisation of the abovesaid proceeds until the Company can identify a suitable warehouse located at central region of Peninsular Malaysia. As at the financial year end on 31 July 2011, management has yet to identify a suitable warehouse that meets the Groups current operational needs. Rights Issue - 13 September 2011 The Company had embarked on a Rights Issue of Shares with Warrants which was completed on 13 September 2011 following the listing and quotation for 94,033,811 Rights Shares of RM0.25 each together with 56,420,285 Warrants (these new warrants are known as TAKASO-WB) on the Main Market of Bursa Securities Berhad on 13 September 2011 (Rights Issue of Shares with Warrants Exercise). The said Rights Issue of Shares with Warrants Exercise was approved at the Companys Extraordinary General Meeting held on 28 April 2010. Total proceeds raised from the Rights Issue of Shares with Warrants Exercise was RM32.912 million and will be utilised as follows:-

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Takaso Resources Berhad

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Annual Report 2011

Manner of Utilisation RM (000) _______________________________________________________________________________ As Working Capital - Overseas expansion - Operating expenses - New business investment 6,500 11,312 9,500 _________ 27,312 Capital Expenditure Repayment of borrowings Expenses in relation to the Rights Issue of Shares with Warrants Exercise 3,000 2,000 600 _________ 32,912 _________ _________

b) Sponsoring the I care, do you? Health Awareness Campaign organised by the First Aid Society of Universiti Tunku Abdul Rahman Perak Campus. c) Supply of food aid to children welfare homes. d) Supply of diapers to old folks public nursing homes. 2) CSR at the Workplace Safety is our priority at work. The on-going in-house safety training is conducted for all our employees. The Health and Safety Audit Committee performs on-going fire hazard internal audit at every six (6) monthly intervals in our factory. In addition, management constantly conducts various structural training and coaching sessions to improve and upgrade the level of our employees knowledge and competency at work. 3) CSR towards the Environment The Groups current pursuit is to ensure that all residual schedule wastes are properly stored and disposed of in accordance with the Akta Alam Sekeliling (1974) (Malaysia) to reduce environment contamination. The Group also promotes environmentally conscious work practices and our internal policy dictates strict compliance to the environment regulations. 4) CSR in the Marketplace The Group believes that in order to achieve sustainable business interests and to be able to respond to the increasing demands from our customers and stakeholders, we have to implement socially responsible business conduct that protects the interest of our customers, shareholders, suppliers, consumers and public at large. The Company is committed to conduct its business with integrity while in compliance with all applicable laws. We also seek our suppliers to conform to the highest standards of business practices in the marketplace to comply with the requirements of our vendors. Audit will be performed by the Group on our suppliers and the audit trail and data on material used by suppliers will be provided to the Group to ensure that products meet the safety and other standards and requirements. In addition, the Group has applied risk management standards on the products based on the requirements of EN ISO 14971.

Non-Audit Fees The amount of non-audit fees paid to external auditors by the Group for the financial year ended 31 July 2011 was RM18,000. Corporate Social Responsibility (CSR) The Group is committed to operate its business in a socially responsible manner towards its employees, the wider environment, the community and the marketplace. The following are the Groups CSR activities conducted during the financial year ended 31 July 2011:1) CSR in the Community Every year in the month of March, this year being of no exception, the Group had organised an annual blood donation campaign in collaboration with the local Hospital Pakar Sultanah Fatimah, Muar, to boost the nations blood bank. This yearly effort has been recognised by the Hospital and it is hoped the annual campaign can help to foster awareness of the spirit of love, care and giving to the community. The Groups continued efforts to reach out to the community include supporting and sponsoring the following programmes:a) Being the main sponsor for the HIV/AIDS Awareness campaign held at Dataran Pahlawan, Melaka Megamall for the CSR Month.

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Audit Committee Report


The Audit Committee for the financial year ended 31 July 2011 comprised the following members:1. MEMBERS AND MEETING ATTENDANCE Membership of the Audit Committee and details of members attendance at the five (5) meetings during the financial year ended 31 July 2011 are as follows:Total no. of Meetings held Meetings Attended during Directors Tenure in Office _____________________________________________________________________________________________________________________________________________________________ To Peng Koon Wong Koon Wai Alex Ng Khang Hui Tunku Makhlad Bin Tunku Mohamed Jamil Tan Ooi Jin Chairman/Independent Non-Executive Director (Resigned w.e.f. 08.06.2011) Chairman/Independent Non-Executive Director (Appointed w.e.f. 29.06.2011) Member/Independent Non-Executive Director (Resigned w.e.f. 28.09.2010) Member/Independent Non-Executive Director 4 1 1 5 4 1 1 5 Audit Committee Member Composition

Member/Independent Non-Executive Director 3 3 (Appointed as Director on 14.09.2010 and as member w.e.f. 03.11.2010) _____________________________________________________________________________________________________________________________________________________________ Mr. Wong Koon Wai is a member of the Malaysian Institute of Accountants (MIA) and CPA Australia. The composition of the Audit Committee during the financial year complied with the Terms of Reference of the Audit Committee which is, the committee shall comprise not less than three (3) members and a majority of whom shall be independent directors and at least one (1) member of the Audit Committee has the required financial background and experience. The Executive Chairman, Chief Financial Officer, General Manager and representatives of the external auditors are normally invited to attend Audit Committee meetings while the internal auditors attend twice a year, at a six (6) monthly interval. Other Board members may attend the meeting upon invitation by the Audit Committee. The Minutes of the Audit Committee meetings are extended to all members of the Board of Directors and significant issues are discussed at Board meetings held subsequent to the Audit Committee meetings. 2. MEETINGS The Audit Committee shall meet regularly, with due notice of issues to be discussed, and shall record its conclusions in discharging its duties and responsibilities. Meetings shall be held not less than four (4) times a year and additional meetings shall be called as the Chairman decides in order to fulfill its duties.

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The Company Secretary or any person appointed by the Audit Committee shall act as Secretary of the Audit Committee and shall be responsible, in conjunction with the Chairman, for drawing up the agenda and other supporting explanatory documentation for circulation to the Audit Committee members prior to each meeting. The Secretary will also be responsible for keeping the minutes of meetings of the Audit Committee and circulating them to the Audit Committee members and other members of the Board of Directors. The Chairman of the Audit Committee shall engage on a continuous basis with senior management such as the Chairman, the Executive Director, Chief Financial Officer, the General Manager and Head of Internal Audit and the external auditors in order to be kept informed of matters affecting the Group. The Chairman of the Audit Committee shall also convene a meeting of the Audit Committee to consider any matters that the external auditors or internal auditors believe should be brought to the attention of the Directors or shareholders. At least twice a year, the Audit Committee shall meet with the external auditors without the presence of any executive directors or employees of the Company. 3. TERMS OF REFERENCE A summary of the key functions, roles and responsibilities as spelt out in the Terms of Reference of the Audit Committee is as follows:Authority The Audit Committee is empowered and authorised by the Board of Directors at the cost of the Company:(a) to investigate any matters within its terms of reference and shall have unrestricted access to both the internal and external auditors and to all employees of the Group;

(e) (f) (g)

to obtain external legal or other independent professional advice where necessary; to invite outsiders with relevant experience to attend its meetings, whenever deemed necessary; and to convene meetings with the external auditors, the internal auditors or both excluding the attendance of other directors and employees of the Company, whenever deemed necessary.

Notwithstanding anything contrary hereinbefore stated, the Committee does not have executive powers and shall report to the Board of Directors on matters pertaining to the Company and the Group that it has considered and its recommendations thereon. Duties Duties of the Committee are as follow:a) To consider and report the same to the Board of Directors of the Company the appointment, nomination, resignation and dismissal of external auditors and their respective audit fees; To discuss with the external auditors before the commencement of their audit, the nature and scope of the audit, competency and resources of the external auditors and to ensure co-ordination where more than one audit firm is involved. To discuss problems and reservations arising from the interim and final audits and any matters the auditors may wish to discuss (in the absence of management); To do the following in relation to the internal audit function and report the same to the Board of Directors of the Company:1) to review the adequacy of the scope, functions, competency and resources of the internal audit function and whether it has the necessary authority to carry out its work; to review the internal audit processes and results of the internal audit plan processes or investigation undertaken and where necessary, ensure

b)

c)

d)

(b) to have the resources in order to perform its duties as set out in its terms of reference; (c) to have full and unrestricted access to any information pertaining to the Company and the Group;

(d) to have direct communication channels with the external auditors and internal auditors;

2)

15

Audit Committee Report

(continued)

that appropriate actions are taken on the recommendations of the internal audit function; 3) 4) 5) to review any appraisal or assessment of the performance of members of the internal audit function and their respective audit fees; to approve any appointment or termination of senior staff members of the internal audit function; and to take cognisance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.

i) j) k)

To consider the report, major findings and managements response thereto on any internal investigations carried out by the internal auditors; To review all areas of significant financial risk and the arrangements in place to contain those risks to acceptance levels; To consider and review any related party transactions and potential conflict of interest situations that may arise within the Company and the Group including any transaction, procedure or course of conduct that raises questions of management integrity; To review and report the same to the Board of Directors of the Company whether there is reason (supported by grounds) to believe that the Companys external auditors are not suitable for re-appointment; To review the allocation of options pursuant to the Share Issuance Scheme and make such statement to be included in the annual report of the Company in relation to a share issuance scheme for employees; and Any such other functions as may be agreed by the Committee and the Board.

l)

e) f)

To review the effectiveness of the management information system; To review the quarterly results and annual financial statements of the Company and the Group with both the external auditors and management and report the same to the Board of Directors of the Company focusing particularly on:1) 2) 3) 4) 5) any change in or implementation of accounting policies and practices; significant adjustment arising from the audit; any unusual events; the going concern assumption; and compliance with accounting standards and other legal requirements. m)

n)

Responsibility Where the Committee is of the view that a matter reported by it to the Board of Directors of the Company has not been satisfactorily resolved resulting in a breach of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad or any serious offence involving fraud and dishonesty committed by the Company or the Group, the Committee has the responsibility to promptly report such matters to Bursa Malaysia Securities Berhad or any other relevant authorities. 4. SuMMARY OF ACTIVITIES DuRING THE YEAR During the financial year ended 31 July 2011, activities undertaken by the Audit Committee include:(a) Review of the quarterly unaudited financial statements of the Group;

g)

To review the following and report the same to the Board of Directors of the Company:1) 2) 3) 4) with the external auditors, the audit plan; with the external auditors, their evaluation of the system of internal controls; with the external auditors, their audit report; and the assistance given by the employees of the Company and the Group to the external auditors.

h)

To review and discuss any management letter sent by the external auditors to the Company and managements response to such letter;

16

(b) Review of inter-company transactions and/or any related party transactions or conflict of interest situations that arose within the Group or in the Company;

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(c)

Review of the annual audited financial statements of the Group and the Company for the financial year ended 31 July 2010;

(r) (s) (t)

Review of the risk profile update and impact report from consultants;

the external

(d) Review of the Audit Planning Memorandum by the external auditors for audit of the financial year ending 31 July 2011; (e) (f) (g) Review of the external auditors report in relation to its audit and accounting issues; Discussion with the external auditors without the presence of the Executive Directors and employees of the Company; Review of the action plan for internal audit of the Group, the audit findings and the follow-up internal audit reports from the internal auditor; 5.

Review of the litigations and claims against the subsidiaries companies of the Company; Review of the forecast consolidated financial statements of the Company; and

(u) Review of the proposed corporate exercise of the Company in relation to the Rights Issue of Shares with Warrants. REVIEW OF SHARE ISSuANCE SCHEME (SIS) The SIS has expired on 26 February 2006 pursuant to Bye-Laws 17 of the SIS thus, no review was conducted by the Audit Committee during the year. 6. INTERNAL AuDIT FuNCTION AND RISK MANAGEMENT The Group has outsourced its internal audit function to a professional services firm which reports directly to the Audit Committee, assisting the Committee in discharging its duties and responsibilities. The Statement on Internal Control is furnished on pages 24 and 25 of this Annual Report and provides an overview of the state of internal controls within the Group. The scope of internal audit encompasses the examination and evaluation of the adequacy and effectiveness of the Companys governance, system of internal control structure and the quality of performance in carrying out assigned responsibilities to achieve the Companys stated goals and objectives. The internal auditors also performed ad hoc appraisals, inspection, investigations, examinations and reviews that may be requested by the Committee or senior management from time to time.

(h) Review of the internal auditors effectiveness, competence and independence; (i) (j) Review of the terms of reference of the audit committee; Discussion and consideration of the utilisation of proceeds arising from the rights issue (2003) of 5,884,000 new TRB Shares with 5,884,000 free detachable warrants at an issue price of RM1.00 per share; Review of the Groups latest business development and operations; Review of the Statement of Directors Responsibility for the financial year ended 31 July 2010;

(k) (l)

(m) Review of the Statement on Internal Control for the financial year ended 31 July 2010; (n) Review of the Audit Committee Report for the financial year ended 31 July 2010; (o) Review of the Statement on Corporate Governance for the financial year ended 31 July 2010.

(p) Review of the Statement on Corporate Social Responsibilities for the financial year ended 31 July 2010; (q) Review of the inter-companies balances for the financial year ended 31 July 2010;

17

Statement On Corporate Governance


The Board of Directors is pleased to report to the shareholders on the manner the Group has applied the principles and the extent of its compliance with the Best Practices of Corporate Governance as set out in Part I and Part II of the Malaysian Code on Corporate Governance (the Code) pursuant to Paragraph 15.25 of the Main Market Listing Requirements (LR) of Bursa Malaysia Securities Berhad. The Board considers that it has, to the best of its ability and knowledge, complied with the Best Practices on Corporate Governance as set out in Part 2 of the Malaysian Code on Corporate Governance. BOARD OF DIRECTORS i. Composition and Board Balance The Board comprises five (5) Directors, three of whom are Independent NonExecutive Directors, a list of the entire Board is found on page 5 of this Annual Report while their respective profiles are on pages 8 to 10. The Independent Non-Executive Directors bring with them objective and independent judgement to facilitate a balanced leadership and decision-making process and also, provides for an effective check and balance to safeguard the interests of the minority shareholders and other stakeholders and to uphold high standards of conduct and integrity. The Board considers the current size and composition of its Directors with a diverse mix of experience, skills and expertise ranging from accounting, legal, logistics and general management to be optimum and provides the Board with not only essential commercial skills needed for sound management decisions but also, invaluable practical and operational experience to professionally manage the Group. ii. Board Responsibility The Board is responsible for the overall corporate governance of the Group. The Board retains full and effective control of the management of the Company and its overall responsibilities include strategic formulations, planning, succession planning and execution of the Groups objectives as well as monitoring managements implementation of its decisions. It is the responsibility of the Board to conscientiously iii. weigh and balance the interests of its shareholders and stakeholders with its own objectives during decision making process. The Executive Chairman and together with the Executive Director of the Company, oversee to the running of the business and implementation of the policies and strategies adopted by the Board. The Independent Non-Executive Directors engage proactively with management and both the external and internal auditors to address matters concerning the management and oversight of the Groups business and operations. The Board has set up and delegated certain responsibilities to three (3) Board Committees that operate within clearly defined terms of reference. The Board Committees are the Audit Committee, the Remuneration Committee and the Nomination Committee. Supply of Information Board meetings for the ensuing financial year are scheduled in advance before the end of each financial year so as to enable the Directors to plan ahead and fit the coming years Board meetings into their schedule. Board meetings are scheduled at quarterly intervals and additional meetings will be held if necessary. Board meetings are conducted in accordance with a structured formal agenda which includes, review of various aspects of the Groups operations, financial performance, business plan, strategic decisions, any major investments, findings from both the external and internal auditors and any other proposals or other significant matters that require the expeditious direction of the Board. The Board members assess the viability of business propositions and corporate proposals and the principal risks that may have significant impact on the Groups business or its financial position and the mitigating factors. During the year, the Board held a total of six (6) meetings and the attendance of each Director is set out in page 11 of this Annual Report. Board meetings are chaired by the Executive Chairman who has the responsibility of ensuring that each agenda item is adequately reviewed and thoroughly deliberated within a reasonable timeframe. A full set of the Board papers for each meeting including financial reports and notices are submitted to the Directors about a week prior to meetings to provide them with sufficient time to evaluate the matters to be discussed and to enable a more informed decision-making process. The Board is also aware of the decisions

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and salient issues deliberated by board committees through the minutes of these committees. The Directors have a duty to declare immediately to the Board should they have any interest in transactions to be entered into directly or indirectly with the Company or the Group. The interested Directors would serve notice to the Board and thereupon, abstain from deliberations and decisions of the Board on the transaction concerned. In the event a corporate proposal is required to be approved by shareholders, the interested Directors would also abstain from voting in respect of their shareholdings relating to that corporate proposal and would further undertake to ensure that persons connected to them similarly abstain from voting on the resolutions. Senior Management as well as the internal and external auditors of the Company may be invited to attend Board meetings to provide the Board with their views and explanations on certain agenda being tabled to the Board and to furnish clarification on issues that may be raised by the Directors. The Directors have direct access to Senior Management and has complete and unimpeded access information relating to the Group in the discharge of their duties. The Directors also have the liberty to engage independent professional advice if necessary at the Companys expense. Every Board member has ready and unrestricted access to the advice and the services of the Company Secretary in ensuring the effective functioning of the Board. The Directors are also regularly updated and advised by the Company Secretary on new statutory and regulatory requirements issued by regulatory authorities, and the resultant implications to the Company and the Directors in relation to their duties and responsibilities. iv. Appointments to the Board Nomination Committee The Nomination Committee of the Company comprises entirely of Independent Non-Executive Directors. The role of the Nomination Committee is to review and assess the proposed appointment of Directors and thereupon, recommends to the Board for approval. However, the Board makes all decisions on appointments after considering those recommendations. The Nomination Committee would also ensure that the Board has an appropriate balance of expertise and ability.

Another objective of this Committee is to assess the effectiveness of the Board as a whole and the contribution of each individual director on an on-going basis. The Nomination Committee will review annually the required mix of skills, experience and other qualities including core competencies which Non-Executive Directors should bring to the Board, identify areas for improvement and review the succession plan for senior management in the Group. Other responsibilities of this Committee are defined in the Terms of Reference of the Nomination Committee. v. Directors Training A familiarisation programme has been put in place for new Directors which include visits to the Groups business and meetings with senior management, where appropriate, to facilitate better understanding of the Groups business and operations. The Board acknowledged that the Directors of the Company, through their varied experience and qualifications, have provided the desired contribution and support to the functions of the Board for the year ended 2011. The Board has empowered the Directors of the Company to determine their own training requirements and will evaluate and determine the training needs of its Directors on an on-going basis to assist them in discharging their responsibilities. During the year, all board members save for the newest member to the Board, Mr. Wong Koon Wai, have attended seminars and briefings during the financial year as set out in their respective profiles on pages 8 to 10 of this Annual Report. vi. Re-election In accordance with Companys Articles of Association, at least one-third (1/3) of the directors for the time being shall be subject to retirement by rotation at the Companys annual general meeting. All retiring directors shall be eligible for reelection. In any case, each director shall submit themselves for re-election at regular interval and at least once every three (3) years. Directors appointed by the Board during the financial period before an annual general meeting are subject to retirement and shall be eligible for re-election by

19

Statement On Corporate Governance

(continued)

the shareholders at the Companys next annual general meeting to be held following their appointments. Details of the retiring Directors are disclosed in the Statement Accompanying the Notice of Annual General Meeting on page 4 of this Annual Report. COMMITTEES OF THE BOARD The Board Committees of the Company are as follows:a) The Audit Committee The Audit Committees role is to review the adequacy and competency of the Groups internal control system including systems for compliance with applicable laws, regulations, rules, directives and guidelines. The Audit Committee assists and supports the Boards responsibility to oversee the Groups operations by providing a means for review of the Groups processes for producing financial data, its internal controls, and that it is independent of the Groups external and internal auditors. The Audit Committee will discuss with management and the external auditors the accounting principles and standards that were applied and their judgment of the items that may affect the financial statements. It is the policy of the Audit Committee to meet with the external auditors at least twice a year to discuss their audit plan, audit findings and the Companys financial statements. These meetings are held without the presence of the Executive Directors and staff of the Company. The Terms of Reference of the Audit Committee are set out under the Audit Committee Report on pages 15 and 16 of this Annual Report.

b)

The Nomination Committee The Nomination Committee held a total of five (5) meetings during the financial year and details of members attendance at meetings are as follows:Total no. of Meetings held during Directors Nomination Committee Member tenure in office Meetings Attended __________________________________________________________________________
(Resigned w.e.f. 08.06.2011)

To Peng Koon (Chairman)

Tunku Makhlad Bin Tunku Mohamed Jamil (Chairman)


(Re-designated as Chairman of Nomination Committee w.e.f. 29.06.2011)

5 2 2

5 2 2

Alex Ng Khang Hui (Member)


(Resigned w.e.f. 28.09.2010)

Tan Ooi Jin (Member)

(Appointed as Director on 14.09.2010 a nd as member w.e.f. 03.11.2010)

Wong Koon Wai (Member) 0 0 (Appointed w.e.f. 29.06.2011) __________________________________________________________________________

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c)

The Remuneration Committee The Remuneration Committee has a total of three (3) members comprising two (2) Independent Non-Executive Directors and the Executive Chairman who is also Chairman of the Remuneration Committee. The Remuneration Committee met once during the financial year and details of members attendance at meetings are as follows:-

The remuneration of non-executive directors comprises fees while the remuneration package of executive directors comprised basic salary, fees and bonus. The Remuneration Committee meets at least once a year to conduct the annual review of the overall remuneration policy for Directors whereupon recommendations are submitted to the Board for approval. The Company adopted the peer evaluation or self-evaluation process to evaluate the performance of the Directors of the Company. Breakdown of the remuneration of the Directors of the Company for the financial year ended 31 July 2011 is as follows:-

Total no. of Meetings held during Directors Remuneration Committee Member tenure in office Meetings Attended __________________________________________________________________________ Tee Tze Chern, JP (Chairman) To Peng Koon (Member)
(Resigned w.e.f. 08.06.2011)

1 1 1 0

1 1 1 0

Executive Non-Executive Directors Directors Total (RM000) (RM000) (RM000) __________________________________________________________________________ Salaries & Other Emoluments 271 271 Bonus Fees 27 35 62 Meeting/Committee Allowance 3.5 11.37 14.87 __________________________________________________________________________ Total 301.50 46.37 347.87 __________________________________________________________________________ The number of Directors, include those Directors who resigned during the financial year, whose remuneration falls into the following bands are as follows:-

Alex Ng Khang Hui (Member)


(Resigned w.e.f. 28.09.2010) (Appointed as Director on 14.09.2010 and as member w.e.f. 03.11.2010)

Tan Ooi Jin (Member)

Wong Koon Wai (Member)


(Appointed w.e.f. 29.06.2011) 0 0 __________________________________________________________________________

The Remuneration Committee of the Company has set up a remuneration policy framework and makes recommendations to the Board on the remuneration and other terms of employment for the Executive Directors. The terms of reference of the Remuneration Committee are clearly defined by the Board to its members. The component parts of remuneration of directors of the Company are structured so as to link rewards to corporate and individual performance in the case of executive directors. In the case of non-executive directors, the levels of remuneration are reflected by the experience and level of responsibilities. The Executive Directors will abstain from participating in the discussion with respect to their own remuneration. The determination of remuneration of NonExecutive Directors is a matter for the Board as a whole. The individual concerned will abstain from discussion and decision of his own remuneration.

Number of Directors Executive Non-Executive Range of Remuneration per annum Directors Directors __________________________________________________________________________ Below 50,000 0 6 RM100,001 to RM150,000 1 0 RM150,001 to RM200,000 1 0 __________________________________________________________________________

21

Statement On Corporate Governance

(continued)

RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS One of the key elements of good corporate governance is being transparent and accountable to all stakeholders. Underlying the transparency and accountability objectives is the provision of clear, relevant, timely, comprehensive and readily assessable information to all stakeholders. i) Shareholders Communication and Investor Relations The Group values its dialogues with investors. The investor relations activities of the Company form an important channel of communication with shareholders, investors and the investment community broadly. The shareholders and investors of the Company can obtain information of the Groups performance and major developments from its Annual Reports, which is disseminated to shareholders either in hard copy or in CD-ROM media, as well as from the Companys website (www.takaso.com) for all announcements, press release, products information and to make enquiries. The Executive Chairman of the Company, Mr. Tee Tze Chern, JP, is responsible for the Companys investor relations functions. This reflects the commitment of the Group to maintain good investor relations and to provide views and information on the Group that is appropriate and substantive to investors. ii) Annual General Meeting and Extraordinary General Meeting The main forum for dialogue with shareholders of the Company is the Companys Annual General Meeting (the AGM) and the Extraordinary General Meeting (EGM). The AGM represents the primary platform for direct two-way interactions between shareholders, Directors and senior management of the Company. During AGMs, shareholders are encouraged to raise questions which the Directors and senior management are at hand to address. Notice of the AGM together with the Annual ii)

Report are sent out not less than twenty-one (21) days from the date of the meeting and explanatory notes or statement to facilitate better understanding and evaluation of issues involved, will accompany items under special business of the meeting. In between AGMs, if a transaction or decision arises that requires shareholders approval, the Board will convene an EGM and the appropriate notice of meeting would be issued together with a circular explaining the intended agenda and purpose of the meeting to facilitate understanding and evaluation. ACCOuNTABILITY AND AuDIT i) Financial Reporting The Board aims to present a balanced, clear and meaningful assessment of the Groups financial position and prospects in all their reports to shareholders, investors, and relevant Regulatory Authorities. The Board is assisted by the Audit Committee to oversee the Groups financial reporting processes and the quality of financial reporting. The Audit Committee also reviews the appropriateness of the Companys and the Groups accounting policies and the changes to these policies. The Responsibility Statement by the Directors on the annual audited financial statements of the Company and the Group is set out on page 26. Internal Control The Board acknowledges its overall responsibility to maintain a sound and reliable systems of internal control within the Group covering financial, operational and compliance aspects of the Group. The internal control systems of individual business units of the Group are managed by the management and operational team of the respective business units. The system of internal controls is designed to meet the Groups needs and to manage risks to which it is exposed. There is a continuous process of managements risk assessment, internal controls reviews and internal audit assessments on major subsidiaries within the Group. The purpose of

22

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this continuous process is to ensure that the Groups assets are safeguarded in the interest of preserving the investment of shareholders. The internal audit function is outsourced to external consultants. The outsourced internal auditors meet and report to the Audit Committee at least twice a year to present their reports and to discuss their findings on the adequacy and integrity of the internal control systems of the Group. The Board has through the Audit Committee reviewed the adequacy and integrity of the Groups system of internal controls and the Boards Statement of Internal Control are on pages 24 and 25 of this Annual Report. iii) Relationship with Auditors The Groups independent external auditors are essential for the shareholders in ensuring the reliability of the Groups financial statements and in providing assurance of that reliability to users of these financial statements. The Audit Committee will meet with the external auditors at least twice a year, or more if deemed necessary, to discuss their audit plan, audit findings and the financial statements of the Company without the presence of the Executive Directors and staff of the Company. In addition, the external auditors are invited to attend the annual general meetings of the Company and would be at hand to answer shareholders questions on the conduct of the audit and the preparation and content of the audit report. An appropriate relationship is maintained with the Groups auditors through the Audit Committee. The Audit Committee has been explicitly accorded the power to communicate directly with both the external and internal auditors. A full Audit Committee Report and its Terms of Reference detailing its role in relation to the auditors, is set out on pages 14 to 17 of this Annual Report. Terms of engagement of the services provided by the external auditors are reviewed by the Audit Committee and approved by the Board. In reviewing the terms of engagement for the services to be provided by the external auditors, the Audit Committee ensures that the independence and objectivity of the external auditors are not compromised.

23

Statement Of Internal Control


The Board of Directors of the Takaso Group of Companies is committed to maintain a sound system of internal control within the Group and is pleased to provide the following statement, made in pursuance to paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, which outlines the nature and scope of internal control of the Group during the financial year ended 31 July 2011. RESPONSIBILITY The Board acknowledges its overall responsibility for the Groups system of internal controls which includes the establishment of an appropriate control environment and framework as well as reviewing its adequacy and integrity. The system of internal control covers inter alia, risk management procedures, financial, operational and compliance controls. Because of the inherent limitation in any system of internal control, it could only provide reasonable and not absolute assurance against any material misstatement and loss as it is designed to manage rather than eliminate the risk of failure to achieve the policies and objectives of the Group. The Group has had in place an on-going process for identifying, monitoring and managing the significant risks affecting the achievement of its business objectives throughout the period. The Board regularly reviews this process and is of the view that the system of internal controls that has been instituted throughout the Group is sound and adequate to safeguard shareholders investment. KEY FEATuRES OF INTERNAL CONTROL SYSTEM The key elements of the Groups existing system of internal control measures are described below: a clearly defined organisation structure with the lines of responsibility and delegated authority to the management and operating units; the Executive Directors, Senior Management and Head of Departments meet regularly to discuss key risks affecting the corporate, operational, financial and compliance aspects of the Group and the relevant actions taken to address, manage and mitigate any risks or potential risks which have been identified accordingly; the Groups quarterly financial results are reviewed and approved by the Audit Committee and the Board; its major subsidiary, Takaso Rubber Products Sdn. Bhd., was certified with ISO Standards carrying the current version of ISO 9001:2008 and ISO 13485:2003 in its manufacturing processes. Internal quality audit was performed annually prior to the annual surveillance audit conducted by the external certification bodies; Management conducts an assessment of staff training needs annually to ensure that staff is armed with the necessary skills to perform their responsibilities diligently. A structured KPI performance appraisal has been instituted to appraise each employees capabilities and achievements. the existence of a formal reporting framework for staff to report on operational performances and the status of control activities periodically; and the outsourced internal audit function to assess the adequacy and integrity of the Groups system of internal controls periodically in accordance with the approved internal audit plan.

RISK MANAGEMENT FRAMEWORK The Enterprise Risk Management (ERM) framework contains a risk profile that is reflective of the latest operating environment within the Group. Principal risks identified therein are managed by the management team via routine management meeting and operation reviews with the development and implementation of relevant strategies.

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INTERNAL AuDIT FuNCTION The Groups internal audit function is outsourced to external consultants. The outsourced internal auditors assist the Board and the Audit Committee in providing an independent assessment on the adequacy and integrity of the Groups internal control system. The annual internal audit plan which reflects the risk profile of the Groups business and operation units, is tabled for the review and approval of the Audit Committee. The outsourced internal auditors report directly to the Audit Committee on its audit activities and the outcome of internal audit assessments including follow-up review on the implementation status of managements actions to address the internal audit findings highlighted. The effectiveness of the system of internal controls of the Company and the Group is reviewed by the Audit Committee during its quarterly meetings. The review covers the financial, operational and compliance controls. The Audit Committee assists the Board in its review of the effectiveness of the internal control and risk management processes of the Group. Minutes of the Audit Committee meetings are circulated to the Directors for notation and if necessary, action by the Board. The cost incurred in relation to the internal audit function during the financial year ended 31 July 2011 was RM36,000. REVIEW OF THE STATEMENT BY ExTERNAL AuDITORS The external auditors have reviewed this Statement of Internal Control for inclusion in the Annual Report of the Group for the financial year ended 31 July 2011 in accordance with Recommended Practice Guidance 5 Guidance for Auditors on the Review of Directors Statement on Internal Control. They have reported to the Board that nothing has come to their attention that causes them to believe that the Statement is inconsistent with their understanding of the processes adopted by the Board in reviewing the adequacy and integrity of the system of internal controls.

25

Directors Responsibility Statement


This Directors responsibility statement is issued, as required under paragraph 15.27(a) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, in respect of the preparation of the audited financial statements of the Group and of the Company for the financial year ended 31 July 2011. The Directors are required by law to prepare financial statements for each financial year that give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial year and of the results and cashflow of the Group and of the Company for the year ended. In preparing the financial statements for the financial year ended 31 July 2011, the Directors have: adopted the applicable accounting standards issued by the Malaysian Accounting Standards Board and applied them consistently; made estimates and judgments which are reasonable and fair; ensured that applicable accounting standards have been followed; and prepared the financial statements on the going concern basis.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy, at any time, the financial positions of the Group and of the Company thus ensuring that the financial statements comply with the Companies Act, 1965. Further thereto, the Directors are also responsible for taking reasonable steps to safeguard the assets of the Group to prevent and detect fraud and other irregularities. The Directors confirm that they have complied with these requirements and have a reasonable expectation that the Group has adequate resources to continue its operation for the future and to continue to adopt a going concern basis in preparing the financial statements. The Directors also confirmed that the annual audited financial statements of the Company are properly drawn up to give a true and fair view of the state of affairs of the Group for the financial year ended 31 July 2011.

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Executive Chairmans Statement

Dear Shareholders,
On behalf of the Board of Directors of Takaso Resources Berhad, I am pleased to present herewith the Groups Annual Report for the financial year ended 31 July 2011.

27

Executive Chairmans Statement

(continued)

FINANCIAL RESuLTS Group revenue for the financial year ended 31 July 2011 was RM16.8 million, 11.6% lower than the revenue of RM19.0 million achieved the year before. The Group ended the financial year with a loss before tax of RM2.2 million compared to the previous years loss of RM1.5 million. The drop in revenue was primarily because of lower exports due to reduced orders from the Middle East countries following the political crisis besieging the region and the customers in Europe in the wake of the financial crisis roiling the Eurozone. In addition, cost of production has risen considerably as material costs, especially latex, and packaging material, have been increasing incessantly. The shortage of labour has also led to a higher rate of overtime. All these combined factors resulted in a net loss for the year. CORPORATE ExERCISES During the year under review the Company had successfully undertaken the following key corporate exercises which had received the prior approval of the members at the Extraordinary General Meeting of the Company held on 28 April 2011:(i) reduction of the par value of the existing ordinary shares of RM1.00 each in the Company to RM0.25 each which was sanctioned by the High Court on 13 July 2011.

6,529,131 Warrants. The exercise price of TAKASO-WA was also revised downwards from RM1.00 to RM0.89. INDuSTRY OuTLOOK AND FuTuRE PROSPECTS OF THE GROuP Being export orientated with major distributors based in the Middle East and Europe, the Group foresees a challenging outlook so long as the respective political crisis and debt crisis of its customers remained unresolved. However, steps have already started to reduce dependency on these two major markets by venturing into Asian countries. As a start, the Group has in August 2011 executed a Memorandum of Understanding with Yakin Hakikat (Thailand) Ltd. Part. to secure an exclusive distribution in Thailand. Inflation is expected to continue trending upwards and the Group is monitoring the situation closely and will try to increase its selling prices to sustain margins while balancing this with ensuring its competitiveness is not compromised. On the local front, domestic demand is expected to remain due to the Governments push towards a high income nation. Notwithstanding this, demand for the Groups products is affected by rising energy costs and higher food prices which if, on the uptrend in the coming year, will see demand for the Groups products dampening. Management expects the coming year to be an even more challenging year in the light of natural disasters hitting the surrounding regions such as the floods in Thailand and earthquake and tsunami in Japan, political tensions in the Middle East and North Africa, the European debt crisis, worldwide food crisis and a slowing global economy. Going forward, management will emphasise on the following to bring the Group back to profitability:-

(ii) completed the listing and quotation for 94,033,811 Rights Shares together with 56,420,285 Warrants on the Main Market of Bursa Securities Berhad on 13 September 2011. Total proceeds raised from this special exercise was RM32.912 million, the manner in which the proceeds is to be utilised is spelt out under Utilisation of Proceeds on page 12. As a consequence of the Rights Issue of Shares with Warrants, holders of the warrants issued in 2003 and maturing on 13 November 2013 (TAKASO-WA) were issued with an additional 645,139 bringing the total TAKASO-WA in circulation to

28

Takaso Resources Berhad

440503-K

Annual Report 2011

upgrading and improving its plant and machinery in order to achieve optimal output and capacity. re-structuring, revamping and beefing up its sales and marketing team and identifying and appointing new members who have the ability and capacity to contribute in all aspects of th Groups Operations. identifying and venturing into more new markets especially in the Asian region. developing new marketing strategies and implementing incentive schemes for our distributers to strive harder for the sales of our products. sourcing for new business opportunities that fit into our business model which may contribute to the future growth of the Group.

extend my heartfelt appreciation to the shareholders, all customers, business associates and all other stakeholders and the Government of Malaysia who have each supported and believed in us throughout the years and I look forward to your continued support and trust in the years ahead. Last but not least, my gratitude goes to our dedicated employees, whose steadfast commitment to deliver value and quality products and services which is the backbone and growth of the Group. TEE TzE CHERN, JP Executive Chairman

CORPORATE SOCIAL RESPONSIBILITY The Group remains committed in operating its business in a socially responsible manner in respect to its employees, the wider environment, the community and the marketplace. The Groups CSR towards its employees is in the form of maintaining and providing the staff with a conducive working environment bearing in mind staff welfare and well being. This also includes providing them with the necessary training to equip their knowledge and to enable progression up the career path as well as to train them on health and safety issues. CSR activities towards the community at large during the year includes organising its annual blood donation drive in March 2011 in collaboration with Hospital Pakar Sulit Fatimah, Muar, reaching out to the community by supporting and sponsoring various health awareness campaigns and supplying of food to children welfare homes and old folks public nursing homes. APPRECIATION I wish to take this opportunity to express my sincere appreciation and thanks to my fellow Board of Directors for their constant support and contribution. I also wish to

29

Export Markets

22 19 36 26 6 14 33 5 18 13 38 25 21 3 29 28 31 30 9 16 10 8 20 34 32

7 17 39 23 1 2 24 12 11 4

27

37 15 35

30

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Malaysia Indonesia Iran Phillippines Greece Romania China Oman Saudi Arabia Yemen

11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Taiwan Singapore Syria Spain Australia UAE Bangladesh Turkey United Kingdom Nigeria

21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

Iraq Russia India Cambodia Lebanon Ukraine Suriname Kuwait Jordan Bahrain

31. 32. 33. 34. 35. 36. 37. 38. 39.

Qatar Kenya Portugal Uganda South Africa Hungary Fiji Island Cyprus Myanmar

Takaso Resources Berhad

440503K

Annual Report 2011

Directors Report and Audited Financial Statements


32 37 37 38 40 42 43 45 47 Directors Report Statement by Directors Statutory Declaration Independent Auditors Report Statements of Financial Position Statements of Comprehensive Income Statements of Changes in Equity Statements of Cash Flows Notes to the Financial Statements

Directors Report
The Directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 July 2011.

OPTIONS GRANTED OVER UNISSUED SHARES


No options were granted to any person to take up unissued ordinary shares of the Company during the financial year.

PRINCIPAL ACTIVITIES
The principal activity of the Company is investment holding. The principal activities of the subsidiaries are set out in Note 8 to the financial statements. There has been no significant changes in the nature of these activities during the financial year.

WARRANTS 2003/2013
Pursuant to a deed poll dated 22 August 2003 (Deed Poll), the Company issued 5,883,992 warrants (Warrants) in conjunction with the issue of 5,883,992 renounceable rights issue at nominal value of RM1.00 in 2003. The salient features of the Warrants as stated in the Deed Poll are as follows:

RESULTS
Group RM Loss for the financial year 2,162,703 Company RM 236,754

(a)

Each Warrant entitles the registered holder at any time during the exercise period to subscribe for one ordinary share at an exercise price of RM1.00 per ordinary share.

DIVIDEND
No dividend has been paid or declared by the Company since the end of the previous financial year. The Directors do not recommend any dividend payment in respect of the current financial year ended 31 July 2011.

(b) The exercise price and the number of Warrants are subject to adjustment in accordance with the conditions provided in the Deed Poll. (c) In the case of windingup of the Company, all Subscription Rights which have not been exercised within six weeks of the passing of such resolution shall lapse and the Warrants will cease to be valid for any purpose.

RESERVES AND PROVISIONS


There were no material transfers to or from reserves or provisions during the financial year.

(d) The exercise period is approximately 10 years from the date of issue to expire on 13 November 2013. (e) Upon expiry of the exercise period, any Warrants which has not been exercised will lapse and cease to be valid for any purpose.

ISSUE OF SHARES AND DEBENTURES


The Company has not issued any new shares or debentures during the financial year.

The Warrants were granted for listing and quotation with effect from 27 November 2003.

32

Takaso Resources Berhad

440503-K

Annual Report 2011

Directors Report

(continued)

WARRANTS 2003/2013 (CONTINUED)


Pursuant to Condition 3.1(d) and Condition 3.1(e) of the Second Schedule (Part III) and Clause 2(v) of the Third Schedule (Memorandum) of the Deed Poll, an adjustment shall be made to the exercise price and/or the number of Warrants, if the Company shall make any offer or invitation to the shareholders of the Company by way of rights whereunder they may acquire or subscribe for shares or acquire or subscribe for securities convertible into or rights to acquire or subscribe for shares in the Company. Pursuant thereto, as a consequence to the renounceable rights issue of up to 141,215,940 of the Companys shares (Rights Shares) on the basis of three (3) Rights Shares for every one (1) existing share held after the par value reduction together with up to 84,729,564 free detachable new warrants on the basis of three (3) warrants for every five (5) Rights Shares subscribed by the entitled shareholders, which had been completed on 13 September 2011, the exercise price of the Warrants, after the adjustment is RM0.89 and the number of outstanding Warrants, after the adjustment is 6,529,131. The adjustment to the exercise price and the number of outstanding Warrants is reflected in the Supplemental Deed Poll dated 18 August 2011. There were no Warrants being exercised during the financial year ended 31 July 2011. As at 31 July 2011, 5,883,992 warrants have yet to be converted.

DIRECTORS INTERESTS The Directors holding office at the financial year end and their beneficial interests in the ordinary shares and/or warrants of the Company during the financial year ended 31 July 2011 as recorded in the Register of Directors Shareholdings kept by the Company under Section 134 of the Companies Act, 1965 were as follows: <---Number of ordinary shares of RM0.25 each#---> Balance at Balance at 1.8.2010 Bought Sold 31.7.2011 Shares in the Company Direct interests: Tee Tze Chern, JP Indirect interests: Tee Tze Chern, JP *
#

88

88

15,250,250

7,820,050 (15,250,250)

7,820,050

The Company has undertaken a capital reduction exercise pursuant to Section 64 of the Companies Act, 1965. The capital reduction was completed on 22 July 2011 whereby the par value of the ordinary shares of the Company has been reduced from RM1.00 per share to RM0.25 per share. By virtue of his interests in Up & Famous Sdn. Bhd. a previous substantial shareholder of the Company and Nextplus Fortune Sdn. Bhd., a substantial shareholder of the Company.

DIRECTORS
The Directors who have held for office since the date of the last report are: Tee Tze Chern, JP Tunku Makhlad bin Tunku Mohamed Jamil Tan Ooi Jin Chin Boon Kim Wong Koon Wai Dato Tee How Cut, PIS, DPTJ To Peng Koon

(appointed on 29 June 2011) (resigned on 14 December 2010) (resigned on 8 June 2011)

33

Directors Report

(continued)

DIRECTORS INTERESTS (continued) <-------------------Number of Warrants 2003/2013---------------------> Balance at Balance at 1.8.2010 Bought Sold Exercised 31.7.2011 Warrants in the Company Indirect interests: Tee Tze Chern, JP 403,479 (403,450) 29

OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (I) AS AT THE END OF THE FINANCIAL YEAR (a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the Directors took reasonable steps: (i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and have satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and

By virtue of his interests in the ordinary shares of the Company, Tee Tze Chern, JP is deemed to be interested in the ordinary shares of all the subsidiaries to the extent of the Companys interest, in accordance with Section 6A of the Companies Act, 1965 in Malaysia. None of the other Directors holding office at the end of the financial year had any interest in the ordinary shares and/or warrants of the Company and of its related corporations during the financial year.

(ii) to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values. (b) In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature. (II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT (c) The Directors are not aware of any circumstances: (i) which would render the amount written off for bad debts or the amount of provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any material extent; and

DIRECTORS BENEFITS Since the end of the previous financial year, none of the Directors have received or become entitled to receive a benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the Directors as shown in 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 the Director is a member, or with a company in which the Director has a substantial financial interest. There were no arrangements during and at the end of the financial year, to which the Company is a party, which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate except for the Warrants.

(ii) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; and (iii) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

34

Takaso Resources Berhad

440503-K

Annual Report 2011

Directors Report

(continued)

OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (continued) (II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT (continued) (d) In the opinion of the Directors: (i) there has not arisen any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made; and

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR On 28 January 2011, on behalf of the Board of Directors of the Company, PM Securities Sdn. Bhd. (PM Securities) announced that the Company had proposed to undertake the following: (i) proposed reduction of the par value of the existing ordinary shares of RM1.00 each in the Company to RM0.25 each (TRB Shares) (Proposed Par Value Reduction);

(ii) no contingent or other liability has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due. (III) AS AT THE DATE OF THIS REPORT (e) There are no charges on the assets of the Group and of the Company which have arisen since the end of the financial year to secure the liabilities of any other person. There are no contingent liabilities of the Group and of the Company which have arisen since the end of the financial year. The Directors are not aware of any circumstances not otherwise dealt with in the report or financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading.

(ii) proposed renounceable rights issue of up to 141,215,940 TRB Shares (Rights Shares) on the basis of three (3) Rights Shares for every one (1) existing TRB Share held after the Proposed Par Value Reduction together with up to 84,729,564 free detachable new warrants (Warrants) on the basis of three (3) Warrants for every five (5) Rights Shares subscribed by the entitled shareholders (Proposed Rights Issue of Shares with Warrants); (iii) proposed increase in the authorised share capital of the Company from RM50,000,000 comprising 50,000,000 TRB Shares of RM1.00 each to RM100,000,000 comprising 400,000,000 TRB Shares of RM0.25 each after the Proposed Par Value Reduction (Proposed Increased in Authorised Share Capital); and (iv) proposed amendments to the Memorandum and Articles of Association of the Company (Proposed Amendments). (Collectively referred to as Proposals).

(f)

(g)

On 28 April 2011, the shareholders had, in an Extraordinary General Meeting held on this date, approved the Proposals.

35

Directors Report

(continued)

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (continued) On 13 July 2011, the High Court of Malaya in Kuala Lumpur (the Court) granted an order to the Company confirming the Proposed Par Value Reduction pursuant to Section 64 of the Companies Act, 1965. On 22 July 2011, the sealed order of the Court had been lodged with the Companies Commission of Malaysia for the Proposed Par Value Reduction to take effect. On even date, the share capital of the Company was reduced from RM41,187,988 of RM1.00 each to RM10,296,997 of RM0.25 each via the cancellation of RM0.75 from the par value of the existing share capital. SIGNIFICANT EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD On 13 September 2011, the Rights Issue of Shares with Warrants had been completed following the listing of and quotation for 94,033,811 Rights Shares together with 56,420,285 Warrants on the Main Market of Bursa Malaysia Securities Berhad. On 3 November 2011, the Company acquired the entire issued and paid-up ordinary share captial of Takaso International Sdn. Bhd. (Formerly known as Secret Universal Sdn. Bhd.), a company incorporated in Malaysia which is currently dormant for a cash consideration of RM2.00. AUDITORS The auditors, BDO, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the Directors.

Tee Tze Chern, JP Director Muar 4 November 2011

Chin Boon Kim Director

36

Takaso Resources Berhad

440503-K

Annual Report 2011

Statement by Directors
In the opinion of the Directors, the financial statements set out on pages 40 to 111 have been drawn up in accordance with applicable approved Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 July 2011 and of their financial performance and cash flows for the financial year then ended. On behalf of the Board,

Tee Tze Chern, JP Director Muar 4 November 2011

Chin Boon Kim Director

Statutory Declaration
I, Tee Tze Chern, JP, being the Director primarily responsible for the financial management of Takaso Resources Berhad, do solemnly and sincerely declare that the financial statements set out on pages 40 to 111 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed at Muar, Johor this 4 November 2011 Before me: Hassan Bin Abdul Samad, PPN, PIS, PBM Commissioner for Oaths No. J111 ) ) ) )

37

Independent Auditors Report


to The Members of Takaso Resources Berhad
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of Takaso Resources Berhad, which comprise the statements of financial position as at 31 July 2011 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 40 to 110. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with applicable approved Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia, 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 about 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 judgement, 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 entitys preparation of the 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 entitys 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 applicable approved Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 July 2011 and of their financial performance and cash flows for the financial year 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 have been properly kept in accordance with the provisions of the Act.

(b) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Companys 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.

38

Takaso Resources Berhad

440503-K

Annual Report 2011

Independent Auditors Report

(continued) to The Members of Takaso Resources Berhad

OTHER REPORTING RESPONSIBILITIES


The supplementary information set out in Note 35 to the financial statements 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.

BDO AF : 0206 Chartered Accountants Johor Bahru 4 November 2011

Lim Seng Siew 2894/08/13 (J) Chartered Accountant

39

Statements of Financial Position


as at 31 July 2011
Group 2011 Note RM 2010 (Restated) RM 2011 RM Company 2010 RM

ASSETS
Noncurrent assets Property, plant and equipment Investments in subsidiaries 7 8 17,446,363 17,446,363 Current assets Inventories Trade and other receivables Current tax assets Cash and cash equivalents 9 10 11 5,689,783 4,039,532 37,128 624,453 10,390,896 TOTAL ASSETS 27,837,259 7,284,472 4,811,155 62,348 502,659 12,660,634 31,907,854 440,427 5,460 445,887 8,815,819 1,000 2,116 3,116 8,638,572 19,247,220 19,247,220 1,423 8,368,509 8,369,932 8,635,456 8,635,456

EQUITY AND LIABILITIES


Equity attributable to owners of the parent Share capital Reserves TOTAL EQUITY 12 13 10,296,997 627,814 10,924,811 41,187,988 (28,100,474) 13,087,514 10,296,997 (1,994,116) 8,302,881 41,187,988 (32,648,353) 8,539,635

40

Takaso Resources Berhad

440503-K

Annual Report 2011

Statements of Financial Position


as at 31 July 2011

(continued)

Group 2011 Note RM 2010 (Restated) RM 2011 RM

Company 2010 RM

LIABILITIES
Noncurrent liabilities Borrowings Deferred tax liabilities 14 17 99,896 115,530 215,426 Current liabilities Trade and other payables Borrowings 18 14 6,701,125 9,995,897 16,697,022 TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES 16,912,448 27,837,259 7,054,260 10,297,720 17,351,980 18,820,340 31,907,854 512,938 512,938 512,938 8,815,819 98,937 98,937 98,937 8,638,572 1,352,830 115,530 1,468,360

The accompanying notes form an integral part of the financial statements.

41

Statements of Comprehensive Income


for the financial year ended 31 July 2011
Group Note Revenue Cost of sales Gross profit Other income Distribution costs Administrative expenses Other expenses Finance costs Loss before tax Tax expense Loss for the financial year Other comprehensive income: Revaluation of property, plant and equipment Total comprehensive loss Loss per ordinary share (sen) Basic Diluted The accompanying notes form an integral part of the financial statements. 25 5.25 Not applicable 3.73 Not applicable 22 23 24 20 21 2011 RM 16,843,878 (13,947,562) 2,896,316 1,670,493 (1,137,331) (4,300,304) (321,808) (970,069) (2,162,703) (2,162,703) 2010 RM 19,045,424 (15,018,101) 4,027,323 1,369,048 (947,997) (4,357,713) (672,635) (953,959) (1,535,933) (1,535,933) 2011 RM 8,315 (244,910) (159) (236,754) (236,754) Company 2010 RM 615,255 (201,814) (12,094,395) (107) (11,681,061) (11,681,061)

(2,162,703)

257,908 (1,278,025)

(236,754)

(11,681,061)

42

Takaso Resources Berhad

440503-K

Annual Report 2011

Statements of Changes in Equity


for the financial year ended 31 July 2011
Share capital RM 41,187,988 41,187,988 <-Nondistributable-> Revaluation Accumulated reserve losses RM RM 2,633,211 257,908 257,908 2,891,119 (29,455,660) (1,535,933) (1,535,933) (30,991,593) (2,162,703) Total RM 14,365,539 257,908 (1,535,933) (1,278,025) 13,087,514 (2,162,703)

Group Balance as at 31 July 2009 Revaluation of property, plant and equipment Loss for the financial year Total comprehensive gain/(loss) Balance as at 31 July 2010 Total comprehensive loss Transaction with owners: Par value reduction (Note 12) Total transaction with owners Balance as at 31 July 2011

(30,890,991) (30,890,991) 10,296,997

2,891,119

30,890,991 30,890,991 (2,263,305)

10,924,811

The accompanying notes form an integral part of the financial statements.

43

Statements of Changes in Equity


for the financial year ended 31 July 2011

(continued)

Company Balance as at 31 July 2009 Total comprehensive loss Balance as at 31 July 2010 Total comprehensive loss Transaction with owners: Par value reduction (Note 12) Balance as at 31 July 2011

Share capital RM 41,187,988 41,187,988

Accumulated losses RM (20,967,292) (11,681,061) (32,648,353) (236,754)

Total RM 20,220,696 (11,681,061) 8,539,635 (236,754)

(30,890,991) 10,296,997

30,890,991 (1,994,116)

8,302,881

The accompanying notes form an integral part of the financial statements.

44

Takaso Resources Berhad

440503-K

Annual Report 2011

Statements of Cash Flows


for the financial year ended 31 July 2011
Group 2011 Note CASH FLOWS FROM OPERATING ACTIVITIES Loss before tax Adjustments for: Bad debts written off subsidiary Depreciation of property, plant and equipment Gain on disposal of: property, plant and equipment subsidiary Gain on revaluation of property, plant and equipment Impairment loss on receivables Interest expense Property, plant and equipment written off Revaluation deficit on property, plant and equipment Reversal of: inventories written down impairment loss on receivables Waiver of amounts owing to subsidiaries Operating (loss)/profit before working capital changes Changes in working capital: Inventories Trade and other receivables Trade and other payables Cash generated from/(used in) operations Tax refunded/(paid) Net cash from/(used in) operating activities (2,162,703) (1,535,933) (236,754) (11,681,061) RM 2010 (Restated) RM 2011 RM Company 2010 RM

1,621,362 (302,078) (30,273) 292,825 801,521 (186,102) (102,844) (68,292) 1,698,758 537,499 (787,281) 1,380,684 25,220 1,405,904

1,809,128 (887,630) 239,813 766,152 1,040 294,869 (147,095) 540,344 799,056 583,059 1,822,824 3,745,283 (9,750) 3,735,533

406 (8,315) (244,663) (390,351) 206,990 (428,024) (428,024)

12,094,395 (615,255) (201,921) 10,235 (191,686) (191,686)

27 7

45

Statements of Cash Flows

(continued) for the financial year ended 31 July 2011

Group 2011 Note RM 2010 (Restated) RM 2011 RM

Company 2010 RM

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Proceeds from disposal of a subsidiary Net cash from/(used in) investing activities 7 27 (386,581) 690,000 272,329 575,748 (857,980) (857,980) (1,829) 275,262 273,433

CASH FLOWS FROM FINANCING ACTIVITIES Advances from/(Repayments to) Directors Net advances from subsidiaries Interest paid Repayments of bankers acceptances Repayments to hire purchase creditors Repayments of term loan Net cash (used in)/from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year 11 487,395 (801,521) (987,000) (27,928) (606,697) (1,935,751) 45,901 (3,863,246) (3,817,345) 481,342 (766,152) (1,087,000) (51,167) (884,261) (2,307,238) 570,315 (4,433,561) (3,863,246) 16,850 141,085 157,935 3,344 2,116 5,460 (1,083) 194,350 193,267 1,581 535 2,116

The accompanying notes form an integral part of the financial statements.

46

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011
1. CORPORATE INFORMATION
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office and principal place of business of the Company are both located at K55, Jalan Kesang, Kawasan Perindustrian Tanjung Agas, 84000 Ledang, Johor. The financial statements are presented in Ringgit Malaysia (RM), which is also the Companys functional currency. The financial statements were authorised for issue in accordance with a resolution by the Board of Directors on 4 November 2011.

4.

SIGNIFICANT ACCOUNTING POLICIES


4.1 Basis of accounting The financial statements of the Group and of the Company have been prepared under the historical cost convention except as otherwise stated in the financial statements and on a going concern basis. The Directors are of the opinion that the application of the going concern basis in the preparation of the financial statements is appropriate, given the continuous support of bankers and creditors as well as the ability of the Group to generate adequate cash inflows to meet its liabilities in the foreseeable future, based on financial budgets approved by the Board of Directors. Subsequent to the year end, the Group had also completed the Rights Issue of Shares with Warrants, which raised RM32,911,834. The preparation of financial statements requires the Directors to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and contingent liabilities. In addition, the Directors are also required to exercise their judgement in the process of applying the accounting policies. The areas involving such judgements, estimates and assumptions are disclosed in Note 6 to the financial statements. Although these estimates and assumptions are based on the Directors best knowledge of events and actions, actual results could differ from those estimates. 4.2 Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and all its subsidiaries. Subsidiaries are entities (including special purposes entities) over which the Company has the power to govern the financial operating policies, generally accompanied by a shareholding giving rise to the majority of the voting rights, as to obtain benefits from their activities.

2.

PRINCIPAL ACTIVITIES
The principal activity of the Company is investment holding. The principal activities of the subsidiaries are set out in Note 8 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

3.

BASIS OF PREPARATION
The financial statements of the Group and of the Company have been prepared in accordance with applicable approved Financial Reporting Standards (FRSs) and the provisions of the Companies Act, 1965 in Malaysia. However, Note 35 to the financial statements has been prepared 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.

47

Notes to the Financial Statements


31 July 2011

(continued)

4.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


4.2 Basis of consolidation (continued) Subsidiaries are consolidated from the date on which control is transferred to the Group up to the effective date on which control ceases, as appropriate. Intragroup balances, transactions, income and expenses are eliminated on consolidation. Unrealised gains arising from transactions with associates and joint ventures are eliminated against the investment to the extent of the Groups interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no impairment. The financial statements of the subsidiaries are prepared for the same reporting period as that of the Company, using consistent accounting policies. Where necessary, accounting policies of subsidiaries are changed to ensure consistency with the policies adopted by the other entities in the Group. Noncontrolling interests represents the equity in subsidiaries that are not attributable, directly or indirectly, to owners of the Company, and is presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company. Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the noncontrolling interests. Total comprehensive income is attributed to noncontrolling interests even if this results in the noncontrolling interests having a deficit balance. Noncontrolling interests in the acquiree may be initially measured either at fair value or at the noncontrolling interests proportionate share of the fair value of the acquirees identifiable net assets. The choice of measurement basis is made on a combinationbycombination basis. Subsequent to initial recognition, the carrying amount of noncontrolling interests is the amount of those interests at initial recognition plus the noncontrolling interests share of subsequent changes in equity.

The Group has applied the revised FRS 3 Business Combinations in accounting for business combinations from 1 July 2010 onwards. The change in accounting policy has been applied prospectively in accordance with the transitional provisions provided by the Standard. Changes in the Company owners ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the noncontrolling interest is adjusted and the fair value of consideration paid or received is recognised directly in equity and attributed to owners of the parent. When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between: (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest; and

(ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any noncontrolling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investments retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under FRS 139 Financial Instruments: Recognition and Measurement or, where applicable, the cost on initial recognition of an investment in associate or jointly controlled entity.

48

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

4.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


4.3 Business combinations Business combinations from 1 July 2010 onwards Business combinations are accounted for by applying the acquisition method of accounting. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured at their fair value at the acquisition date, except that: (a) deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with FRS 112 Income Taxes and FRS 119 Employee Benefits respectively;

the business combination, the amount of noncontrolling interest in the acquire (if any), and the fair value of the Groups previously held equity interest in the acquire (if any), over the net fair value of the acquirees identifiable assets and liabilities is recorded as goodwill in the statement of financial position. The accounting policy for goodwill is set out in Note 4.7. In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profit or loss on the acquisition date. Business combinations before 1 July 2010 Under the purchase method, the cost of business combination is measured at the aggregate of fair values at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued plus any costs directly attributable to the business combination. At the acquisition date, the cost of business combination is allocated to identifiable assets acquired, liabilities assumed and contingent liabilities in the business combination which are measured initially at their fair values at the acquisition date. The excess of the cost of business combination over the Groups interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised as goodwill (see Note 4.7 to the financial statements on goodwill). If the cost of business combination is less than the interest in the net fair value of the identifiable assets, liabilities and contingent liabilities, the Group will: (a) reassess the identification and measurement of the acquirees identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the business combination; and

(b) liabilities or equity instruments related to the replacements by the Group of an acquirees sharebased payment awards are measured in accordance with FRS 2 Sharebased Payment; and (c) assets (or disposal groups) that are classified as held for sale in accordance with FRS 5 Noncurrent Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

Acquisitionrelated costs are recognised as expenses in the periods in which the costs are incurred and the serviced are received. In a business combination achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profits or loss. The Group elects for each individual business combination, whether non controlling interest in the acquire (if any) is recognised on the acquisition date at fair value, or at the noncontrolling interests proportionate share of the acquire net identifiable assets. Any excess of the sum of the fair value of the consideration transferred in

(b) recognise immediately in profit or loss any excess remaining after that reassessment. When a business combination includes more than one exchange transaction, any adjustment to the fair values of the subsidiarys identifiable assets, liabilities and contingent liabilities relating to previously held interests of the Group is accounted for as a revaluation.

49

Notes to the Financial Statements


31 July 2011

(continued)

4.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


4.4 Property, plant and equipment and depreciation All items of property, plant and equipment are initially measured at cost. Cost includes expenditure that is directly attributable to the acquisition of the asset. Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that the future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. The carrying amount of the parts that are replaced is derecognised. The costs of the daytoday servicing of property, plant and equipment are recognised in profit or loss as incurred. Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which is located for which the Group is obligated to incur when the asset is acquired, if applicable. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the asset and which has different useful life, is depreciated separately. After initial recognition, property, plant and equipment except for freehold land and buildings are stated at cost less any accumulated depreciation and any accumulated impairment losses. The freehold land and buildings are stated at valuation, which is the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The freehold land and buildings are revalued with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the reporting period. The surplus arising from such revaluations is credited to shareholders equity as a revaluation reserve, net of deferred tax, if any, and any subsequent deficit is offset against such surplus to the extent of a previous increase for the same property. In all other cases, the deficit will be charged to profit or loss. For a revaluation increase subsequent to a revaluation deficit of the same asset,

the surplus is recognised as income to the extent that it reverses the deficit previously recognised as an expense with the balance of increase credited to revaluation reserve. Depreciation is calculated to write off the costs or valuation of the assets to their residual values on a straight line basis over their estimated useful lives. The principal rates are as follows: Leasehold land Buildings Motor vehicles Plant and machinery Renovation, furniture and fittings Tools and equipment 60 Years 2% 10% 7.5% 10% 10 33.33%

Freehold land has unlimited useful life and is not depreciated. At the end of each reporting period, the carrying amount of an item of property, plant and equipment is assessed for impairment when events or changes in circumstances indicate that its carrying amount may not be recoverable. A write down is made if the carrying amount exceeds the recoverable amount (see Note 4.8 to the financial statements on impairment of nonfinancial assets). The residual values, useful lives and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment. If expectations differ from previous estimate, the changes are accounted for as a change in an accounting estimate.

50

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

4.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


4.4 Property, plant and equipment and depreciation (continued) The carrying amount of an item of property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the carrying amount is included in profit or loss and the revaluation surplus related to those assets, if any, is transferred directly to retained earnings. 4.5 Leases and hire purchase (a) Finance leases and hire purchase Assets acquired under finance leases and hire purchase which transfer substantially all the risks and rewards of ownership to the Group are recognised initially at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the leases, if this is practicable to determine; if not, the Groups incremental borrowing rate is used. Any initial direct costs incurred by the Group are added to the amount recognised as an asset. The assets are capitalised as property, plant and equipment and the corresponding obligations are treated as liabilities. The property, plant and equipment capitalised are depreciated on the same basis as owned assets. The minimum lease payments are apportioned between the finance charges and the reduction of the outstanding liability. The finance charges are recognised in profit or loss over the period of the lease term so as to produce a constant periodic rate of interest on the remaining lease and hire purchase liabilities.

(b) Operating leases A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. Lease payments under operating leases are recognised as an expense on a straightline basis over the lease term. (c) Leases of land and buildings For leases of land and buildings, the land and buildings elements are considered separately for the purpose of lease classification and these leases are classified as operating or finance leases in the same way as leases of other assets. The minimum lease payments including any lumpsum upfront payments made to acquire the interest in the land and buildings are allocated between the land and the buildings elements in proportion to the relative fair values of the leasehold interests in the land element and the buildings element of the lease at the inception of the lease. For a lease of land and buildings in which the amount that would be initially be recognised for the land element is immaterial, the land and buildings are treated as a single unit for the purpose of lease classification and is accordingly classified as a finance or operating lease. In such a case, the economic life of the buildings is regarded as the economic life of the entire leased asset. Following the adoption of Amendment to FRS 117 Leases contained in the Improvements to FRSs (2009), the Group reassessed the classification of land elements of unexpired leases on the basis of information existing at the inception of those leases. Consequently, the Group retrospectively reclassified all its prepaid lease payments for land as finance leases as disclosed in Note 34 to the financial statements.

51

Notes to the Financial Statements


31 July 2011

(continued)

4.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


4.6 Investments in subsidiaries A subsidiary is an entity in which the Group and the Company have power to control over the financial and operating policies so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity. An investment in subsidiary, which is eliminated on consolidation, is stated in the Companys separate financial statements at cost. Investments accounted for at cost shall be accounted for in accordance with FRS 5 Noncurrent Assets Held for Sale and Discontinued Operations when they are classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with FRS 5. When control of a subsidiary is lost as a result of a transaction, event or other circumstance, the Group would derecognise all assets, liabilities and non controlling interests at their carrying amount and to recognise the fair value of the consideration received. Any retained interest in the former subsidiary is recognised at its fair value at the date control is lost. The resulting difference is recognised as a gain or loss in profit or loss. 4.7 Goodwill Goodwill recognised in a business combination is an asset at the acquisition date and is initially measured at cost being the excess of the sum of the consideration transferred, the amount of any noncontrolling interest in the acquiree and the fair value of the acquirers previously held equity interest (if any) in the entity over net of the acquisitiondate amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the Groups interest in the fair value of the acquirees identifiable net assets exceeds the sum of the consideration transferred, the amount of any non controlling interest in the acquiree and the fair value of the acquirers previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any. Goodwill is not amortised but instead tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. 4.8 Impairment of nonfinancial assets The carrying amounts of assets, except for financial assets (excluding investments in subsidiaries), inventories and deferred tax assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If such indication exists, the assets recoverable amount is estimated. Goodwill that has an indefinite useful life is tested annually for impairment or more frequently if events or changes in circumstances indicate that the goodwill might be impaired. The recoverable amount of an asset is estimated for an individual asset. Where it is not possible to estimate the recoverable amount of the individual asset, the impairment test is carried out on the cash generating unit (CGU) to which the asset belongs. Goodwill acquired in a business combination is from the acquisition date, allocated to each of the Groups CGU or groups of CGU that are expected to benefit from the synergies of the combination giving rise to the goodwill irrespective of whether other assets or liabilities of the acquiree are assigned to those units or groups of units. Goodwill acquired in a business combination shall be tested for impairment as part of the impairment testing of CGU to which it relates. The CGU to which goodwill is allocated shall represent the lowest level within the Group at which the goodwill is monitored for internal management purposes and not larger than an operating segment determined in accordance with FRS 8.

52

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

4.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


4.8 Impairment of nonfinancial assets (continued) The recoverable amount of an asset or CGU is the higher of its fair value less cost to sell and its value in use. In estimating the value in use, the estimated future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. An impairment loss is recognised in profit or loss when the carrying amount of the asset or the CGU, including the goodwill or intangible asset, exceeds the recoverable amount of the asset or the CGU. The total impairment loss is allocated, first, to reduce the carrying amount of any goodwill allocated to the CGU and then to the other assets of the CGU on a prorata basis of the carrying amount of each asset in the CGU. The impairment loss is recognised in profit or loss immediately. An impairment loss on goodwill is not reversed in subsequent periods. An impairment loss for other assets is reversed if, and only if, there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised. Such reversals are recognised as income immediately in profit or loss.

4.9

Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the firstin, firstout formula. The cost of raw materials comprises all costs of purchase plus the cost of bringing the inventories to their present location and condition. The cost of workin progress and finished goods includes the cost of raw materials, direct labour and a proportion of production overheads based on normal operating capacity of the production facilities. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

4.10 Financial instruments A financial instrument is any contract that gives rise to a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. A financial asset is any asset that is cash, an equity instrument of another enterprise, a contractual right to receive cash or another financial asset from another enterprise, or a contractual right to exchange financial assets or financial liabilities with another enterprise under conditions that are potentially favourable to the Group. A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or a contractual obligation to exchange financial assets or financial liabilities with another enterprise under conditions that are potentially unfavourable to the Group.

53

Notes to the Financial Statements


31 July 2011

(continued)

4.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


4.10 Financial instruments (continued) Financial instruments are recognised on the statement of financial position when the Group has become a party to the contractual provisions of the instrument. At initial recognition, a financial instrument is recognised at fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issuance of the financial instrument. An embedded derivative is separated from the host contract and accounted for as a derivative if, and only if the economic characteristics and risks of the embedded derivative is not closely related to the economic characteristics and risks of the host contract, a separate instrument with the same terms as the embedded derivative meets the definition of a derivative, and the hybrid instrument is not measured at fair value through profit or loss. (a) Financial assets A financial asset is classified into the following four categories after initial recognition for the purpose of subsequent measurement: (i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss comprise financial assets that are held for trading (i.e. financial assets acquired principally for the purpose of resale in the near term), derivatives (both, freestanding and embedded) and financial assets that were specifically designated into this classification upon initial recognition. Subsequent to initial recognition, financial assets classified as at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in the fair value of financial assets classified as at fair value through profit or loss are recognised in profit or loss. Net gains or losses on financial assets classified

as at fair value through profit or loss exclude foreign exchange gains and losses, interest and dividend income. Such income is recognised separately in profit or loss as components of other income or other operating losses. However, derivatives that are linked to and must be settled by delivery of unquoted equity instruments that do not have a quoted market price in an active market are recognised at cost. (ii) Heldtomaturity investments Financial assets classified as heldtomaturity comprise non derivative financial assets with fixed or determinable payments and fixed maturity that the Group has the positive intention and ability to hold to maturity. Subsequent to initial recognition, financial assets classified as heldtomaturity are measured at amortised cost using the effective interest method. Gains or losses on financial assets classified as heldtomaturity are recognised in profit or loss when the financial assets are derecognised or impaired, and through the amortisation process. (iii) Loans and receivables Financial assets classified as loans and receivables comprise non derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, financial assets classified as loans and receivables are measured at amortised cost using the effective interest method. Gains or losses on financial assets classified as loans and receivables are recognised in profit or loss when the financial assets are derecognised or impaired, and through the amortisation process.

54

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

4.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


4.10 Financial instruments (continued) (a) Financial assets (continued) (iv) Availableforsale financial assets Financial assets classified as availableforsale comprise non derivative financial assets that are designated as availableforsale or are not classified as loans and receivables, heldtomaturity investments or financial assets at fair value through profit or loss. Subsequent to initial recognition, financial assets classified as availableforsale are measured at fair value. Any gains or losses arising from changes in the fair value of financial assets classified as availableforsale are recognised directly in other comprehensive income, except for impairment losses and foreign exchange gains and losses, until the financial asset is derecognised, at which time the cumulative gains or losses previously recognised in other comprehensive income are recognised in profit or loss. However, interest calculated using the effective interest method is recognised in profit or loss whilst dividends on availableforsale equity instruments are recognised in profit or loss when the Groups right to receive payment is established. Cash and cash equivalents include cash and bank balances, bank overdrafts, deposits and other short term, highly liquid investments, which are readily convertible to cash and are subject to insignificant risk of changes in value. A financial asset is derecognised when the contractual right to receive cash flows from the financial asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised directly in other comprehensive income shall be recognised in profit or loss.

A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or marketplace convention. A regular way purchase or sale of financial assets shall be recognised and derecognised, as applicable, using trade date accounting. (b) Financial liabilities Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. A financial liability is classified into the following two categories after initial recognition for the purpose of subsequent measurement: (i) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss comprise financial liabilities that are held for trading, derivatives (both, freestanding and embedded) and financial liabilities that were specifically designated into this classification upon initial recognition. Subsequent to initial recognition, financial liabilities classified as at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in the fair value of financial liabilities classified as at fair value through profit or loss are recognised in profit or loss. Net gains or losses on financial liabilities classified as at fair value through profit or loss exclude foreign exchange gains and losses, interest and dividend income. Such income is recognised separately in profit or loss as components of other income or other operating losses.

55

Notes to the Financial Statements


31 July 2011

(continued)

4.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


4.10 Financial instruments (continued) (b) Financial liabilities (continued) (ii) Other financial liabilities Financial liabilities classified as other financial liabilities comprise nonderivative financial liabilities that are neither held for trading nor initially designated as at fair value through profit or loss. Subsequent to initial recognition, other financial liabilities are measured at amortised cost using the effective interest method. Gains or losses on other financial liabilities are recognised in profit or loss when the financial liabilities are derecognised and through the amortisation process. A financial liability is derecognised when, and only when, it is extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or expired. An exchange between an existing borrower and lender of debt instruments with substantially different terms are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of a financial liability extinguished or transferred to another party and the consideration paid, including any noncash assets transferred or liabilities assumed, is recognised in profit or loss. A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

The Group designates corporate guarantees given to banks for credit facilities granted to subsidiaries as insurance contracts as defined in FRS 4 Insurance Contracts. The Group recognises these insurance contracts as recognised insurance liabilities when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. At the end of every reporting period, the Group shall assess whether its recognised insurance liabilities are adequate, using current estimates of future cash flows under its insurance contracts. If this assessment shows that the carrying amount of the insurance liabilities is inadequate, the entire deficiency shall be recognised in profit or loss. Recognised insurance liabilities are only removed from the statement of financial position when, and only when, it is extinguished via a discharge, cancellation or expiration. (c) Equity An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are classified as equity instruments. Ordinary shares are recorded at the nominal value and proceeds in excess of the nominal value of shares issued, if any, are accounted for as share premium. Both ordinary shares and share premium are classified as equity. Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax benefit. Otherwise, they are charged to profit or loss. Dividends to shareholders are recognised in equity in the period in which they are declared.

56

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

4.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


4.10 Financial instruments (continued) (c) Equity (continued) If the Company reacquires its own equity instruments, the consideration paid, including any attributable transaction costs is deducted from equity as treasury shares until they are cancelled. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Companys own equity instruments. Where such shares are issued by resale, the difference between the sales consideration and the carrying amount is shown as a movement in equity. 4.11 Warrants The Group issued Warrants 2003/2013 at no cost and these are not recognised in the financial statements. Each warrant is convertible into one new ordinary share of RM0.25 each at the adjusted exercise price of RM0.89 per share during the exercise period and will only be recognised as equity instruments upon conversion. 4.12 Impairment of financial assets The Group assesses whether there is any objective evidence that a financial asset is impaired at the end of each reporting period. Loans and receivables The Group collectively considers factors such as the probability of bankruptcy or significant financial difficulties of the receivable, and default or significant delay in payments to determine whether there is objective evidence that an impairment loss on loans and receivables has occurred. Other objective evidence of impairment include historical collection rates determined on an individual basis and observable changes in national or local economic conditions that are directly correlated with the historical default rates of receivables.

If any such objective evidence exists, the amount of impairment loss is measured as the difference between the financial assets carrying amount and the present value of estimated future cash flows discounted at the financial assets original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of loans and receivables is reduced through the use of an allowance account. If in a subsequent period, the amount of the impairment loss decreases and it objectively relates to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of impairment reversed is recognised in profit or loss. 4.13 Borrowing costs All borrowing costs are recognised in profit or loss in the period in which they are incurred. 4.14 Income taxes Income taxes include all taxes on taxable profit. Taxes in the statement of comprehensive income comprise current tax and deferred tax. (a) Current tax Current tax is the amount of income taxes payable or receivable in respect of the taxable profit or loss for a period.

57

Notes to the Financial Statements


31 July 2011

(continued)

4.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


4.14 Income taxes (continued) (a) Current tax (continued) Current taxes for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that have been enacted or substantively enacted by the end of the reporting period. (b) Deferred tax Deferred tax is recognised in full using the liability method on temporary differences arising between the carrying amount of an asset or liability in the statement of financial position and its tax base. Deferred tax is recognised for all temporary differences, unless the deferred tax arises from goodwill or the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profit nor taxable profit. A deferred tax asset is recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amount of a deferred tax asset is reviewed at each balance sheet date. If it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available, such reductions will be reversed to the extent of the taxable profit.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to either: (i) the same taxable entity; or

(ii) different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. Deferred tax will be recognised as income or expense and included in the profit or loss for the period unless the tax relates to items that are credited or charged, in the same or a different period, directly to equity, in which case the deferred tax will be charged or credited directly to equity. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted by the reporting period. 4.15 Provisions Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past event, and when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the effect of the time value of money is material, the amount of a provision will be discounted to its present value at a pretax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

58

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

4.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


4.15 Provisions (continued) Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision will be reversed. Provisions are not recognised for future operating losses. If the Group has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision. 4.16 Contingent liabilities and contingent assets A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or nonoccurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or nonoccurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise a contingent asset but discloses its existence where the inflows of economic benefits are probable, but not virtually certain. In the acquisition of subsidiaries by the Group under business combinations, contingent liabilities assumed are measured initially at their fair value at the acquisition date, irrespective of the extent of any noncontrolling interest.

4.17 Employee benefits 4.17.1 Short term employee benefits Wages, salaries, social security contributions, paid annual leave, paid sick leave, bonuses and nonmonetary benefits are recognised as an expense in the financial year when employees have rendered their services to the Group. Short term accumulating compensated absences such as paid annual leave are recognised as an expense when employees render services that increase their entitlement to future compensated absences. Short term nonaccumulating compensated absences such as sick leave are recognised when the absences occur. Bonuses are recognised as an expense when there is a present, legal or constructive obligation to make such payments, as a result of past events and when a reliable estimate can be made of the amount of the obligation. 4.17.2 Defined contribution plan The Company and its subsidiaries makes contributions to a statutory provident fund. The contributions are recognised as a liability after deducting any contribution already paid and as an expense in the period in which the employees render their services. 4.18 Foreign currency transactions and translation 4.18.1 Functional and presentation currency Items included in the financial statements of the Groups entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Ringgit Malaysia, which is also the Companys functional and presentation currency.

59

Notes to the Financial Statements


31 July 2011

(continued)

4.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


4.18 Foreign currency transactions and translation (continued) 4.18.2 Foreign currency translations and balances Transactions in foreign currencies are converted into Ringgit Malaysia at rates of exchange ruling at the transaction dates. Monetary assets and liabilities in foreign currencies at the reporting date are translated into Ringgit Malaysia at rates of exchange ruling at that date. All exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are included in profit or loss in the period in which they arise. Nonmonetary items initially denominated in foreign currencies, which are carried at historical cost are translated using the historical rate as of the date of acquisition, and nonmonetary items which are carried at fair value are translated using the exchange rate that existed when the values were determined for presentation currency purposes. 4.19 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable net of discounts and rebates. Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow to the Group, and the amount of revenue and the cost incurred or to be incurred in respect of the transaction can be reliably measured and specific recognition criteria have been met for each of the Groups activities as follows: Sale of goods Revenue from sale of goods is recognised when significant risk and rewards of ownership of the goods have been transferred to the customer and where the Group retains neither continuing managerial involvement over the goods, which coincides with delivery of goods and acceptance by customers.

4.20 Operating segments Following the adoption of FRS 8 Operating Segments during the previous financial year, operating segments are defined as components of the Group that: (a) engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group);

(b) whose operating results are regularly reviewed by the Groups chief operating decision maker (i.e. the Groups Chief Executive Officer) in making decisions about resources to be allocated to the segment and assessing its performance; and (c) for which discrete financial information is available.

An operating segment may engage in business activities for which it has yet to earn revenues. The Group reports separately information about each operating segment that meets any of the following quantitative thresholds: (a) Its reported revenue, including both sales to external customers and intersegment sales or transfers, is 10 per cent or more of the combined revenue, internal and external, of all operating segments.

(b) The absolute amount of its reported profit or loss is 10 per cent or more of the greater, in absolute amount of: (i) the combined reported profit of all operating segments that did not report a loss; and

(ii) the combined reported loss of all operating segments that reported a loss.

60

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

4.

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


4.20 Operating segments (continued) (c) Its assets are 10 per cent or more of the combined assets of all operating segments.

5.

ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs


5.1 New FRS adopted during the current financial year (a) FRS 7 Financial Instruments: Disclosures and the consequential amendments resulting from FRS 7 are mandatory for annual financial periods beginning on or after 1 January 2010. FRS 7 replaces the disclosure requirements of the existing FRS 132 Financial Instruments: Disclosure and Presentation. This Standard applies to all risks arising from a wide array of financial instruments and requires the disclosure of the significance of financial instruments for the Groups financial position and performance. (b) FRS 123 Borrowing Costs and the consequential amendments resulting from FRS 123 are mandatory for annual periods beginning on or after 1 January 2010. This Standard removes the option of immediately recognising as an expense borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. However, capitalisation of borrowing costs is not required for assets measured at fair value, and inventories that are manufactured or produced in large quantities on a repetitive basis, even if they take a substantial period of time to get ready for use or sale. There is no impact upon adoption of this Standard during the financial year.

Operating segments that do not meet any of the quantitative thresholds may be considered reportable, and separately disclosed, if the management believes that information about the segment would be useful to users of the financial statements. Total external revenue reported by operating segments shall constitute at least 75 per cent of the Groups revenue. Operating segments identified as reportable segments in the current financial year in accordance with the quantitative thresholds would result in a restatement of prior period segment data for comparative purposes. 4.21 Basic loss per share 4.21.1 Basic Basic loss per ordinary share for the financial year is calculated by dividing the loss for the financial year attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year. 4.21.2 Diluted Diluted loss per ordinary share for the financial year is calculated by dividing the loss for the financial year attributable to equity holders of the parent by the weighted average number of ordinary shares outstanding during the financial year adjusted for the effects of dilutive potential ordinary shares.

61

Notes to the Financial Statements


31 July 2011

(continued)

5.

ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs (CONTINUED)


5.1 New FRS adopted during the current financial year (continued) (c) FRS 139 Financial Instruments: Recognition and Measurement and the consequential amendments resulting from FRS 139 are mandatory for annual financial periods beginning on or after 1 January 2010. This Standard establishes the principles for the recognition and measurement of financial assets and financial liabilities including circumstances under which hedge accounting is permitted. There is no impact upon adoption of this Standard. (d) Amendments to FRS 2 Sharebased Payment: Vesting Conditions and Cancellations are mandatory for annual financial periods beginning on or after 1 January 2010. These amendments clarify that vesting conditions comprise service conditions and performance conditions only. Cancellations by parties other than the Group are accounted for in the same manner as cancellations by the Group itself and features of a sharebased payment that are nonvesting conditions are included in the grant date fair value of the sharebased payment. There is no impact upon adoption of these amendments during the financial year. (e) Amendments to FRS 1 Firsttime Adoption of Financial Reporting Standards and FRS 127 Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate are mandatory for annual periods beginning on or after 1 January 2010. These amendments allow firsttime adopters to use a deemed cost of either fair value or the carrying amount under previous accounting practice to measure the initial cost of investments in subsidiaries, jointly (g) (f)

controlled entities and associates in the separate financial statements. The cost method of accounting for an investment has also been removed pursuant to these amendments. There is no impact upon adoption of these amendments during the financial year. IC Interpretation 9 Reassessment of Embedded Derivatives is mandatory for annual financial periods beginning on or after 1 January 2010. This Interpretation prohibits the subsequent reassessment of embedded derivatives unless there is a change in the terms of the host contract that significantly modifies the cash flows that would otherwise be required by the host contract. There is no impact upon adoption of this Interpretation during the financial year. IC Interpretation 10 Interim Financial Reporting and Impairment is mandatory for annual financial periods beginning on or after 1 January 2010. This Interpretation prohibits the reversal of an impairment loss recognised in a previous interim period in respect of goodwill or an investment in either an equity instrument or a financial asset carried at cost. There is no impact upon adoption of this Interpretation during the financial year. (h) IC Interpretation 11 FRS 2 Group and Treasury Share Transactions is mandatory for annual periods beginning on or after 1 January 2010. This Interpretation requires sharebased payment transactions in which the Company receives services from employees as consideration for its own equity instruments to be accounted for as equitysettled, regardless of the manner of satisfying the obligations to the employees.

62

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

5.

ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs (CONTINUED)


5.1 New FRS adopted during the current financial year (continued) (h) IC Interpretation 11 FRS 2 Group and Treasury Share Transactions is mandatory for annual periods beginning on or after 1 January 2010 (continued). If the Company grants rights to its equity instruments to the employees of its subsidiaries, this Interpretation requires the Company to recognise the equity reserve for the obligation to deliver the equity instruments when needed whilst the subsidiaries shall recognise the remuneration expense for the services received from employees. If the subsidiaries grant rights to equity instruments of the Company to its employees, this Interpretation requires the Company to account for the transaction as cashsettled, regardless of the manner the subsidiaries obtain the equity instruments to satisfy its obligations. There is no impact upon adoption of this Interpretation during the financial year. The Group would like to draw attention to the withdrawal of this Interpretation for annual periods beginning on or after 1 January 2011 as disclosed in Note 5.2(d) to the financial statements. (i) IC Interpretation 13 Customer Loyalty Programmes is mandatory for annual periods beginning on or after 1 January 2010. This Interpretation requires the separation of award credits as a separately identifiable component of sales transactions involving the award of free or discounted goods or services in the future. The fair value of the consideration received or receivable from the initial sale shall be allocated between the award credits and the other components of the sale.

If the Group supplies the awards itself, the consideration allocated to the award credits shall only be recognised as revenue when the award credits are redeemed. If a third party supplies the awards, the Group shall assess whether it is acting as a principal or agent in the transaction. If the Group is acting as the principal in the transaction, it shall measure its revenue as the gross consideration allocated to the award credits. If the Group is acting as an agent, it shall measure its revenue as the net amount retained on its own account, and recognise the net amount as revenue when the third party becomes obliged to supply the awards and entitled to receive the consideration for doing so. There is no impact upon adoption of this Interpretation during the financial year. (j) IC Interpretation 14 FRS 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction is mandatory for annual periods beginning on or after 1 January 2010. This Interpretation applies to all postemployment defined benefits and other longterm employee defined benefits. This Interpretation clarifies that an economic benefit is available if the Company can realise it at some point during the life of the plan or when the plan liabilities are settled, and that it does not depend on how the Group intends to use the surplus.

63

Notes to the Financial Statements


31 July 2011

(continued)

5.

ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs (CONTINUED)


5.1 New FRS adopted during the current financial year (continued) (j) IC Interpretation 14 FRS 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction is mandatory for annual periods beginning on or after 1 January 2010 (continued). A right to refund is available to the Group in stipulated circumstances and the economic benefit available shall be measured as the amount of the surplus at the end of the reporting period less any associated costs. If there are no minimum funding requirements, the economic benefit available shall be determined as a reduction in future contributions as the lower of the surplus in the plan and the present value of the future service cost to the Group. If there is a minimum funding requirement for contributions relating to the future accrual of benefits, the economic benefit available shall be determined as a reduction in future contributions at the present value of the estimated future service cost less the estimated minimum funding required in each financial year. There is no impact upon adoption of this Interpretation during the financial year. (k) FRS 101 Presentation of Financial Statements is mandatory for annual periods beginning on or after 1 January 2010. FRS 101 sets out the overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content. This Standard introduces the titles statement of financial position and statement of cash flows to replace the current titles balance sheet and cash flow statement respectively. A new statement known as the statement of comprehensive income is also introduced in this Standard whereby all nonowner changes in equity are required to be presented in either one statement of comprehensive income or in two statements (i.e. a separate income statement and a statement of comprehensive income). (l)

This Standard also introduces a new requirement to present a statement of financial position as at the beginning of the earliest comparative period if there are applications of retrospective restatements that are defined in FRS 108, or when there are reclassifications of items in the financial statements. Additionally, FRS 101 requires the disclosure of reclassification adjustments and income tax relating to each component of other comprehensive income, and the presentation of dividends recognised as distributions to owners together with the related amounts per share in the statement of changes in equity or in the notes to the financial statements. This Standard introduces a new requirement to disclose information on the objectives, policies and processes for managing capital based on information provided internally to key management personnel as defined in FRS 124 Related Party Disclosures. Additional disclosures are also required for puttable financial instruments classified as equity instruments. Following the adoption of this Standard, the Group has reflected the new format of presentation and additional disclosures warranted in the primary financial statements and relevant notes to the financial statements. Amendments to FRS 139, FRS 7 and IC Interpretation 9 are mandatory for annual periods beginning on or after 1 January 2010. These amendments permit reclassifications of nonderivative financial assets (other than those designated at fair value through profit or loss upon initial recognition) out of the fair value through profit or loss category in rare circumstances. Reclassifications from the availablefor sale category to the loans and receivables category are also permitted provided there is intention and ability to hold that financial asset for the foreseeable future. All of these reclassifications shall be subjected to subsequent reassessments of embedded derivatives.

64

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

5.

ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs (CONTINUED)


5.1 New FRS adopted during the current financial year (continued) (l) Amendments to FRS 139, FRS 7 and IC Interpretation 9 are mandatory for annual periods beginning on or after 1 January 2010 (continued). These amendments also clarify the designation of onesided risk in eligible hedged items and streamline the terms used throughout the Standards in accordance with the changes resulting from FRS 101. There is no impact upon adoption of these amendments during the financial year. (m) Amendments to FRS 132 Financial Instruments: Presentation are mandatory for annual periods beginning on or after 1 January 2010. These amendments require certain puttable financial instruments, and financial instruments that impose an obligation to deliver to counterparties a pro rata share of the net assets of the entity only on liquidation to be classified as equity. Puttable financial instruments are defined as financial instruments that give the holder the right to put the instrument back to the issuer for cash, or another financial asset, or are automatically put back to the issuer upon occurrence of an uncertain future event or the death or retirement of the instrument holder. There is no impact upon adoption of these amendments during the financial year.

(n) Improvements to FRS (2009) are mandatory for annual periods beginning on or after 1 January 2010. Amendment to FRS 5 Noncurrent Assets Held for Sale and Discontinued Operations clarifies that the disclosure requirements of this Standard specifically apply to noncurrent assets (or disposal groups) classified as held for sale or discontinued operations. There is no impact upon adoption of this amendment during the financial year. Amendment to FRS 8 clarifies the consistency of disclosure requirement for information about profit or loss, assets and liabilities. There is no impact upon adoption of this amendment during the financial year. Amendment to FRS 107 Statement of Cash Flows clarifies the classification of cash flows arising from operating activities and investing activities. Cash payments to manufacture or acquire assets held for rental to others and subsequently held for sale, and the related cash receipts, shall be classified as cash flows from operating activities. Expenditures that result in a recognised asset in the statement of financial position are eligible for classification as cash flows from investing activities. There is no impact upon adoption of this amendment during the financial year. Amendment to FRS 108 clarifies that only Implementation Guidance issued by the MASB that are integral parts of FRSs is mandatory. There is no impact upon adoption of this amendment during the financial year. Amendment to FRS 110 Events after the Reporting Period clarifies the rationale for not recognising dividends declared after the reporting period but before the financial statements are authorised for issue. There is no impact upon adoption of this amendment during the financial year.

65

Notes to the Financial Statements


31 July 2011

(continued)

5.

ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs (CONTINUED)


5.1 New FRS adopted during the current financial year (continued) (n) Improvements to FRS (2009) are mandatory for annual periods beginning on or after 1 January 2010 (continued). Amendment to FRS 116 Property, Plant and Equipment removes the definition pertaining the applicability of this Standard to property that is being constructed or developed for future use as investment property but do not yet satisfy the definition of investment property in FRS 140 Investment Property. This amendment also replaces the term net selling price with fair value less costs to sell, and clarifies that proceeds arising from routine sale of items of property, plant and equipment shall be recognised as revenue in accordance with FRS 118 Revenue rather than FRS 5. There is no impact upon adoption of this amendment during the financial year. Amendment to FRS 117 Leases removes the classification of leases of land and of buildings, and instead, requires assessment of classification based on the risks and rewards of the lease itself. The reassessment of land elements of unexpired leases shall be made retrospectively in accordance with FRS 108. At the beginning of reporting period, the Group has carrying amount of prepaid lease payments for land of RM1,418,037 (see Note 34 to the financial statements) that has been reclassified as land held in accordance with FRS 116 upon adoption of this amendment. Amendment to FRS 118 clarifies reference made on the term transaction costs to the definition in FRS 139. There is no impact upon adoption of this amendment during the financial year. Amendment to FRS 119 Employee Benefits clarifies the definitions in this Standard by consistently applying settlement dates within twelve months in the distinction between shortterm employee benefits and other longterm employee benefits. This amendment also provides additional explanations on negative past service cost and curtailments.

There is no impact upon adoption of this amendment during the financial year. Amendment to FRS 120 Accounting for Government Grants and Disclosure of Government Assistance streamlines the terms used in this Standard in accordance with the new terms used in FRS 101. There is no impact upon adoption of this amendment during the financial year. Amendment to FRS 123 clarifies that interest expense calculated using the effective interest rate method described in FRS 139 qualifies for recognition as borrowing costs. There is no impact upon adoption of this amendment during the financial year. Amendment to FRS 127 Consolidated and Separate Financial Statements clarifies that investments measured at cost shall be accounted for in accordance with FRS 5 when they are held for sale in accordance with FRS 5. There is no impact upon adoption of this amendment during the financial year. Amendment to FRS 128 Investments in Associates clarifies that investments in associates held by venture capital organisations, or mutual funds, unit trusts and similar entities shall make disclosures on the nature and extent of any significant restrictions on the ability of associates to transfer funds to the investor in the form of cash dividends, or repayment of loans or advances. This amendment also clarifies that impairment loss recognised in accordance with FRS 136 Impairment of Assets shall not be allocated to any asset, including goodwill, that forms the carrying amount of the investment. Accordingly, any reversal of that impairment loss shall be recognised in accordance with FRS 136. There is no impact upon adoption of this amendment during the financial year.

66

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

5.

ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs (CONTINUED)


5.1 New FRS adopted during the current financial year (continued) (n) Improvements to FRS (2009) are mandatory for annual periods beginning on or after 1 January 2010 (continued). Amendment to FRS 129 Financial Reporting in Hyperinflationary Economies streamlines the terms used in this Standard in accordance with the new terms used in FRS 101. This amendment also clarifies that assets and liabilities that are measured at fair value are exempted from the requirement to apply historical cost basis of accounting. There is no impact upon adoption of this amendment during the financial year. Amendment to FRS 131 Interests in Joint Ventures clarifies that venturers interests in jointly controlled entities held by venture capital organisations, or mutual funds, unit trusts and similar entities shall make disclosures on related capital commitments. This amendment also clarifies that a listing and description of interests in significant joint ventures and the proportion of ownership interest held in jointly controlled entities shall be made. There is no impact upon adoption of this amendment during the financial year. Amendment to FRS 136 clarifies the determination of allocation of goodwill to each cashgenerating unit whereby each unit shall not be larger than an operating segment as defined in FRS 8 before aggregation. This amendment also requires additional disclosures if the fair value less costs to sell is determined using discounted cash flow projections. There is no impact upon adoption of this amendment during the financial year. Amendment to FRS 138 Intangible Assets clarifies the examples provided in this Standard in measuring the fair value of an intangible asset acquired in a business combination. This amendment also removes the statement on the rarity of situations whereby the application of the amortisation method for intangible assets results in a lower amount of accumulated amortisation than under the straight line method. (o)

There is no impact upon adoption of this amendment during the financial year. Amendment to FRS 140 clarifies that properties that are being constructed or developed for future use as investment property are within the definition of investment property. This amendment further clarifies that if the fair value of such properties cannot be reliably determinable but it is expected that the fair value would be readily determinable when construction is complete, the properties shall be measured at cost until either its fair value becomes reliably determinable or construction is completed, whichever is earlier. There is no impact upon adoption of this amendment during the financial year. Amendments to FRS 132 are mandatory for annual periods beginning on or after 1 January 2010 and 1 March 2010 in respect of the transitional provisions in accounting for compound financial instruments and classification of right issues respectively. These amendments remove the transitional provisions in respect of accounting for compound financial instruments issued before 1 January 2003 pursuant to FRS 1322004 Financial Instruments: Disclosure and Presentation. Such compound financial instruments shall be classified into its liability and equity components when FRS 139 first applies. The amendments also clarify that rights, options or warrants to acquire a fixed number of the Companys own equity instruments for a fixed amount of any currency shall be classified as equity instruments rather than financial liabilities if the Company offers the rights, options or warrants pro rata to all of its own existing owners of the same class of its own nonderivative equity instruments. There is no impact upon adoption of these amendments during the financial year.

67

Notes to the Financial Statements


31 July 2011

(continued)

5.

ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs (CONTINUED)


5.1 New FRS adopted during the current financial year (continued) (p) Amendments to FRS 139 are mandatory for annual periods beginning on or after 1 January 2010. These amendments remove the scope exemption on contracts for contingent consideration in a business combination. Accordingly, such contracts shall be recognised and measured in accordance with the requirements of FRS 139. There is no impact upon adoption of these amendments during the financial year. (q) IC Interpretation 12 Service Concession Arrangements is mandatory for annual periods beginning on or after 1 July 2010. This Interpretation applies to operators for publictoprivate service concession arrangements, whereby infrastructure within the scope of this Interpretation shall not be recognised as property, plant and equipment of the operator. The operator shall recognise and measure revenue in accordance with FRS 111 Construction Contracts and FRS 118 for the services performed. The operator shall also account for revenue and costs relating to construction or upgrade services in accordance with FRS 111. Consideration received or receivable by the operator for the provision of construction or upgrade services shall be recognised at its fair value. If the consideration consists of an unconditional contractual right to receive cash or another financial asset from the grantor, it shall be classified as a financial asset. Conversely, if the consideration consists of a right to charge users of the public service, it shall be classified as an intangible asset. There is no impact upon adoption of this Interpretation during the financial year. (r) FRS 1 Firsttime Adoption of Financial Reporting Standards is mandatory for annual periods beginning on or after 1 July 2010. This Standard supersedes the existing FRS 1 and shall be applied when the Group adopts FRSs for the first time via the explicit and unreserved statement of compliance with FRSs. An opening FRS statement of financial position shall be prepared and presented at the date of transition to FRS, whereby: (i) All assets and liabilities shall be recognised in accordance with FRSs; (ii) Items of assets and liabilities shall not be recognised if FRSs do not permit such recognition; (iii) Items recognised in accordance with previous GAAP shall be reclassified in accordance with FRSs; and (iv) All recognised assets and liabilities shall be measured in accordance with FRSs. All resulting adjustments shall therefore be recognised directly in retained earnings at the date of transition to FRSs. There is no impact upon adoption of this Standard during the financial year. (s) FRS 3 Business Combinations is mandatory for annual periods beginning on or after 1 July 2010. This Standard supersedes the existing FRS 3 and now includes business combinations involving mutual entities and those achieved by way of contract alone. Any noncontrolling interest in an acquiree shall be measured at fair value or as the noncontrolling interests proportionate share of the acquirees net identifiable assets.

68

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

5.

ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs (CONTINUED)


5.1 New FRS adopted during the current financial year (continued) (s) FRS 3 Business Combinations is mandatory for annual periods beginning on or after 1 July 2010 (continued). The time limit on the adjustment to goodwill due to the arrival of new information on the crystallisation of deferred tax benefits shall be restricted to the measurement period resulting from the arrival of the new information. Contingent liabilities acquired arising from present obligations shall be recognised, regardless of the probability of outflow of economic resources. Acquisitionrelated costs shall be accounted for as expenses in the periods in which the costs are incurred and the services are received. Consideration transferred in a business combination, including contingent consideration, shall be measured and recognised at fair value at acquisition date. Any changes in the amount of consideration to be paid will no longer be adjusted against the goodwill but recognised in profit or loss. In business combinations achieved in stages, the acquirer shall remeasure its previously held equity interest at its acquisition date fair value and recognise the resulting gain or loss in profit or loss. The revised FRS 3 has been applied prospectively in accordance with its transitional provisions. Assets and liabilities that arose from business combinations whose acquisition dates were before 1 July 2010 are not adjusted. There is no impact upon adoption of this Standard during the financial year.

(t)

FRS 127 Consolidated and Separate Financial Statements is mandatory for annual periods beginning on or after 1 July 2010. This Standard supersedes the existing FRS 127 and replaces the current term minority interest with a new term noncontrolling interest which is defined as the equity in a subsidiary that is not attributable, directly or indirectly, to a parent. Accordingly, total comprehensive income shall be attributed to the owners of the parent and to the noncontrolling interests, even if this results in the noncontrolling interests having a deficit balance. Changes in the Groups ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. If the Group loses control of a subsidiary, any gains or losses are recognised in profit or loss and any investment retained in the former subsidiary shall be measured at its fair value at the date when control is lost. According to its transitional provisions, the revised FRS 127 has been applied prospectively, and does not impact the Groups consolidated financial statements in respect of transactions with noncontrolling interest, attribution of losses to noncontrolling interest, and disposal of subsidiaries before 1 July 2010. These changes would only affect future transactions with noncontrolling interest. There is no impact upon adoption of this Standard during the financial year.

(u) Amendments to FRSs are mandatory for annual periods beginning on or after 1 July 2010. Amendments to FRS 2 Sharebased Payments clarify that transactions in which the Company acquired goods as part of the net assets acquired in a business combination or contribution of a business on the formation of a joint venture are excluded from the scope of this Standard. There is no impact upon adoption of these amendments during the financial year.

69

Notes to the Financial Statements


31 July 2011

(continued)

5.

ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs (CONTINUED)


5.1 New FRS adopted during the current financial year (continued) (u) Amendments to FRSs are mandatory for annual periods beginning on or after 1 July 2010 (continued). Amendments to FRS 5 clarify that noncurrent asset classified as held for distribution to owners acting in their capacity as owners are within the scope of this Standard. The amendments also clarify that in determining whether a sale is highly probable, the probability of shareholders approval, if required in the jurisdiction, shall be considered. In a sale plan involving loss of control of a subsidiary, all assets and liabilities of that subsidiary shall be classified as held for sale, regardless of whether the Group retains a noncontrolling interest in its former subsidiary after the sale. Discontinued operations information shall also be presented. Noncurrent asset classified as held for distribution to owners shall be measured at the lower of its carrying amount and fair value less costs to distribute. There is no impact upon adoption of these amendments during the financial year. Amendments to FRS 138 clarify that the intention of separating an intangible asset is irrelevant in determining the identifiability of the intangible asset. In a separate acquisition and acquisition as part of a business combination, the price paid by the Company reflects the expectations of the Company of an inflow of economic benefits, even if there is uncertainty about the timing or the amount of the inflow. Accordingly, the probability criterion is always considered to be satisfied for separately acquired intangible assets. The useful life of a reacquired right recognised as an intangible asset in a business combination shall be the remaining contractual period of the contract in which the right was granted, and do not include renewal periods. In the case of a reacquired right in a business combination, if the right is subsequently reissued to a third party, the related carrying amount shall be used in determining the gain or loss on reissue. There is no impact upon adoption of these amendments during the financial year. (v)

Amendments to IC Interpretation 9 clarify that embedded derivatives in contracts acquired in a business combination, combination of entities or business under common controls, or the formation of a joint venture are excluded from this Interpretation. There is no impact upon adoption of these amendments during the financial year. IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation is mandatory for annual periods beginning on or after 1 July 2010. This Interpretation applies to hedges undertaken on foreign currency risk arising from net investments in foreign operations and the Company wishes to qualify for hedge accounting in accordance with FRS 139. Hedge accounting is applicable only to the foreign exchange differences arising between the functional currency of the foreign operation and the functional currency of any parent (immediate, intermediate or ultimate parent) of that foreign operation. An exposure to foreign currency risk arising from a net investment in a foreign operation may qualify for hedge accounting only once in the consolidated financial statements. Hedging instruments designated in the hedge of a net investment in a foreign operation may be held by any companies within the Group, as long as the designation, documentation and effectiveness requirements of FRS 139 are met. There is no impact upon adoption of this Interpretation during the financial year. (w) IC Interpretation 17 Distributions of Noncash Assets to Owners is mandatory for annual periods beginning on or after 1 July 2010. This Interpretation applies to nonreciprocal distributions of noncash assets by the Group to its owners in their capacity as owners, as well as distributions that give owners a choice of receiving either noncash assets or a cash alternative. This Interpretation also applies to distributions in which all owners of the same class of equity instruments are treated equally.

70

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

5.

ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs (CONTINUED)


5.1 New FRS adopted during the current financial year (continued) (w) IC Interpretation 17 Distributions of Noncash Assets to Owners is mandatory for annual periods beginning on or after 1 July 2010 (continued). The liability to pay a dividend shall be recognised when the dividend is appropriately authorised and is no longer at the discretion of the Group. The liability shall be measured at the fair value of the assets to be distributed. If the Group gives its owners a choice of receiving either a noncash asset or a cash alternative, the dividend payable shall be estimated by considering the fair value of both alternatives and the associated probability of the owners selection. At the end of each reporting period, the carrying amount of the dividend payable shall be remeasured and any changes shall be recognised in equity. At the settlement date, any difference between the carrying amounts of the assets distributed and the carrying amount of the dividend payable shall be recognised in profit or loss. The new accounting policy has been applied prospectively. There is no impact upon adoption of this Interpretation during the financial year. 5.2 New FRSs that have been issued, but not yet effective and not yet adopted (a) Amendment to FRS 1 Limited Exemption from Comparative FRS 7 Disclosures for Firsttime Adopters is mandatory for annual periods beginning on or after 1 January 2011. This amendment permits a firsttime adopter of FRSs to apply the exemption of not restating comparatives for the disclosures required in Amendments to FRS 7.

The Group does not expect any impact on the financial statements arising from the adoption of this amendment. (b) Amendments to FRS 1 Additional Exemptions for Firsttime Adopters are mandatory for annual periods beginning on or after 1 January 2011. These amendments permit a firsttime adopter of FRSs to apply the exemption of not restating the carrying amounts of oil and gas assets determined under previous GAAP. The Group does not expect any impact on the financial statements arising from the adoption of these amendments. (c) Amendments to FRS 7 Improving Disclosures about Financial Instruments are mandatory for annual periods beginning on or after 1 January 2011. These amendments require enhanced disclosures of fair value of financial instruments based on the fair value hierarchy, including the disclosure of significant transfers between Level 1 and Level 2 of the fair value hierarchy as well as reconciliations for fair value measurements in Level 3 of the fair value hierarchy. By virtue of the exemption provided under paragraph 44G of FRS 7, the impact of applying these amendments on the financial statements upon first adoption of FRS 7 as required by paragraph 30(b) of FRS 108 are not disclosed. (d) Amendments to FRS 2 Group Cashsettled Sharebased Payment Transactions are mandatory for annual periods beginning on or after 1 January 2011. These amendments clarify the scope and the accounting for group cashsettled sharebased payment transactions in the separate financial statements of the entity receiving the goods or services when that entity has no obligation to settle the sharebased payment transaction.

71

Notes to the Financial Statements


31 July 2011

(continued)

5.

ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs (CONTINUED)


5.2 New FRSs that have been issued, but not yet effective and not yet adopted (continued) (d) Amendments to FRS 2 Group Cashsettled Sharebased Payment Transactions are mandatory for annual periods beginning on or after 1 January 2011 (continued). Consequently, IC Interpretation 8 Scope of FRS 2 and IC Interpretation 11 have been superseded and withdrawn. The Group does not expect any impact on the financial statements arising from the adoption of these amendments. The effects of adopting IC Interpretation 11 have been disclosed in Note 5.1(h) to the financial statements. (e) IC Interpretation 4 Determining whether an Arrangement contains a Lease is mandatory for annual periods beginning on or after 1 January 2011. This Interpretation requires the determination of whether an arrangement is, or contains, a lease based on an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset and whether the arrangement conveys a right to use the asset. This assessment shall be made at the inception of the arrangement and subsequently reassessed if certain condition(s) in the Interpretation is met. The Group does not expect any impact on the financial statements arising from the adoption of this Interpretation because there are no arrangements dependent on the use of specific assets in the Group. (f) IC Interpretation 18 Transfers of Assets from Customers is mandatory for annual periods beginning on or after 1 January 2011. This Interpretation applies to agreements in which an entity receives from a customer an item of property, plant and equipment that must be (g)

used to either connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services. The entity receiving the transferred item is required to assess whether the transferred item meets the definition of an asset set out in the Framework. The credit entry would be accounted for as revenue in accordance with FRS 118. The Group does not expect any impact on the financial statements arising from the adoption of this Interpretation because there are no such arrangements in the Group. IC Interpretation 15 Agreements for the Construction of Real Estate is mandatory for annual periods beginning on or after 1 January 2012. This Interpretation applies to the accounting for revenue and associated expenses by entities undertaking construction or real estate directly or via subcontractors. Within a single agreement, the Company may contract to deliver goods or services in addition to the construction of real estate. Such an agreement shall therefore, be split into separately identifiable components. An agreement for the construction of real estate shall be accounted for in accordance with FRS 111 if the buyer is able to specify the major structural elements of the design of the real estate before construction begins and/or specify major structural changes once construction is in progress. Accordingly, revenue shall be recognised by reference to the stage of completion of the contract. An agreement for the construction of real estate in which buyers only have limited ability to influence the design of the real estate or to specify only minor variations to the basic designs is an agreement for the sale of goods in accordance with FRS 118. Accordingly, revenue shall be recognised by reference to the criteria in paragraph 14 of FRS 118 (e.g. transfer of significant risks and rewards, no continuing managerial involvement nor effective control, reliable measurement, etc.).

72

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

5.

ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs (CONTINUED)


5.2 New FRSs that have been issued, but not yet effective and not yet adopted (continued) (g) IC Interpretation 15 Agreements for the Construction of Real Estate is mandatory for annual periods beginning on or after 1 January 2012 (continued). The Group does not expect any impact on the financial statements arising from the adoption of this Interpretation. (h) Improvements to FRSs (2010) are mandatory for annual periods beginning on or after 1 January 2011. Amendments to FRS 1 clarify that FRS 108 does not apply to changes in accounting policies made upon adoption of FRSs until after the first FRS financial statements have been presented. If changes in accounting policies or exemptions in this FRS are used, an explanation of such changes together with updated reconciliations shall be made in each interim financial report. Entities whose operations are subject to rate regulation are permitted the use of previously revalued amounts as deemed cost. The Group does not expect any impact on the financial statements arising from the adoption of these amendments. Amendments to FRS 3 clarify that for each business combination, the acquirer shall measure at the acquisition date noncontrolling interests that consists of the present ownership interests and entitle holders to a proportionate share of the entitys net assets in the event of liquidation. Unreplaced and voluntarily replaced sharebased payment transactions shall be measured using the marketbased measurement method in accordance with FRS 2 at the acquisition date. The Group does not expect any impact on the financial statements arising from the adoption of these amendments. Amendments to FRS 7 clarify that quantitative disclosures of risk concentrations are required if the disclosures made in other parts of the

financial statements are not readily apparent. The disclosure on maximum exposure to credit risk is not required for financial instruments whose carrying amount best represents the maximum exposure to credit risk. The Group expects to improve the disclosures on maximum exposure to credit risk upon adoption of these amendments. Amendments to FRS 101 clarify that a statement of changes in equity shall be presented as part of a complete set of financial statements. The Group does not expect any impact on the financial statements arising from the adoption of these amendments. Amendments to FRS 121 The Effects of Changes in Foreign Exchange Rates clarify that the accounting treatment for cumulative foreign exchange differences in other comprehensive income for the disposal or partial disposal of a foreign operation shall be applied prospectively. The Group does not expect any impact on the financial statements arising from the adoption of these amendments. Amendments to FRS 128 clarify that the accounting treatment for the cessation of significant influence over an associate shall be applied prospectively. The Group does not expect any impact on the consolidated financial statements arising from the adoption of these amendments. Amendments to FRS 131 clarify that the accounting treatment for the cessation of joint control over an entity shall be applied prospectively. The Group does not expect any impact on the consolidated financial statements arising from the adoption of these amendments. Amendments to FRS 132 clarify that contingent consideration from a business combination that occurred before the effective date of the revised FRS 3 of 1 July 2010 shall be accounted for prospectively. The Group does not expect any impact on the financial statements arising from the adoption of these amendments.

73

Notes to the Financial Statements


31 July 2011

(continued)

5.

ADOPTION OF NEW FRSs AND AMENDMENTS TO FRSs (CONTINUED)


5.2 New FRSs that have been issued, but not yet effective and not yet adopted (continued) (h) Improvements to FRSs (2010) are mandatory for annual periods beginning on or after 1 January 2011 (continued). Amendments to FRS 134 clarify that updated information on significant events and transactions since the end of the last annual reporting period shall be included in the Groups interim financial report. Although the Group does not expect any impact on the financial statements rising from the adoption of these amendments, it is expected that additional disclosures would be made in the quarterly interim financial statements of the Group. Amendments to FRS 139 clarify that contingent consideration from a business combination that occurred before the effective date of the revised FRS 3 of 1 July 2010 shall be accounted for prospectively. The Group does not expect any impact on the financial statements arising from the adoption of these amendments. Amendments to IC Interpretation 13 clarify that the fair value of award credits takes into account, amongst others, the amount of the discounts or incentives that would otherwise be offered to customers who have not earned award credits from an initial sale. The Group does not expect any impact on the financial statements arising from the adoption of these amendments. (i) Amendments to IC Interpretation 14 FRS 119 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction are mandatory for annual periods beginning on or after 1 July 2011. These amendments clarify that if there is a minimum funding requirement for contributions relating to future service, the economic benefit available as a reduction in future contributions shall include any amount that reduces future minimum funding requirement contributions for future (j)

service because of the prepayment made. The Group does not expect any impact on the financial statements arising from the adoption of these amendments. IC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments is mandatory for annual periods beginning on or after 1 July 2011. This Interpretation applies to situations whereby equity instruments are issued to a creditor to extinguish all or part of a recognised financial liability. Such equity instruments shall be measured at fair value, and the difference between the carrying amount of the financial liability extinguished and the consideration paid shall be recognised in profit or loss. The Group does not expect any impact on the financial statements arising from the adoption of this Interpretation. (k) FRS 124 Related Party Disclosures and the consequential amendments to FRS 124 are mandatory for annual periods beginning on or after 1 January 2012. This revised Standard simplifies the definition of a related party and eliminates certain inconsistencies within the superseded version. In addition to this, transactions and balances with governmentrelated entities are broadly exempted from the disclosure requirements of the Standard. The Group expects to reduce related party disclosures in respect of transactions and balances with governmentrelated entities upon adoption of this Standard.

74

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

6.

SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS


6.1 Changes in estimates Estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Directors are of the opinion that there are no changes in estimates at the end of the reporting period. 6.2 Critical judgement made in applying accounting policies There are no critical judgements made by management in the process of applying the Groups accounting policies that have the most significant effect on the amount recognised in the financial statements apart from those involving estimates, which are dealt with below. 6.3 Key sources of estimation uncertainty The following are key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. (i) Impairment of property, plant and equipment and investments in subsidiaries Property, plant and equipment and investments in subsidiaries are assessed for impairment losses whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Such assessment requires the Directors to make estimates of the recoverable amounts. Impairment loss is recognised for the amount by which the carrying amount of the assets exceeds its recoverable amount, which is the higher of an assets fair value less cost to sell and its value in use. The Directors believe that the estimates of the recoverable amounts are reasonable.

(ii) Income taxes Significant judgement is required in determining transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for any anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. (iii) Depreciation of property, plant and equipment The cost of property, plant and equipment is depreciated on a straight line basis over the assets useful lives. Management estimates the useful lives of these property, plant and equipment in accordance with accounting policy stated in Note 4.4 on property, plant and equipment and depreciation. These are common life expectancies applied in this industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, and therefore future depreciation charges could be revised. (iv) Fair values of borrowings The fair values of the borrowings are estimated by discounting future contractual cash flows at the current market interest rates available to the Group for similar financial instruments. It is assumed that the effective interest rates approximate the current market interest rates available to the Group based on its size and business risk.

75

Notes to the Financial Statements


31 July 2011

(continued)

6.

SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)


6.3 Key sources of estimation uncertainty (continued) (v) Impairment of receivables The Group makes impairment of receivables based on an assessment of the recoverability of receivables. Impairment is applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. The management specifically analyses historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of impairment of receivables. Where expectations differ from the original estimates, the differences will impact the carrying value of receivables. (vi) Write down for obsolete or slow moving inventories The Group writes down its obsolete or slow moving inventories based on assessment of their estimated net selling price. Inventories are written down when events or changes in circumstances indicate that the carrying amounts may not be recoverable. The management specifically analyses sales trend and current economic trends when making a judgement to evaluate the adequacy of the write down for obsolete or slow moving inventories. Where expectations differ from the original estimates, the differences will impact the carrying amount of inventories.

(vii) Deferred tax assets Deferred tax assets are recognised for all unused tax losses, unabsorbed capital allowances and other deductible temporary differences to the extent that it is probable that taxable profits will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

76

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

7.

PROPERTY, PLANT AND EQUIPMENT


Balance as at 1.8.2010, as restated RM Disposal of a subsidiary RM Depreciation charge for the financial year RM Balance as at 31.7.2011 RM

Group 2011 Carrying amount Freehold land at 2010 valuation Freehold buildings at 2010 valuation Leasehold land Leasehold buildings at 2010 valuation Motor vehicles Plant and machinery Renovation, furniture and fittings Tools and equipment

Additions RM

Disposals RM

4,120,000 1,160,333 1,418,037 5,506,717 35,030 4,235,626 238,770 2,532,707 19,247,220

5,000 8,835 372,746 386,581

(387,922) (387,922)

(178,154) (178,154)

(23,600) (39,225) (112,000) (4,413) (705,285) (95,861) (640,978) (1,621,362)

4,120,000 1,136,733 1,378,812 5,394,717 30,617 3,535,341 151,744 1,698,399 17,446,363

Group 2011 Freehold land Freehold buildings Leasehold land Leasehold buildings Motor vehicles Plant and machinery Renovation, furniture and fittings Tools and equipment

<-------------------------------------------- At 31.7.2011--------------------------------------------------> Accumulated Accumulated impairment Carrying Cost Valuation depreciation losses amount RM RM RM RM RM 1,569,000 1,506,446 21,503,704 3,722,972 9,975,047 38,277,169 4,120,000 1,180,000 5,600,000 10,900,000 (43,267) (190,188) (205,283) (1,475,829) (17,968,363) (3,310,228) (8,276,648) (31,469,806) (261,000) (261,000) 4,120,000 1,136,733 1,378,812 5,394,717 30,617 3,535,341 151,744 1,698,399 17,446,363

77

Notes to the Financial Statements


31 July 2011

(continued)

7.

PROPERTY, PLANT AND EQUIPMENT (CONTINUED)


Balance as at 1.8.2009, as restated RM Depreciation charge for the financial year RM Revaluation surplus/(deficit) recognised in Profit or loss Equity RM RM Balance as at 31.7.2010, as restated RM

Group 2010 Carrying amount Freehold land at 2006 valuation at 2010 valuation Freehold buildings at 2006 valuation at 2010 valuation at cost Leasehold land Leasehold buildings at 2006 valuation at 2010 valuation Motor vehicles Plant and machinery Renovation, furniture and fittings Tools and equipment

Additions RM

Written off RM

Reclassification RM

3,725,000 641,080 860,612 1,459,535 4,729,140 48,689 4,763,535 392,542 2,613,076 19,233,209

203,812 1,380 652,788 857,980

(1,040) (1,040)

(2,273) (19,667) (2,988) (41,498) (16,770) (93,283) (13,659) (731,721) (155,152) (732,117) (1,809,128)

(3,725,000) 3,725,000 (638,807) 1,496,431 (857,624) (4,712,370) 4,712,370

(294,869) 887,630 592,761

395,000 (21,562) 373,438

4,120,000 1,160,333 1,418,037 5,506,717 35,030 4,235,626 238,770 2,532,707 19,247,220

78

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

7.

PROPERTY, PLANT AND EQUIPMENT (CONTINUED)


<-------------------------------------------- At 31.7.2010-------------------------------------> Accumulated Accumulated Carrying Valuation depreciation impairment amount Cost (restated) (restated) losses (restated) RM RM RM RM RM 1,569,000 1,506,447 21,498,704 3,714,137 10,837,850 39,126,138 4,120,000 1,180,000 5,600,000 10,900,000 (19,667) (150,963) (93,283) (1,471,417) (17,263,078) (3,214,367) (8,305,143) (30,517,918) (261,000) (261,000) 4,120,000 1,160,333 1,418,037 5,506,717 35,030 4,235,626 238,770 2,532,707 19,247,220

Group 2010 Freehold land Freehold buildings Leasehold land Leasehold buildings Motor vehicles Plant and machinery Renovation, furniture and fittings Tools and equipment

Company 2011 Carrying amount Renovation, furniture and fittings

Balance as at 1.8.2010 RM

Additions RM

Depreciation charge for the financial year RM

Balance as at 31.7.2011 RM

1,829 1,829

(406) (406)

1,423 1,423

<--------------- At 31.7.2011---------------------> Accumulated Carrying Cost depreciation amount RM RM RM Renovation, furniture and fittings 1,829 1,829 (406) (406) 1,423 1,423

79

Notes to the Financial Statements


31 July 2011

(continued)

7.

PROPERTY, PLANT AND EQUIPMENT (CONTINUED)


(a) As at 31 July 2011, property, plant and equipment of the Group with a carrying amount of RM16,022,039 (2010: RM19,219,907) are pledged to a licensed bank for credit facilities granted to the Group (Notes 15 and 19).

8.

INVESTMENTS IN SUBSIDIARIES
Company 2011 RM Unquoted equity shares, at cost Less: Accumulated impairment losses 24,701,786 (16,333,277) 8,368,509 2010 RM 24,968,733 (16,333,277) 8,635,456

(b) During the financial year, the Group reassessed its leases of land in accordance with the Amendment to FRS 117 to be finance leases. The classification of prepaid lease payments for land as property, plant and equipment has been accounted for retrospectively. The effects of the reclassifications are shown in Note 34 to the financial statements. (c) In the previous financial year, included in property, plant and equipment of the Group were plant and machinery with a carrying amount of RM160,633 acquired under hire purchase arrangements.

The details of the subsidiaries, which are all incorporated in Malaysia, are as follows: Equity interest 2011 2010 % %

(d) The freehold land and buildings as well as the leasehold buildings of the Group were revalued on 28 September 2009 by the Directors based on a valuation carried out by independent professional valuers using the open market value on existing use basis. Had the revalued assets been carried at cost less accumulated depreciation, the carrying amounts would have been as follows: Group 2011 RM Freehold land Buildings 1,827,583 4,368,727 6,196,310 2010 RM

Name of Company Takaso Rubber Products Sdn. Bhd.

Principal activities

100

100

Manufacturing of rubber products and baby products and trading in baby apparels, infant milk and toiletries Manufacturing and repairing of moulds Trading of baby products and apparels

LSR Technology Sdn. Bhd. 1,827,583 4,484,732 Japlo Healthcare Sdn. Bhd. 6,312,315 Takaso Trading Sdn. Bhd. (Formerly known as Romantic Family Planning Sdn. Bhd.)

100

100

100

100

100

Dormant

80

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

8.

INVESTMENTS IN SUBSIDIARIES (CONTINUED)


Equity interest Subsidiary of Takaso 2011 2010 Rubber Products Sdn. Bhd. % % Takaso Marketing Sdn. Bhd.

The Group reversed RM186,102 (2010: Nil) in respect of inventories written down in the previous financial years that was subsequently not required as the Group was able to sell those inventories above their carrying amounts.

Principal activities

10. TRADE AND OTHER RECEIVABLES


100 100 Marketing of rubber products and baby products and trading in baby apparels, infant milk and toiletries Trade receivables Group 2011 RM 2010 RM 2011 RM Company 2010 RM

(a)

On 15 December 2010, the Company disposed its entire shareholding in a subsidiary, LSR Technology Sdn. Bhd. to a third party for a total consideration of RM275,262. Accordingly, LSR Technology Sdn. Bhd. ceased to be a subsidiary of the Company.

Third parties Less: Impairment loss

3,791,037 (401,612) 3,389,425

5,374,671 (833,060) 4,541,611

(b) The impairment losses on certain investments in subsidiaries were recognised in the previous financial years to reduce the carrying amount of the investments in subsidiaries to their recoverable amounts. The recoverable amounts of the investments in subsidiaries were determined by reference to their value in use.

Other receivables, deposits and prepayments Amounts owing by subsidiaries Other receivables Deposits Prepayments Less: Impairment loss Third parties

9.

INVENTORIES
Group At cost Raw materials Workinprogress Finished goods 2011 RM 2,525,608 1,166,490 1,997,685 5,689,783 2010 RM 2,583,242 2,028,692 2,672,538 7,284,472

312,889 57,020 520,011 889,920

314,039 69,795 125,523 509,357

49,076 391,351 440,427

1,000 1,000

(239,813) 650,107 4,039,532

(239,813) 269,544 4,811,155

440,427 440,427

1,000 1,000

81

Notes to the Financial Statements


31 July 2011

(continued)

10. TRADE AND OTHER RECEIVABLES (CONTINUED)


(a) Trade receivables are noninterest bearing and the normal trade credit terms granted by the Group range from one to four months (2010: one to four months). They are recognised at their original invoice amounts which represent their fair value on initial recognition.

Receivables that are neither past due nor impaired Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group and the Company. None of the trade receivables of the Group that are neither past due nor impaired have been renegotiated during the financial year. Receivables that are past due but not impaired Trade receivables that are past due but not impaired mainly arose from customers where the Group has a healthy business relationship with, whereby the management is of the view that the amounts are recoverable based on past payments history. The trade receivables of the Group that are past due but not impaired are unsecured in nature. Receivables that are past due and impaired Trade receivables of the Group that are past due and impaired at the end of the reporting period are as follows:

(b) Amounts owing by subsidiaries represented advances and payments on behalf by the Company, which are unsecured, interestfree and payable upon demand in cash and cash equivalents. (c) The ageing analysis of trade receivables of the Group is as follows: Group 2011 RM Neither past due nor impaired Past due, not impaired 1 to 30 days 31 to 60 days More than 60 days 94,169 123,856 760,380 978,405 650,689 310,276 1,867,515 2,828,480 2010 RM 2011 RM Company 2010 RM

2,411,020

1,713,131

Group Trade receivables, gross Less: Impairment loss

Individually impaired 2011 2010 RM RM 401,612 (401,612) 833,060 (833,060)

Past due and impaired

401,612 3,791,037

833,060 5,374,671

82

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

10. TRADE AND OTHER RECEIVABLES (CONTINUED)


(c) The ageing analysis of trade receivables of the Group is as follows (continued): The reconciliation of movements in the impairment loss on trade receivables is as follows: Group 2011 RM At 1 August 2010/2009 Charge for the financial year Reversal Written off At 30 July 2011/2010 833,060 292,825 (102,844) (621,429) 401,612 2010 RM

11. CASH AND CASH EQUIVALENTS


Group 2011 RM Cash and bank balances 2010 RM 2011 RM Company 2010 RM

624,453

502,659

5,460

2,116

(a) 1,063,072 (147,095) (82,917) 833,060

The currency exposure profile of cash and cash equivalents is as follows: Group 2011 RM Ringgit Malaysia United States Dollar Euro 436,074 187,272 1,107 624,453 2010 RM 165,156 237,994 99,509 502,659 2011 RM 5,460 5,460 Company 2010 RM 2,116 2,116

Trade receivables that are individually determined to be impaired at the end of the reporting period relate to those debtors that exhibit significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements. (d) The currency exposure profile of receivables is follows: Group 2011 RM Ringgit Malaysia 2,852,024 Singapore Dollar 300,537 Euro 131,239 United States Dollar 755,732 4,039,532 2010 RM 3,274,086 125,117 292,280 1,119,672 4,811,155 2011 RM 440,427 440,427 Company 2010 RM 1,000 1,000

83

Notes to the Financial Statements


31 July 2011

(continued)

11. CASH AND CASH EQUIVALENTS (CONTINUED)


(b) For the purpose of the statements of cash flows, cash and cash equivalents comprise the following as at the end of the reporting period: Group 2011 RM Cash and bank balances Bank overdrafts included in borrowings (Note 14) 2010 RM 2011 RM Company 2010 RM

By the sanction of the Court obtained on 13 July 2011, the Company changed its authorised share capital from 50,000,000 ordinary share capital of RM1.00 each to 50,000,000 ordinary shares of RM0.25 each. On 22 July 2011, the Company completed a capital reduction exercise pursuant to Section 64 of the Companies Act, 1965 to reduce the Companys issued and paid-up ordinary share capital from 41,187,988 ordinary shares of RM1.00 each to 41,187,988 ordinary shares of RM0.25 each by way of cancellation of RM0.75 from the par value of each existing ordinary shares of the Company. Warrants 2003/2013 Pursuant to a deed poll dated 22 August 2003 (Deed Poll), the Company issued 5,883,992 warrants (Warrants) in conjunction with the issue of 5,883,992 renounceable rights issue at nominal value of RM1.00 in 2003. The salient features of the Warrants as stated in the Deed Poll are as follows: (a) Each Warrant entitles the registered holder at any time during the exercise period to subscribe for one ordinary share at an exercise price of RM1.00 per ordinary share.

624,453

502,659

5,460

2,116

(4,441,798) (3,817,345)

(4,365,905) (3,863,246)

5,460

2,116

12. SHARE CAPITAL Group and Company 2011 Number of shares Ordinary shares of RM0.25 (2010: RM1.00) each Authorised Issued and fully paid At beginning of the financial year Par value reduction At end of the financial year RM Number of shares 2010 RM

(b) The exercise price and the number of Warrants are subject to adjustment in accordance with the conditions provided in the Deed Poll. (c) In the case of windingup of the Company, all Subscription Rights which have not been exercised within six weeks of the passing of such resolution shall lapse and the Warrants will cease to be valid for any purpose.

50,000,000

12,500,000

50,000,000

50,000,000

(d) The exercise period is approximately 10 years from the date of issue to expire on 13 November 2013. (e) Upon expiry of the exercise period, any Warrants which has not been exercised will lapse and cease to be valid for any purpose.

41,187,988 41,187,988 (30,890,991)

41,187,988

41,187,988

84

41,187,988

10,296,997

41,187,988

41,187,988

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

12. SHARE CAPITAL (CONTINUED)


Warrants 2003/2013 (Continued) The Warrants were granted for listing and quotation with effect from 27 November 2003. Pursuant to Condition 3.1(d) and Condition 3.1(e) of the Second Schedule (Part III) and Clause 2(v) of the Third Schedule (Memorandum) of the Deed Poll, an adjustment shall be made to the exercise price and/or the number of Warrants, if the Company shall make any offer or invitation to the shareholders of the Company by way of rights whereunder they may acquire or subscribe for shares or acquire or subscribe for securities convertible into or rights to acquire or subscribe for shares in the Company. Pursuant thereto, as a consequence to the renounceable rights issue of up to 141,215,940 of the Companys shares (Rights Shares) on the basis of three (3) Rights Shares for every one (1) existing share held after the par value reduction together with up to 84,729,564 free detachable new warrants on the basis of three (3) warrants for every five (5) Rights Shares subscribed by the entitled shareholders, which had been completed on 13 September 2011, the exercise price of the Warrants, after the adjustment is RM0.89 and the number of outstanding Warrants, after the adjustment is 6,529,131. The adjustment to the exercise price and the number of outstanding Warrants is reflected in the Supplemental Deed Poll dated 18 August 2011. There were no Warrants being exercised during the financial year ended 31 July 2011. As at 31 July 2011, 5,883,992 warrants have yet to be converted.

13. RESERVES
Group 2011 RM Nondistributable: Revaluation reserve Distributable: Accumulated losses 2010 RM 2011 RM Company 2010 RM

2,891,119

2,891,119

(2,263,305) (30,991,593) 627,814 (28,100,474)

(1,994,116) (32,648,353) (1,994,116) (32,648,353)

The revaluation reserve represents the surplus arising from the revaluation of property.

14. BORROWINGS
Group 2011 RM Noncurrent liabilities Secured: Hire purchase creditors Term loans 2010 RM

99,896 99,896

1,076 1,351,754 1,352,830

85

Notes to the Financial Statements


31 July 2011

(continued)

14. BORROWINGS (CONTINUED)


Group 2011 RM Current liabilities Secured: Bank overdrafts Bankers acceptances Hire purchase creditors Term loans 2010 RM

15. BANK OVERDRAFTS, BANKERS ACCEPTANCES AND TERM LOAN


Bank overdrafts, bankers acceptances and term loan of certain subsidiaries are secured by a fixed charge over property, plant and equipment with carrying amounts of RM16,022,039 (2010: RM19,219,907) (Note 7). These borrowings are also guaranteed by the Company.

4,441,798 3,994,000 1,560,099 9,995,897

4,365,905 4,981,000 35,877 914,938 10,297,720

16. HIRE PURCHASE CREDITORS


Group 2011 RM Minimum hire purchase payments: not later than one year later than one year and not later than five years 2010 RM

Total borrowings Bank overdrafts (Note 15) Bankers acceptances (Note 15) Hire purchase creditors (Note 16) Term loans (Note 15)

38,861 1,080 39,941 (2,988) 36,953

4,441,798 3,994,000 1,659,995 10,095,793

4,365,905 4,981,000 36,953 2,266,692 11,650,550

Less: Future interest charges Carrying value of hire purchase liabilities

Maturity of borrowings Within one year More than one year and less than five years

9,995,897 99,896 10,095,793

10,297,720 1,352,830 11,650,550

Repayable as follows: Current liabilities: not later than one year Noncurrent liabilities: later than one year and not later than five years

35,877 1,076 36,953

86

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Notes to the Financial Statements


31 July 2011

(continued)

17. DEFERRED TAX LIABILITIES


(a) Deferred tax assets and deferred tax liabilities are made up of the following: Group 2011 RM Balance as at 1 August 2010/2009 Recognised in profit or loss Revaluation surplus Balance as at 31 July Presented after appropriate offsetting: Deferred tax assets Deferred tax liabilities 2,370,725 (2,486,255) (115,530) 2,370,725 (2,486,255) (115,530) (115,530) (115,530) 2010 RM (115,530) (115,530)

(b) The components and movements of deferred tax assets and liabilities during the financial year prior to offsetting are as follows: Unused tax losses and unabsorbed capital allowances RM 2,171,725 2,171,725 2,171,725

Deferred tax assets of the Group As at 1 August 2009 Recognised in profit or loss As at 31 July/1 August 2010 Recognised in profit or loss As at 31 July 2011

Others RM 199,000 199,000 199,000

Total RM 2,370,725 2,370,725 2,370,725

Deferred tax liabilities of the Group As at 1 August 2009 Recognised in profit or loss Recognised in equity As at 31 July/1 August 2010 Recognised in profit or loss As at 31 July 2011

Property, plant and equipment RM (2,229,001) (2,229,001) (2,229,001)

Revaluation surplus RM (141,724) (115,530) (257,254) (257,254)

Total RM (2,370,725) (115,530) (2,486,255) (2,486,255)

87

Notes to the Financial Statements


31 July 2011

(continued)

17. DEFERRED TAX LIABILITIES (CONTINUED)


(c) The amounts of temporary differences for which no deferred tax assets have been recognised in the financial statements are as follows: Group 2011 RM Unused tax losses Unabsorbed capital allowances Other deductible timing differences 14,053,910 1,392,209 114,779 15,560,898 2010 RM 12,595,418 475,156 830,442 13,901,016

18. TRADE AND OTHER PAYABLES


Group 2011 RM Trade payables Third parties Other payables Amounts owing to Directors Amount owing to a subsidiary Other payables Accruals 2010 RM 2011 RM Company 2010 RM

2,308,614

3,185,644

1,011,937 2,271,403 1,109,171 4,392,511 6,701,125

524,542 2,075,948 1,268,126 3,868,616 7,054,260

53,392 190,161 238,040 31,345 512,938 512,938

36,542 35,050 27,345 98,937 98,937

Deferred tax assets of certain subsidiaries have not been recognised in respect of these items as it is not probable that taxable profit of certain subsidiaries will be available against which the deductible temporary differences can be utilised. The unused tax losses and unabsorbed capital allowances do not expire under the current tax legislation.

(a)

Trade payables are noninterest bearing and the normal trade credit terms granted to the Group range from one to five months (2010: one to five months).

(b) Amounts due to Directors and a subsidiary represent mainly advances and remuneration payable, which are unsecured, interestfree and payable upon demand in cash and cash equivalents.

88

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Notes to the Financial Statements


31 July 2011

(continued)

18. TRADE AND OTHER PAYABLES (CONTINUED)


(c) The currency exposure profile of payables is as follows: Group 2011 RM Ringgit Malaysia 5,276,142 Singapore Dollar 608,183 United States Dollar 586,180 Chinese Renmimbi 230,620 6,701,125 2010 RM 5,216,698 5,997 1,534,945 296,620 7,054,260 2011 RM 512,938 512,938 Company 2010 RM 98,937

20. REVENUE
Group 2011 RM Sale of goods 16,843,878 2010 RM 19,045,424

21. COST OF SALES


98,937 Cost of sales represents cost of inventories sold.

22. FINANCE COSTS


Group 2011 RM 2010 RM 183,583 4,224 361,544 191,608 5,521 207,479 953,959 2011 RM 159 159 Company 2010 RM 107 107

19. CONTINGENT LIABILITIES


Company 2011 RM Guarantees for banking facilities granted by financial institutions to subsidiaries secured (Note 7) 2010 RM Bank charges Commitment fee Interest expense on: bank overdrafts bankers acceptance hire purchase term loan 166,150 2,398 397,138 247,527 2,553 154,303 970,069 The Directors are of the view that the chances of the financial institutions to call upon the guarantees are not probable.

10,095,793

11,733,597

89

Notes to the Financial Statements


31 July 2011

(continued)

23. LOSS BEFORE TAX


Group 2011 RM Loss before tax is arrived at after charging: Auditors remuneration Bad debts written off: subsidiary Depreciation of property, plant and equipment (Note 7) Directors remuneration: Fees: payable by the Company Other emoluments: payable by the Company payable by a subsidiary Impairment loss on receivables trade receivables (Note 10(c)) other receivables Property, plant and equipment written off (Note 7) Realised loss from foreign currency transactions Rental of premises Revaluation deficit on property, plant and equipment (Note 7) 2010 (Restated) RM 2011 RM Company 2010 RM

65,000 1,621,362

65,000 1,809,128

24,000 406

22,000 12,094,395

62,000 14,875 316,720 292,825 26,456 143,920

57,792 7,200 375,180 239,813 1,040 136,915 194,820 294,869

62,000 14,875

57,792 7,200

90

Takaso Resources Berhad

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Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

23. LOSS BEFORE TAX (CONTINUED)


Group 2011 RM And crediting: Bad debts recovered Gain on disposal of: a subsidiary (Note 27) property, plant and equipment Gain on revaluation of property, plant and equipment (Note 7) Realised gain from foreign currency transactions Reversal of: inventories written down (Note 9) impairment loss on receivables (Note 10(c)) Waiver of amounts owing to subsidiaries 1,160 30,273 302,078 5,315 186,102 102,844 887,630 147,095 8,315 615,255 2010 (Restated) RM 2011 RM Company 2010 RM

In the previous financial year, the estimated monetary value of benefitsinkind received by the Directors otherwise than in cash from the Group amounted to RM18,615.

91

Notes to the Financial Statements


31 July 2011

(continued)

24. TAX EXPENSE


The numerical reconciliation between the tax expense and the product of accounting loss multiplied by the applicable tax rate of the Group and of the Company are as follows: Group 2011 RM Loss before tax Tax at Malaysian statutory tax rate of 25% (2010:25%) Tax effects in respect of: Nonallowable expenses Nontaxable income Deferred tax assets not recognised during the year (2,162,703) 2010 RM (1,535,933) 2011 RM Company 2010 RM

25. LOSS PER ORDINARY SHARE


(a) Basic Basic loss per ordinary share for the financial year is calculated by dividing the loss for the financial year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the financial year. Group 2011 RM Loss for the financial year attributable to owners of the parent (540,676) (383,983) (59,189) (2,920,265) Weighted average number of ordinary shares in issue 2010 RM

(236,754) (11,681,061)

2,162,703 Unit 41,187,988 Sen 5.25

1,535,933 Unit 41,187,988 Sen 3.73

Basic loss per ordinary share 125,705 28,746 61,267 (2,078) 3,074,079 (153,814) (b) Diluted

The diluted earnings per ordinary share of the current and previous financial years are not presented as it is antidilutive. 414,971 355,237

92

Takaso Resources Berhad

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Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

26. EMPLOYEE BENEFITS


Group 2011 RM Wages and salaries Contributions to defined contributions plan Other benefits 4,141,078 2010 RM 4,661,647 2011 RM Company 2010 RM Company Cost of investment Gain on disposal Net proceeds from disposal

2011 RM 266,947 8,315 275,262

458,813 54,381 4,654,272

497,380 118,020 5,277,047

3,500 3,500

2,100 2,100

28. RELATED PARTY DISCLOSURES


(a) Identities of related parties Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. The Company has controlling related party relationships with its direct and indirect subsidiaries. Related parties of the Group include: (i) Direct and indirect subsidiaries as disclosed in Note 8 to the financial statements; (ii) Spouse of Tee Tze Chern, JP Lim Kwee Hua (Staff of the Group); and (iii) Key management personnel which comprises persons (including the Directors of the Company) having authority and responsibility for planning, directing and controlling the activities of the Group directly or indirectly.

Included in the employee benefits of the Group and of the Company are Executive Directors remuneration of RM305,220 (2010: RM298,080) and RM3,500 (2010: RM2,100) respectively.

27. DISPOSAL OF A SUBSIDIARY


On 15 December 2011, the Company completed the disposal of its entire equity interest in a subsidiary, LSR Technology Sdn. Bhd., a company incorporated in Malaysia which is engaged in the manufacturing and repairing of moulds, components articles and other related products for a cash consideration of RM275,262. The gain on disposal of the subsidiary during the financial year is as follows: 2011 RM 244,989 30,273 275,262 (2,933) 272,329

Group Net assets disposed Gain on disposal Net proceeds from disposal Cash and bank balances of a subsidiary disposed Net cash inflow

93

Notes to the Financial Statements


31 July 2011

(continued)

28. RELATED PARTY DISCLOSURES (CONTINUED)


(b) Related party transactions The Company had the following transactions with related parties during the financial year: 2011 RM Subsidiaries Net advances received 141,085 194,350 2010 RM

(c)

Compensation of key management personnel The remuneration of Directors and other key management personnel during the financial year was as follows: Group 2011 RM Directors emoluments paid to: Executive Directors fees 27,000 salaries, allowances and bonuses 274,500 contribution to defined contribution plan 30,720 Nonexecutive Directors fees salaries and allowances 2010 RM 2011 RM Company 2010 RM

24,500

27,000

24,500

The related party transactions were carried out on negotiated and mutually agreed terms and conditions. Information regarding outstanding balances arising from related parties as at 31 July 2011 are disclosed in Note 10 and Note 18 to the financial statements.

279,300

3,500

2,100

18,780

35,000 26,375

33,292 84,300

35,000 11,375

33,292 5,100

94

Takaso Resources Berhad

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Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

28. RELATED PARTY DISCLOSURES (CONTINUED)


(c) Compensation of key management personnel (continued) Group 2011 RM 2010 RM 2011 RM Company 2010 RM

Others

: Consist of investment holding company and a subsidiary which is dormant

The accounting policies of operating segments are the same as those described in the summary of significant accounting policies. The Group evaluates performance on the basis of profit or loss from operations. The Directors are of the opinion that all intersegment transactions have been entered into in the normal course of business and are based on negotiated and mutually agreed terms. Intersegment revenue is eliminated in the consolidated financial statements. Segment assets exclude tax assets.

Other key management personnel Salaries, allowances and bonuses contribution to defined contribution plan

338,290

410,000

Segment liabilities exclude tax liabilities.

40,596

49,320

29. OPERATING SEGMENTS


Takaso Resources Berhad and its subsidiaries are principally engaged in manufacturing of rubber products and baby products as well as trading in baby apparels, infant milk and toiletries. The Group has arrived at three reportable segments that are organised and managed separately according to the nature of products and services. The reportable segments are summarised as follows: Manufacturing : Manufacturing of condoms, baby products and moulds Trading : Trading and retailing in rubber products, baby apparels, infant milk formula and toiletries

95

Notes to the Financial Statements


31 July 2011

(continued)

29. OPERATING SEGMENTS (CONTINUED)


Group 2011 Revenue Total revenue Intersegment revenue Revenue from external customers Manufacturing RM Trading RM Others RM Consolidated RM

15,270,151 (3,308,714) 11,961,437

4,905,286 (22,845) 4,882,441

20,175,437 (3,331,559) 16,843,878

Finance costs Depreciation Segment loss before income tax Other material noncash items: Impairment loss on receivables Reversal of: inventories written down impairment loss on receivables Additions to noncurrent assets other than financial instruments and deferred tax assets Segment assets Current tax assets Total assets Segment liabilities Deferred tax liabilities Total liabilities

968,653 1,606,997 (1,258,164)

1,257 13,959 (463,684)

159 406 (440,855)

970,069 1,621,362 (2,162,703)

279,828 186,102 381,466 25,269,202 37,128 25,306,330 15,895,258 115,530 16,010,788

12,997 102,844 3,286 2,119,837 2,119,837 209,588 209,588

1,829 411,092 411,092 692,072 692,072

292,825 186,102 102,844 386,581 27,800,131 37,128 27,837,259 16,796,918 115,530 16,912,448

96

Takaso Resources Berhad

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Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

29. OPERATING SEGMENTS (CONTINUED)


Group 2010 Revenue Total revenue Intersegment revenue Revenue from external customers Manufacturing RM Trading RM Others RM Consolidated RM

17,312,223 (2,716,689) 14,595,534

4,486,213 (36,323) 4,449,890

21,798,436 (2,753,012) 19,045,424

Finance costs Depreciation Segment (loss)/profit before income tax Other material noncash items: Gain on revaluation of the property, plant and equipment Impairment loss on receivables Revaluation deficit on property, plant and equipment Reversal of impairment loss on receivables Additions to noncurrent assets other than financial instruments and deferred tax assets Segment assets Current tax assets Total assets Segment liabilities Deferred tax liabilities Total liabilities

952,313 1,795,318 (1,674,351)

1,539 13,810 342,735

107 (204,317)

953,959 1,809,128 (1,535,933)

856,900 29,729,274 62,348 29,791,622 18,358,272 115,530 18,473,802

887,630 239,813 294,869 147,095 1,080 2,113,116 2,113,116 246,325 246,325

3,116 3,116 100,213 100,213

239,813 147,095 857,980 31,845,506 62,348 31,907,854 18,704,810 115,530 18,820,340

97

Notes to the Financial Statements


31 July 2011

(continued)

29. OPERATING SEGMENTS (CONTINUED)


Geographical information The Groups manufacturing facilities and sales offices are based in Malaysia. In presenting information on the basis of geographical areas, segment revenue is based on the geographical location from which the sales orders originated. Segment assets are based on the geographical location of the Groups assets. The noncurrent assets do not include financial instruments and deferred tax assets. Revenue by location of customers 2011 2010 RM RM Malaysia Other Asian countries European countries African countries Others 6,868,108 7,513,770 1,266,542 846,931 348,527 16,843,878 7,261,558 8,326,667 2,224,564 599,131 633,504 19,045,424 Noncurrent assets by location of assets 2011 2010 RM RM 17,446,363 17,446,363 19,247,220 19,247,220 Capital expenditure by location of assets 2011 2010 RM RM 386,581 386,581 857,980 857,980

There is no revenue from any single external customer which is equal or more than 10 percent of the Groups revenue.

98

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Notes to the Financial Statements


31 July 2011

(continued)

30. FINANCIAL INSTRUMENTS


(a) Capital management The primary objective of the Groups capital management is to ensure that it maintains healthy ratios in order to support its business operations and to provide fair returns for shareholders and benefits for other stakeholders. The Group manages its capital structure and makes adjustments to it, as deemed appropriate. In order to maintain or adjust the capital structure, the Group may, from time to time, adjust the dividend payout to shareholders, issue new shares and redeem debts, where necessary. No changes were made in the objectives, policies or processes during the financial years ended 31 July 2011 and 31 July 2010. The Group is not subject to any extremely imposed capital requirements. The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group regards net debt to include all loans and borrowings less cash and cash equivalents (including fixed deposits) and capital to include all equities attributable to the equity holders of the Company. Gearing ratio (%) 46.4% Loans and borrowings Less: Cash and cash equivalents Net debt 2011 RM 10,095,793 (624,453) 9,471,340

Group 2010 RM 11,650,550 (502,659) 11,147,891

Total capital Net debt Equity attributable to owners of the parent

10,924,811 9,471,340 20,396,151

13,087,514 11,147,891 24,235,405

46.0%

99

Notes to the Financial Statements


31 July 2011

(continued)

30. FINANCIAL INSTRUMENTS (CONTINUED)


(b) Financial instruments Certain comparative figures have not been presented for 31 July 2010 by virtue of the exemption given in paragraph 44AA of FRS 7. Categories of financial instruments Fair value through profit or loss RM

Group 2011 Financial assets Trade and other receivables Cash and cash equivalents

Loans and receivables RM

Available forsale RM

Held to maturity RM

Total RM

4,039,532 624,453 4,663,985

4,039,532 624,453 4,663,985

Group 2011 Financial liabilities Borrowings Trade and other payables

Fair value through profit or loss RM

Other financial liabilities RM

Total RM

10,095,793 6,701,125 16,796,918

10,095,793 6,701,125 16,796,918

100

Takaso Resources Berhad

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Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

30. FINANCIAL INSTRUMENTS (CONTINUED)


(b) Financial instruments (continued) Categories of financial instruments (continued) Fair value through profit or loss RM

Company 2011

Loans and receivables RM

Available forsale RM

Held to maturity RM

Total RM

Financial assets Trade and other receivables Cash and cash equivalents

440,427 5,460 445,887

440,427 5,460 445,887

Company 2011

Fair value through profit or loss RM

Other financial liabilities RM

Total RM

Financial liabilities Trade and other payables

512,938 512,938

512,938 512,938

101

Notes to the Financial Statements


31 July 2011

(continued)

30. FINANCIAL INSTRUMENTS (CONTINUED)


(c) Fair values of financial instruments The fair values of financial instruments that are not carried at fair value and whose carrying amounts do not approximate its fair values are as follows: Group Carrying amount RM 2011 Recognised Financial liabilities: Hire purchase and lease creditors Fair value RM

nature or that they are floating rate instruments that are repriced to market interest rates on or near the end of the reporting period. (ii) Hire purchase and lease creditors The fair values of these borrowings are estimated based on the future contractual cash flows discounted at current market interest rates available for similar financial instruments and of the same remaining maturities.

31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES


Exposure to credit risk, liquidity and cash flow risk, foreign currency risk and interest rate risk arises in the normal course of the Groups businesses. The Groups overall financial risk management objective is to minimise potential adverse effects on the financial performance of the Group. The Groups overall business strategies, its tolerance of risk and its general risk management philosophy are determined by the management in accordance with prevailing economic and operating conditions. Financial risk management is carried out through risk review, internal control systems and adherence to the Groups financial risk management policies. The Group does not have financial instruments for trading purposes. The Groups management policies for managing each of the financial risk are summarised below: (i) Credit risk Cash deposits and receivables may give rise to credit risk, which requires the loss to be recognised if a counter party fails to perform as contracted. Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group seeks to control credit risk by setting counterparty credit limits and ensuring that sales of products are made to customers with appropriate credit history. Receivables are monitored by management on an ongoing basis.

2010 Financial liabilities: Hire purchase and lease creditors

36,953

34,420

(d) Determination of fair values Methods and assumptions used to estimate fair values The fair values of financial assets and financial liabilities are determined as follows: (i) Financial instruments that are not carried at fair values and whose carrying amounts are a reasonable approximation of fair values. The carrying amounts of financial assets and financial liabilities, such as trade and other receivables, trade and other payables and borrowings, are reasonable approximation of fair values, either due to their shortterm

102

Takaso Resources Berhad

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Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)


(i) Credit risk (continued) The Groups primary exposure to credit risk arises through its trade receivables. The carrying amount of financial assets as recorded in the financial statements, grossed up for any impairment losses, represents the Groups maximum exposure to credit risk without taking account of the value of any collateral obtained. Exposure to credit risk At the end of the reporting period, the Groups and the Companys maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position. Credit risk concentration profile The Group determines concentration of credit risk by identifying and monitoring any significant long outstanding balance owing by any major customer or counter party on an ongoing basis. At the end of the reporting period, approximately 36% (2010: 25%) of the Groups trade receivables were due from four major customers who are retailers located in geographical location as such: 2011 RM 2,314,386 755,284 318,912 843 3,389,425 2010 RM 3,026,418 961,726 461,904 91,563 4,541,611

Financial assets that are neither past due nor impaired Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 10 to the financial statements. Deposits with banks and other financial institutions, that are neither past due nor impaired are placed with or entered into with financial institutions with good standing. Financial assets that are either past due or impaired Information regarding financial assets that are either past due or impaired is disclosed in Note 10 to the financial statements. (ii) Liquidity and cash flow risk Liquidity risk is the risk that the Group is unable to service its cash obligations in the future. To mitigate this risk, the management measures and forecasts its cash commitments, monitors and maintains a level of cash and cash equivalents deemed adequate to finance the Groups operations and development activities.

Group Malaysia Other Asian countries European countries African countries

103

Notes to the Financial Statements


31 July 2011

(continued)

31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)


(ii) Liquidity and cash flow risk (continued) Analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the Groups and the Companys liabilities at the end of the reporting period based on contractual undiscounted repayment obligations. 2011 On demand or within one year RM Group Financial liabilities: Trade and other payables Borrowings Total undiscounted financial liabilities One to five years RM Over five years RM

Total RM

6,701,125 10,773,331 17,474,456

107,987 107,987

6,701,125 10,881,318 17,582,443

Company Financial liabilities: Trade and other payables Total undiscounted financial liabilities

512,938 512,938

512,938 512,938

104

Takaso Resources Berhad

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Notes to the Financial Statements


31 July 2011

(continued)

31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)


(iii) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group is exposed to foreign currency exchange risks on transactions that are denominated in currencies other than the functional currency of the operating entities within the Group. Transactional currency exposures arise from sales to the Groups foreign customers as well as purchases from foreign suppliers. It is not the Groups policy to enter into foreign exchange contracts in managing its foreign exchange risk resulting from cash flows on transactions denominated in foreign currency. Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Groups profit after tax to a 10% change in the United States Dollar (USD), Euro Dollar (EURO), Singapore Dollar (SGD) and Chinese Renmimbi (RMB) exchange rates against the Ringgit Malaysia (RM) respectively, with all other variables held constant. 10% is the sensitivity rate used when reporting foreign currency risk exposures internally to key management personnel and represents managements assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only significant outstanding balances denominated in foreign currencies. If the relevant foreign currency fluctuated by 10% against the functional currency of the Group as at the end of the reporting period, loss for the financial year would increase/(decrease) by the following amounts, mainly due to period end exposure on monetary balances denominated in the respective foreign currencies. USD/RM strengthen by 10% weaken by 10% strengthen by 10% weaken by 10% strengthen by 10% weaken by 10% strengthen by 10% weaken by 10%

Group RM Loss after tax (26,762) 26,762 (9,926) 9,926 23,073 (23,073) 17,297 (17,297)

EURO/RM

SGD/RM

RMB/RM

(iv) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Groups and the Companys financial instruments will fluctuate because of changes in market interest rates. The Groups exposure to market risk for changes in interest rates relates primarily to the interestbearing borrowings. The Group does not use derivative financial instruments to hedge this risk. Sensitivity analysis for interest rate risk As at 31 July 2011, if interest rates at the date had been 100 basis points lower with all other variables held constant, posttax loss for the year would have been RM54,347 lower. If interest rates had been 100 basis points higher, with all other variables held constant, posttax loss would have been RM54,347 higher. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

105

Notes to the Financial Statements


31 July 2011

(continued)

31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)


(iv) Interest rate risk (continued) The following tables set out the carrying amounts, the weighted average effective interest rates (WAEAIR) as at the end of the reporting period and the remaining maturities of the Groups and the Companys financial instruments that are exposed to interest rate risk: Within 1 year RM

Note 2011 Floating rate instruments Bank overdrafts Bankers acceptances Term loans

WAEAIR %

1 2 years RM

2 3 years RM

3 4 years RM

4 5 years RM

Total RM

14 14 14

8.94 4.55 7.06

4,441,798 3,994,000 1,560,099

99,896

4,441,798 3,994,000 1,659,995

2010 Fixed rate instruments Hire purchase creditors

16

7.15

35,877

1,076

36,953

Floating rate instruments Bank overdrafts Bankers acceptances Term loans

14 14 14

7.73 3.53 6.58

4,365,905 4,981,000 914,938

1,351,754

4,365,905 4,981,000 2,266,692

106

Takaso Resources Berhad

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Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

32. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR


On 28 January 2011, on behalf of the Board of Directors of the Company, PM Securities Sdn. Bhd. (PM Securities) announced that the Company had proposed to undertake the following: (i) proposed reduction of the par value of the existing ordinary shares of RM1.00 each in the Company to RM0.25 each (TRB Shares) (Proposed Par Value Reduction);

RM10,296,997 of RM0.25 each via the cancellation of RM0.75 from the par value of the existing share capital.

33. SIGNIFICANT EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD


On 13 September 2011, the Rights issue of Shares with Warrants has been completed following the listing of and quotation for 94,033,811 Right Shares together with 56,420,285 Warrants on the Main Market of Bursa Malaysia Securities Berhad. On 3 November 2011, the Company acquired the entire issued and paid-up ordinary share captial of Takaso International Sdn. Bhd. (Formerly known as Secret Universal Sdn. Bhd.), a company incorporated in Malaysia which is currently dormant for a cash consideration of RM2.00.

(ii) proposed renounceable rights issue of up to 141,215,940 TRB Shares (Rights Shares) on the basis of three (3) Rights Shares for every one (1) existing TRB Share held after the Proposed Par Value Reduction together with up to 84,729,564 free detachable new warrants (Warrants) on the basis of three (3) Warrants for every five (5) Rights Shares subscribed by the entitled shareholders (Proposed Rights Issue of Shares with Warrants); (iii) proposed increase in the authorised share capital of the Company from RM50,000,000 comprising 50,000,000 TRB Shares of RM1.00 each to RM100,000,000 comprising 400,000,000 TRB Shares of RM0.25 each after the Proposed Par Value Reduction (Proposed Increase In Authorised Share Capital); and (iv) proposed amendments to the Memorandum and Articles of Association of the Company (Proposed Amendments). (Collectively referred to as Proposals). On 28 April 2011, the shareholders had, in an Extraordinary General Meeting held on this date, approved the Proposals. On 13 July 2011, the High Court of Malaya in Kuala Lumpur (the Court) granted an order to the Company confirming the Proposed Par Value Reduction pursuant to Section 64 of the Companies Act, 1965. On 22 July 2011, the sealed order of the Court had been lodged with the Companies Commission of Malaysia for the Proposed Par Value Reduction to take effect. On even date, the share capital of the Company was reduced from RM41,187,988 of RM1.00 each to

107

Notes to the Financial Statements


31 July 2011

(continued)

34. COMPARATIVES
Certain figures as at 1 August 2009 and 31 July 2010 have been restated due to the effects arising from the adoption of Amendment to FRS 117 Leases, which have resulted in retrospective adjustments. Leasehold land held by the Group for own use were reclassified from prepaid lease payments for land as previously reported to property, plant and equipment leasehold land. Effects on adoption of Amendment to FRS 117 RM

As at 1 August 2009 Group Statement of financial position Assets Noncurrent assets Property, plant and equipment Prepaid lease payments for land

As previously reported RM

As restated RM

17,773,674 1,459,535 19,233,209

1,459,535 (1,459,535)

19,233,209 19,233,209

Current assets Inventories Trade and other receivables Current tax assets Cash and cash equivalents

8,083,528 5,486,932 52,598 54,474 13,677,532

8,083,528 5,486,932 52,598 54,474 13,677,532 32,910,741

Total assets

32,910,741

108

Takaso Resources Berhad

440503-K

Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

34. COMPARATIVES (CONTINUED)


Certain figures as at 1 August 2009 and 31 July 2010 have been restated due to the effects arising from the adoption of Amendment to FRS 117 Leases, which have resulted in retrospective adjustments. Leasehold land held by the Group for own use were reclassified from prepaid lease payments for land as previously reported to property, plant and equipment leasehold land (continued). Effects on adoption of Amendment to FRS 117 RM

As previously reported RM Equity and liabilities Equity attributable to owners of the parent Share capital Reserves Total equity Liabilities Noncurrent liabilities Borrowings

As restated RM

41,187,988 (26,822,449) 14,365,539

41,187,988 (26,822,449) 14,365,539

2,318,301 2,318,301

2,318,301 2,318,301

Current liabilities Trade and other payables Borrowings

4,750,094 11,476,807 16,226,901

4,750,094 11,476,807 16,226,901 18,545,202 32,910,741

Total liabilities Total equity and liabilities

18,545,202 32,910,741

109

Notes to the Financial Statements


31 July 2011

(continued)

34. COMPARATIVES (CONTINUED)


Certain figures as at 1 July 2009 and 31 July 2010 have been restated due to the effects arising from the adoption of Amendment to FRS 117 Leases, which have resulted in retrospective adjustments. Leasehold land held by the Group for own use were reclassified from prepaid lease payments for land as previously reported to property, plant and equipment leasehold land (continued). Effects on adoption of Amendment to FRS 117 RM

Group For the financial year ended 31 July 2010 Statement of comprehensive income Depreciation of property, plant and equipment Amortisation of prepaid lease payments for land Statement of financial position Property, plant and equipment leasehold land Prepaid lease payments for land Statement of cash flows Depreciation of property, plant and equipment Amortisation of prepaid lease payments for land

As previously reported RM

As restated RM

1,767,630 41,498

41,498 (41,498)

1,809,128

1,418,037

1,418,037 (1,418,037)

1,418,037

1,767,630 41,498

41,498 (41,498)

1,809,128

110

Takaso Resources Berhad

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Annual Report 2011

Notes to the Financial Statements


31 July 2011

(continued)

35. SUPPLEMENTARY INFORMATION ON REALISED AND UNREALISED PROFITS OR LOSSES AS AT 31 JULY 2011
The accumulated losses as at the end of the reporting period may be analysed as follows: 2011 Group RM Total accumulated losses of Takaso Resources Berhad and its subsidiaries: Realised Unrealised Company RM

14,372,386 115,530 14,487,916 (12,224,611) 2,263,305

1,994,116 1,994,116 1,994,116

Less: Consolidation adjustments Total group/company accumulated losses as per financial statements

111

List of Properties
Location Description Tenure Existing use, Age of Building and Built up Area Net Book Value as at 31-07-2011 (RM) Date of Revaluation

Lot PTD No. 4917 Mukim Kesang District of Ledang, Johor Darul Tazim.

The Building is a lean-to structure which adjoins a two-storey office cum factory building. A three storey administrative building.

60 years lease expiring on 01.04.2049 (i.e. having an unexpired term of 39 years).

1. A unit of 20 years single storey 4,483,611 lean-to factory building. 2. A unit of 16 years factory building. (1 + 2 with a total built up area of 43,560 sq. ft.). 3. A unit of 7 years 8 months three-storey administrative building with a built up area of 11,500 sq. ft. A 12 years two-storey factory building. 2,289,918

28th September 2009

Lot P.T.D No. 4965 Mukim Kesang District of Ledang Johor Darul Tazim. Lot No. 987 Mukim Sungai Terap District of Muar Johor Darul Tazim. Lot No. 2526 Mukim Serom District of Muar Johor Darul Tazim.

A two-storey factory building. 60 years lease expiring on factory building. 20.09.2049 (i.e. having an unexpired term of 39 years).

28th September 2009

A piece of agriculture land with land area of 77,591.25 sq. ft.

Freehold.

Unoccupied vacant land.

1,000,000

28th September 2009

A piece of newly converted medium industrial land with land area of 395,034.75 sq. ft.

Freehold.

Permitted to build a warehouse with total built up area of 10,940 sq. ft. (8 years 3 months).

4,256,733

28th September 2009

112

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Annual Report 2011

Analysis Of Shareholdings
Authorised Capital Total number issued Class of securities Voting rights Number of shareholders : : : :

As At 20.10.2011

400,000,000 ordinary shares of RM0.25 each 135,221,799 ordinary shares of RM0.25 each Ordinary shares of RM0.25 each Each member of the Company, present in person or by proxy, shall have one (1) vote on a show of hands and in the case of a poll, shall have one (1) vote for every ordinary share held. A proxy need not be a member. : 2,010

DISTRIBUTION OF SHAREHOLDINGS Size of Holdings 1 99 100 1,000 1,001 - 10,000 10,001 - 100,000 100,001 6,761,088 * 6,761,089 and above ** Total Notes: * means less than 5% of issued and paid-up share capital ** means 5% and above of issued and paid-up share capital No. of Holders 97 87 840 848 137 1 2,010 % 4.83 4.33 41.79 42.19 6.82 0.05 100.00 No. of Shares 4,415 52,027 4,332,273 32,422,088 67,130,796 31,280,200 135,221,799 % 0.00 0.04 3.20 23.98 49.64 23.13 100.00

113

Analysis Of Shareholdings As At 20.10.2011

(continued)

DIRECTORS SHAREHOLDINGS AS AT 20.10.2011 The respective shareholdings of the Directors of Takaso Resources Berhad based on the Register of Directors Shareholdings of the Company are as follows:-

Directors

Ordinary Shares of RM0.25 Each Direct Interest Indirect Interest No. of No. of shares shares held % held % 88 0 31,280,200(1) 23.13(1) -

TAKASO-WA Direct Interest Indirect Interest No of No of Warrant A Warrant A held % held % 29(2) 0(2) -

TAKASO-WB Direct Interest Indirect Interest No of No of Warrant B Warrant B held % held % -

Tee Tze Chern, JP Chin Boon Kim Tunku Makhlad Bin Tunku Mohamed Jamil Tan Ooi Jin Wong Koon Wai

Notes: (1) Deemed interested by virtue of Tee Tze Cherns shareholding in JF Apex Nominees (Tempatan) Sdn. Bhd., pledged securities account for Nextplus Fortune Sdn. Bhd., pursuant to Section 6A of the Companies Act, 1965. (2) Deemed interested by Tee Tze Chern by virtue of the Warrant A held by his spouse. SUBSTANTIAL SHAREHOLDERS AS AT 20 OCTOBER 2011 Substantial shareholders (holding 5% or more of the capital) based on the Register of Substantial Shareholdings of the Company as at 20 October 2011 are as follows:Direct Interest No. of Holders Indirect Interest No. of Shares

Substantial Shareholders JF Apex Nominees (Tempatan) Sdn. Bhd. [pledged securities account for Nextplus Fortune Sdn. Bhd. (Margin)]

31,280,200

23.13

114

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Annual Report 2011

THIRTY LARGEST SHAREHOLDERS AS AT 20 OCTOBER 2011 No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Shareholders JF APEX NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR NEXTPLUS FORTUNE SDN. BHD. (MARGIN) TAN YU WEI HENRICK KWOK-HANG YAU HEILESEN TAN LEE HON EB NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR PHOON GAM FOONG (SFC) WONG LEE PENG TOH EAN HAI SHAHIDAN BIN KASSIM TEO YONG FONG MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR DIONG MEE (RF2 MARGIN) SU MING KEAT FOO WEN HANN LEE YU YONG @ LEE YUEN YING JF APEX NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR KOM2 HOLDINGS SDN. BHD. (MARGIN) THONG LEANG CHANG @ THONG LIN CHUN CIMSEC NOMINEES (TEMPATAN) SDN. BHD. CIMB BANK FOR TAY HOCK SOON (MY1055) GOH KIAM TECK KENANGA NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR LIM SIEW ANN YAP CHEE WEI WONG YOOK PHOOI MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR HONG HUEI LENG (RF2-MARGIN) CHIN BOON LONG POH BEE YONG TAY KENG CHONG ENG MOK HOCK M & A NOMINEE (ASING) SDN. BHD. FOR WONG JACQUELINE (STA) HO YIN KEONG YOONG DAI TAI LEE BOON HUAT NG OI LAN No. of Shares 31,280,200 4,987,400 4,323,000 3,500,000 3,316,400 3,217,000 3,093,900 2,350,000 2,101,000 1,750,400 1,600,000 1,110,000 1,100,000 1,030,000 1,020,000 1,000,000 947,400 915,000 817,600 757,000 753,500 749,900 710,000 700,000 655,000 650,000 600,000 558,100 500,000 500,000 76,592,800 % 23.13 3.69 3.20 2.59 2.45 2.38 2.29 1.74 1.55 1.29 1.18 0.82 0.81 0.76 0.75 0.74 0.70 0.68 0.60 0.56 0.56 0.55 0.53 0.52 0.48 0.48 0.44 0.41 0.37 0.37 56.64

115

Analysis Of Warrant A (Takaso-WA) Holdings


Number of outstanding Warrant A Exercise period Exercise price Warrant A Entitlement Number of Warrant A Holders

As At 20.10.2011

: 6,529,131 TAKASO-WA : The exercise period is ten (10) years from the date of issue on 14 November 2003 and maturing on 13 November 2013. : RM0.89 and subject to adjustment in accordance with the conditions provided in the Deed Poll dated 22 August 2003 and Supplemental Deed Poll dated 18 August 2011. : Each Warrant A entitles the registered holder during the Exercise Period to subscribe for one new ordinary share of RM0.25 each at the Exercise Price. : 709

DISTRIBUTION OF WARRANT A HOLDINGS No. of Warrant A Holders 116 166 272 148 6 1 709 No. of Warrant A 5,665 70,467 651,775 4,503,713 938,302 359,209 6,529,131

Size of Holdings 1 99 100 1,000 1,001 10,000 10,001 100,000 100,001 326,455 * 326,456 and above ** Total Notes: * **

% 16.36 23.41 38.36 20.87 0.85 0.14 100.00

% 0.09 1.08 9.98 68.98 14.37 5.50 100.00

means less than 5% of the total Warrant A of the Company means 5% and above of the total Warrant A of the Company

116

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Annual Report 2011

THIRTY LARGEST WARRANT A (TAKASO-WA) HOLDERS AS AT 20 OCTOBER 2011 No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Warrant A Holders RHB CAPITAL NOMINEES (TEMPATAN) SDN. BHD. KHOR LEONG KEE (LPN) PUBLIC NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR ONG JEIK BOON @ ONG TEIK BOON (E-TWU) HLG NOMINEE (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR YEOH AH CHAI (CCTS) TA NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR FOO SEE YOON HDM NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR AZNI JAYA BIN MANSOR (M02) MOHD RAZIB BIN YUNUS YEW YOKE LAM CHEW SAA KOK CHEE PEK FONG PANG TECK SENG TA NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR CHIN JOW FOONG PUBLIC NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR SOON CHIEW LENG (E-TSA) MOHAMAD LAZIF BIN LASIMIN HOO SENG JOO YUSOFF KHAN BIN GULDAD MAYBAN NOMINEES (TEMPATAN) SDN. BHD. TOI HOCK GUAN AZMAN BIN IBRAHIM GOPALA KRISHNAN A/L K. VELLASAMY LYE YOON SEN MAYBAN NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR SOON CHIEW LENG TAN SEAH LEE MOHD HAFIZUDDIN BIN JAMIL CHEW SA PAU CIMSEC NOMINEES (TEMPATAN) SDN. BHD. CIMB BANK FOR LAW YIIK TIN (MQ0193) CHONG QHEK KHEONG CHUA KIM HOCK LEE SOO HOBA LIEW FUNG SHIA @ LIEW FUNG LIAN LOW SU CIN MOHD NASHIR BIN SAAT No. of Warrant A 359,209 293,182 147,590 140,044 128,725 126,669 102,092 91,727 88,776 88,776 88,776 77,568 74,793 72,633 72,130 70,885 70,000 66,582 66,582 66,582 66,582 65,000 62,187 56,816 55,485 55,485 55,485 55,485 55,485 55,485 2,876,816 % 5.50 4.49 2.26 2.14 1.97 1.94 1.56 1.40 1.36 1.36 1.36 1.19 1.15 1.11 1.10 1.09 1.07 1.02 1.02 1.02 1.02 1.00 0.95 0.87 0.85 0.85 0.85 0.85 0.85 0.85 44.06

117

Analysis Of Warrant B (Takaso-WB) Holdings


Number of outstanding Warrant B Exercise period Exercise price Warrant B Entitlement Number of Warrant B Holders : : : :

As At 20.10.2011

56,420,285 TAKASO-WB The exercise period is five (5) years from the date issue on 5 September 2011 and maturing on 4 September 2016. RM0.35 and subject to adjustment in accordance with the conditions provided in the Deed Poll dated 26 July 2011. Each Warrant B entitles the registered holder during the Exercise Period to subscribe for one new ordinary share of RM0.25 each at the Exercise Price. : 622

DISTRIBUTION OF WARRANT B HOLDINGS No. of Warrant B Holders 8 15 224 293 80 2 622 No. of Warrant B 541 9,250 1,240,404 11,578,595 34,591,495 9,000,000 56,420,285

Size of Holdings 1 99 100 1,000 1,001 10,000 10,001 100,000 100,001 2,821,013 * 2,821,014 and above ** Total Notes: * **

% 1.29 2.41 36.01 47.11 12.86 0.32 100.00

% 0.00 0.02 2.20 20.52 61.31 15.95 100.00

means less than 5% of the total Warrant B of the Company means 5% and above of the total Warrant B of the Company

118

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Annual Report 2011

THIRTY LARGEST WARRANT B (TAKASO-WB) HOLDERS AS AT 20 OCTOBER 2011 No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Warrant B Holders HLG NOMINEE (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR SIAW KOK TONG (CCTS) LIU, CHING-AN TAN YU WEI GOH BOON LEONG ECML NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR SIN FEE SHANN (08S00070Q-008) LING KANG TENG @ LING LEE CHOO YEE SENG KENG MAYBAN NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR TAN SUN PING TEO YONG FONG YONG SIEW NGEE ECML NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR KENNY KHOW CHUAN WAH (008) LUM YIN MUI SU MING KEAT YEE KONG SIONG ZULCEPLE BIN MOHD SANI YEE KONG WAY THONG LEANG CHANG @ THONG LIN CHUN SHAHIDAN BIN KASSIM SAW CHANG JOO CHNG AH LECK @ CHNG AH HEANG CIMSEC NOMINEES (TEMPATAN) SDN. BHD. CIMB BANK FOR PEK KIAM KEK (MM0606) WO TING TAK ONG LIAN OEU CIMSEC NOMINEES (TEMPATAN) SDN. BHD. PLEDGED SECURITIES ACCOUNT FOR NG CHEONG KWAN (SEA PARK-CL) YOUNG PEY FEEI DAN YOKE PYNG TAN HUNG CHEW LEE KAH KING LEE BOON HUAT NG OI LAN No. of Warrant B 5,000,000 4,000,000 2,700,000 2,294,700 2,261,500 1,950,000 1,550,000 1,500,000 1,260,600 1,100,000 1,000,000 961,000 960,000 800,000 700,000 650,000 612,000 600,000 500,500 500,000 500,000 500,000 460,000 450,000 430,000 366,000 350,000 340,000 300,000 300,000 34,896,300 % 8.86 7.09 4.79 4.07 4.01 3.46 2.75 2.66 2.23 1.95 1.77 1.70 1.70 1.42 1.24 1.15 1.08 1.06 0.89 0.89 0.89 0.89 0.82 0.80 0.76 0.65 0.62 0.60 0.53 0.53 61.85

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120

Proxy Form
(Full Name in Capital Letters)

CDS A/C No. No. of shares held.

I/We _________________________________________________________________________________________of __________________________________________________________________________


(Full Address)

________________________________________________________________________________________________________________________being (a) member(s) of TAKASO RESOURCES BERHAD, do hereby appoint(s)___________________________________________________________________________of____________________________________________________________________________


(Full Name in Capital Letters) (Full Address) (Full Name in Capital Letters)

_______________________________________________________________________________or failing him/her, ___________________________________________________________________________ of ________________________________________________________________________________________________________________________________________________________________________


(Full Address)

or failing him/her, the Chairman of the Meeting as *my/our proxy to attend and vote for *me/us and on *my/our behalf at the Fourteenth Annual General Meeting of the Company to be held at the Registered Office of the Company at K55 Jalan Kesang, Kawasan Perindustrian Tanjung Agas, 84000 Ledang, Johor Darul Tazim on Wednesday, 21 December 2011, at 2.30 p.m. and at any adjournment thereof. Please indicate with X in the space provided below how you wish your votes to be cast. If no specific direction as to voting is given, the Proxy will vote or abstain from voting as his/ her discretion.

Item
1.

Agenda
To receive the Audited Financial Statements for the financial year ended 31 July 2011 together with the Directors and Auditors Reports thereon. ______________________________ Telephone number during office hours:
NOTES: 1. A member of the Company who is entitled to attend and vote at the meeting is entitled to appoint more than two (2) proxies to attend and vote instead of him/her. Where a member appoints two (2) or more proxies, the appointment shall be invalid unless he/ she specifies the proportion of his/her shareholdings to be represented by each proxy. A proxy may but need not be a member of the Company and a member may appoint any person to be his/her proxy without limitation and the provision of Section 149(1)(a), (b), (c) and (d) of the Companies Act, 1965 shall not apply to the Company. 2. Where a member is an authorised nominee, it may appoint more than one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 3. The instrument appointing a proxy must be in writing under the hand of the appointer or his/her attorney duly authorised in writing or if such appointer is a corporation, either under its common seal or under the hand of its officer or its attorney duly authorised. 4. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the Registered Office of the Company at K55 Jalan Kesang, Kawasan Perindustrian Tanjung Agas, 84000 Ledang, Johor Darul Tazim not less than forty-eight (48) hours before the time for holding the meeting or at any adjournment thereof. 5. In respect of deposited securities, only member whose names appear in the Record of Depositors on 14 December 2011 (General Meeting Record of Depositors) shall be eligible to attend the meeting.

Resolution
2. 3. 4. To approve the payment of Directors fee of RM62,000 for the financial year ended 31 July 2011. To approve the payment of Directors fee of RM150,000 for the financial year ending 31 July 2012. To re-elect the following Directors who retire and being eligible, offered themselves for re-election in accordance with Article 92 and Article 98 of the Companys Articles of Association:i) Mr. Tee Tze Chern, JP (Article 92) ii) Mr. Wong Koon Wai (Article 98) 5. To re-appoint Messrs BDO as auditors of the Company for the financial year ending 31 July 2012 and to authorise the Board of Directors to fix their remuneration. To approve the authority to Directors to issue new ordinary shares pursuant to Section 132D of the Companies Act, 1965. 1 2

For

Against

_______________________________ Signature of member/ Common Seal

3 4 5

6.

* Strike out whichever not applicable. As witness *my/our hand this______________________________ day of ____________________________, 2011

121

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Affix Stamp here The Company Secretary TAKASO RESOURCES BERHAD (Company No.440503-K) K55 Jalan Kesang Kawasan Perindustrian Tanjung Agas 84000 Ledang Johor Darul Tazim

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