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Submitted By rahmat13
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The cover design bears the theme, “Made For Modern Lifestyles”, which emphasizes how
Farm’s Best Berhad’s products are ideal for contemporary lifestyles. Our delicious products can be cooked with speed and ease, making them ideal for today’s culinary needs.
A sleek refrigerator appears on the cover to emphasize how modern our products are, and there are notes pasted on it that highlight the various types of food products that are available from us. On the whole, the cover design possesses a sophisticated aura that is inspired by our innovative corporate spirit.

table

of

contents
Notice of Annual General Meeting 02
Corporate Structure 08
Corporate Information 10
Directorsʼ Profile 11
Chairmanʼs Statement 18
Management Discussion and Analysis 22
Corporate Social Responsibilty 24
Corporate Governance Statement 27
Internal Control Statement 36
Audit Committee Report 40
Financial Statements 45
Statistics on Shareholdings 132
Statistics on Shareholdings-Warrant 135
List of Properties 138
Additional Compliance Information 144
Form of Proxy

Notice of Annual General Meeting

FARM’S BEST BERHAD (301653-V)

2

NOTICE IS HEREBY GIVEN THAT the Twentieth Annual General Meeting of the Company will be held at
Function Room 2, Level 2, Holiday Inn Melaka, Jalan Syed Abdul Aziz, 75000, Melaka on Friday, 27 June 2014 at 11.00 a.m. for the following purposes :AGENDA
ORDINARY BUSINESS:1.

To receive the Audited Financial Statements for the financial year ended 31 December 2013 together with the Reports of the Directors and Auditors thereon.

Please refer to
Explanatory Notes A

2.

To approve the payment of Directorsʼ fees of RM108,000-00 for the financial year ended 31
December 2013.

Ordinary Resolution 1

3.

To re-elect the following Directors who retire by rotation in accordance with Article 105 of the
Companyʼs Articles of Association:(a) Datuk Fong Kiah Yeow
(b) Mr Fong Choon Kai

Ordinary Resolution 3

(c) Encik Mohd Khasan bin Ahmad
4.

Ordinary Resolution 2

Ordinary Resolution 4

To consider and, if thought fit, to pass the following Ordinary Resolution in accordance with
Section 129(6) of the Companies Act, 1965 :“THAT Tuan Haji Baharom Bin Abd Wahab, a Director who retires pursuant to Section 129(2) of the Companies Act, 1965, be and is hereby re-appointed as Director of the Company pursuant to Section 129(6) of the Companies Act, 1965 and to hold office until the conclusion of the next
Annual General Meeting of the Company.”

5.

Ordinary Resolution 5

To appoint Auditors and to authorise the Directors to fix their remuneration.

Ordinary Resolution 6

Notices of Nomination pursuant to Section 172(11) of the Companies Act, 1965, copies of which are annexed hereto, have been received by the Company for the nomination of Messrs UHY [AF:
1411], who have given their consent to act, for appointment as Auditors and of the intention to propose the following ordinary resolution:“THAT Messrs UHY [AF: 1411] be and is hereby appointed as Auditors of the Company in place of the retiring Auditors, Messrs Ernst & Young and to hold office until the conclusion of the next
Annual General Meeting and that the Directors be authorised to determine their remuneration.”

ANNUAL REPORT 2013

Notice of Annual General Meeting

FARM’S BEST BERHAD (301653-V)

(Continued)

3

AS SPECIAL BUSINESS :To consider and, if thought fit, to pass the following ordinary resolutions:
6.

To re-appoint the following Independent Non-Executive Directors as per recommendation 3.3 set out in the Malaysian Code on Corporate Governance 2012:
(a) Tuan Haji Baharom Bin Abd Wahab

(b) En Mohd Khasan Bin Ahmad

7.

Ordinary Resolution 7
(Explanatory Notes B)
Ordinary Resolution 8
(Explanatory Notes B)

Authority for Directors to issue and allot shares in the Company pursuant to Section 132D of the
Companies Act, 1965

Ordinary Resolution 9
(Explanatory Notes C)

“THAT pursuant to Section 132D of the Companies Act, 1965, and subject always to the approval of the relevant authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, from time to time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company AND THAT the
Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares on Bursa Malaysia Securities Berhad.”

BY ORDER OF THE BOARD

CATHERINE MAH SUIK CHING (LS 01302)
LIEW SENG AUN (MIA 13109)
Company Secretaries
Melaka
Date: 5 June 2014

ANNUAL REPORT 2013

Notice of Annual General Meeting

FARM’S BEST BERHAD (301653-V)

(Continued)

4

Notes:(i)

A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies to attend and vote on his (her) behalf. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(a), (b), (c) and (d) of the Companies Act, 1965 shall not apply to the Company.

(ii) Where a member appoints two (2) or more proxies, the appointment shall not be valid unless he (she) specifies the proportion of his (her) shareholdings to be represented by each proxy.
(iii) The Proxy Form shall be signed by the appointor or his (her) attorney duly authorized in writing or, if the member is a corporation, it must be executed under its common seal or by its authorized attorney or officers.
(iv) The instrument appointing a proxy shall be deposited at the office of the Companyʼs Share Registrar at Level 6, Symphony
House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight
(48) hours before the time set for the Meeting or any adjournment thereof.
(v) For the purpose of determining a member who shall be entitled to attend and vote in the forthcoming Twentieth Annual
General Meeting, the Company shall be requesting the Record of Depositors in accordance with Article 71(b) of the
Companyʼs Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act 1991, to issue a
General Meeting Record of Depositors as at 20 June 2014. Only a depositor whose name appears on the Record of
Depositors as at 20 June 2014 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf. ANNUAL REPORT 2013

Notice of Annual General Meeting

FARM’S BEST BERHAD (301653-V)

(Continued)

5

Explanatory Notes A:
The Audited Financial Statements in Agenda 1 is intended for discussion only as the provision of Section 169(1) of the
Companies Act, 1965 does not require a formal approval of the members and hence is not put for voting.
Explanatory Notes B:
Ordinary Resolution No. 7 and 8
To re-appoint Independent Non-Executive Directors
Under the Malaysian Code on Corporate Governance 2012 [“MCCG 2012”], the Board must undertake an assessment of its independent directors annually. In addition, the MCCG 2012 has recommended that the tenure of an independent director should not exceed a cumulative term of nine years. A shareholdersʼ approval must be sought in the event that the Company intends to retain the independent directors who have served in that capacity for more than nine years.
Explanatory Notes C:
Ordinary Resolution No. 9
Authority for Directors to issue and allot shares in the Company pursuant to Section 132D of the Companies Act, 1965
The Ordinary Resolution 9 if passed will give the Directors of the Company from the date of the above meeting, authority to allot and issue ordinary shares from the unissued capital of the Company for such purposes as the Directors consider would be in the interest of the Company. The purpose of this general mandate is for possible fund raising exercise but not limited to further placing of shares for purpose of funding investment(s), working capital and/or acquisitions at any time to such persons in their absolute discretion without convening a general meeting as it would be both costs and time-consuming to organize a general meeting. This authorization will expire at the conclusion of the next Annual General Meeting of the Company.
This general mandate sought for the issue of securities is a new mandate which the Company wish to seek from its Shareholders at this Annual General Meeting.

ANNUAL REPORT 2013

FARM’S BEST BERHAD (301653-V)

6

ANNUAL REPORT 2013

FARM’S BEST BERHAD (301653-V)

7

ANNUAL REPORT 2013

FARM’S BEST BERHAD (301653-V)

Corporate Structure

8

100%

Sinmah Livestocks Sdn Bhd
100%

Bersatu Segar Sdn Bhd

100%

Dee Huat Farming Trading Sdn Bhd

100%

Chem Ventures Sdn Bhd

51%

Syarikat Perniagaan Suann Sdn Bhd
100%

58.91%

Joint Farming Sdn Bhd
60%
30.77%

99.99%

Suann Food Processors Sdn Bhd

Joint Food Proccessing Sdn Bhd
Ban Yen Sdn Bhd

Sinmah Multifeed Sdn Bhd
100%

Premier Broilers Sdn Bhd

100%

Sinmah Breeders Sdn Bhd

100%

Sinmah Egg Products Sdn Bhd
100%

100%

Sinmah Poultry Farm Sdn Bhd

Farm's Best Food Industries Sdn Bhd
100%

SM Broilers Sdn Bhd
50%

100%

Farm's Best Eggmart Sdn Bhd

Sinmah Development Sdn Bhd
100%
100%

Realtemas Realty Sdn Bhd

100%
100%

Sinmah Builders Sdn Bhd

Cosmal Enterprise Sdn Bhd

Sinmah Ventures Sdn Bhd
100%

FB Food (Nanjing) Pte Ltd

51%
50%
100%

Chix Unlimited Inc.
SM Enterprise (Nanjing) Pte Ltd

Lynbridge Sdn Bhd
49.90%

SMNS Rubber Holdings Sdn Bhd
100%

100%

ANNUAL REPORT 2013

Smallholdings Management Sdn Bhd

Farm’s Best (Cambodia) Co., Ltd

50%

Developing
Delicious Recipes

We are constantly experimenting with new recipes to thrill our customers. By discovering new ways to improve our products, we have been able to steadily expand our customer base.

Corporate Information

FARM’S BEST BERHAD (301653-V)

10

BOARD OF DIRECTORS

REMUNERATION COMMITTEE

COMPANY SECRETARIES

Datuk Hj. Zainal Bin Hj. Shamsudin
Chairman,
Independent Non-Executive Director

Mohd Khasan Bin Ahmad
Chairman,
Independent Non-Executive Director

Catherine Mah Suik Ching (LS 01302)
Liew Seng Aun (MIA 13109)

Dato' Fong Kok Yong
Managing Director

Datuk Hj. Zainal Bin Hj. Shamsudin
Independent Non-Executive Director

AUDITORS

Datuk Fong Kiah Yeow
Executive Director

Tuan Haji Baharom Bin Abd. Wahab
Independent Non-Executive Director

Fong Ngan Teng
Executive Director

Dato' Fong Kok Yong
Managing Director

Fong Choon Kai
Executive Director

Datuk Fong Kiah Yeow
Executive Director

Ernst & Young
Chartered Accountants
Level 16-1, Jaya 99 Tower B
99 Jalan Tun Sri Lanang
75100 Melaka
Tel : 06-288 2399
Fax : 06-283 2899

PRINCIPAL BANKERS
Ng Cheu Kuan
Executive Director
Datuk Ng Peng Hay @ Ng Peng Hong
Executive Director
Tuan Haji Baharom Bin Abd. Wahab
Independent Non-Executive Director
Mohd Khasan Bin Ahmad
Senior Independent
Non-Executive Director

AUDIT COMMITTEE & NOMINATION
COMMITTEE
Datuk Hj. Zainal Bin Hj. Shamsudin
Chairman,
Independent Non-Executive Director
Tuan Haji Baharom Bin Abd. Wahab
Independent Non-Executive Director
Mohd Khasan Bin Ahmad
Senior Independent
Non-Executive Director

ANNUAL REPORT 2013

REGISTERED OFFICE AND
PRINCIPAL PLACE OF BUSINESS
AG 5730
Alor Gajah Industrial Estate
78000 Alor Gajah, Melaka
Tel : 06-556 1293
Fax : 06-556 2445

REGISTRAR
Symphony Share Registrars Sdn. Bhd.
Level 6, Symphony House
Pusat Dagangan Dana 1
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor
Tel : 03-7841 8000
Fax : 03-7841 8151/52

Bank Kerjasama Rakyat
Malaysia Berhad
AGROBANK (Bank Pertanian
Malaysia Berhad)
Malayan Banking Berhad

STOCK EXCHANGE LISTING
Main Market
Bursa Malaysia Securities Berhad
Stock Name : FARMBES
Stock Code : 9776
Sector : Consumer Products

Directors’ Profile

FARM’S BEST BERHAD (301653-V)

11

Y. BHG. DATUK HJ. ZAINAL
BIN HJ. SHAMSUDIN
CHAIRMAN, INDEPENDENT
NON-EXECUTIVE
DIRECTOR & CHAIRMAN
OF AUDIT COMMITTEE
67 years of age - Malaysian

Y. Bhg. Datuk Hj. Zainal Bin Hj. Shamsudin was appointed to the Board of Farmʼs Best
Berhad (“Farmʼs Best”) as Chairman of Farmʼs Best on 8 August 2006. He is also the
Chairman of the Audit and Nomination Committees and member of the Remuneration
Committee of Farmʼs Best.
Y. Bhg. Datuk Hj. Zainal holds a Diploma in Police Science and he has served in the Royal
Malaysian Police Force since June 1965 until his retirement in June 2003. Y. Bhg. Datuk Hj.
Zainal began his career in the Royal Malaysian Police Force as an Investigation Officer and has climbed the rank of SAC(I) holding the post of Deputy Director (II) of the Malaysian
Special Branch when he retired. He also sits on the boards of several private limited companies. In recognition of his continuous efforts and dedication to the Malaysian Police Force, Y. Bhg.
Datuk Hj. Zainal was conferred the Panglima Gemilang Darjah Kinabalu (P.G.D.K.) by His
Excellency, the Governor of Sabah in September 2000.
Subsequently, in July 2008, in recognition of his many past contributions to the Malaysian
Police Force, Y. Bhg. Datuk Hj. Zainal was conferred the Jaksa Pendamai (J.P) by HRH Yang
Di-Pertuan Besar Negeri Sembilan.
As at the date of this annual report, Y. Bhg. Datuk Hj. Zainal does not have any interest in
Farmʼs Best. He has attended all five (5) board meetings held during the financial year ended
31 December 2013.

ANNUAL REPORT 2013

Directors’ Profile

FARM’S BEST BERHAD (301653-V)

(Continued)

12

Y. BHG. DATOʼ FONG KOK
YONG
MANAGING DIRECTOR
63 years of age - Malaysian

Y. Bhg. Datoʼ Fong Kok Yong was appointed to the Board of Farmʼs Best on 10 February
1995 and is currently the Managing Director of Farmʼs Best. He is also a member of the
Remuneration Committee of Farmʼs Best.
Y. Bhg. Datoʼ Fong Kok Yong graduated from the University of Singapore in 1975 with a
Bachelor of Business Administration degree. He joined Sinmah Multifeed Sdn Bhd, a wholly owned subsidiary of Farmʼs Best on 18 October 1976 as a Director. He presently oversees the Groupʼs operations.
Y. Bhg. Datoʼ Fong Kok Yong is currently,
(i)
(ii)
(iii)
(iv)

Advisor to the Federation of Livestock Farmersʼ Associations of Malaysia (since 1995)
Member, Malaysian Institute of Management (since 1990)
Member, Agricultural Institute of Malaysia (since 1985)
Member, Pemandu Food Security Lab (since 2012)

He had also served in the various positions/bodies during the past years:(i)
(ii)
(iii)
(iv)
(v)

Secretary General, Federation of Livestock Farmersʼ Associations of Malaysia (1986 –
1991)
President, Federation of Livestock Farmersʼ Associations of Malaysia (1991 – 1995)
President, Federation of Asean Poultry Producers (March 2003 – March 2005)
Director, Selangor Chinese Chamber of Commerce and Industry (1991 – 1995)
Director, Malacca Chinese Chamber of Commerce and Industry (1995 to 2000)

In October 2008, in recognition of his continuous efforts, dedication and contribution to the livestock industry in Malaysia, Y. Bhg. Datoʼ Fong Kok Yong was conferred the Darjah Indera
Mahkota Pahang (D.I.M.P.) by HRH, the Sultan of Pahang.
As at the date of this annual report, Y. Bhg. Datoʼ Fong Kok Yong has an indirect interest of
21,463,805 shares in Farmʼs Best. He has attended all five (5) board meetings held during the financial year ended 31 December 2013.

ANNUAL REPORT 2013

Directors’ Profile

FARM’S BEST BERHAD (301653-V)

(Continued)

13

Y. Bhg. Datuk Fong Kiah Yeow was appointed to the Board of Farmʼs Best on 10 February 1995. He is also a member of the Remuneration
Committee of Farmʼs Best.

Y. BHG. DATUK FONG KIAH YEOW
EXECUTIVE DIRECTOR
59 years of age - Malaysian

In October 2008, in recognition of his efforts and dedication, Y. Bhg. Datuk
Fong Kiah Yeow was conferred the
Darjah Mulia Seri Melaka (D.M.S.M.) by
His Excellency, the Governor of Melaka.

Y. Bhg. Datuk Fong Kiah Yeow completed an accountancy course in
1975 from the Tottenham College of
Technology, United Kingdom. He was also an associate member of the
Chartered Association of Certified
Accountants,
United
Kingdom.
Immediately, upon completion of his studies, Y. Bhg. Datuk Fong Kiah Yeow joined his family business and was responsible for his familyʼs rice wholesale business. He was later appointed to the Board of Sinmah
Multifeed Sdn Bhd on 31 January 1980.
He is presently responsible for the
Groupʼs corporate affairs and financial matters. He also sits on the board of several private limited companies.

As at the date of this annual report, Y.
Bhg. Datuk Fong Kiah Yeow has a direct interest of 108,000 shares and an indirect interest of 21,463,805 shares in
Farmʼs Best. He has attended all five (5) board meetings held during the financial year ended 31 December 2013.

FONG NGAN TENG
EXECUTIVE DIRECTOR
56 years of age - Malaysian

Fong Ngan Teng was appointed to the Board of Farmʼs Best on 10 February 1995.
He graduated in 1982 with a Bachelor of Arts (Honours) degree from The City of
London Polytechnic in United Kingdom. He joined Sinmah Multifeed Sdn Bhd upon his graduation and was appointed as a Director of Sinmah Multifeed Sdn Bhd on 1
March 1983. He is currently the Groupʼs Marketing Director and is also responsible for the breeding, hatchery and contract farming of the Group. He also sits on the boards of several private limited companies.
As at the date of this annual report, Fong Ngan Teng has an indirect interest of
21,463,805 shares in Farmʼs Best. He has attended four (4) of the five (5) board meetings held during the financial year ended 31 December 2013.

ANNUAL REPORT 2013

Directors’ Profile

FARM’S BEST BERHAD (301653-V)

(Continued)

14

Fong Choon Kai was appointed to the
Board of Farmʼs Best on 10 February
1995. He graduated in 1985 with a
Bachelor of Actuarial Science (Honours) degree from London School of
Economics, United Kingdom and later in
1987, with a Masters degree in Systems
Analysis and Design from The City
University, United Kingdom. Thereafter, he was attached to a public chartered accounting firm, Lewis, Berman &
Partners in United Kingdom for 2 years.
Prior to his appointment to the Board of
Sinmah Multifeed Sdn Bhd on 15
January 1992, he was engaged in a construction and property development
FONG CHOON KAI
EXECUTIVE DIRECTOR
52 years of age - Malaysian

NG CHEU KUAN
EXECUTIVE DIRECTOR
59 years of age - Malaysian

Ng Cheu Kuan was appointed to the Board of Farmʼs Best on 10 February 1995 and is in charge of the Groupʼs property development operations. He graduated with a degree in Civil Engineering (Honours) from the University of Southampton, United
Kingdom in July 1977. He is a Professional Engineer registered with the Board of
Engineers, Malaysia and was conferred a Fellow of the Institution of Engineers,
Malaysia in 1990, making him one of the youngest Fellow of the Institution then. He was also the Chairman of the Institution of Engineers, Malacca Branch from 1988 to 1990. Upon his graduation in 1977, he joined Dewan Bandaraya, Kuala Lumpur as a project engineer and in 1980 he became design engineer in Angkasa Gutteridge
Haskins & Davey Consulting Engineers, Kuala Lumpur, which provides professional engineering services to clients from the private and public sectors. In 1982, he joined
Bolton Properties Berhad as a project manager before becoming the project manager and later senior manager of Supreme Corporation Berhad (now known as
Lion Land Berhad) for 10 years. Between 1992 and May 1994, he worked in Lion
Land Berhad. He then started his own property development and construction businesses. He is also a director of several private limited companies.
As at the date of this annual report, Ng Cheu Kuan does not have any interest in
Farmʼs Best. He has attended all five (5) board meetings held during the financial year ended 31 December 2013.

ANNUAL REPORT 2013

company, Hanover Construction Ltd, as well as in export and import business of
Hanover Trading Ltd, United Kingdom for
2 years. Fong Choon Kai is currently responsible for all administrative matters in the Group. He also sits on the boards of several private limited companies.
As at the date of this annual report, Fong
Choon Kai has an indirect interest of
21,463,805 shares in Farmʼs Best. He has attended four (4) of the five (5) board meetings held during the financial year ended 31 December 2013.

Directors’ Profile

FARM’S BEST BERHAD (301653-V)

(Continued)

15

Y. Bhg. Datuk Ng Peng Hay @ Ng Peng Hong was appointed to the Board of
Farmʼs Best on 10 February 1995.
Y. Bhg. Datuk Ng Peng Hay was the State Assemblyman for Tengkera Constituency of Barisan Nasional between 1982 and 1986. He then served as a Senator in the
Malaysian Parliament from 1987 to 1993. His first involvement in social activities was upon completing his secondary education. He has been appointed as the
Investment Co-ordinator by the Melaka State Development Corporation to handle direct investments in the State of Melaka since 1988. Together with his teams of officials and his excellent public relations, he has helped in attracting numerous
Taiwanese, Singaporean and Chinese investors into the State of Melaka.
In recognition of his efforts and dedication, Y. Bhg. Datuk Ng Peng Hay was conferred the Darjah Mulia Seri Melaka (D.M.S.M.) by His Excellency, the Governor of Melaka in 1992. On 17 July 1999, the Taiwanese Government awarded him the
Economics Medal.
Y. BHG. DATUK NG PENG HAY @
NG PENG HONG
EXECUTIVE DIRECTOR
62 years of age Malaysian

Presently, he is the Chairman of Koperasi Jayadiri Malaysia Berhad, a Board
Member of Malaysian Investment Development Authority (MIDA), a Director of Invest
Melaka Berhad and also a Director of The Tun Hussein Onn National Eye Hospital.
Y. Bhg. Datuk Ng Peng Hay is also the Independent Non-Executive Director of Bonia
Corporation (M) Berhad since 1994, Komarkcorp Berhad since 1997, Icapital.Biz
Berhad since 2010. In addition, he is also the Chairman of Wellcall Holdings Berhad since 2006.
As at the date of this annual report, Y. Bhg. Datuk Ng Peng Hay does not have any interest in Farmʼs Best. He has attended all five (5) board meetings held during the financial year ended 31 December 2013.

TUAN HAJI BAHAROM BIN ABD. WAHAB
INDEPENDENT NON-EXECUTIVE DIRECTOR
79 years of age - Malaysian

Tuan Haji Baharom Bin Abd. Wahab was appointed to the
Board of Farmʼs Best on 14 June 1999. He is also a member of the Audit, Nomination and Remuneration Committees of Farmʼs
Best.
Haji Baharom started his teaching career since 1955 and was in the teaching profession for more than 35 years. He was later promoted to the position of headmaster in 1976 and held this position until his optional retirement in 1990. He attended courses for “Modern Administration and Management for
Headmasters” in University Sains Malaysia, Penang, in 1976 and “Management and Leadership in Education” in University
Malaya, Kuala Lumpur in 1982. Haji Baharom has been very active in both political and community work since his early

days. Haji Baharom was actively involved in the co-operative and was appointed director for Koperasi Guru-Guru Melayu
Melaka from 1986 to 1991. In recognition of his contribution to the society, Haji Baharom was conferred the P.J.K. (Pingat
Jasa Kebaktian) in 1985 and B.K.T. (Bintang Kelakuan Terpuji) in 2009 by His Excellency, the Govenor of Melaka. Since his retirement in 1990, Haji Baharom was appointed and sits on the Board of several private limited companies.
As at the date of this annual report, Haji Baharom holds 4,500 shares in Farmʼs Best. He has attended four (4) of the five (5) board meetings held during the financial year ended
31 December 2013.

ANNUAL REPORT 2013

Directors’ Profile

FARM’S BEST BERHAD (301653-V)

(Continued)

16

MOHD KHASAN BIN AHMAD
SENIOR INDEPENDENT
NON-EXECUTIVE DIRECTOR
53 years of age - Malaysian

Mohd Khasan Bin Ahmad was appointed to the Board of Farmʼs Best on 10 January 2002.
He is the Chairman of the Remuneration Committee and a member of the Audit and
Nomination Committees of Farmʼs Best.
Mohd Khasan obtained a diploma in Accountancy and later graduated with a degree in
Accountancy from University Teknologi Mara. He is a member of the Malaysian Institute of
Accountants (“MIA”). He served Bank Negara Malaysia for a period of about 7 years, the last
2 years of which he was seconded to the Capital Issues Committee (“CIC”) as its Principal
Assistant Secretary. Subsequently, he joined the Securities Commission for a period of about
6 years and his last capacity was an Assistant Manager in its Issues and Investment Division.
During the tenure of his above appointments, he was involved in various corporate exercises ranging from initial public offerings, mergers and acquisitions, reverse take-overs, issuance of bonds and other capital raising exercises. He joined the private sector in 1997 and held various senior management positions. Mohd Khasan also sits on the Board of Ta Win
Holdings Berhad, Crest Builder Holdings Berhad and Homeritz Corporation Berhad as an
Independent Non-Executive Director.
As at the date of this annual report, Mohd Khasan does not have any interest in Farmʼs Best.
He has attended all five (5) board meetings held during the financial year ended 31 December
2013.

ADDITIONAL INFORMATION
(i)

Conflict of interest
None of the Directors have any conflict of interest with the
Company.

(ii)

Family Relationship with any
Director and / or Major
Shareholder
None of the Directors have family relationship with any Director and
/ or major shareholder of the company except for Fong Kok
Yong, Fong Kiah Yeow, Fong
Ngan Teng and Fong Choon Kai who are brothers.

(iii) Conviction for offences (within the past 10 years, other than traffic offences)
None of the Directors have been convicted for offences.

ANNUAL REPORT 2013

Featuring Fresh
Ingredients

We will not compromise on the freshness of our ingredients. As such, our customers have come to trust us to provide them with products of superior quality. FARM’S BEST BERHAD (301653-V)

Chairman’s Statement

18

Dear shareholders and stakeholders, On behalf of my fellow Board members, I am pleased to present to you the Annual Report and Audited
Financial Statements of the Company and of the Group for the financial year ended 31 December 2013.

Chairman’s Statement

FARM’S BEST BERHAD (301653-V)

(Continued)

19

FINANCIAL REVIEW
The Group posted revenue of RM455.4 million for the year ended 31 December 2013, a significant increase of RM54.9 million or 14% as compared to the previous yearʼs revenue of
RM400.5 million. The increase in revenue was due to increases in average selling prices and sales volumes of live broilers and table eggs during the year under review.
The Group recorded a net profit attributable to owners of the parent of RM4.3 million as opposed to a net loss attributable to owners of the parent of RM9.5 million in the previous financial year ended 31 December 2012. Hence, the Groupʼs earnings per share increased to 7.5 sen from -17.2 sen in 2012, an increase of 24.7 sen.

Chicken Cocktail
(Blackpepper)
Every bite releases a burst of flavours Overall, the Groupʼs improved results during the current year under review was due to increases in average selling prices of live broilers and table eggs during the financial year under review. Furthermore, during the financial year under review, there are decreases in allowances for impairment of goodwill of RM1.9 million and impairment in receivables totaling
RM1.2 million.

CORPORATE DEVELOPMENTS
The Companyʼs Proposed Private Placement Exercise which was disclosed in the previous yearʼs Annual Report was completed on 25 July 2013.
The utilization of the proceeds raised from the above Corporate Exercise is as follows:
Purpose

Proposed
Utilisation
RMʼ000

Actual
Utilisation
RMʼ000

Purchase of raw materials
Private Placement Expenses

6,505
270

6,543
232

Total

6,775

Deviation
Amount
RMʼ000

6,775

(38)
38

The Group had fully utilised all the proceeds raised from the abovementioned exercise within the stipulated expected time frame of utilisation.

ANNUAL REPORT 2013

Chairman’s Statement

FARM’S BEST BERHAD (301653-V)

(Continued)

20

Chicken Nuggets
The taste and textures are tantalizing

On 20 January 2014, the Company had entered into a Heads of Agreement (“HOA”) with Zhu
Zong Ying and Zheng Wendi (“Target Shareholders”) as well as SHH (Malaysia) Sdn Bhd
(“SHH Malaysia”) for their participation in the corporate exercise of the Company which, interalia shall encompass the following:
(i) for the Target Shareholders to set up a Newco;
(ii) for the Company to conduct and implement the Proposed Par Value Reduction, Proposed
Acquisition, Proposed Securities Exchange, Proposed Offer for Sale, Proposed Special
Issue and Proposed Transfer of Listing Status; and
(iii) for the Target Shareholders, SHH Malaysia and Newco to participate in the proposals to be undertaken by the Company and eventually to apply for the listing of and quotation for the entire issued and fully paid-up share capital of Newco and Newco Warrants on the
Main Market of Bursa Securities Malaysia Berhad (“Bursa Securities”), assuming the listing status of the Company.
Details of the above have been announced to the Bursa Securities on 20 January 2014.

GOING FORWARD
Notwithstanding the completion of the Corporate Exercise above, the Group expects to produce a positive set of results for the financial year ending 31 December 2014 as that of the financial year under review.
In the meantime, the Group will continue with its ongoing efforts on cost cutting measures in order to remain competitive during the coming financial year ending 31 December 2014.
Hence, it is hoped that the Group would be able to produce a positive set of financial results for the coming financial year ending 31 December 2014.

ANNUAL REPORT 2013

Chairman’s Statement

FARM’S BEST BERHAD (301653-V)

(Continued)

21

ACKNOWLEDGEMENT
The Group gratefully acknowledges the support and guidance received from the State
Government of Melaka, Department of Veterinary Services, the Agriculture Ministry, MITI,
MIDA, Immigration Department and other ministries and agencies. Our appreciation is also extended to our business partners, consultants, customers, suppliers and financiers.

Chicken Meatballs
High-quality ingredients provide excellent nourishment

I also wish to extend my most heartfelt appreciation to my fellow Board members for their support, contribution and dedication in discharging their duties and responsibilities. We also recognize that our dedicated workforce remains the backbone of the Group and they had helped to build a good reputation that the Group currently enjoys. On behalf of the Board, I wish to express our utmost appreciation to them.
Lastly, I wish to thank you, our shareholders, for your unwavering support and we look forward to your continuing vote of confidence. Thank you.

With best wishes,

DATUK HJ. ZAINAL BIN HJ. SHAMSUDIN
CHAIRMAN

ANNUAL REPORT 2013

Management Discussion and Analysis

FARM’S BEST BERHAD (301653-V)

22

During the financial year under review, there was a turnaround in the results of the Group as compared to the previous financial year ended 31 December 2012. Although prices of imported raw materials such as corn and soybean meal were higher during the financial year under review as compared to the previous financial year, the Group recorded a net profit attributable to owners of the parent of RM4.3 million as opposed to a net loss attributable to owners of the parent of RM9.5 million during the previous financial year ended 31 December
2012. This is because the increased selling prices of processed poultry and poultry products, live broilers and table eggs during the financial year under review were adequate to cover the increased prices of the imported raw materials as mentioned above. Our housing development division also showed better results in the financial year under review compared to the previous financial year ended 31 December 2012.
The performances of the key operative divisions within the Group are discussed below.

Poultry Division

Chicken Sausage
Our unique recipe ensures immense satisfaction

The poultry division comprises the integrated poultry operations and the egg layer operations.
During the financial year ended 31 December 2013, the integrated poultry operations of the
Group made a profit before tax of about RM15.70 million as compared to a profit before tax of RM4.86 million during the previous financial year. The increase in profit before tax was aided by increases in average selling prices processed poultry and poultry products and live broilers during the financial year under review as compared to the previous financial year ended 31 December 2012.
The Groupʼs egg layer division showed a lower operating loss of about RM4.92 million during the current year under review as compared to an operating loss of about RM5.96 million during the previous financial year. Even though feed cost had increased because of the increase in costs of imported raw feedstuffs, resulting in the eggʼs production cost during the financial year under review being higher than that during the previous financial year ended
31 December 2012, the increase in average selling prices of table eggs was greater than the increase in feed cost, hence resulting in the egg layer division making a lower loss in the financial year under review as compared to the previous financial year ended 31 December
2012.
Overall, both operations of the Groupʼs poultry division turned in a combined profit before tax of RM10.78 million during the financial year under review as opposed to a loss before tax of
RM1.10 million during the previous financial year.

ANNUAL REPORT 2013

Management Discussion and Analysis

FARM’S BEST BERHAD (301653-V)

23

(Continued)

Housing Development Division
During the financial year under review, the housing development division showed a profit before tax of RM1.73 million as compared to a profit before tax of RM1.28 million during the previous financial year. Turnover from the housing development division increased to
RM26.46 million during the financial year under review as compared to RM16.72 million during the previous financial year. The increase in revenue was mainly due to more houses being completed and sold in the financial year under review compared to the previous financial year.

Moving Forward Together
Prices of imported raw materials such as corn and soybean meal has decreased during the first quarter of the financial year ending 31 December 2014. The Group hopes that the prices of imported raw materials will remain stable throughout the financial year ending 31 December
2014. With this and together with our continuous cost reduction strategies, the Group hopes that 2014 will also be a profitable one.

ANNUAL REPORT 2013

Corporate Social Responsibility

FARM’S BEST BERHAD (301653-V)

24

Introduction
Consistent with Bursa Malaysia Securities Berhadʼs Corporate Social Responsibility framework, Farmʼs Best Berhadʼs Corporate Social Responsibility activities focus on caring to the Environment, Workplace, Community and Marketplace.
Our policies/ activities in these are as follow:Environment
The Group is aware of its responsibility to protect the environment in which it operates in.
As such, the Group continually maintains its waste management system effectively to ensure that the discharged water from the Groupʼs processing plant complies with the requirements of the Environmental Quality Act, 1974.
To demonstrate the Groupʼs commitment towards protection of the environment, the Group has achieved a better standard of environmental protection than what was required by the said Act. The discharged water from the Groupʼs processing plant complies with Standard A of the said Act, thus exceeding the Standard B requirement of the said Act.
For preservation of air quality, the Groupʼs feedmill plant is required to periodically monitor its dust collector emission and chimney gas emission to ensure that the emissions are within the limits required by the Environmental Quality Act (“EQA”) and the Department of Environment
(“DOE”). During the year, the Groupʼs feedmill plant engaged a qualified environmental engineering firm to conduct two (2) air emission/quality monitoring jobs. The Group is pleased to report that the 2 reports showed that all parameters sampled and tested complied with
EQA/DOE limits.

Workplace
The Group is concerned about the occupational safety of its employees. Hence, the Group strives to comply with all Department of Safety and Health Malaysia (“DOSH”) standards on health and safety.
As part of our responsibility of safeguarding the health of our employees, we provide free anti-typhoid vaccination to employees of the food processing sector of the Group. This is done on a rotational basis to ensure that each employee in this sector receives the antityphoid vaccination once every 3 years. During the year ended 31 December 2013, 160 workers at the Groupʼs processing plant in Masjid Tanah, Melaka had undergone typhoid vaccine immunization at the processing plantʼs clinic to ensure that the workers health were taken care of in order to satisfy the requirements of the Health Ministry.

ANNUAL REPORT 2013

Corporate Social Responsibility

FARM’S BEST BERHAD (301653-V)

(Continued)

25

Drummets
The crunchy exterior is complemented by the tender meat The Groupʼs processing plant in Masjid Tanah, Melaka also holds fire safety training from time to time to train its workers and employees in putting out fires should there be any incidences.
One was conducted in March 2013.

Besides that, the Group also continuously conducts staff trainings such as “5S”(Housekeeping
Programme), “Halal” and “Food Safety” in its effort to produce a competent workforce.
The Group also sends selected staff to attend seminars and workshops to update their knowledge in their respective fields.

Community
As part of the Groupʼs corporate social responsibility towards the community, the Group has made cash donations to temples and schools in Melaka. Apart from cash donations, we have also made donations in the form of poultry products to schools in Melaka for school activities such as sports day, student seminars and schoolsʼ fund raising activities.
We also carried out a blood donation campaign amongst our employees in August 2013 as part of the Groupʼs contribution towards the Malaysian Blood Bank. A total of 21 workers participated in the campaign.
As part of the Groupʼs commitment in sharing its knowledge on poultry food processing with students from schools and institutes of higher learning in Malaysia, the Group accommodates study tours from various schools and institutes of higher learning. During the year 2013, students from Kolej Teknoloji Unified, Universiti Kuala Lumpur (Alor Gajah), Universiti Malaysia
Kelantan, Universiti Teknologi Mara, Universiti Pertanian Malaysia and Malaysian Institute of
Chemical & Bio-Engineering Technology (MICET) had their study tours at the Groupʼs processing plant.

Market Place
As we consider Corporate Social Responsibility part of corporate governance, we are fully supportive of local suppliers. We treasure our relationships with our key customers and regularly conduct satisfaction surveys as part of our efforts to improve products and services.

ANNUAL REPORT 2013

A big delight in every bite

Our customers are thrilled by our products because we believe in maintaining excellence.
We develop innovative recipes and we use high-quality ingredients to ensure customer satisfaction. Corporate Governance Statement

FARM’S BEST BERHAD (301653-V)

27

Introduction
The Board of Farmʼs Best Berhad (the “Company”) recognises the importance of adopting high standards of corporate governance in the Company in order to safeguard stakeholdersʼ interests as well as enhancing shareholdersʼ value.
Pursuant to Paragraph 15.25 of the Listing requirements of Bursa Malaysia Securities Berhad, this corporate governance statement (the “Statement”) sets out how the Company has applied the Principles of the Malaysian Code on Corporate
Governance (“MCCG 2012”) and observed the Recommendations supporting the Principles of the MCCG 2012 for the year under review. Where a specific Recommendation of the MCCG 2012 has not been observed during the year under review, the non-observation, including the reasons thereof, and the alternative practice, if any, is mentioned in this Statement.
Principle 1 - Establish clear Roles and Responsibilities of the Board and Management
The Board recognises the key role it plays in charting the strategic direction of the Company and has assumed the following principal responsibilities in discharging its fiduciary and leadership functions:







reviewing and adopting a strategic plan for the Company, addressing the sustainability of the Groupʼs businesses; overseeing the conduct of the Groupʼs businesses and evaluating whether or not its businesses are being properly managed; identify principal business risks faced by the Group and ensuring the implementation of appropriate internal controls and mitigating measures to address such risks; ensuring that all candidates appointed to Senior Management positions are of sufficient calibre, including the orderly succession of Senior Management personnel; overseeing the development and implementation of a shareholder communications policy, including an investor relations programme for the Company; and reviewing the adequacy and integrity of the Groupʼs internal control and management information systems.

To assist in the discharge of its stewardship role, the Board has established Board Committees, namely the Audit Committee,
Nominating Committee and Remuneration Committee, to examine specific issues within their respective terms of reference as approved by the Board and report to the Board with their recommendations. The ultimate responsibility for decision making, however, lies with the Board.
Board Charter
Whilst Directors and Management of the Company are aware of their respective roles and responsibilities, including the limits of authority accorded, the Board recognizes the need to formalize such demarcation of duties to provide clarity and guidance to Directors and Management. During the financial year, the Board appointed an independent firm of consultants to assist in developing a Board Charter, setting out, inter-alia, the roles of the Board, Board Committees, Executive and Non-Executive
Directors and Management. The Board Charter, which serves as a referencing point for Boardʼs activities to enable Directors carry out their stewardship role and discharge their fiduciary duties towards the Company, also seeks to include a formal schedule of matters reserved to the Board for deliberation and decision so that the control and direction of the Company are in its hands. At the date of this statement, the Board has adopted the Board Charter, which will be uploaded on the Companyʼs website at http:\\www.farmsbest.com.my in line with Recommendation 1.7 of the MCCG 2012.

ANNUAL REPORT 2013

Corporate Governance Statement

FARM’S BEST BERHAD (301653-V)

(Continued)

28

Code of Conduct and Whistle-Blower Policy
The Board has developed a Code of Conduct for employees of the Group as well as for Directors, setting out the standards of conduct expected from Directors and employees, to engender good corporate behavior across the Group. The Code of Conduct for Directors, which is included in the Board Charter adopted by the Board, includes pertinent whistle-blower procedures, which outline when, how and to whom a concern may be properly raised about the actual or potential corporate fraud or breach of conduct involving employee, Management or Director in the Group. The Board also recognizes the importance of adherence to the Code by all personnel in the Group and will take measures to put in place a process to ensure its compliance, including steps to upload a summary of the Code of Conduct on the Companyʼs website.
Sustainability of Business
The Board is mindful of the importance of business sustainability and, in conducting the Groupʼs business, the impact on the environmental, social and governance aspects is taken into consideration. Accordingly, the Board will take steps to formalize the Companyʼs sustainability policy and embed the environment, social and governance elements in its corporate strategy. The
Groupʼs activities on corporate social responsibilities for the financial year under review are disclosed on page 24 of this Annual
Report.
Supply of, and Access to, Information
All Directors are provided with an agenda and the relevant Board papers prior to every Board meeting to ensure that the Directors are fully apprised on matters or key issues affecting the Group as well as to enable Directors to make well-informed decisions on matters arising at the Board meetings. The Company Secretary records all the deliberations, including pertinent issues, the substance of inquiries and responses, Board membersʼ suggestions and the decision made in the minutes of meeting. The minutes of every Board meeting are also circulated to Directors for their perusal prior to confirmation of the same at the following
Board meeting.
In addition, the Board members are updated on the Companyʼs activities and its operations on a regular basis. Directors have access to all information of the Company on a timely basis in an appropriate manner and quality necessary to enable them to discharge their duties and responsibilities.
Senior Management of the Group and external advisers are invited to attend Board meetings to provide additional insights and professional views, advice and explanations on specific items on the meeting agenda. Besides direct access to Management,
Directors may obtain independent professional advice at the Companyʼs expense, if considered necessary, in furtherance of their duties. This procedure is formalised in the Companyʼs Board Charter.
Directors have unrestricted access to the advice and services of the Company Secretary to enable them to discharge their duties effectively. The Board is regularly updated and advised by the Company Secretary who is qualified, experienced and competent on statutory and regulatory requirements, and the resultant implications of any changes therein to the Company and
Directors in relation to their duties and responsibilities. The Company Secretary, who oversees adherence with board policies and procedures, briefs the Board on the proposed contents and timing of material announcements to be made to regulators.
The Company Secretary attends all Board and Board Committees meetings and ensures that meetings are properly convened, and that accurate and proper records of the proceedings and resolutions passed are taken and maintained accordingly. The removal of Company Secretary, if any, is a matter for the Board, as a whole, to decide.

ANNUAL REPORT 2013

Corporate Governance Statement

FARM’S BEST BERHAD (301653-V)

(Continued)

29

Principle 2 - Strengthen Composition of the Board
During the financial year under review, the Board consisted of nine (9) members, comprising six (6) Executive Directors and three
(3) Independent Non-Executive Directors. This composition fulfills the requirements as set out under the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa”), which stipulate that at least two (2) Directors or one-third of the Board, whichever is higher, must be Independent. The profile of each Director is set out in this Annual Report. The Directors, with their diverse backgrounds and specializations, collectively bring with them a wide range of experience in relevant fields such as poultry farming, business administration, planning, corporate finance, development and marketing. The profile of each Director is set out on pages 11 to 16 of this Annual Report.
Nomination Committee – Selection and Assessment of Directors
A Nomination Committee, which was established on 28 March 2002 with specific terms of reference accorded by the Board, comprises exclusively Independent Non-Executive Directors as follows:
1.
2.
3.

Datuk Hj. Zainal Bin Hj. Shamsudin - Chairman (Independent Non-Executive Director)
Tuan Haji Baharom Bin Abd. Wahab - Member (Independent Non-Executive Director)
Mohd Khasan Bin Ahmad – Member (Senior Independent Non-Executive Director)

The Nomination Committee is primarily responsible for recommending suitable appointments to the Board, taking into consideration the Board structure, size, composition and the required mix of expertise and experience which the Director should bring to the Board. It assesses the effectiveness of the Board as a whole, the Board Committees and the contribution of each
Director, including Non-Executive Directors.
The final decision on the appointment of a candidate recommended by Nomination Committee rests with the whole Board. The
Board is entitled to the services of the Company Secretary who would ensure that all appointments are properly made upon obtaining all necessary information from the Directors.
During the financial year, the Nomination Committee met once, attended by all members, to assess the Board membersʼ effectiveness. All assessments and evaluations carried out by the Nomination Committee are properly documented. Insofar as board diversity is concerned, the Board does not have a specific policy on setting targets for women candidates. The evaluation of the suitability of candidates for filling of casual vacancy, re-election or re-appointment is solely based on the candidatesʼ competency, character, time commitment, integrity and experience in meeting the needs of the Company, including, where appropriate, the ability of the candidates to act as Independent Non-Executive Directors, as the case may be. The Nomination
Committee has taken this into consideration when assessing the performance of the Directors. The Board recognizes the importance in having a board diversity policy, including the evaluation criteria, and will take steps to formalize such a policy going forward. Directors’ Remuneration
A Remuneration Committee was established by the Board on 28 March 2002, comprising a majority of Independent NonExecutive Directors as follows:
1.
2.
3.
4.
5.

Mohd Khasan Bin Ahmad - Chairman (Senior Independent Non-Executive Director)
Datuk Hj. Zainal Bin Hj. Shamsudin - Member (Independent Non-Executive Director)
Tuan Haji Baharom Bin Abd. Wahab - Member (Independent Non-Executive Director)
Datoʼ Fong Kok Yong - Member (Managing Director)
Datuk Fong Kiah Yeow – Member (Executive Director)

ANNUAL REPORT 2013

Corporate Governance Statement

FARM’S BEST BERHAD (301653-V)

(Continued)

30

The Remuneration Committee has been entrusted by the Board with specific terms of reference to review and recommend to the Board an appropriate remuneration framework for Executive Directors, including recommendations to the Board on all elements of remuneration, terms of employment, reward structures and fringe benefits for Executive Directors, sufficient enough to attract and retain Directors of quality required to manage the business of the Group. The remuneration package of NonExecutive Directors is also assessed by the Remuneration Committee and recommended to the Board thereafter.
In the case of Executive Directors, the components of the remuneration package are linked to corporate and individual performance. For Non-Executive Directors, the level of remuneration is reflective of their experience and level of responsibilities.
The determination of each Directorʼs remuneration is a matter for the Board, as a whole. Directors do not participate in decision regarding their own remuneration package.
During the financial year under review, the Committee met twice attended by all members.
Details of the aggregate remuneration of Directors for the financial year ended 31 December 2013 are as follows:
Executive Directors
RMʼ000

Non-Executive Directors
RMʼ000

Total
RMʼ000

2,685
318

108
-

108
2,685
318

3,003

108

3,111

Executive Directors

Non-Executive Directors

Total

2
4

3
-

3
2
4

Total remuneration
Fees
Salaries & other emoluments
Pension costs - defined contribution plan

The number of Directors whose remuneration falls within the bands of RM50,000 is as follows:

Below RM50,000
RM200,001 to RM250,000
RM650,001 to RM700,000

Principle 3 - Reinforce Independence of the Board
Directors’ Independence
There is a clear division of responsibilities between the Independent Non-Executive Chairman and the Managing Director to embed accountability and facilitate the division of responsibility, such that no one individual has unfettered powers over decision making. The Chairman is responsible for ensuring the adequacy and effectiveness of the Boardʼs governance process and acts as a facilitator at Board meetings to ensure that contributions by Directors are forthcoming on matters being deliberated and that no Board member dominates discussion. The Managing Director, supported by his fellow Executive Directors, implements the
Groupʼs strategic plan, policies and decisions adopted by the Board, and oversees the operations and business development of the Group.

ANNUAL REPORT 2013

Corporate Governance Statement

FARM’S BEST BERHAD (301653-V)

(Continued)

31

The Board recognises the importance of independence and objectivity in the decision making process. Executive Directors are responsible for the management of day-to-day business operations in the respective business units of the Group as well as the implementation of policies and decisions approved by the Board, whilst the Board sets the strategic direction for the Group.
The presence of Independent Non-Executive Directors ensures that issues of strategies, performance and resources proposed by Management are objectively evaluated, taking into consideration the long-term interests of shareholders, employees, customers, suppliers and other communities in which the Group conducts its business. The Independent Non-Executive Directors also ensure that the investment of minority shareholders is fairly reflected through Board representation.
The Company recognises the contribution of the Independent Non-executive Directors as equal Board members to the development of the Companyʼs strategy, the importance of representing the interests of public shareholders and providing a balanced and independent view to the Board. All Independent Non-Executive Directors are independent of Management and free from any relationship which could interfere with their independent judgment. They contribute significantly in areas such as policy and strategy, performance monitoring, allocation of resources as well as improving governance and controls. Encik Mohd
Khasan Bin Ahmad has been identified by the Board as the Companyʼs Senior Independent Non-Executive Director, to whom concerns may be conveyed by fellow Directors, shareholders and other stakeholders.
En. Mohd Khasan Bin Ahmad and Tuan Haji Baharom bin Abdul Wahad have served the Board as Independent Non-Executive
Directors beyond the 9-year tenure limit promulgated by the MCCG 2012. Nonetheless, the Board has, after conducting an assessment of these 2 Directorsʼ performance as Independent Directors, recommended them for shareholdersʼ approval to continue to act as Independent Non-Executive Directors for the ensuing year based on the following justifications:
a.

b.
c.

They have fulfilled the criteria under the definition of Independent Director as stated in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, and thus, are able to function as a check and balance, bringing an element of objectivity to the Board;
They have devoted sufficient time and attention to their professional obligations for informed and balanced decision making; and They have continued to exercise their independence and due care during their tenure as Independent Non-Executive
Directors and carried out their professional duties in the best interests of the Company and shareholders.

The criteria for independent directors used by the Board in assessing the Independent Directors of the Company accord with those of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

Principle 4 – Foster commitment of Directors
The Board meets at least four (4) times a year and additional meetings are held as and when necessary. Board Meetings are scheduled in advance at the end of the previous financial year prior to commencement of the new financial year to enable
Directors to plan ahead and fit the yearʼs meetings into their own schedules.
In the intervals between Board meetings, for exceptional matters requiring urgent Board decisions, Board approvals are obtained via circular resolutions which are supported with information necessary for an informed decision.

ANNUAL REPORT 2013

Corporate Governance Statement

FARM’S BEST BERHAD (301653-V)

(Continued)

32

During the financial year ended 31 December 2013, five (5) Board meetings were held. Details of the attendance are as follows:
No. of Board
Meetings Attended

Percentage (%)

Chairman, Independent
Non-Executive Director

5/5

100%

Datoʼ Fong Kok Yong

Managing Director

5/5

100%

Datuk Fong Kiah Yeow

Executive Director

5/5

100%

Fong Ngan Teng

Executive Director

4/5

80%

Fong Choon Kai

Executive Director

4/5

80%

Ng Cheu Kuan

Executive Director

5/5

100%

Datuk Ng Peng Hay @ Ng Peng Hong

Executive Director

5/5

100%

Tuan Haji Baharom Bin Abd. Wahab

Independent NonExecutive Director

4/5

80%

Mohd Khasan Bin Ahmad

Senior Independent
Non-Executive Director

5/5

100%

Directors

Description

Datuk Hj. Zainal Bin Hj. Shamsudin

The Chairman of the Board chairs the Board Meetings while the Managing Director of the Company leads the presentation and provides explanation on the Board papers and reports. Senior management staff may be invited to attend the Board and Board
Committee Meetings to advise and provide the Board and Board Committee members with the presentations, detailed explanation and clarification on relevant agenda items that have been tabled to the Board to enable them to arrive at a considered decision. At the quarterly Board meetings, the Board reviews the business performance of the Group and discusses major operational and financial issues. The Chairman of each Board Committee informs the Directors at each Board meetings of any salient matters noted during the respective Committeesʼ meetings which require the Boardʼs notice or direction. All pertinent issues discussed at Board meetings in arriving at the decisions and conclusions are properly recorded by the Company Secretaries by way of minutes of meetings.
It is the practice of the Company for Directors to devote sufficient time and efforts to carry out their responsibilities. In addition, the Board Charter sets out a policy, requiring Directors to notify the Chairman before accepting any new directorships notwithstanding that the Listing Requirements of Bursa allow a Director to sit on the boards of five (5) listed issuers. Such notification is expected to include an indication of time that will be spent on the new appointment.

ANNUAL REPORT 2013

Corporate Governance Statement

FARM’S BEST BERHAD (301653-V)

(Continued)

33

Directors’ Training – Continuing Education Programmes
The Board is mindful of the importance for its members to undergo continuous training to be apprised on changes to regulatory requirements and the impact such regulatory requirements have on the Group.
As an integral element of the process of appointing new Directors, the Board ensures that there is an orientation and education programme for new Board members. This is supplemented by visits to key locations and meetings with other key senior executives. Directors also receive further training from time to time, particularly on relevant new laws and regulations and changing commercial risks.
All Directors of the Company have attended the Mandatory Accreditation Programme conducted by Bursa Malaysia Training Sdn
Bhd within the stipulated timeframe required in the Listing Requirements.
On 27 May 2013, all the Directors were briefed by KPMG Management & Risk Consultancy Sdn Bhd on the salient gaps noted between the MCCG 2012 and the Companyʼs existing corporate governance practices, including how the gaps could be bridged or narrowed.
In addition to that, on 5 September 2013, all the Executive Directors of the Company attended a One-Day Training on
Competition Law Compliance titled “Understanding Competition Law and Its Implication on Business”, conducted by First
Competition Consulting (SA 01244456-D).
The Board acknowledges that continuous training is important to enable the Directors to effectively discharge their duties. The
Board will on a continuous basis, evaluate and determine the training needs of its Directors. During the year under review,
Mohd Khasan Bin Ahmad also attended the training as mentioned below:i

“Forensic Accounting for Non-Executive Directors”, organized by MSWG on 23 January 2013; and

ii

“ACCA Bursa Forum – Future of Corporate Reporting”, organized by Bursa Malaysia on 12 June 2013.

The Company Secretaries normally circulate the relevant guidelines on statutory and regulatory requirements from time to time for the Boardʼs reference and brief the Board on these updates, where applicable. The External Auditors also brief the Board members on any changes to the Malaysian Financial Reporting Standards that affect the Groupʼs financial statements for the financial year under review.

Principle 5 – Uphold integrity in financial reporting by the Company
It is the Boardʼs commitment to present a balanced and meaningful assessment of the Groupʼs financial performance and prospects at the end of each reporting period and financial year, primarily through the quarterly announcement of Groupʼs results to Bursa, the annual financial statements of the Group and Company as well as the Chairmanʼs statement and review of the
Groupʼs operations in the Annual Report, where relevant. A statement by the Directors of their responsibilities in the preparation of financial statements is set out in the ensuing paragraph.

ANNUAL REPORT 2013

Corporate Governance Statement

FARM’S BEST BERHAD (301653-V)

(Continued)

34

Statement of Directors’ Responsibility for Preparing Financial Statements
The Board is responsible to ensure that the financial statements are properly drawn up in accordance with the provisions of the
Companies Act, 1965 and approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group as at the end of the financial year and of the results and cash flows of the Group for the financial year then ended.
The Directors are satisfied that in preparing the financial statements of the Group for the year ended 31 December 2013, the
Group has adopted suitable accounting policies and applied them consistently, prudently and reasonably. The Directors also consider that all applicable approved accounting standards have been followed in the preparation of the financial statements, subject to any material departures being disclosed and explained in the notes to the financial statements. The financial statements have been prepared on the going concern basis.
In assisting the Board to discharge its duties on financial reporting, the Board has established an Audit Committee, comprising wholly Independent Non-Executive Directors, with Datuk Hj. Zainal Bin Hj. Shamsudin as the Committee Chairman. The composition of the Audit Committee, including its roles and responsibilities, are set out in the Audit Committee Report on pages
40 to 44 of this Annual Report. One of the key responsibilities of the Audit Committee in its specific terms of reference is to ensure that the financial statements of the Group and Company comply with applicable financial reporting standards in Malaysia and provisions of the Companies Act, 1965, as the case may be. Such financial statements comprise the quarterly financial report announced to Bursa and the annual statutory financial statements.
The Board understands its role in upholding the integrity of financial reporting by the Company. Accordingly, the Audit Committee, which assists the Board in overseeing the financial reporting process of the Company, has adopted a policy on the types of nonaudit services permitted to be provided by the external auditors, including the need for the Audit Committeeʼs approval in writing before such services are provided by the external auditors. To address the “self review” threat faced by the external audit firm, the procedures to be included in the policy require the engagement team conducting the non-audit services to be different from the external audit team.
In assessing the independence of external auditors, the Audit Committee requires assurance by the external auditors, confirming that they are, and have been, independent throughout the conduct of the audit engagement with the Company in accordance with the independence criteria set out by the International Federation of Accountants and the Malaysian Institute of Accountants.

Principle 6 – Recognise and manage risks of the Group
Recognising the importance of risk management, the Board has in past years established a structured risk management framework to identify, evaluate, control, monitor and report the principal business risks faced by the Group on an ongoing basis.
The risk profiles of significant subsidiaries in the Group have been approved by the Board during the financial year under review, including action plans to be taken by Management to mitigate the risks to acceptable levels. Further details of this process are set out in the Internal Control Statement in the Annual Report.
The internal audit function of the Group is co-sourced to an independent professional firm, whose work is performed with impartially, proficiency and due professional care, and in accordance with the International Professional Practices Framework of the Institute of Internal Auditors, Incorporated, which sets out professional standards on internal audit. It undertakes regular reviews of the adequacy and effectiveness of the Groupʼs system of internal controls and risk management process, as well as appropriateness and effectiveness of the corporate governance practices. The co-sourced Internal Audit reports directly to the
Audit Committee. Further details on the internal audit function can be seen in the Audit Committee Report and the Internal
Control Statement in this Annual Report.

ANNUAL REPORT 2013

Corporate Governance Statement

FARM’S BEST BERHAD (301653-V)

(Continued)

35

Principle 7 – Ensure timely and high quality disclosure
The Board is aware of the need to establish corporate disclosure policies and procedures to enable comprehensive, accurate and timely disclosures relating to the Company and its subsidiaries to be made to the regulators, shareholders and stakeholders.
Accordingly, the Board will formalise pertinent corporate disclosure policies not only to comply with the disclosure requirements as stipulated in the Listing Requirements of Bursa, but also setting out the persons authorised and responsible to approve and disclose material information to regulators, shareholders and stakeholders.
To augment the process of disclosure, the Board will earmark a dedicated section for corporate governance on the Companyʼs website, where information on the Companyʼs announcements to the regulators, the Board Charter, rights of shareholders and the Companyʼs Annual Report may be accessed.

Principle 8 – Strengthen relationship between the Company and its shareholders
Shareholder participation at general meeting
The Annual General Meeting (“AGM”), which is the principal forum for shareholder dialogue, allows shareholders to review the
Groupʼs performance via the Companyʼs Annual Report and pose questions to the Board for clarification. At the AGM, shareholders participate in deliberating resolutions being proposed or on the Groupʼs operations in general. At the last AGM, a question & answer session was held where the Chairman invited shareholders to raise questions with responses from the
Board.
The Notice of AGM is circulated at least twenty one (21) days before the date of the meeting to enable shareholders to go through the Annual Report and papers supporting the resolutions proposed. Shareholders are invited to ask questions both about the resolutions being proposed before putting a resolution to vote as well as matters relating to the Groupʼs operations in general.
All the resolutions set out in the Notice of the last AGM were put to vote by show of hands and duly passed. The outcome of the AGM was announced to Bursa on the same meeting day. Going forward, the Board will adopt poll voting for related party transactions, if any, which require specific approvals, including the announcement of the detailed results showing the number of votes cast for and against each resolution.
Communication and engagement with shareholders
The Board recognises the importance of being transparent and accountable to the Companyʼs investors and, as such, has various channels to maintain communication with them. The various channels of communications are through the quarterly announcements on financial results to Bursa, relevant announcements and circulars, when necessary, the Annual and
Extraordinary General Meetings and through the Groupʼs website at where shareholders can access pertinent information concerning the Group.

ANNUAL REPORT 2013

Internal Control Statement

FARM’S BEST BERHAD (301653-V)

36

INTRODUCTION
The Board is committed to maintaining a sound system of risk management and internal control in the Group and is pleased to provide the following Internal Control Statement (the “Statement”), which outlines the nature and scope of risk management and internal control of the Group during the financial year under review. This Statement also takes into account the Statement on
Risk Management and Internal Control – Guidelines for Directors of Listed Issuers released by Bursa Malaysia Securities Berhad
(“Bursa Securities”) on the issuance of Internal Control Statement pursuant to paragraph 15.26(b) of the Listing Requirements.
For the purpose of this Statement, associated companies have not been included.

BOARDʼS RESPONSIBILITY
The Board is ultimately responsible for the Groupʼs system of risk management and internal control (“system”), which includes the establishment of an appropriate control environment and risk management framework as well as reviewing their adequacy and effectiveness in safeguarding shareholdersʼ investment and the Groupʼs assets. In view of the limitations inherent in any system of risk management and internal control, the system is designed to manage, rather than to eliminate, the risk of failure to achieve the Groupʼs business and corporate objectives. Accordingly, the system can only provide reasonable, but not absolute, assurance against material misstatement or loss. The system of internal control covers, inter-alia, financial, organisational, operational and compliance controls as well as risk management.
The Board affirms that there is an on-going process for identifying, evaluating and managing the significant risks faced by major companies in the Group. The results of this process, including risk mitigating measures taken by Management to address key risks identified, are periodically reviewed by the Board.
Besides confirming that this process has been in place for the financial year under review and up to the date of approval of this
Statement for inclusion in the Annual Report of the Company, the Board, through the Audit Committee, also reviews the adequacy and effectiveness of the risk management and internal control system in the Group to ensure that appropriate measures are carried out to obtain the level of assurance required by the Board.

RISK MANAGEMENT
In line with Recommendation 6.1 of the Malaysian Code on Corporate Governance 2012, the Board has established a structured risk management framework (“Framework”) to identify, evaluate, control, report and monitor significant business risks faced by major companies in the Group, where the updated risk profiles of the companies concerned are tabled to the Board for deliberation and action plans to be taken by Management in mitigating the risks, as deemed necessary.
At the date of this Statement, the Group has conducted a comprehensive update of the business risks faced by major companies in the Group, with the risk profiles thereof tabled to the Audit Committee and Board for notation as well as relevant action plans to be taken to manage the risks to acceptable levels.
This Framework enables the Management and the Board to share a common model in the effective communication and evaluation of principal risks faced by the Group and internal controls implemented to address the risks concerned. The process involved Managementʼs identification of risks, assessment of risks and controls and formulation of appropriate action plans before these were escalated to the Board for review.
The business risks identified are scored for likelihood of their occurrence and the magnitude of impact upon the Group based on the relevant risk parameters that articulate the risk appetite of the companies concerned. The internal audit function carried out its internal audit based on the risk profiles of major companies in the Group.

ANNUAL REPORT 2013

Internal Control Statement

FARM’S BEST BERHAD (301653-V)

(Continued)

37

The key elements of the Groupʼs Risk Management Framework comprise the following:


Structure
The Group adopts a decentralized approach to risk management, where all the employees take ownership and accountability for risks at their respective levels. The process of risk management and treatment is the responsibility of the
Heads of Department.
The Corporate Affairs Department provides risk management support to Management for the Group, as a whole. The role of the Corporate Affairs Department in providing risk management support is to look out for significant changes in the business and external environment which may affect the Groupʼs principal business risks and report to Management so that pertinent remedial measures may be developed to mitigate the key risks caused by changes in the business and external environment; and,



Risk assessment
The Group maintains a database of key risks specific to the major companies in the Group, together with their corresponding controls. At the date of this Statement, the internal audit function has reviewed the database of key risks and controls.
There were certain risks which were now revised in terms of their rankings in tandem with the changes in environment and the enhancements of internal controls, as the case may be. The changes to key risks have been documented and updated in the risk profiles of the companies concerned.

INTERNAL AUDIT
The Group augmented its internal audit function by appointing KPMG Management & Risk Consulting Sdn. Bhd., an independent professional firm to conduct internal audit on a co-sourced basis. The scope of work performed by the co-sourced internal audit function comprises the conduct of internal audit to assess the adequacy and integrity of the governance, risk and internal control processes, and highlighting to the Audit Committee significant areas for improvements as well as risks that may impact the business units concerned. The co-sourced internal audit function, which reports directly to the Audit Committee, is responsible for planning and executing internal audit, on a risk-based approach, covering the key companies in the Group. The activities undertaken by the co-sourced internal audit function during the financial year comprise the following:


conducted a follow-up on outstanding issues raised in preceding cycles of co-sourced internal audit to assess the status of managementʼs action plans implemented;



engaged with Senior Management on the outcome of the follow-up; and



reported to the Audit Committee, highlighting the status of managementʼs action plans in addressing issues highlighted in preceding cycles of internal audit.

At the date of this statement, the Company has commissioned the co-sourced internal audit function to carry out new cycles of internal audit.

INTERNAL CONTROL
The Board has established a robust system of internal control for the smooth running of the Groupʼs operations, augmented by an established organisational structure with clearly defined lines of responsibilities and appropriate levels of delegation and authority. A process of hierarchical reporting is established which provides a documented and auditable trail of accountability.

ANNUAL REPORT 2013

Internal Control Statement

FARM’S BEST BERHAD (301653-V)

(Continued)

38

The system of internal control entails, inter-alia, the proper delegation of duties and responsibilities from the Board to the
Managing Director, Executive Directors and Senior Management (“Management”) in running the Groupʼs operations.
Details of some key elements of the Groupʼs internal control system are described below:


Control environment
To provide a proper control environment, focus is directed towards the qualities and abilities of the Groupʼs employees with continuing education and training to enhance the skills of employees and reinforce qualities of professionalism and integrity.
Continuing education and training include internal briefings and external seminars for selected employees to enhance the level of awareness and knowledge on matters relating to risk management and internal controls;



Control structure
The Board and Management have established a formal organizational structure with clearly defined lines of accountability and delegated authority within the Group. This includes well-defined responsibilities of Board committees and various management levels, including authorization levels for all aspects of the business.
The key elements of the Groupʼs control structure are as follows:
Management


Through the Groupʼs Business and Financial Policies and Procedures manual, Management has introduced wellestablished standard operating procedures that cover key aspects of the Groupʼs business processes. These policies and procedures deal with, inter-alia, control issues for financial accounting and reporting, treasury management, asset security, information technology, etc. The procedures are subject to regular reviews to cater for process changes, changing risks or further improvements;



Visits by the corporate office personnel to subsidiaries and depots to provide moral checks;



Meetings with Heads of division which provide a sound platform for the Heads of division to communicate with, and provide feedback to, Management.

Audit Committee
The Audit Committee reviews and notes the internal audit observations reported by the co-sourced internal audit function, including follow-up by the co-sourced internal audit function on the status of Management-agreed action plans to address observations reported in preceding cycles of internal audit.
The Audit Committee Report, set out on pages 40 to 44 of this Annual Report, contains further details on the activities undertaken by the Audit Committee during the financial year under review.
Board
The Board holds regular discussions with the Audit Committee and Management and considers their reports on matters relating to internal controls and deliberates on their recommendation for implementation.

ANNUAL REPORT 2013

Internal Control Statement

FARM’S BEST BERHAD (301653-V)

(Continued)

39



Reporting and information
The Group has in place the following reporting and information structure:




The Group has in place a budgeting process that provides for a responsibility accounting framework;



Management reports are generated on a regular and consistent basis to facilitate the Board and the Groupʼs
Management to perform financial reviews on the various operating subsidiaries. The reviews encompass areas such as financial and non-financial key performance indicators and variances between budget and operating results and explanation of significant variances;



The Executive Directors review the monthly management accounts of all major operating companies in the Group; and •



Authority limits are established to provide a functional framework of authority in approving revenue and capital expenditure; The Executive Directors conduct monthly meetings with Management of all significant business units within the Group to discuss the various aspects of the business, financial and operational performance of the Group

Monitoring and review
The system of internal controls is reviewed on an ongoing basis by the Board (through the Audit Committee) and the
Groupʼs designated in-house internal auditor, the functions of whom are distinct from those of the co-sourced internal audit.
Responsibility for monitoring compliance with policies, procedures and guidelines rests principally with the in-house internal auditor who reports directly to the Managing Director.

ASSURANCE BY THE MANAGING DIRECTOR AND FINANCE DIRECTOR (EXECUTIVE DIRECTOR) ON THE ADEQUACY
AND EFFECTIVENESS OF THE GROUPʼS RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM
The Board has received assurance from the Managing Director and the Executive Director – Finance in writing stating that the
Groupʼs risk management and internal control system is operating adequately and effectively, in all material aspects, for the financial year under review.

BOARDʼS COMMENTS ON THE ADEQUACY AND EFFECTIVENESS OF THE GROUPʼS RISK MANAGEMENT AND
INTERNAL CONTROL SYSTEM
The Board, through its Audit Committee, has reviewed the adequacy and effectiveness of the system internal controls, and that relevant actions have been or are being taken, as the case may be, to remedy the internal control weaknesses identified from the review, which was largely based on the outcome of observations raised by the co-sourced internal auditors and external auditors directly to the Audit Committee.
The Board is of the view that there have been no weaknesses in the system of risk management and internal control that resulted in material losses, contingencies or uncertainties that would require mention in the Companyʼs Annual Report 2013, other than impairment of receivables totaling RM1.18 million. The Board continues to take measures to strengthen the internal control environment from time to time based on the recommendations of the co-sourced internal audit function as well as the external auditors.
This statement is issued in accordance with a resolution of the Board dated 29 April 2014.

ANNUAL REPORT 2013

Audit Committee Report

FARM’S BEST BERHAD (301653-V)

40

The Board of Directors is pleased to present the following Audit Committee Report and its activities for the financial year ended
31 December 2013.
1.

MEMBERS OF THE COMMITTEE
The Audit Committee comprises the following members:
Y. Bhg. Datuk Hj. Zainal Bin Hj. Shamsudin
Chairman of the Committee and Independent Non-Executive Director
Tuan Haji Baharom Bin Abd Wahab
Independent Non-Executive Director
Encik Mohd Khasan Bin Ahmad
Senior Independent Non-Executive Director

2.

TERMS OF REFERENCE
The terms of reference of the Committee as approved by the Board are as follows:
2.1. Composition
(a) The Company shall appoint an Audit Committee from amongst its Directors which shall consist of not less than three
(3) in number. All members of the Audit Committee must be Non-Executive Directors, with a majority of them independent. (b) All the Committee members shall be financially literate.
(c)

No alternate Director shall be appointed as a member of the Audit Committee.

(d) In the event of any vacancy in the Audit Committee resulting in the number of members reduced to below three (3), the Board shall within three (3) months appoint a new member to fill the vacancy.
2.2. Membership
At least one (1) member of the Audit Committee:
(a) must be a member of the Malaysian Institute of Accountants; or
(b) if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) yearsʼ working experience and:
(i)
(ii)

(c)

he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967; or he must be a member of one (1) of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967; or

must have a degree/master/doctorate in accounting or finance and at least three (3) yearsʼ post qualification experience in accounting or finance; or

ANNUAL REPORT 2013

Audit Committee Report

FARM’S BEST BERHAD (301653-V)

(Continued)

41

(d) must have at least seven (7) yearsʼ experience being a chief financial officer of a corporation or having the function of being primarily responsible for the management of the financial affairs of a corporation; or
(e) possesses such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.
2.3. Chairman
The members of the Audit Committee shall elect a Chairman from among its number who shall be an Independent
Director.
2.4. Quorum
The quorum for a meeting of an Audit Committee shall consist of a majority of members present, who must be
Independent Directors.
2.5. Meeting
(a) the Audit Committee shall have at least four (4) meetings in a financial year and such additional meetings as the
Chairman shall decide in order to fulfill its duties;
(b) the Audit Committee meeting shall be chaired by the Chairman, or in his absence, another member who is an
Independent Director appointed by the Audit Committee;
(c)

the Company Secretary or any person appointed by the Audit Committee shall act as Secretary of the Audit
Committee and shall be responsible, with the concurrence of the Chairman, for drawing up and circulating the agenda and the notice of meetings together with the supporting explanatory documentation to members not less than seven (7) days prior to each meeting;

(d) the Secretary of the Audit Committee shall be entrusted to record all proceedings of meetings;
(e) the Audit Committee may invite any Board member or any member of the Senior Management or any employees within the Company or the Group to attend any particular meeting;
(f)

the Audit Committee shall report to the full Board, from time to time, its recommendation for consideration and implementation and the final decision shall be the responsibility of the Board; and

(g) the Audit Committee shall hold at least two (2) meetings in a financial year with external auditors without the presence of the other executive directors and employees of the Company.
2.6. Voting and Proceeding of Meeting
The decision of the Audit Committee shall be decided by a majority of votes. In the case of an equality of votes, the
Chairman shall have a second or casting vote. Provided that where two (2) members form a quorum, the Chairman of a meeting at which only such a quorum is present, or at which only two (2) Directors are competent to vote on the question in issue, the Chairman shall not have a casting vote.
2.7. Minutes
(a) The Audit Committee shall cause minutes to be duly recorded and entered into the books provided for the purpose of all resolutions and proceedings of all meetings of the Audit Committee. Such minutes shall be signed by the
Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting.

ANNUAL REPORT 2013

Audit Committee Report

FARM’S BEST BERHAD (301653-V)

(Continued)

42

(b) Minutes of the Audit Committee meetings shall be made available to all Board members. A summary of significant matters of each meeting of the Audit Committee and resolutions (if any) will be reported to the Board by the
Chairman of the Audit Committee.
(c)

The books containing the minutes of proceedings of any meeting of the Audit Committee shall be kept by the
Company at the registered office of the Company, and shall be opened for the inspection of any member of the
Audit Committee and the Board.

2.8. Authority
The Audit Committee shall, in accordance with a procedure to be determined by the Board and at the cost of the
Company:
(a) have the authority to investigate any matter within its terms of reference;
(b) have the resources which are required to perform its duties;
(c)

have full and unrestricted access to any information, records, properties and personnel of the Company and of the Group;

(d) have direct communication channels with the external auditors and internal auditors;
(e) have the right to obtain independent professional or other advice and to invite any person with relevant experience and expertise to attend the Audit Committee meeting, whenever deemed necessary; and
(f)

have the right to convene meeting with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary.

2.9. Functions and Responsibilities
The functions and responsibilities of the Audit Committee shall include the following:
(a) to consider the appointment, resignation and dismissal of external auditors and make appropriate recommendations to the Board (including the audit fees);
(b) to review with the external auditors of the Company:
(i)
(ii)
(iii)
(iv)
(c)

the audit plan; the audit report; their Management letter and Managementʼs response; and the assistance given by the employees of the Company and the Group to the external auditors;

to discuss problems and reservations arising from the interim and final audits, and any matter the external auditors may wish to discuss (in the absence of Management, where necessary);

(d) to review and consider the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work;
(e) to review the internal audit programme, processes, the reports prepared by the internal audit department and to ensure that appropriate action is taken on the recommendations of the internal audit function;
(f)

to review any appraisal or assessment of the performance of members of the internal audit function;

ANNUAL REPORT 2013

Audit Committee Report

FARM’S BEST BERHAD (301653-V)

(Continued)

43

(g) to approve any appointment or termination of senior members of the internal audit function;
(h) to be informed of any resignation of internal audit staff and provide an avenue for resigning staff to explain or submit the reasons for resignation;
(i)

to review the quarterly financial results of the Group and annual audited financial statements of the Company and the Group before recommending the same for the Boardʼs approval, focusing particularly on:
(i)
(ii)
(iii)
(iv)

compliance with accounting standards and any other legal requirements; any changes in or implementation of accounting policies and practices; significant and unusual events and adjustments arising from the audit; and the going concern assumption;

(j)

to review any related party transactions and conflict of interest situation that may arise within the Company or the Group, including any transaction, procedure or course of conduct that may raise questions on Management integrity; (k)

to consider the reports, major findings and Managementʼs responses thereto on any internal investigations carried out by internal audit function;

(l)

to verify, on an annual basis, the allocation of options under a share scheme for employees to ensure compliance with the allocation criteria determined by the Companyʼs share option committee and in accordance with the ByLaws of the relevant option scheme;

(m) to promptly report to Bursa Malaysia Securities Berhad (“Bursa Securities”) of a matter reported by the Audit
Committee to the Board of Directors which has not been satisfactorily resolved resulting in a breach of the Main
Market Listing Requirements (“Listing Requirements”); and
(n) such other functions or responsibilities as may be agreed to by the Audit Committee and the Board.
The reports of the Audit Committee, the external and internal auditors shall be tabled to the Board for discussion.
2.10. Review of the Audit Committee
The Board of the Company shall review the term of office and performance of the Audit Committee and each of its members at least once every three (3) years to determine whether such Audit Committee and members have carried out their duties in accordance with their terms of reference.

3.

MEETINGS
There were five (5) meetings of the Audit Committee held during the financial year ended 31 December 2013, which were attended by the Audit Committee members as follows:
Member

Description

Datuk Hj. Zainal Bin
Hj. Shamsudin

Chairman,
Independent Non-Executive Director

Tuan Haji Baharom Bin
Abd. Wahab

Independent Non-Executive Director

Mohd Khasan Bin Ahmad

Senior Independent Non-Executive Director

No. of Board Meetings
Attended

Percentage
(%)

5/5

100%

4/5

80%

5/5

100%

ANNUAL REPORT 2013

Audit Committee Report

FARM’S BEST BERHAD (301653-V)

(Continued)

44

The Groupʼs external auditors attended all the Audit Committee meetings during the year.
The Chairman of the Audit Committee undertakes a continuing process of engagement with senior executives of the
Company as well as the external auditors so that the Audit Committee is kept up-to-date with all important issues affecting the Company.

4.

ACTIVITIES OF THE AUDIT COMMITTEE
During the financial year, the activities undertaken by the Audit Committee are as follows:
a.
b.
c.
d.

e.
f.
g.
h.

Reviewed the quarterly financial and operational reports of the Group before recommending to the Board for approval;
Reviewed the external auditorsʼ reports in relation to audit and accounting issues arising from the audit; and updates of new developments on accounting standards issued by the Malaysian Accounting Standards Board;
Reviewed the audit plan of the external auditors;
Reviewed the inter-company transactions and any related/interested party transactions that arose within the Company and the Group to ensure compliance with Malaysian Accounting Standards Board and Bursa Securities Listing
Requirements;
Reviewed the annual report and audited financial statements of the Company and the Group prior to the submission to the Board for their consideration and approval;
Reviewed the adequacy of the scope, functions, competency and resources of the internal audit function;
Reviewed the internal audit report prepared by the internal auditors and the follow-up on Managementʼs implementation of the recommended actions; and
Reviewed the Internal Control Statement and Audit Committee Report prior to the Boardʼs approval for inclusion in the Companyʼs Annual Report.

The trainings attended by Audit Committee members during the financial year are set out in the Corporate Governance
Statement on page 33 of this Annual Report.

5.

INTERNAL AUDIT FUNCTION

The Audit Committee is aware that an independent internal audit function is essential to assist in providing the assurance the
Audit Committee requires regarding the adequacy and effectiveness of the risk management and internal control systems of the
Group. Although the Company has an in-house internal audit function, the Audit Committee appointed an independent professional firm, KPMG Management & Risk Consulting Sdn. Bhd., to augment the in-house function on a co-sourced basis, which reports directly to the Audit Committee. The co-sourced internal auditor carries out internal audit with a view to assess the adequacy and effectiveness of the Groupʼs system of internal controls, focusing on the principal companies within the Group.
The costs incurred for the internal audit function in respect of the financial year ended 31 December 2013 was RM39,367.
A summary of internal audit activities performed by the internal audit function during the financial year under review is set out in the Internal Control Statement on pages 36 to 39 of this Annual Report.

ANNUAL REPORT 2013

financial

statements
Directorsʼ Report 46
Statement by Directors 51
Statutory Declaration 51
Independent Auditorsʼ Report 52
Statements of Comprehensive Income 54
Statements of Financial Position 55
Statements of Changes in Equity 58
Statements of Cash Flows 60
Notes to the Financial Statements 62
Notes to the Financial Statements
- Supplementary Information 131

Directors’ Report

FARM’S BEST BERHAD (301653-V)

46

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the
Company for the financial year ended 31 December 2013.

Principal activities
The principal activities of the Company are investment holding and provision of management services. The principal activities of the subsidiaries and the associates are described in Note 19 and Note 20 to the financial statements respectively. There have been no significant changes in the nature of the principal activities during the financial year.

Results
Group
RMʼ000
Profit/(loss) after tax, attributable to:
Equity holders of the parent
Non-controlling interests

Company
RMʼ000

4,330
(26)

(1,331)
-

4,304

(1,331)

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.

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 to be paid in respect of the current financial year.

Directors
The names of the directors of the Company in office since the date of the last report and at the date of this report are:
Datuk Hj. Zainal Bin Hj. Shamsudin
Datoʼ Fong Kok Yong
Datuk Fong Kiah Yeow
Fong Ngan Teng
Fong Choon Kai
Ng Cheu Kuan
Datuk Ng Peng Hay @ Ng Peng Hong
Tuan Haji Baharom Bin Abd Wahab
Mohd Khasan Bin Ahmad

ANNUAL REPORT 2013

Directors’ Report

FARM’S BEST BERHAD (301653-V)

(Continued)

47

Directorsʼ benefits
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate.
Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a fulltime employee of the Company as shown in Note 14 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 38 to the financial statements.

Directorsʼ interests
According to the register of directorsʼ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:
Number of ordinary shares of RM1 each
Acquired
Sold 31.12.2013
1.1.2013
Holding company
Direct interest
Datoʼ Fong Kok Yong
Datuk Fong Kiah Yeow
Fong Ngan Teng
Fong Choon Kai

85,000
85,000
85,000
85,000

-

-

85,000
85,000
85,000
85,000

108,000
4,500

-

-

108,000
4,500

The Company
Direct interest
Datuk Fong Kiah Yeow
Tuan Haji Baharom Bin Abd Wahab

1.1.2013

Number of ordinary shares of RM1 each
Private share
Acquired placement
Sold 31.12.2013

The Company
Indirect interest
Datoʼ Fong Kok Yong
Datuk Fong Kiah Yeow
Fong Ngan Teng
Fong Choon Kai

20,348,705
20,348,705
20,348,705
20,348,705

559,800
559,800
559,800
559,800

555,300
555,300
555,300
555,300

-

21,463,805
21,463,805
21,463,805
21,463,805

ANNUAL REPORT 2013

Directors’ Report

FARM’S BEST BERHAD (301653-V)

(Continued)

48

Directorsʼ interests (continued)

Holding company
Direct interest
Datoʼ Fong Kok Yong
Datuk Fong Kiah Yeow
Fong Ngan Teng
Fong Choon Kai

1.1.2013

Number of warrants
Private share
Alloted placement
Sold

(5,847,560)
(5,847,560)
(5,847,560)
(5,847,560)

31.12.2013

-

4,181,701
4,181,701
4,181,701
4,181,701

1,665,900
1,665,900
1,665,900
1,665,900

41
41
41
41

-

21,600

-

-

21,600

-

900

-

-

900

The Company
Direct interest
Datuk Fong Kiah Yeow
Tuan Haji Baharom Bin
Abd Wahab

By virtue of their interests in the holding company, namely F.C.H. Holdings Sdn. Bhd. (“FCH”), Datoʼ Fong Kok Yong, Datuk Fong
Kiah Yeow, Fong Ngan Teng and Fong Choon Kai are deemed interested in the shares in all the subsidiaries of the Company to the extent that FCH has an interest.
The other directors in office at the end of the financial year, Datuk Hj. Zainal Bin Hj. Shamsudin, Ng Cheu Kuan, Datuk Ng Peng
Hay @ Ng Peng Hong and Mohd Khassan Bin Ahmad, did not have any interest in shares in the Company or in its related corporations during the financial year.

Issuance of shares and warrants
During the financial year, the Company:
(a) issued 11,106,052 free warrants (“Free Warrants”) on the basis of one Free Warrant for every 5 existing ordinary shares of
RM1 each in the Company; and
(b) increased its issued and fully paid up share capital from RM55,530,263 to RM61,083,263 by way of a private share placement of 5,553,000 ordinary shares of RM1 each (“Placement Shares”) together with 16,659,000 free detachable warrants (“Placement Warrants”) on the basis of 3 Placement Warrants for every one Placement Share at an issue price of RM1.22 per share to provide working capital.
The Placement Shares ranked pari passu in all respects with the existing ordinary shares of the Company.

ANNUAL REPORT 2013

Directors’ Report

FARM’S BEST BERHAD (301653-V)

(Continued)

49

Issuance of shares and warrants (continued)
The Free Warrants and Placement Warrants (collectively “the Warrants”) are constituted by a Deed Poll dated 27 June 2013.
The salient features of the Warrants are as follows:
(a) Each Warrant entitles the registered holder to subscribe for one new ordinary shares of RM1 each in the Company at an exercise price of RM1 per ordinary share subject to adjustments in accordance with the provisions of the Deed Poll;
(b) The Warrants may be exercised at any time within 5 years commencing on and including the date of first issuance of the
Warrants. Warrants not exercised during the exercise period will thereafter lapse and cease to be valid. All Warrants mature on 14 July 2018; and
(c) The Warrant holders are not entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment and issuance of new ordinary shares in the Company upon the exercise of the
Warrants. The Warrant holders are not entitled to any voting rights or participation in any form of distribution and/or offer of securities in the Company until and unless such Warrant holders exercise their Warrants into new ordinary shares in the
Company.

Other statutory information
(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 allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.
(b) At the date of this report, the directors are not aware of any circumstances which would:
(i)

render the amount written off as bad debts or the amount provided for as doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and

(ii) render the values attributed to the current assets in the financial statements of the Group and of the Company misleading. (c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.
(e) As at the date of this report, there does not exist:
(i)

any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.

ANNUAL REPORT 2013

Directors’ Report

FARM’S BEST BERHAD (301653-V)

(Continued)

50

Other statutory information (continued)
(f) In the opinion of the directors:
(i)

no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the
Company for the financial year in which this report is made.

Event after the reporting period
The event after the reporting period is disclosed in Note 43 to the financial statements.

Holding company
The directors regard F.C.H. Holdings Sdn. Bhd., a company incorporated in Malaysia, as the Companyʼs holding company.

Auditors
The auditors, Ernst & Young, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the directors dated 29 April 2014.

Datoʼ Fong Kok Yong

ANNUAL REPORT 2013

Datuk Fong Kiah Yeow

Statement By Directors

FARM’S BEST BERHAD (301653-V)

Pursuant to Section 169 (15) of the Companies Act, 1965

51

We, Datoʼ Fong Kok Yong and Datuk Fong Kiah Yeow, being two of the directors of Farmʼs Best Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 54 to 130 are drawn up in accordance with Financial Reporting Standards and the requirements 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 December 2013 and of their financial performance and cash flows for the year then ended.
The information set out in Note 46 to the financial statements on page 131 have been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to
Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
Signed on behalf of the Board in accordance with a resolution of the directors dated 29 April 2014.

Datoʼ Fong Kok Yong

Datuk Fong Kiah Yeow

Statutory Declaration
Pursuant to Section 169 (16) of the Companies Act, 1965
I, Datuk Fong Kiah Yeow, being the director primarily responsible for the financial management of Farmʼs Best Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 54 to 131 are in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory
Declarations Act, 1960.
Subscribed and solemnly declared by the abovenamed, Datuk Fong Kiah Yeow on
29 April 2014 at Melaka in the State of Melaka

Datuk Fong Kiah Yeow

Before me,
SAIFUL BAHARI S ABDULLAH, PJK
Commissioner for Oaths

ANNUAL REPORT 2013

Independent Auditors’ Report

FARM’S BEST BERHAD (301653-V)

To The Members Of Farm’s Best Berhad

52

Report On The Financial Statements
We have audited the financial statements of Farmʼs Best Berhad , which comprise the statements of financial position of the
Group and of the Company as at 31 December 2013, 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 year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 54 to 130.

Directors’ responsibility for the financial statements
The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entityʼs preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entityʼs internal control. An audit also includes evaluating the appropriateness of the 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 give a true and fair view of the financial position of the Group and of the Company as at
31 December 2013 and of their financial performance and cash flows for the year then ended in accordance with Financial
Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
Emphasis of matter
Without qualifying our opinion, we draw attention to Note 2.1(b) to the financial statements which indicates that the Group and the Company reported accumulated losses of approximately RM34,282,000 (2012: RM36,196,000) and RM46,696,000 (2012:
RM42,881,000) respectively. The Group and the Company reported negative cash flows from operating activities of approximately RM2,650,000 and RM5,936,000 during the current financial year.
The ability of the Group and the Company to continue as a going concern is dependent upon the continuing financial support from the bankers and the successful outcome of certain strategic measures initiated by the directors, which in their opinion, will result in the Group and the Company being able to achieve future profitable operations and generate sufficient cashflows to meet the liabilities of the Group and the Company as and when they fall due. The financial statements of the Group and the Company have been prepared on a going concern basis and do not include any adjustments relating to the amounts and classification of assets and liabilities that might be necessary should the Group and the Company be unable to continue as a going concern.

ANNUAL REPORT 2013

Independent Auditors’ Report

FARM’S BEST BERHAD (301653-V)

To The Members Of Farm’s Best Berhad (Continued)

53

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 by its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b) We have considered the financial statements and the auditorsʼ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 19 to the financial statements, being financial statements that have been included in the consolidated financial statements.
(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.
(d) The auditorsʼ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.

Other reporting responsibilities
The supplementary information set out in Note 46 on page 131 is disclosed to meet the requirement of Bursa Malaysia Securities
Berhad. 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.

Ernst & Young
AF: 0039
Chartered Accountants

Low Khung Leong
2697/01/15(J)
Chartered Accountant

Melaka, Malaysia
29 April 2014

ANNUAL REPORT 2013

Statements of Comprehensive Income

FARM’S BEST BERHAD (301653-V)

For The Financial Year Ended 31 December 2013

54

Group

Company
2013
2012
RMʼ000
RMʼ000

Note

2013
RMʼ000

2012
RMʼ000

8
9

455,381
(389,690)

400,514
(348,954)

2,500
-

1,878
-

65,691
3,253
(23,614)
(13,318)

51,560
1,592
(30,517)
(11,076)

2,500
(2,540)
-

1,878
(774)
-

32,012
1,337
(20,982)
(1,011)

11,559
582
(19,704)
(581)

(40)
106
(897)
-

1,104
148
(1,041)
-

11,356
(7,052)

(8,144)
(572)

(831)
(500)

211
(149)

4,304

(8,716)

(1,331)

Continuing operations
Revenue
Cost of sales
Gross profit
Other operating income
Administrative expenses
Selling and marketing expenses
Operating profit
Finance income
Finance costs
Share of losses of associates
Profit/(loss) before tax
Income tax expense
Profit/(loss) after tax
Other comprehensive income
Foreign exchange differences on translation of foreign operations

10

11

12
15

(182)

(86)

-

62

-

Total comprehensive income/
(loss) for the year

4,122

(8,802)

(1,331)

62

Profit/(loss) after tax, attributable to:
Equity holders of the parent
Non-controlling interests

4,330
(26)

(9,530)
814

(1,331)
-

62
-

4,304

(8,716)

(1,331)

62

4,202
(80)

(9,616)
814

(1,331)
-

62
-

4,122

(8,802)

(1,331)

62

Total comprehensive income/(loss) for the year attributable to:
Equity holders of the parent
Non-controlling interests

Earnings/(loss) per share attributable to equity holders of the parent (sen)
Basic
Diluted

16
16

7.5
7.5

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
ANNUAL REPORT 2013

(17.2)
(17.2)

Statements of Financial Position

FARM’S BEST BERHAD (301653-V)

As At 31 December 2013

55

Note

Assets
Non-current assets
Property, plant and equipment
Land use rights
Investment in subsidiaries
Investment in associates
Quoted investments
Goodwill
Deferred tax assets
Land held for property development

31.12.2013
RMʼ000

Group
31.12.2012 01.01.2012
RMʼ000
RMʼ000
(restated)
(restated)

140,113
142
245
25
2,302
2,259
1,229

145,234
154
1,256
25
4,462
4,159
5,102

120,580
166
3,375
25
8,556
2,602
5,102

146,315

160,392

140,406

18,019
13,762
15,030
174,796
1,697
45,271
1,876
4,170

16,960
16,588
16,611
158,971
2,086
35,475
1,406
4,695

17,969
16,693
18,842
140,878
3,776
18,216
1,787
3,235

274,621

252,792

221,396

420,936

413,184

361,802

61,083
62,410
3,142
(34,282)

55,530
62,641
(368)
(36,196)

55,530
62,641
(282)
(26,666)

Equity attributable to equity holders of the parent
Non-controlling interest

92,353
6,580

81,607
6,660

91,223
5,846

Total equity

98,933

88,267

97,069

64,585
12,352

63,970
10,327

56,662
8,666

76,937

74,297

65,328

Current assets
Property development costs
Biological assets
Inventories
Trade and other receivables
Other current assets
Held-to-maturity investments
Tax recoverable
Cash and bank balances

17
18
19
20
21
22
23
24

25
26
27
28
29
30
31

Total assets

Equity and liabilities
Equity
Share capital
Share premium
Other reserves
Accumulated losses

Non-current liabilities
Loans and borrowings
Deferred tax liabilities

32
33
34

35
23

ANNUAL REPORT 2013

Statements of Financial Position

FARM’S BEST BERHAD (301653-V)

As At 31 December 2013 (Continued)

56

Note

Current liabilities
Loans and borrowings
Trade and other payables
Income tax payable

Group
31.12.2012 01.01.2012
RMʼ000
RMʼ000
(restated)
(restated)

185,468
57,288
2,310

177,984
72,460
176

145,803
51,806
1,796

245,066

250,620

199,405

Total liabilities

322,003

324,917

264,733

Total equity and liabilities

420,936

413,184

361,802

Net current assets

29,555

2,172

21,991

Net assets

98,933

88,267

97,069

ANNUAL REPORT 2013

35
36

31.12.2013
RMʼ000

Statements of Financial Position

FARM’S BEST BERHAD (301653-V)

As At 31 December 2013 (Continued)

57

Note

Assets
Non-current assets
Property, plant and equipment
Investment in subsidiaries

Company
31.12.2012 01.01.2012
RMʼ000
RMʼ000
(restated)
(restated)

284
78,466

294
78,551

449
74,951

78,750

78,845

75,400

15,620
5
833
3

10,657
5
937
2

15,697
988
-

16,461

11,601

16,685

95,211

90,446

92,085

61,083
62,410
3,706
(46,696)

55,530
62,641
(42,881)

55,530
62,641
(42,943)

80,503

75,290

75,228

5,760
8,948

8,958
6,198

10,220
6,637

14,708

15,156

16,857

Total liabilities

14,708

15,156

16,857

Total equity and liabilities

95,211

90,446

92,085

1,753

(3,555)

80,503

75,290

Current assets
Trade and other receivables
Other current assets
Tax recoverable
Cash and bank balances

17
19

31.12.2013
RMʼ000

28
29
31

Total assets

Equity and liabilities
Equity
Share capital
Share premium
Other reserves
Accumulated losses

32
33
34

Total equity
Current liabilities
Loans and borrowings
Trade and other payables

Net current assets/(liabilities)

Net assets

35
36

(172)

75,228

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
ANNUAL REPORT 2013

Statements of Changes In Equity

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013

58

Issued capital (Note 32)
RMʼ000

Share premium (Note 33)
RMʼ000

Other reserves Accumulated
(Note 34) losses RMʼ000
RMʼ000

Total equity attributable equity
Nonholders of controlling the parent interest RMʼ000
RMʼ000

Total equity RMʼ000

Group
2013
Opening balance at
1 January 2013
Total comprehensive income/(loss) Transactions with owners
Private share placement
Private placement expenses Transfer to accumulated losses Issuance of warrants

55,530

62,641

(368)

(36,196)

81,607

-

-

(128)

4,330

4,202

5,553

1,222

-

-

6,775

-

-

(231)

-

(1,222)

5,553
Closing balance at
31 December 2013

-

(231)

(231)

6,660

(80)

-

88,267

4,122

6,775
(231)

(68)
3,706

68
(2,484)

-

-

-

3,638

(2,416)

6,544

-

6,544

3,142

(34,282)

92,353

6,580

98,933

5,846

97,069

61,083

62,410

55,530

62,641

(282)

(26,666)

91,223

-

-

(86)

(9,530)

(9,616)

55,530

62,641

(368)

(36,196)

81,607

2012
Opening balance at
1 January 2012
Total comprehensive income/(loss) Closing balance at
31 December 2012

ANNUAL REPORT 2013

814

6,660

(8,802)

88,267

Statements of Changes In Equity

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

59

Issued capital (Note 32)
RMʼ000

Share premium (Note 33)
RMʼ000

Other reserves (Note 34)
RMʼ000

Accumulated losses RMʼ000

Total equity RMʼ000

Company
2013
At 1 January 2013
Total comprehensive income
Transaction with owners
Private share placement
Private placement expenses
Issuance of warrants

55,530

62,641

-

(42,881)

75,290

-

-

-

(1,331)

(1,331)

1,222
(231)
(1,222)

3,706

(2,484)

6,775
(231)
-

5,553
At 31 December 2013

5,553
-

(231)

3,706

(2,484)

6,544

61,083

62,410

3,706

(46,696)

80,503

55,530

62,641

-

(42,943)

75,228

-

-

-

55,530

62,641

-

2012
At 1 January 2012
Total comprehensive income
At 31 December 2012

62
(42,881)

62
75,290

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
ANNUAL REPORT 2013

Statements of Cash Flows

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013

60

Group
Note

2012
RMʼ000
(restated)

11,356

(8,144)

22
28
28
19
19

2,160
179
1,001
-

4,094
526
1,826
33

100
1,626
-

17
18

9,384
12
20,982
(1,337)

9,608
12
19,704
(582)

10
(2,500)
897
(106)

(206)
96

(169)
287

-

10
2

(290)
1,011
6

(15)
581
(129)

-

-

Profit/(loss) before tax
Adjustments for:
Allowance for impairment losses:
- Goodwill
- Trade receivables
- Other receivables
- Investment in subsidiaries
- Capital contribution in subsidiaries
Bad debts written off on other receivables
Depreciation and amortisation:
- Property, plant and equipment
- Land use rights
Dividend income from subsidiaries
Interest expense
Interest income
Net (gain)/loss on disposal of property, plant and equipment
Property, plant and equipment written off
Reversal of allowance for impairment losses on trade receivables
Share of associatesʼ results
- Unrealised foreign exchange loss/(gain)

Company
2013
2012
RMʼ000
RMʼ000

2013
RMʼ000

28

(831)

211

16
(1,878)
1,041
(148)

-

Total adjustments

32,998

35,776

27

(957)

Operating cash flows before changes in working capital

44,354

27,632

(804)

(746)

2,814
2,826
1,329
(16,715)
389
(15,202)

1,009
105
2,231
(20,334)
1,690
15,304

(6,589)
2,750

5,034
(439)

(3,839)

4,595

Changes in working capital
Decrease in property development costs
Decrease in biological assets
Decrease in inventories
(Increase)/decrease in receivables
Decrease in other current assets
(Decrease)/increase in payables

(24,559)
Cash flows from/(used in) operations
Interest paid
Tax paid
Net cash flows (used in)/from operating activities

ANNUAL REPORT 2013

5

19,795
(20,982)
(1,463)

27,637
(19,704)
(1,707)

(4,643)
(897)
(396)

3,849
(1,041)
(98)

(2,650)

6,226

(5,936)

2,710

Statements of Cash Flows

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

61

Group
Note

Investing activities
Purchase of property, plant and equipment
Additional subscription in shares in a subsidiary
Acquisition of a subsidiary
Proceeds from disposal of property, plant and equipment
Interest received
Increase in held-to-maturity investments
Dividend received from:
- subsidiaries
- an associate

17(c)

2013
RM'000

2012
RM'000

Company
2013
2012
RM'000
RM'000

(1,108)
-

(31,883)
-

(15)

402
1,337
(9,796)

374
582
(17,259)

106
-

127
148
-

1,538

2,500
-

1,878
(1,447)

-

(3,600)
-

Net cash flows (used in)/from investing activities

(9,165)

(46,648)

2,591

Financing activities
Repayment of term loans
Drawdown of term loans
Repayment of finance lease payables
Proceed of issue of private placement
Private placement expenses
Increase in amount due to holding company
Increase in short term borrowings

(8,517)
8,350
(2,362)
6,775
(231)
24
7,962

(4,944)
11,850
(269)
5,350
30,873

(558)
6,775
(231)
-

(380)
-

Net cash flows from financing activities

12,001

42,860

5,986

(380)

186

2,438

2,641

883

-

-

Net increase in cash and cash equivalents
Effects of foreign exchange changes

(182)
(15,932)

Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

31

(86)
(18,284)

(7,629)

(8,512)

(15,928)

(15,932)

(4,988)

(7,629)

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013

62

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 of the Company is located at AG 5730, Alor Gajah Industrial
Estate, Alor Gajah, 78000 Melaka.
The principal activities of the Company are investment holding and provision of management services. The principal activities of the subsidiaries and associates are described in Note 19 and Note 20 respectively. There have been no significant changes in the nature of the principal activities during the financial year.
The directors regard F.C.H. Holdings Sdn. Bhd., a company incorporated in Malaysia, as the Companyʼs holding company.

2.

Basis of preparation
(a) Accounting framework
These financial statements have been prepared in accordance with Financial Reporting Standards (FRS) as issued by the Malaysian Accounting Standards Board (MASB) and the requirements of the Companies Act, 1965 in Malaysia.
The financial statements have also been prepared on a historical basis, unless otherwise indicated in the accounting policies below.
The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand
(RMʼ000) except when otherwise indicated.
(b) Going concern assumption
During the current financial year, the Group and the Company reported accumulated losses of approximately
RM34,282,000 (2012: RM36,196,000) and RM46,696,000 (2012: RM42,881,000) respectively. The Group and the
Company reported negative cash flows from operating activities of approximately RM2,650,000 and RM5,936,000 during the current financial year. The ability of the Group to and the Company continue as a going concern is dependent upon the continuing financial support of the bankers and the successful outcome of the following strategic measures initiated by the directors:
(i)

implementation of process re-engineering, energy savings and cost cutting measures;

(ii) efforts to increase sales of the Groupʼs “further processed products” which carry higher profit margin;
(iii) disposal of non-core assets of the Group; and
(iv) successful synergies to be derived upon the completion of the proposed corporate exercise as described in Note 43.
These factors indicate the existence of a material uncertainty that may cast significant doubt about the Groupʼs and the
Companyʼs ability to continue as going concerns. These financial statements have been prepared on a going concern basis on the assumptions that the Group and the Company will be able to obtain continuous support from their bankers and the successful outcome of the aforementioned strategic measures. These financial statements do not include any adjustments which may arise should the aforementioned assumptions prove to be invalid.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

63

3.

Summary of significant accounting policies
3.1 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied for like transactions and events in similar circumstances.
The Company controls an investee if and only if the Company has all the following:

(i)

power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee); (ii) exposure, or rights, to variable returns from its investment with the investee; and
(iii) the ability to use its power over the investee to affect its returns.
When the Company has less than a majority of the voting rights of an investee, the Company considers the following in assessing whether or not the Companyʼs voting rights in an investee are sufficient to give it power over the investee:
(i)

the size of the Companyʼs holding of voting rights relative to the size and dispersion of holdings of the other vote holders; (ii) potential voting rights held by the Company, other vote holders or other parties;
(iii) rights arising from other contractual arrangements; and
(iv) any additional facts and circumstances that indicate that the Company/Group has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholdersʼ meetings.
Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.
Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.
Changes in the Groupʼs ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Groupʼs interests and the noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss 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 and liabilities of the subsidiary and any non-controlling interest, is recognised in profit or loss. The subsidiaryʼs cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

64

3.

Summary of significant accounting policies (continued)
3.2 Business combinations and goodwill
Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred,measured at acquisition date fair value and the amount of any noncontrolling interests in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquireeʼs identifiable net assets. Transaction costs incurred are expensed and included in administrative expenses.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of FRS 139, it is measured in accordance with the appropriate FRS.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of the acquirerʼs previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Groupʼs cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.
3.3 Foreign currency translation
(a) Functional and presentation currency
The Groupʼs and the Companyʼs financial statements are presented in Ringgit Malaysian which is also the
Companyʼs functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

65

3.

Summary of significant accounting policies (continued)
3.3 Foreign currency translation (continued)
(b) Transactions and balances
Transactions in foreign currencies are initially recorded by the Group entities at the functional currency rates prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date.
All differences are taken to the in profit or loss with the exception of all monetary items that forms part of a net investment in a foreign operation. These are recognised in other comprehensive income until the disposal of the net investment, at which time they are reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items is recognised in line with the gain or loss of the item that gave rise to the translation difference (translation differences on items whose gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss respectively).
(c) Group companies
On consolidation, the assets and liabilities of foreign operations are translated into RM at the rate of exchange prevailing at the reporting date and their income statements are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.
3.4 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the
Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty.
The Company and its subsidiaries assess their revenue arrangements against specific criteria in order to determine if the Company and its subsidiaries are acting as principal or agent. The Group and the Company have concluded that they are acting as a principal in all of its revenue arrangements.
The following specific recognition criteria must also be met before revenue is recognised:
(a) Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods.
(b) Sale of development properties
Revenue from sale of development properties is accounted for by the stage of completion method.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

66

3.

Summary of significant accounting policies (continued)
3.4 Revenue recognition (continued)
(c) Interest income
For all financial instruments measured at amortised cost and interest bearing financial assets classified as available for sale, interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the profit or loss.
(d) Management fees
Management fees are recognised when services are rendered.
(e) Dividend income
Dividend income is recognised when the Groupʼs and the Companyʼs right to receive payment is established.
(f) Rental income
Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms.
3.5 Taxes
(a) Current income tax
Current income tax assets and liabilities for the current period 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 are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the profit or loss.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
(b) Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all temporary differences, except:
(i)

where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

(ii) in respect of taxable temporary differences associated with investments in subsidiaries and associates where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

67

3.

Summary of significant accounting policies (continued)
3.5 Taxes (continued)
(b) Deferred tax (continued)
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
(i)

where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

(ii) in respect of deductible temporary differences associated with investments in subsidiaries and associates deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in 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 at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it is incurred during the measurement period or in profit or loss.
(c) Sales tax
Revenues, expenses and assets are recognised net of the amount of sales tax except:
(i)

where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

(ii) receivables and payables that are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

68

3.

Summary of significant accounting policies (continued)
3.6 Employee benefits
(i) Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.
(ii) Defined contribution plans
The Group makes contributions to the Employees Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.
3.7 Property, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Such cost includes the cost of replacing component parts of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.
When significant parts of property, plant and equipment are required to be replaced at intervals, the Group derecognises the replaced part, and recognises the new part with its own associated useful life and depreciation. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in the profit or loss as incurred. The present value of the expected cost for the decommissioning of the asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
Capital work-in-progress is not depreciated. For other assets, depreciation is calculated on a straight-line basis over their estimated useful lives as follows:
Leasehold land
Buildings
Motor vehicles
Plant and machinery
Other assets

72 to 100 years
50 years
10 years
5 to 20 years
5 to 10 years

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss in the year the asset is derecognised.
The assetsʼ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.
3.8 Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

69

3.

Summary of significant accounting policies (continued)
3.8

Leases (continued)
(a) Group as lessee
Finance leases which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the profit or loss.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an operating expense in the profit or loss on a straight-line basis over the lease term.
(b) Group as lessor
Leases in which the Group do not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income.
Contingent rents are recognised as revenue in the period in which they are earned.

3.9

Land use rights
Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less accumulated amortisation and accumulated impairment losses. The land use rights are amortised over their lease terms. 3.10 Subsidiaries
A subsidiary is an entity over which the Group has all the following:
(i)

Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee); (ii) Exposure, or rights, to variable returns from its investment with the investee; and
(iii) The ability to use its power over the investee to affect its returns.
In the Companyʼs separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

70

3.

Summary of significant accounting policies (continued)
3.11 Investment in associates
An associate is an entity in which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control over those policies.
On acquisition of an investment in associate, any excess of the cost of investment over the Groupʼs share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill and included in the carrying amount of the investment. Any excess of the Groupʼs share of the net fair value of the identifiable assets and liabilities of the investee over the cost of investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Groupʼs share of the associateʼs profit or loss for the period in which the investment is acquired.
An associate is equity accounted for from the date on which the investee becomes an associate.
Under the equity method, on initial recognition the investment in an associate is recognised at cost, and the carrying amount is increased or decreased to recognise the Groupʼs share of the profit or loss and other comprehensive income of the associate after the date of acquisition. When the Groupʼs share of losses in an associate equal or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the Groupʼs financial statements only to the extent of unrelated investorsʼ interests in the associate.
Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group applies FRS 139 Financial Instruments: Recognition and
Measurement to determine whether it is necessary to recognise any additional impairment loss with respect to its net investment in the associate. When necessary, the entire carrying amount of the investment is tested for impairment in accordance with FRS 136 Impairment of Assets as a single asset, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss is recognised in profit or loss. Reversal of an impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.
In the Companyʼs separate financial statements, investments in associates are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

71

3.

Summary of significant accounting policies (continued)
3.12 Land held for property development and property development costs
(i) Land held for property development
Land held for property development consists of land where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Such land is classified within non-current assets and is stated at cost less any accumulated impairment losses.
Land held for property development is reclassified as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle.
(ii)Property development costs
Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities.
When the financial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in profit or loss by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.
Where the financial outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on properties sold are recognised as an expense in the period in which they are incurred. Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised as an expense immediately.
Property development costs not recognised as an expense are recognised as an asset, which is measured at the lower of cost and net realisable value.
The excess of revenue recognised in the profit or loss over billings to purchasers is classified as accrued billings within trade receivables and the excess of billings to purchasers over revenue recognised in profit or loss is classified as progress billings within trade payables.
3.13 Biological assets
Biological assets comprise breeder chickens and hatching eggs which are held to produce day old chicks for sale, as well as pullets and layers. Pullets consist of the purchase price of day old chicks plus growing costs which include feed and vaccines, direct labour cost and a proportion of farm overheads. Breeders chickens and layers are stated at cost adjusted for amortisation (calculated based on their economic egg laying lives less net realisable values).
3.14 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

72

3.

Summary of significant accounting policies (continued)
3.15 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
(a) Financial assets
(i) Initial recognition and measurement
Financial assets within the scope of FRS 139 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial assets at initial recognition.
All financial assets are recognised initially at fair value plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.
The Groupʼs financial assets include cash and bank balances, trade and other receivables, loans and other receivables, held-to-maturity investments and quoted financial instruments.
(ii) Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss includes financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by FRS 139. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with changes in fair value recognised in finance income or finance costs in the profit or loss.
The Group evaluates its financial assets held for trading, other than derivatives, to determine whether the intention to sell them in the near term is still appropriate. When the Group is unable to trade these financial assets due to inactive markets and managementʼs intention to sell them in the foreseeable future significantly changes, the Group may elect to reclassify these financial assets in rare circumstances. The reclassification to loans and receivables, available-for-sale or held to maturity depends on the nature of the asset. This evaluation does not affect any financial assets designated at fair value through profit or loss using the fair value option at designation.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

73

3.

Summary of significant accounting policies (continued)
3.15 Financial instruments (continued)
(a) Financial assets (continued)
(ii) Subsequent measurement (continued)
Financial assets at fair value through profit or loss (continued)
Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in the profit or loss. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss in finance costs.
Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as heldto-maturity when the Group has the positive intention and ability to hold them to maturity. After initial measurement, held-to- maturity investments are measured at amortised cost using the effective interest method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss in finance costs.
Available-for-sale financial investments
Available-for-sale financial investments include equity and debt securities. Equity investments classified as available-for-sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those which are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions.
After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or determined to be impaired, at which time the cumulative loss is reclassified to the profit or loss in finance costs and removed from the available-for-sale reserve. Interest income on available-for-sale debt securities is calculated using the effective interest method and is recognised in profit or loss.
The Group evaluates its available-for-sale financial assets to determine whether the ability and intention to sell them in the near term is still appropriate. When the Group is unable to trade these financial assets due to inactive markets and managementʼs intention to do so significantly changes in the foreseeable future, the
Group may elect to reclassify these financial assets in rare circumstances.
ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

74

3.

Summary of significant accounting policies (continued)
3.15 Financial instruments (continued)
(a) Financial assets (continued)
(ii) Subsequent measurement (continued)
Available-for-sale financial investments (continued)
Reclassification to loans and receivables is permitted when the financial assets meet the definition of loans and receivables and the Group has the intent and ability to hold these assets for the foreseeable future or until maturity. Reclassification to the held-to-maturity category is permitted only when the entity has the ability and intention to hold the financial asset accordingly.
For a financial asset reclassified out of the available-for-sale category, any previous gain or loss on that asset that has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortised cost and the expected cash flows is also amortised over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to the profit or loss.
(iii) Derecognition
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:
-

The rights to receive cash flows from the asset have expired;

The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ʻpass-throughʼ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or
(b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of it, the asset is recognised to the extent of the Groupʼs continuing involvement in it.
In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

75

3.

Summary of significant accounting policies (continued)
3.15 Financial instruments (continued)
(b) Impairment of financial assets
The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ʻloss eventʼ) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial assetʼs original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the profit or loss.
Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to finance costs in the profit or loss.
Available-for-sale investments
For available-for-sale financial investments, the Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired.
In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. ʻSignificantʼ is evaluated against the original cost of the investment and ʻprolongedʼ against the period in which the fair value has been below its original cost.
Where there is evidence of impairment, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the profit or loss - is removed from other comprehensive income and recognised in the profit or loss. Impairment losses on equity investments are not reversed through the profit or loss; increases in their fair value after impairments are recognised directly in other comprehensive income.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

76

3.

Summary of significant accounting policies (continued)
3.15 Financial instruments (continued)
(b) Impairment of financial assets (continued)
Available-for-sale investments (continued)
Future interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in the profit or loss, the impairment loss is reversed through the profit or loss.
(c) Financial liabilities
(i) Initial recognition and measurement
Financial liabilities within the scope of FRS 139 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings, carried at amortised cost. This includes directly attributable transaction costs.
The Groupʼs financial liabilities include trade and other payables, bank overdrafts, loans and borrowings and financial guarantee contracts.
(ii) Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by FRS 139. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in MFRS 139 are satisfied. No financial liability has been designated at fair value through profit or loss during the reporting period.
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the profit or loss when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the profit or loss.
This category generally applies to interest-bearing loans and borrowings.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

77

3.

Summary of significant accounting policies (continued)
3.15 Financial instruments (continued)
(c) Financial liabilities (continued)
(ii) Subsequent measurement (continued)
Financial guarantee contracts
Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount recognised less cumulative amortisation. (iii) Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit or loss.
(d) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
3.16 Inventories
Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for as follows:
(a) Raw materials: purchase costs on a weighted average basis.
(b) Finished goods and work-in-progress: Cost of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.
(c) Property inventories: Cost of unsold properties comprises cost associated with the acquisition of land, construction and appropriate development overheads.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

78

3.

Summary of significant accounting policies (continued)
3.17 Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the assetʼs recoverable amount. An assetʼs recoverable amount is the higher of an assetʼs or cash-generating unitʼs (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators.
The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Groupʼs cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year.
Impairment losses of continuing operations, including impairment on inventories, are recognised in the income statement in those expense categories consistent with the function of the impaired asset, except for a property previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.
Goodwill is tested for impairment annually at reporting date and when circumstances indicate that the carrying value may be impaired. Impairment is determined by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the assetʼs or cash- generating unitʼs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the assetʼs recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.
3.18 Cash and short-term deposits
Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and shortterm deposits with a maturity of three months or less.
For the purpose of the consolidated statement cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

79

3.

Summary of significant accounting policies (continued)
3.19 Share capital and share issuance expenses
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 equity instruments.
Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs.
Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.
3.20 Dividend distributions
The Group recognises a liability to make cash or non-cash distributions to owners of equity when the distribution is authorised and is no longer at the discretion of the Group. A corresponding amount is recognised directly in equity.
Non-cash distributions are measured at the fair value of the assets to be distributed. Upon settlement of the distribution of non-cash assets, any difference between the carrying amount of the liability and the carrying amount of the assets distributed is recognised in income as a separate line in statement of comprehensive income.
3.21 Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, 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 Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
3.22 Contingencies
A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non- occurrence of uncertain future event(s) not wholly within the control of the
Group.
Contingent liabilities and assets are not recognised in the statements of financial position of the Group and of the
Company.
3.23 Segment reporting
For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 42, including the factors used to identify the reportable segments and the measurement basis of segment information.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

80

3.

Summary of significant accounting policies (continued)
3.24 Current versus non-current classification
Assets and liabilities in statements of financial position are presented based on current/non-current classification. An asset is current when it is:
-

Expected to be realised or intended to sold or consumed in normal operating cycle;
Held primarily for the purpose of trading;
Expected to be realised within twelve months after the reporting period, or
Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current. A liability is current when:
-

It is expected to be settled in normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within twelve months after the reporting period; or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
3.25 Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
-

In the principal market for the asset or liability; or
In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Group or by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participantʼs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
Valuation techniques that are appropriate in the circumstances and for which sufficient data are available, are used to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

81

3.

Summary of significant accounting policies (continued)
3.25 Fair value measurement (continued)
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the
Company determine whether transfers have occurred between levels in the hierarchy by re-assessing categorisation
(based on the lowest Level input that is significant to the fair value measurement as a whole) at the end of each reporting period. Policies and procedures are determined by senior management for both recurring fair value measurement and for nonrecurring measurement.
External valuers are involved for valuation of significant assets and significant liabilities. Involvement of external valuers is decided by senior management. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The senior management decides, after discussions with the external valuers, which valuation techniques and inputs to use for each case.
At each reporting date, the senior management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed according to the accounting policies of the Group and of the Company.
For this analysis, the senior management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The senior management, in conjunction with the external valuers, also compares the changes in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, classes of assets and liabilities are determined based on the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

82

4.

Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year except as follows:
On 1 January 2013, the Group and the Company adopted the following new and amended FRS and IC Interpretations mandatory for annual financial periods beginning on or after 1 July 2012 and 1 January 2013.

Description
Amendments to FRS 101: Presentation of Items of Other Comprehensive Income
FRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004)
FRS 127 Consolidated and Separate Financial Statements (IAS 27 revised by IASB in
December 2003)
FRS 10 Consolidated Financial Statements
FRS 11 Joint Arrangements
FRS 12 Disclosure of Interests in Other Entities
FRS 13 Fair Value Measurement
FRS 119 Employee Benefits (IAS 19 as amended by IASB in June 2011)
FRS 127 Separate Financial Statements (IAS 27 as amended by IASB in May 2011)
FRS 128 Investment in Associate and Joint Ventures (IAS 28 as amended by IASB in May 2011)
IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine
Amendments to FRS 7: Disclosures – Offsetting Financial Assets and Financial Liabilities
Annual Improvements 2009-2011 Cycle
Amendments to FRS 1: Government Loans
Amendments to FRS 10, FRS 11 and FRS 12: Consolidated Financial Statements,
Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance

Effective for annual periods beginning on or after
1 July 2012
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013

Adoption of the above standards and interpretations did not have any effect on the financial performance or position of the
Group and the Company except for those discussed below:
FRS 12 Disclosures of Interests in Other Entities
FRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and has no impact on the Groupʼs financial position or performance.
FRS 13 Fair Value Measurement
FRS 13 establishes a single source of guidance under FRS for all fair value measurements. FRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under FRS. FRS 13 defines fair value as an exit price. As a result of the guidance in FRS 13, the Group re-assessed its policies for measuring fair values, in particular, its valuation inputs such as non-performance risk for fair value measurement of liabilities. FRS 13 also requires additional disclosures.
Application of FRS 13 has not materiality impacted the fair value measurement of the Group. Additional disclosures where required, are provided in the individual notes relating to the assets and liabilities whose fair values were determined.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

83

4.

Changes in accounting policies (policies)(continued)
Amendments to FRS 101: Presentation of Items of Other Comprehensive Income
The amendments to FRS 101 introduce a grouping of items presented in other comprehensive income. Items that will be reclassified (“recycled”) to profit or loss at a future point in time (eg. net loss or gain on available-for-sale financial assets) have to be presented separately from items that will not be reclassified (eg. revaluation of land and buildings). The amendments affect presentation only and have no impact on the Groupʼs financial position or performance.

5.

Standards issued but not yet effective
The standards and interpretations that are issued but not yet effective up to the date of issuance of the Groupʼs and
Companyʼs financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective.

Description
Amendments to FRS 132: Offsetting Financial Assets and Financial Liabilities
Amendments to FRS 10, FRS 12 and FRS 127: Investment Entities
Amendments to FRS 136: Recoverable Amount Disclosures for Non-Financial Assets
Amendments to FRS 139: Novation of Derivatives and Continuation of Hedge Accounting
IC Interpretation 21 Levies
Amendments to FRS 119: Defined Benefit Plans: Employee Contributions
Annual Improvements to FRSs 2010–2012 Cycle
Annual Improvements to FRSs 2011–2013 Cycle
FRS 9 Financial Instruments (IFRS 9 issued by IASB in November 2009)
FRS 9 Financial Instruments (IFRS 9 issued by IASB in October 2010)
FRS 9 Financial Instruments: Hedge Accounting and amendments to FRS 9, FRS 7 and FRS 139

Effective for annual periods beginning on or after
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 July 2014
1 July 2014
1 July 2014
To be announced
To be announced
To be announced

The directors expect that the adoption of the above standards and interpretations will have no material impact on the financial statements in the period of initial application except as discussed below:
FRS 9 Financial Instruments
FRS 9 reflects the first phase of work on the replacement of FRS 139 and applies to classification and measurement of financial assets and financial liabilities as defined in FRS 139. The standard was initially effective for annual periods beginning on or after 1 January 2013, but Amendments to FRS 9: Mandatory Effective Date of FRS 9 and Transition
Disclosures, issued in March 2012, moved the mandatory effective date to 1 January 2015. Subsequently, on 14 February
2014, it was announced that the new effective date will be decided when the project is closer to completion. The adoption of the first phase of FRS 9 will have an effect on the classification and measurement of the Groupʼs financial assets, but will not have an impact on classification and measurements of the Groupʼs financial liabilities. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.
Amendments to FRS 139: Novation of Derivatives and Continuation of Hedge Accounting
These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. The Group has not novated its derivatives during the current period. However, these amendments would be considered for future novation.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

84

6.

Malaysian Financial Reporting Standards (MFRS Framework)
On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework).
The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after
1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC
Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer
(herein called ʻTransitioning Entitiesʼ).
Transitioning Entities are allowed to defer the adoption of the new MFRS Framework and may in the alternative, apply Financial
Reporting Standards (FRS) as its financial reporting framework for annual periods beginning on or after 1 January 2014.
As certain of the Groupʼs subsidiaries fall within the scope definition of Transitioning Entities and have opted to defer adoption of the new MFRS Framework. Accordingly, the Group will present its first set of MFRS financial statements when the MFRS Framework is mandated by the MASB. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits.
The Group has not completed its assessment of the financial effects of the differences between Financial Reporting
Standards and accounting standards under the MFRS Framework. Accordingly, the financial performance and financial position as disclosed in these financial statements for the year ended 31 December 2013 could be different if prepared under the MFRS Framework.

7.

Significant accounting judgments, estimates and assumptions
The preparation of these financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
7.1 Judgments made in applying accounting policies
In the process of applying the above accounting policies, management has not made any critical judgments, apart from those involving estimations, which significantly affect the amounts recognised in these financial statements.
7.2 Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Assumptions and estimates are based on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group and of the Company. Such changes are reflected in the assumptions when they occur.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

85

7.

Significant accounting judgments, estimates and assumptions (continued)
7.2 Estimates and assumptions (continued)
(a) Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units (“CGU”) to which goodwill is allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill as at year end amounts to RM2,302,000 (2012: RM4,462,000). Further details are disclosed in Note 22.
(b) Impairment of loans and receivables
An assessment is made at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments, are considered.
Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. If the present value of estimated future cash flows increases/decreases by 5% from managementʼs estimate, the Group allowance for impairment will decrease/increase by RM754,000 (2012: RM652,000).
(c) Taxes
Deferred tax assets are recognised for unutilised tax losses and unused tax credits to the extent that it is probable that taxable profits will be available against which the losses and credits can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
As at the end of the reporting period as disclosed in Note 23, the Group has unutilised tax losses, unabsorbed capital allowances and unabsorbed reinvestment allowances totalling RM87,533,000 (2012: RM93,506,000) for which deferred tax assets have not been recognised. The Group has no taxable temporary differences nor any tax planning opportunities available that could partly support the recognition of these losses and credits as deferred tax assets.
If the Group was able to recognise all unrecognised deferred tax assets, after-tax profit of the Group would increase by RM21,883,000 (2012: RM23,377,000).
(d) Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions in an armʼs length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the assetʼs performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

86

8.

Revenue
Group

Company
2013
2012
RMʼ000
RMʼ000

2013
RMʼ000

9.

428,922
26,459
-

383,794
16,720
-

2,500

1,878

455,381

Sales of goods
Sales of completed houses and development revenue
Dividend income from subsidiaries

2012
RMʼ000

400,514

2,500

1,878

Cost of sales
Group
2013
RMʼ000
366,131
250
23,309

334,523
2,029
12,402

389,690

Cost of goods sold
Cost of inventories
Development cost

2012
RMʼ000

348,954

10. Other operating income
Group
2013
RMʼ000

ANNUAL REPORT 2013

9

56

206
290
2,748

129
34
169
15
1,189

3,253

Bad debts recovered
Gain on foreign exchange:
- Unrealised
- Realised
Net gain from disposal of property, plant and equipment
Reversal of allowance for impairment losses on trade receivables
Sundry income

2012
RMʼ000

1,592

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

87

11. Finance costs
Group

Company
2013
2012
RMʼ000
RMʼ000

2013
RMʼ000
Interest expense on:
- Bank overdrafts
- Bankersʼ acceptances
- Term loans
- Obligations under finance leases
- Revolving credits
- Trust receipts
- Others
Interest recouped by subsidiaries
Total finance costs

2012
RMʼ000

1,829
1,898
6,660
358
9,460
727
50
-

1,901
2,497
7,593
450
6,441
783
39
-

595
85
217

766
96
179

20,982

19,704

897

1,041

12. Profit/(loss) before tax
The following amounts have been included in arriving at profit/(loss) before tax:
Group

Company
2013
2012
RMʼ000
RMʼ000

2013
RMʼ000
Auditorsʼ remuneration
- Statutory audits
- current year
- under provision in prior year
- Other services
Impairment loss on:
- Investment in subsidiaries (Note 19)
- Capital contribution in subsidiaries (Note 19)
- Goodwill (Note 22)
- Trade receivables (Note 28)
- Other receivables (Note 28)
Bad debts written off on other receivables
Depreciation and amortisation:
- Property, plant and equipment (Note 17)
- Land use rights (Note 18)
Employee benefit expense (Note 13)
Loss on foreign exchange:
- Unrealised
- Realised
Minimum operating lease payments:
- Land and buildings
- Plant and machinery
- Motor vehicles
Net loss from disposal of property, plant and equipment
Non-executive director remuneration (Note 14)
Property, plant and equipment written off

2012
RMʼ000

202
27
41

182
10
136

15
4
41

15
-

2,160
179
1,001
-

4,094
526
1,826
33

100
1,626
-

-

9,384
12
29,045

9,608
12
29,914

10
-

16
-

6
41

-

-

-

448
1,661
184
108
96

998
1,648
334
108
287

108
-

10
108
2

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

88

13. Employee benefits expense
Group
2013
RMʼ000

3,003
386

937
113
4

1,021

1,054

21,576
1,948
1,111

22,304
1,904
1,064

24,635

25,272

29,045

Other staff
Wages and salaries
Defined contribution plans
Other related costs

3,588

912
105
4

Other key management personnel
Wages and salaries
Defined contribution plans
Other related costs

3,173
415

3,389

Executive directors (Note 14)
Directors of the Company
Other directors of subsidiaries

2012
RMʼ000

29,914

14. Directorsʼ remuneration
Group

Company
2013
2012
RMʼ000
RMʼ000

2013
RMʼ000

2012
RMʼ000

2,685
318

2,835
338

-

-

3,003

3,173

-

-

346
40

369
46

-

-

386

415

-

-

3,389

3,588

-

-

4

4

-

-

3,393

3,592

-

-

Executive directors
Directors of the Company:
- Salaries and other emoluments
- Defined contribution plans

Other directors of subsidiaries:
- Salaries and other emoluments
- Defined contribution plans

Total executive directorsʼ remuneration (Note 13)
Estimated monetary value of benefits-in-kind
- Directors of the Company
Total executive directorsʼ remuneration
(including benefits-in-kind)

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

89

14. Directorsʼ remuneration (continued)
Group

Company
2013
2012
RMʼ000
RMʼ000

2013
RMʼ000

2012
RMʼ000

Non-executive directors
Directors of the Company
- Fees

108

108

108

108

Total non-executive directorsʼ emoluments

108

108

108

108

3,501

3,700

108

108

The number of directors of the Company with total annual emoluments within the following bands is as follows:
Number of directors
2013
2012
Executive directors:
RM200,001 to RM250,000
RM650,001 to RM700,000

2
4

2
4

Non-executive directors:
Below RM50,000

3

3

15. Income tax expense
Major components of income tax expense
The major components of income tax expense for the years ended 31 December 2013 and 2012 are:
Group
2013
RMʼ000

2012
RMʼ000

Company
2013
2012
RMʼ000
RMʼ000

Statement of comprehensive income:
Current income tax:
- Malaysian income tax
- Under/(over)provision in respect of previous years

804
(336)

500
-

149
-

3,127

Deferred tax (Note 23):
- Origination and reversal of temporary differences
- Underprovision in respect of previous years

2,860
267

468

500

149

2,185
1,740

(1)
105

-

-

3,925

104

-

-

7,052

572

500

149

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

90

15. Income tax expense (continued)
Reconciliation between tax expense and accounting profit/(loss)
The reconciliation of tax expense and the product of accounting profit/(loss) multiplied by the domestic corporate tax rate for the years ended 31 December 2013 and 2012 are as follows:
Group
2013
RM'000
Profit/(loss) before tax

Tax at Malaysian statutory tax rate of 25% (2012:25%)
Adjustments:
- Non-deductible expenses
- Income not subject to taxation
Share of results of associates
Effect of tax relief
Benefits from previously unrecognised:
- Tax losses and capital allowances
- Reinvestment allowances
Under/(over)provision in respect of previous years:
- Current tax
- Deferred tax
Income tax expense recognised in profit or loss

2012
RM'000

Company
2013
2012
RM'000
RM'000

11,356

(8,144)

(831)

211

2,839

(2,036)

(208)

53

3,473
(14)
253
(5)

3,831
(408)
145
(38)

708
-

391
-

(1,438)
(63)

(573)
(118)

-

267
1,740

(336)
105

-

-

7,052

572

500

149

(295)
-

The following tax losses, capital allowance and reinvestment allowance are available for offset against future taxable income are as follows:

31.12.2013
RMʼ000
98,365
14,594

113,884
16,750

112,959

Unutilised tax losses and capital allowances
Unabsorbed reinvestment allowances

Group
31.12.2012
RMʼ000

130,634

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2012: 25%) of the estimated assessable profit for the year.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

91

16. Earnings per share
Basic earnings per share (EPS) amounts are calculated by dividing the Groupʼs profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS are the same as the basic EPS as there are no dilutive potential ordinary shares outstanding during the year.
The following reflects the income and share data used in the basic and diluted EPS computations:
Group
2013
4,330

Weighted average number of ordinary shares (ʻ000) *

Earnings/(loss) per share (sen)
* - Basic
* - Diluted

*

(9,530)

57,949

Profit/(loss), net of tax, attributable to ordinary equity owners of the parent (RMʼ000)

2012

55,530

7.5
7.5

(17.2)
(17.2)

The weighted average number of ordinary shares takes into account the weighted average effect of changes in share capital during the reporting period.

17. Property, plant and equipment

Group

* Land and buildings RMʼ000

Plant and machinery RMʼ000

Motor vehicles RMʼ000

Other assets RMʼ000

Total
RMʼ000

Cost
At 1 January 2012
Additions
Disposals
Written off

85,753
28,434
(190)
-

147,524
4,390
(899)

19,964
1,704
(1,370)
(229)

13,456
226
(117)
(300)

266,697
34,754
(1,677)
(1,428)

At 31 December 2012 and 1 January 2013
Additions
Transfer from inventories
Disposals
Written off

113,997
463
252
-

151,015
726
-

20,069
2,974
(1,765)
(299)

13,265
140
(2)
(67)

298,346
4,303
252
(1,767)
(366)

At 31 December 2013

114,712

151,741

20,979

13,336

300,768

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

92

17. Property, plant and equipment (continued)

Group

* Land and buildings RMʼ000

Plant and machinery RMʼ000

Motor vehicles RMʼ000

Other assets RMʼ000

Total
RMʼ000

Depreciation
At 1 January 2012
Charge for the year
Reclassification
Disposals
Written off

35,288
2,793
(53)
-

84,778
5,115
2
(627)

15,615
1,259
(1,302)
(217)

10,436
441
(2)
(117)
(297)

146,117
9,608
(1,472)
(1,141)

At 31 December 2012 and 1 January 2013
Charge for the year
Disposals
Written off

38,028
2,952
-

89,268
4,783
-

15,355
1,342
(1,570)
(205)

10,461
307
(1)
(65)

153,112
9,384
(1,571)
(270)

At 31 December 2013

40,980

94,051

14,922

10,702

160,655

At 31 December 2012

75,969

61,747

4,714

2,804

145,234

At 31 December 2013

73,732

57,690

6,057

2,634

140,113

Freehold land RMʼ000

Leasehold land RMʼ000

Buildings
RMʼ000

Total
RMʼ000

At 1 January 2012
Additions
Disposals

12,521
11,722
-

3,666
-

69,566
16,712
(190)

At 31 December 2012 and 1 January 2013
Additions
Transfer from inventories

24,243
-

3,666
-

86,088
463
252

113,997
463
252

At 31 December 2013

24,243

3,666

86,803

114,712

Carrying amount

* Land and buildings

Group
Cost

ANNUAL REPORT 2013

85,753
28,434
(190)

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

93

17. Property, plant and equipment (continued)
* Land and buildings (continued)
Freehold
land
RMʼ000

Leasehold land RMʼ000

At 1 January 2012
Charge for the year
Disposals

-

717
53
-

34,571
2,740
(53)

35,288
2,793
(53)

At 31 December 2012 and 1 January 2013
Charge for the year

-

770
53

37,258
2,899

38,028
2,952

At 31 December 2013

-

823

40,157

40,980

At 31 December 2012

24,243

2,896

48,830

75,969

At 31 December 2013

24,243

2,843

46,646

73,732

Buildings
RMʼ000

Motor vehicles RMʼ000

Office equipment RMʼ000

Total
RMʼ000

Group

Buildings
RMʼ000

Total
RMʼ000

Depreciation

Net carrying amount

Company
Cost
At 1 January 2012
Disposals
Written off
At 31 December 2012 and 2013

600
(190)
410

66
(66)
-

539
(293)

1,205
(256)
(293)

246

656

529
6
(291)

756
16
(119)
(291)

Depreciation
At 1 January 2012
Charge for the year
Disposals
Written off

161
10
(53)
-

66
(66)
-

At 31 December 2012 and 1 January 2013
Charge for the year

118
8

-

244
2

362
10

At 31 December 2013

126

-

246

372

At 31 December 2012

292

-

2

294

At 31 December 2013

284

-

-

284

Net carrying amount

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

94

17. Property, plant and equipment (continued)
(a) Other assets consist of furniture, fixtures and fittings, office equipment, piping, fencing and tubewell, renovations and improvements and capital work-in-progress. The cost of assets under capital work-in-progress included herein amounts to RM660,000 (2012: RM660,000).
(b) The net carrying amount of property, plant and equipment pledged to secure bank borrowings as referred to in Note 35 are as follows:

31.12.2013
RMʼ000
63,098
35,368
1,009

64,940
37,575
1,111

99,475

Land and buildings
Plant and machinery
Other assets

Group
31.12.2012
RMʼ000

103,626

Certain assets of the Group at net carrying amount of RM32,763,000 (2012: RM32,532,000) were subject to negative pledges in relation to banking facilities granted to the Group as disclosed in Note 35.
(c) Property, plant and equipment purchased by the Group during the reporting period were by means of:

31.12.2013
RMʼ000
1,108
3,195

31,883
2,871

4,303

Outright purchase with cash
Lease financing

Group
31.12.2012
RMʼ000

34,754

(d) The carrying amount of property, plant and equipment under finance leases as at reporting date are as follows:

31.12.2013
RMʼ000

ANNUAL REPORT 2013

4,810
2,390

3,158
3,003

7,200

Motor vehicles
Plant and machinery

Group
31.12.2012
RMʼ000

6,161

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

95

18. Land use rights

31.12.2013
RMʼ000

Group
31.12.2012
RMʼ000

191

191

At 1 January
Amortisation for the year

37
12

25
12

At 31 December

49

37

142

154

12
48
82

12
48
94

31.12.2013
RMʼ000

Company
31.12.2012
RMʼ000

01.01.2012
RMʼ000

Unquoted shares at cost
At 1 January
Acquisition during the year
Additional subscription in shares in a subsidiary
Capital contribution

115,063
15
1,626

111,463
3,600
-

85,351
26,112

At 31 December

116,704

115,063

111,463

Accumulated impairment losses
At 1 January
Impairment on capital contribution
Impairment for the year

36,512
1,626
100

36,512
-

10,400
26,112
-

At 31 December

38,238

36,512

36,512

Net carrying amount

78,466

78,551

74,951

Cost
At 1 January/31 December
Accumulated amortisation

Net carrying amount

Amount to be amortised:
- Not later than one year
- Later than one year but not later than five years
- Later than five years

Land use rights are pledged as security for bank borrowings as disclosed in Note 35.

19. Investment in subsidiaries

Impairment losses recognised
During the financial year, impairment losses of RM100,000 and RM1,626,000 were recognised to write down the carrying amount of investment in Lynbridge Sdn. Bhd. and capital contribution to Sinmah Ventures. Sdn. Bhd. respectively.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

96

19. Investments in subsidiaries (continued)
(a) Details of the Groupʼs subsidiaries are as follows:

Name

Country of incorporation/ Principal place of business

Principal activities

% of ownership interest held by the Group*
2013
2012

% of ownership interest held by non-controlling interests*
2013
2012

Held by the Company
Sinmah Livestocks
Sdn. Bhd.

Malaysia

Contract farming and trading of chicken feeds, day old chicks and vaccines

100%

100%

-

-

Sinmah Multifeed
Sdn. Bhd.

Malaysia

Manufacturing and wholesale of chicken feeds

99.99%

99.99%

0.01%

0.01%

Sinmah Egg
Products Sdn. Bhd.

Malaysia

Investment holding

100%

100%

-

-

Farmʼs Best Food
Industries Sdn. Bhd.

Malaysia

Poultry processing, contract farming, marketing and distribution of poultry products

100%

100%

-

-

Sinmah Development
Sdn. Bhd.

Malaysia

Property development 100%

100%

-

-

Sinmah Breeders
Sdn. Bhd.

Malaysia

Poultry breeding and hatchery operations 100%

100%

-

-

Sinmah Ventures
Sdn. Bhd.

Malaysia

Investment holding

100%

100%

-

-

Lynbridge Sdn. Bhd.

Malaysia

Dormant

100%

100%

-

-

FARMʼS BEST
(Cambodia) Co.,Ltd. **

Cambodia

Dormant

100%

-

-

-

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

97

19. Investments in subsidiaries (continued)

Name

Country of incorporation/ Principal place of business

Principal activities

% of ownership interest held by the Group*
2013
2012

% of ownership interest held by non-controlling interests*
2013
2012

Held by Sinmah Livestocks Sdn. Bhd.
Joint Farming
Sdn. Bhd.

Malaysia

Dormant

58.91%

58.91%

41.09%

41.09%

Bersatu Segar
Sdn. Bhd.

Malaysia

Trading of feeds, medication and poultry farming

100%

100%

-

-

Dee Huat Farming
Trading Sdn. Bhd.

Malaysia

Dormant

100%

100%

-

-

Chem Ventures
Sdn. Bhd.

Malaysia

Trading of chemicals, medication and related equipment

100%

100%

-

-

Syarikat Perniagaan
Suann Sdn. Bhd.

Malaysia

Trading of feeds, medication and poultry farming

51%

51%

49%

49%

Dormant

60%

60%

40%

40%

Poultry meat processing 100%

100%

-

-

Dormant

100%

100%

-

-

Poultry farming and investment holding

100%

100%

-

-

Held by Joint Farming Sdn. Bhd.
Joint Food Proccessing
Sdn. Bhd.

Malaysia

Held by Syarikat Perniagaan Suann Sdn. Bhd.
Suann Food Processors
Sdn. Bhd.

Malaysia

Held by Sinmah Multifeed Sdn. Bhd.
Premier Broilers
Sdn. Bhd.

Malaysia

Held by Sinmah Egg Products Sdn. Bhd.
Sinmah Poultry
Farm Sdn. Bhd.

Malaysia

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

98

19. Investments in subsidiaries (continued)

Name

Country of incorporation/ Principal place of business

Principal activities

% of ownership interest held by the Group*
2013
2012

% of ownership interest held by non-controlling interests*
2013
2012

Held by Farm’s Best Food Industries Sdn. Bhd.
SM Broilers
Sdn. Bhd.

Malaysia

Contract farming, marketing and distribution of poultry products

100%

100%

-

-

Dormant

100%

100%

-

-

Held by Sinmah Poultry Farm Sdn. Bhd. and SM Broilers Sdn. Bhd.
Farmʼs Best Eggmart
Sdn. Bhd.

Malaysia

Held by Sinmah Development Sdn. Bhd.
Realtemas Realty
Sdn. Bhd.

Malaysia

Property development

100%

100%

-

-

Cosmal Enterprise
Sdn. Bhd.

Malaysia

Property development

100%

100%

-

-

Sinmah Builders
Sdn. Bhd.

Malaysia

Building and general contracting and provision of management services

100%

100%

-

-

Held by Sinmah Ventures Sdn. Bhd.
FB Food (Nanjing)
Pte. Ltd. **

Peopleʼs
Republic of
China

International trade, import and export of poultry products, value-added production and sales and marketing

100%

100%

-

-

Chix Unlimited Inc.

Philippines

Hatchery operations

51%

51%

49%

49%

*
**

equal to the proportion of voting rights held not audited by Ernst & Young

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

99

19. Investment in subsidiaries (continued)
(b) Summarised financial information of Suann Food Processors Sdn. Bhd. and Joint Farming Sdn. Bhd. which have noncontrolling interests that are material to the Group is set out below. The summarised financial information presented below is the amount before inter-company elimination. The other non-controlling interests is not material to the Group.
i)

Summarised statements of financial position
Syarikat Perniagaan
Joint Farming
Suann Sdn. Bhd.
Sdn. Bhd.
2013
2012
2013
2012
RMʼ000
RMʼ000
RMʼ000
RMʼ000

Other individually non-material subsidiaries
Total
2013
2012
2013
2012
RMʼ000 RMʼ000 RMʼ000 RMʼ000

Non-current assets
Current assets

3,657
1,867

3,677
1,754

2,400
10,299

2,400
10,337

2,093
8,467

1,992
8,300

8,150
20,633

8,069
20,391

Total assets

5,524

5,431

12,699

12,737

10,560

10,292

28,783

28,460

13,433

13,928

126

130

7,837

7,221

21,396

21,279

-

-

-

-

1,755

1,884

1,755

1,884

Total liabilities

13,433

13,928

126

130

9,592

9,105

23,151

23,163

Net (liabilities)/ assets

(7,909)

(8,497)

12,573

12,607

968

1,187

5,632

5,297

Equity attributable to owners of the
Company

(7,888)

(8,188)

7,407

7,427

(467)

(21)

(309)

5,166

5,180

Current liabilities
Non-current liabilities

Non-controlling interest ii) 1,435

(602)
1,789

(948)
6,580

(1,363)
6,660

Summarised statements of comprehensive income
Syarikat Perniagaan
Joint Farming
Suann Sdn. Bhd.
Sdn. Bhd.
2013
2012
2013
2012
RMʼ000
RMʼ000
RMʼ000
RMʼ000
Revenue
(Loss)/profit for the year

Other individually non-material subsidiaries
Total
2013
2012
2013
2012
RMʼ000 RMʼ000 RMʼ000 RMʼ000

35,516
588

31,810
(120)

(34)

1,628

34,358
(111)

32,470
493

69,874
443

64,280
2,001

Profit attributable to:
- owners of the Company
- non-controlling interets

300
288

(61)
(59)

(20)
(14)

959
669

189
(300)

289
204

469
(26)

1,187
814

Other comprehensive loss attributable to:
- owners of the Company
- non-controlling interets

-

-

-

-

(54)
(54)

-

(54)
(54)

-

Other comprehensive loss for the year

-

-

-

-

(108)

-

(108)

-

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

100

19. Investment in subsidiaries (continued)
(b) ii)

Summarised statements of comprehensive income (continued)
Syarikat Perniagaan
Joint Farming
Suann Sdn. Bhd.
Sdn. Bhd.
2013
2012
2013
2012
RMʼ000
RMʼ000
RMʼ000
RMʼ000
Total comprehensive income/(loss) Total comprehensive income/(loss) attributable to:
- owners of the
Company
- non-controlling interets 588

(120)

(34)

1,628

300

(61)

(20)

288

(59)

(14)

Other individually non-material subsidiaries
Total
2013
2012
2013
2012
RMʼ000 RMʼ000 RMʼ000 RMʼ000

(219)

493

335

2,001

959

135

289

415

1,187

669

(354)

204

(80)

814

(b) (iii) Summarised statements of cash flows
Syarikat Perniagaan
Joint Farming
Suann Sdn. Bhd.
Sdn. Bhd.
2013
2012
2013
2012
RMʼ000
RMʼ000
RMʼ000
RMʼ000
Net cash from/
(used in) operating activities 179

Net cash (used in)/from investing activities (44)

Net cash used in financing activities

-

13

(13)

Other individually non-material subsidiaries
Total
2013
2012
2013
2012
RMʼ000 RMʼ000 RMʼ000 RMʼ000

(12)

(3,745)

153

(882)

320

(4,614)

8

1,624

(44)

(174)

(80)

1,450

-

-

(360)

(460)

(360)

(473)

(251)

(1,516)

(120)

(3,637)

(918)

2,719

Net decrease in cash and cash equivalents 135

-

Cash and cash equivalent at the beginning of the year

147

147

131

2,252

(1,196)

Cash and cash equivalent at the end of the year

282

147

127

131

(1,447)

ANNUAL REPORT 2013

(4)

(2,121)

320

(1,196)

(1,038)

(918)

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

101

19. Investment in subsidiaries (continued)
c)

Acquistion of subsidiary
On 3 May 2013, the Company acquired 1,000 shares of 20,000 Riels each representing 100% equity interest in FARMʼS
BEST (Cambodia) Co., LTD. (“FBCCL”) for a total cash consideration of 20,000,000 Riels (approximately RM15,000).
The principal activities of FBCCL will be to perform contract rice planting with independent contract rice grower and also rice milling, importation, exportation and trading of rice and other rice related activities.

20. Investment in associates
Group
31.12.2013 31.12.2012
RMʼ000
RMʼ000
Unquoted shares, at cost
Share of post acquisition reserves

5,646
(5,401)

Share of net assets

245

5,646
(4,390)
1,256

(a) Details of the Groupʼs associates are as follows:

Name of company Country of incorporation/ Principal place of business

Principal activities % of ownership interest held by the Group*
2013
2012

Accounting model applied

Held by Sinmah Ventures Sdn. Bhd.
S.M. Enterprise
(Nanjing) Pte.
Ltd. **

Peopleʼs
Repulic of
China

Dormant

50.00%

50.00%

Equity method

Management of rubber small holdings 49.90%

49.90%

Equity method

Poultry breeding and hatchery operations.
Temporarily cease operation in prior year.

30.77%

30.77%

Equity method

Held by Lynbridge Sdn. Bhd.
SMNS Rubber
Holdings Sdn.
Bhd.

Malaysia

Held by Joint Farming Sdn. Bhd.
Ban Yen Sdn. Bhd.

*

Malaysia

equals to the proportion of voting rights held

* * The Group holds a 50% voting share in SM Enterprise (Nanjing) Limited. However, the Group do not have majority representation on the entityʼs board of directors and the Groupʼs approval is not required for the major operational decisions. Based on these facts and circumstances, management determined that, in substance, the Group can only exert significant influence to the entity.
These associates have the same reporting period as the Group except for Ban Yen Sdn. Bhd. which have a reporting period end of 30 April.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

102

20. Investment in associates (continued)
(b) Summarised financial information in respect of each of the Groupʼs material associates is set out below. The summarised financial information represents the amounts in the FRS financial statements of the associates and not the
Groupʼs share of those amounts.
S.M. Enterprise
(Nanjing) Pte. Ltd.
2013
2012
RMʼ000
RMʼ000

SMNS Rubber
Holdings Sdn. Bhd. Ban Yen Sdn. Bhd.
Total
2013
2012
2013
2012
2013
2012
RMʼ000
RMʼ000 RMʼ000 RMʼ000 RMʼ000 RMʼ000

(i) Summarised statements of financial position
Non-current assets
Current assets

490

491

7

385
682

1,129
11

1,129
1,363

1,129
508

1,514
2,536

Total assets

490

491

7

1,067

1,140

2,492

1,637

4,050

Current liabilities
Non-current liabilities

-

-

9
-

24
-

1,932
919

731
168

1,941
919

755
168

Total liabilities

-

-

9

24

2,851

899

2,860

923

490

491

Net (liabilities)/assets

(2)

1,043

(1,711)

1,593

(1,223)

3,127

243

3,601

3,582

3,605

3,825

(336)
(336)

(3,304)
(3,304)

(ii) Summarised statements of comprehensive income
Revenue
Loss for the year from continuing operations
Total comprehensive loss

-

-

(1)
(1)

(1)
(1)

4
(1,045)
(1,045)

(330)
(330)

(4,350)
(4,350)

(667)
(667)

(iii) Reconciliation of the summarised financial information presented above to the carrying amount of the
Groupʼs interest in associates
S.M. Enterprise
(Nanjing) Pte. Ltd.
2013
2012
RMʼ000
RMʼ000
Net assets at 1 January
Loss for the year
Net assets/(liabilities) at 31 December
Interest in associates
Carrying value of
Groupʼs interest in associates ANNUAL REPORT 2013

491
(1)

492
(1)

490
50.00%

491
50.00%

245

246

SMNS Rubber
Holdings Sdn. Bhd. Ban Yen Sdn. Bhd.
Total
2013
2012
2013
2012
2013
2012
RMʼ000
RMʼ000 RMʼ000 RMʼ000 RMʼ000 RMʼ000
1,043
(1,045)

(2)
49.90%

-

1,379
(336)

1,043
49.90%

520

1,593
(3,304)

1,923
(330)

(1,711)
1,593
30.77% 30.77%

-

490

3,127
(4,350)

3,794
(667)

(1,223)
1,468

3,127
(1,871)

245

1,256

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

103

20. Investment in associates (continued)
(c) Unrecognised share of losses in associates
2013
RMʼ000
The unrecognised share of loss in associates for the year
Cumulative share of loss in associates

(528)
(528)

2012
RMʼ000
-

21. Quoted investments
Group
Carrying amount
Fair value
31.12.2013 31.12.2012 31.12.2013 31.12.2012
RMʼ000
RMʼ000
RMʼ000
RMʼ000
Fair value through profit or loss
- Equity instruments
(quoted in Malaysia)

25

25

23

25

22. Goodwill
Goodwill acquired through business combinations has been allocated to two individual CGUs as follows:
Group
31.12.2013 31.12.2012
RMʼ000
RMʼ000
Cost
At 1 January/31 December

19,660

19,660

Accumulated impairment losses
At 1 January
Impairment for the year

15,198
2,160

11,104
4,094

At 31 December

17,358

15,198

2,302

4,462

Net carrying amount

Goodwill acquired through business combinations has been allocated to individual CGUs as follows:
31.12.2013
RMʼ000
Poultry Division
Syarikat Perniagaan Suann Sdn. Bhd.
Suann Food Processors Sdn. Bhd.
Sinmah Breeders Sdn. Bhd.
Housing Development
Sinmah Development Sdn. Bhd.

31.12.2012
RMʼ000

38

452
1,708
38

2,264

2,264

2,302

4,462

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

104

22. Goodwill (continued)
Impairment testing of goodwill
The recoverable amount of each CGU is determined based on value-in-use calculations using cash flow projections of financial budgets approved by senior management covering a 5-year period. The forecast growth rates used to extrapolate cash flows for the five-year period and pre-tax discount rates applied to the cash flow projections are as follows:
Poultry division
2013
2012
Growth rate
Budgeted gross margins
Pre-tax discount rate

5%
10%
10%

5%
11%
10%

Housing development
2013
2012
11%
10%

11%
10%

The calculations of value in use for the CGUs are most sensitive to the following assumptions:
Growth rates - The forecast growth rates are based on published industry research and do not exceed the long-term average growth rate for the industries relevant to the CGUs.
Budgeted gross margins - Gross margins are based on average values achieved in the 3 years preceding the start of the budget period. These are increased over the budget period for anticipated efficiency improvements.
Pre-tax discount rates – The discount rate calculation is derived from its weighted average cost of capital (WACC) which takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Groupʼs investors. The cost of debt is based on the interest- bearing borrowings the Group is obliged to service. Segment-specific risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly available market data.
Market share assumptions – When using industry data for growth rates (as noted above), management assesses how the
CGUʼs position, relative to its competitors, might change over the budget period. Management expects the Groupʼs share of the poultry and property market, on which the Groupʼs products are dependent upon, to be stable over the budget period.
Impairment losses recognised
During the financial year, impairment losses of RM2,160,000 (2012: RM4,094,000) were recognised to write-down the net carrying amount of goodwill attributable to Suann Food Processors Sdn Bhd and Syarikat Perniagaan Suann Sdn. Bhd.
(2012: Sinmah Poultry Farm Sdn. Bhd. and Chix Unlimited Inc.) to their recoverable amount.

23. Deferred tax (assets)/liabilities
Group
31.12.2013 31.12.2012
RMʼ000
RMʼ000
At 1 January
Recognised in profit or loss (Note 15)

6,168
3,925

6,064
104

At 31 December

10,093

6,168

Presented after appropriate offsetting as follows:
Deferred tax assets
Deferred tax liabilities

(2,259)
12,352

(4,159)
10,327

10,093

6,168

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

105

23. Deferred tax (assets)/liabilities (continued)
Components of the deferred tax (assets)/liabilities are as follows:

Group

Property, plant and equipment RMʼ000

Unutilised tax losses and capital allowances RMʼ000

Unabsorbed reinvestment allowances
RMʼ000

Others
RMʼ000

Total
RMʼ000

At 1 January 2012
Recognised in profit or loss

19,756
135

(6,982)
(112)

(2,401)
213

(4,309)
(132)

6,064
104

At 31 December 2012 and
1 January 2013

19,891

(7,094)

(2,188)

(4,441)

6,168

Recognised in profit or loss

(1,579)

2,442

2,586

3,925

At 31 December 2013

18,312

(4,652)

(1,855)

10,093

476
(1,712)

The following items were not recognised for deferred tax assets as they relate to those loss-making subsidiaries and it is not probable that they will be utilised by taxable profits in the foreseeable future.
Group
31.12.2013 31.12.2012
RMʼ000
RMʼ000
Unutilised tax losses and capital allowances
Unabsorbed reinvestment allowances
Others

79,757
7,746
30

85,508
7,998
-

87,533

93,506

24. Land held for property development
Group
31.12.2013 31.12.2012
RMʼ000
RMʼ000
Leasehold land
Cost
1 January
Transfer to property development cost (Note 25)
At 31 December

5,102
(3,873)

5,102
-

1,229

5,102

Land held for development comprises leasehold land which is being pledged to secure bank borrowings as disclosed in Note
35.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

106

25. Property development costs
Freehold
land
RMʼ000

Leasehold land RMʼ000

Development costs RMʼ000

Total
RMʼ000

Group
Cumulative costs
At 1 January 2012
Cost incurred during the year
Reversal of completed projects

581
-

2,997
(858)

20,902
13,422
(9,490)

24,480
13,422
(10,348)

At 31 December 2012 and 1 January 2013

581

2,139

24,834

27,554

242
(361)

3,873
(708)

20,503
(9,538)

20,503
242
3,873
(10,607)

462

5,304

35,799

41,565

172
66
123
-

1,255
660
128
(858)

5,084
11,676
1,778
(9,490)

6,511
12,402
2,029
(10,348)

361
(361)

1,185
1,133
21
(708)

9,048
22,176
229
(9,538)

10,594
23,309
250
(10,607)

-

1,631

21,915

23,546

At 31 December 2012

220

954

15,786

16,960

At 31 December 2013

462

3,673

13,884

18,019

Cost incurred during the year
Transfer from inventory
Transfer from land held for property development (Note 24)
Reversal of completed projects
At 31 December 2013
Cumulative costs recognised in profit or loss
At 1 January 2012
Recognised during the year
Transfer from inventory
Reversal of completed projects
At 31 December 2012 and 1 January 2013
Recognised during the year
Transfer from inventory
Reversal of completed projects
At 31 December 2013
Property development costs

The leasehold and freehold land have been pledged to secure bank borrowings as disclosed in Note 35.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

107

26. Biological assets
Group
31.12.2013 31.12.2012
RMʼ000
RMʼ000
At cost:
Hatching eggs
Day old chicks
Pullets

2,008
368
1,396

1,819

3,772

4,068
7,875

5,239
7,577

11,943

12,816

13,762

At cost less amortisation:
Layers
Breeders

1,819
-

16,588

27. Inventories
Group
31.12.2013 31.12.2012
RMʼ000
RMʼ000
At cost:
Raw materials, medical supplies and chemicals
Processed chickens
Trading eggs
Consumable supplies
Completed houses and shops
Ingredient stocks and others

4,480
5,949
85
3,295
141
1,080

4,529
6,009
176
3,344
885
1,668

15,030

16,611

During the year, the amount of inventories recognised as expense in cost of sales of the Group was RM389,690,000 (2012:
RM348,619,000).

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

108

28. Trade and other receivables

31.12.2013
RMʼ000

Group
31.12.2012 01.01.2012
RMʼ000
RMʼ000
(restated)
(restated)

Trade receivables
Third parties
Accrued billings in respect property development costs
Retention sum

185,239
6,802
234

167,899
2,916
232

144,337
2,969
1,948

192,275

171,047

149,254

Less: Allowance for impairment third parties

(25,251)

(25,432)

(24,921)

Trade receivables, net

167,024

145,615

124,333

5,705
3,275

5,566
9,823

6,487
10,278

8,980

15,389

16,765

(1,208)

(2,033)

7,772

13,356

16,545

Total trade and other receivables
Add: Cash and bank balances

174,796
4,170

158,971
4,695

140,878
3,235

Total loans and receivables

178,966

163,666

144,113

Other receivables
Sundry receivables
Refundable deposits

Less: Allowance for impairment third parties
Other receivables, net

(220)

Company
31.12.2013 31.12.2012
RMʼ000
RMʼ000
Other receivables
Amounts due from subsidiaries
Sundry receivables
Refundable deposits

16,919
8

11,934
22
8

Less: Allowance for impairment subsidiaries

16,927
(1,307)

11,964
(1,307)

Other receivables, net

15,620

10,657

Total trade and other receivables
Add: Cash and bank balances

15,620
3

10,657
2

Total loans and receivables

15,623

10,659

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

109

28. Trade and other receivables (continued)
(a) Trade receivables
Trade receivables are non-interest bearing and are generally on 30 to 120 (2012: 30 to 120) days terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.
Ageing analysis of trade receivables
The ageing analysis of the Groupʼs trade receivables is as follows:

31.12.2013
RMʼ000

Group
31.12.2012 01.01.2012
RMʼ000
RMʼ000
(restated)
(restated)

Neither past due nor impaired

87,127

79,891

84,579

1 to 30 days past due but not impaired
30 to 60 days past due but not impaired
More than 60 days past due but not impaired

22,092
7,271
49,299

18,800
17,927
27,877

13,280
10,439
16,035

Past due but not impaired
Impaired

78,662
26,486

64,604
26,552

39,754
24,921

192,275

171,047

149,254

Receivables that are neither past due nor impaired
Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.
None of the Groupʼs trade receivables that are neither past due nor impaired have been renegotiated during the financial year.
Receivables that are past due but not impaired
The Group has trade receivables amounting to RM78,662,000 (31.12.2012: RM64,604,000 and 1.1.2012:
RM39,754,000) that are past due at the reporting date but not impaired. These receivables are active accounts which the management considers to be recoverable.
Receivables that are impaired
The Groupʼs trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

31.12.2013
RMʼ000
Trade receivables - nominal amount
Less : Allowance for impairment

Group
31.12.2012
RMʼ000

26,486
(25,251)

26,552
(25,432)

1,235

1,120

01.01.2012
RMʼ000
24,921
(24,921)
-

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

110

28. Trade and other receivables (continued)
(a) Trade receivables (continued)
Receivables that are impaired (continued)
Movement in allowance accounts:
Group
31.12.2013 31.12.2012
RMʼ000
RMʼ000
At 1 January
Charge for the year (Note 12)
Reversal of impairment losses (Note 10)
Written off

25,432
179
(290)
(70)

24,921
526
(15)
-

At 31 December

25,251

25,432

Trade receivables that are individually determined to be impaired at the reporting date relate to those debtors that are in significant financial difficulties and/or have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.
(b) Other receivables
Other receivables that are impaired
The Groupʼs other receivables that are impaired at the reporting date and the movement of the allowance account used to record the impairment is as follows:
31.12.2013
RMʼ000
Other receivables - nominal amounts
Less: Allowance for impairment

1,208
(1,208)
-

Group
31.12.2012
RMʼ000
2,033
(2,033)
-

01.01.2012
RMʼ000
220
(220)
-

Movement in allowance account:
Group
2013
2012
RMʼ000
RMʼ000
At 1 January
Charge for the year (Note 12)
Written off
At 31 December

2,033
1,001
(1,826)

220
1,826
(13)

1,208

2,033

Other receivables that are individually determined to be impaired at the reporting date relate to those debtors that are in significant financial difficulties and/or have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

111

28. Trade and other receivables (continued)
(c) Related party balances
The amounts due from subsidiaries are unsecured, interest free, repayable on demand and to be settled in cash.
Related party balances that are impaired
The Companyʼs related party balances that are impaired at the reporting date and the movement of the allowance account used to record the impairment is as follows:
Company
31.12.2013 31.12.2012
RMʼ000
RMʼ000
Other receivables - nominal amounts
Less: Allowance for impairment

1,307
(1,307)
-

1,307
(1,307)
-

Movement in allowance account:
Company
2013
2012
RMʼ000
RMʼ000
At 1 January/31 December

1,307

1,307

Related party balances that are individually determined to be impaired at the reporting date relate to those debtors that are in significant financial difficulties and/or have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

29. Other current assets
Group
31.12.2013 31.12.2012
RMʼ000
RMʼ000
Advances to transport provider
Advanced payment to trade suppliers
Deposits paid for acquisition of property, plant and equipment
Prepaid operating expenses

Company
31.12.2013 31.12.2013
RMʼ000
RMʼ000

836
77
784

962
146
5
973

5

5

1,697

2,086

5

5

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

112

30. Held-to-maturity investments
Held-to-maturity investments consist of deposits with licensed financial institutions with maturity period of more than three months are as follows:

31.12.2013
RMʼ000

Deposits with licensed commercial banks

45,271

Group
31.12.2012 01.01.2012
RMʼ000
RMʼ000
(restated)
(restated)
35,475

18,216

The weighted average effective interest rates of held-to-maturity investments at the reporting date are as follows:

31.12.2013

01.01.2012

3.04%

3.04%

3.06%

31.12.2013 days Deposits with licensed commercial banks

Group
31.12.2012

Group
31.12.2012
days

01.01.2012

365

365

365

The varying periods of held-to-maturity investments at the reporting date are as follows:

Deposits with licensed commercial banks

Deposits with licensed banks of the Group are pledged to banks to secure banking facilities granted to the Group as disclosed in Note 35.

31. Cash and bank balances

31.12.2013
RMʼ000
Cash at banks and on hand

Group
31.12.2012
RMʼ000

01.01.2012
RMʼ000

4,170

4,695

3,235

Included in cash at banks of the Group is an amount of RM994,000 (2012: RM1,381,000) held pursuant to Section 7A of the Housing Development (Control and Licensing) Act 1966 and therefore restricted from use in other operations.
Company
31.12.2013 31.12.2013
RMʼ000
RMʼ000
Cash at banks and on hand

ANNUAL REPORT 2013

3

2

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

113

31. Cash and bank balances (continued)
For the purposes of the statements of cash flows, cash and cash equivalents at the reporting date comprise the following:

31.12.2013
RMʼ000

Cash at banks and on hand
Less: Bank overdrafts (Note 35)

Group
31.12.2012 01.01.2012
RMʼ000
RMʼ000
(restated)
(restated)

4,170
(20,098)

4,695
(20,627)

3,235
(21,519)

(15,928)

(15,932)

(18,284)

Company
31.12.2013 31.12.2012
RMʼ000
RMʼ000
Cash at banks and on hand
Less: Bank overdrafts (Note 35)

3
(4,991)

2
(7,631)

(4,988)

(7,629)

32. Share capital
Group and Company
Number of ordinary shares of RM1 each
Amount
31.12.2013 31.12.2012 31.12.2013 31.12.2012
ʻ000
ʻ000
RMʼ000
RMʼ000
Authorised
Shares of RM1 each
At 1 January/31 December

500,000

500,000

500,000

500,000

Issued and fully paid
Ordinary shares of RM1 each
At 1 January
Private share placement

55,530
5,553

55,530
-

55,530
5,553

55,530
-

At 31 December

61,083

55,530

61,083

55,530

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Companyʼs residual assets.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

114

32. Share capital (continued)
During the financial year, the Company:
(a) issued 11,106,052 free warrants (“Free Warrants”) on the basis of one Free Warrant for every 5 existing ordinary shares of RM1 each in the Company; and
(b) increased its issued and fully paid up share capital from RM55,530,263 to RM61,083,263 by way of a private share placement of 5,553,000 ordinary shares of RM1 each (“Placement Share”s) together with 16,659,000 free detachable warrants (“Placement Warrants”) on the basis of 3 Placement Warrants for every one Placement Share at an issue price of RM1.22 per share to provide working capital.
The salient features of the Warrants are as follows:
(a) Each Warrant entitles the registered holder to subscribe for one new ordinary shares of RM1 each in the Company at an exercise price of RM1 per ordinary share subject to adjustments in accordance witht the provisions of the Deed Poll;
(b) The Warrants may be exercised at any time within 5 years commencing on and including the date of first issuance of the Warrants. Warrants not exercised during the exercise period will thereafter lapse and cease to be valid. All Warrants mature on 14 July 2018; and
(c) The Warrant holders are not entitled to any dividends, rights, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment and issuance of new ordinary shares in the Company upon the exercise of the
Warrants. The Warrant holders are not entitled to any voting rights or participation in any form of distribution and/or offer of securities in the Company until and unless such Warrant holders exercise their Warrants into new ordinary shares in the Company.
As at 31 December 2013, none of the warrants were exercise. The exercise price of the warrant is RM1.22.

33. Share premium
This is a non-distributable reserve which arose from the issue of the Companyʼs shares at a premium net of share listing expenses: Group and Company
31.12.2013 31.12.2012
RMʼ000
RMʼ000
At 1 January
Private share placement
Share issuance expenses
Issuance of warrants

62,641
1,222
(231)
(1,222)

62,641
-

At 31 December

62,410

62,641

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

115

34. Other reserves
Group
31.12.2013 31.12.2012
RMʼ000
RMʼ000

Foreign currency translation reserve
Minority discount on acquisition of non-controlling interest
Warrant reserve

Company
31.12.2013 31.12.2012
RMʼ000
RMʼ000

(564)
3,706

(436)
68
-

3,706

-

3,142

(368)

3,706

-

(a) Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Groupʼs presentation currency. (b) Minority discount on acquisition of non-controlling interest
The minority discount on acquisition of non-controlling interest represents the difference between the consideration and the book value of the interest acquired from non-controlling interests. During the financial year, this reserve has been transferred to profit or loss.
(c) Warrant reserve
This non-distributable reserve arose from the issuance of Placement Shares as disclosed in Note 32(b).

35. Loans and borrowings

Maturity
Current
Secured:
Bank overdrafts (Note 31)
Revolving credits
Bankersʼ acceptances
Trust receipts
Term loans
Finance leases (Note 37)

Company
31.12.2013 31.12.2013
RMʼ000
RMʼ000

Total loans and borrowings

20,627
100,515
36,845
8,161
9,926
1,910

4,991
769
-

7,631
1,327
-

177,984

5,760

8,958

60,490
4,095

60,255
3,715

-

-

64,585

2015 to 2022
2015 to 2019

20,098
116,961
28,872
7,650
9,524
2,363
185,468

Non-current
Secured:
Term loans
Finance leases

On demand
2014
2014
2014
2014
2014

Group
31.12.2013 31.12.2013
RMʼ000
RMʼ000

63,970

-

-

250,053

241,954

5,760

8,958

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

116

35. Loans and borrowings (continued)
The remaining maturities of borrowings are as follows:
Group
31.12.2013 31.12.2013
RMʼ000
RMʼ000
On demand or within 1 year
Later than 1 year and not later than 2 years
Later than 2 years and not later than 5 years
Later than 5 years

Company
31.12.2013 31.12.2013
RMʼ000
RMʼ000

185,468
11,762
35,222
17,601

177,984
11,360
39,048
13,562

5,760
-

8,958
-

250,053

241,954

5,760

8,958

Bank overdrafts and revolving credits
Bank overdrafts and revolving credits are denominated in RM, bear interest at base lending rate (“BLR”) + 2.55% and BLR
+ 1.50% per annum, on an average of 9.15% and 8.10% (2012: 9.15% and 8.10%) per annum respectively.
Bankersʼ acceptances and trust receipts
Bankersʼ acceptances and trust receipts are used to finance purchases of the Group denominated in RM and are short term in nature. The weighted average effective interest rate are 4.83% and 9.10% (2012: 4.83% and 9.10%) per annum respectively. Term loans
The term loans were obtained for the purposes of construction of layer farms and broiler house, purchases of property and shoplots, and for working capital. The loans are repayable over a period of 10 years. The weighted average effective interest rate is 8.08% (2012: 8.08%) per annum.
Finance lease obligations
These obligations are secured by a charge over the leased assets (Note 17). The average discount rate implicit in the leases is 4.54% (2012: 4.54%) per annum.
The borrowings of the Group are secured by way of fixed and floating charges over certain assets and also negative pledges over certain assets as disclosed in Notes 17, 18 and 30. The borrowings of the subsidiaries are additionally guaranteed by the Company.
The term loans of the Company are additionally secured by the following:
(i)

Corporate guarantees from the Companyʼs certain existing operating subsidiaries;

(ii) Undertaking by the holding company to fully repay the facilities should the Company be unable to meet its obligations; and (iii) Cross defaults, rights of set-off, negative pledges and pari passu ranking with all other debts of the Company, except where the obligations are preferred by applicable laws.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

117

36. Trade and other payables

31.12.2013
RMʼ000

Trade payables
Third parties
Retention sum

Group
31.12.2012 01.01.2012
RMʼ000
RMʼ000
(Restated) (Restated)

29,170
1,432

30,107
1,253

28,157
3,205

30,602

31,360

31,362

5,377
13,048
8,261

5,353
359
28,625
6,763

3
358
13,632
6,451

26,686

41,100

20,444

Total trade and other payables
Add: Loans and borrowings (Note 35)

57,288
250,053

72,460
241,954

51,806
202,465

Total financial liabilities carries at amortised cost

307,341

314,414

254,271

Other payables
Amounts due to related companies:
- holding company
- fellow subsidiaries
Sundry creditors
Accrued operating expenses

Company
31.12.2013 31.12.2012
RMʼ000
RMʼ000
Other payables
Amounts due to fellow subsidiaries
Sundry creditors
Accrued operating expenses

8,495
330
123

5,804
285
109

Total trade and other payables
Add: Loans and borrowings (Note 35)

8,948
5,760

6,198
8,958

14,708

15,156

Total financial liabilities carries at amortised cost

(a) Trade payables
Trade payables are non-interest bearing and are normally settled on 30 to 90 (2012: 30 to 90) days terms.
(b) Other payables
Other payables are non-interest bearing and are normally settled on an average term of six months (2012: average term of six months).
(c) Amounts due to holding company and fellow subsidiaries
The amounts are unsecured, non-interest bearing and repayable on demand.
ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

118

37. Commitments
(a) Finance lease commitments
The Group has finance leases for certain items of motor vehicles, office equipment and plant and machinery (Note 17).
These leases do not have terms of renewal, but have purchase options at nominal values at the end of the lease term.
Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:
Group
31.12.2013 31.12.2012
RMʼ000
RMʼ000
Minimum lease payments:
Not later than 1 year
Later than 1 year but not later than 2 years
Later than 2 years but not later than 5 years

2,734
1,880
2,518

2,324
1,874
1,836

Total minimum lease payments
Less: Amounts representing finance charges

7,132
(674)

6,034
(409)

Present value of minimum lease payments

6,458

5,625

Present value of payments:
Not later than 1 year
Later than 1 year but not later than 2 years
Later than 2 years but not later than 5 years

2,363
1,691
2,404

1,910
1,704
2,011

6,458
(2,363)

5,625
(1,910)

4,095

3,715

Present value of minimum lease payments
Less: Amount due within 12 months (Note 35)
Amount due after 12 months (Note 35)

(b) Capital commitment
Capital expenditure as at the reporting date is as follows:
Group
31.12.2013 31.12.2012
RMʼ000
RMʼ000
Approved and contracted for:
Property, plant and equipment

ANNUAL REPORT 2013

-

198

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

119

38. Related party transactions
(a) Sale and purchase of goods and services
In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and Company and related parties took place at terms agreed between the parties during the reporting period:
Group
31.12.2013 31.12.2012
RMʼ000
RMʼ000
With holding company
Advance from holding company
Repayment to holding company

10,606
(10,582)

5,350
-

Company
31.12.2013 31.12.2012
RMʼ000
RMʼ000

-

-

With subsidiaries
Advances from subsidiaries
Advances to subsidiaries
Repayment through contra within subsidiaries
Payments on behalf for subsidiaries
Payments on behalf by subsidiaries
Gross dividend from subsidiaries
Interest recouped from subsidiaries
Interest recouped by a subsidiary
Allocation of centralised service costs by subsidiaries

-

-

With an associate
Gross dividend from an associate

-

1,538

-

-

36

32

-

-

-

66
23

-

-

With other related parties
Rental paid to a director of a subsidiary
Companies connected to certain directors:
- Transport charges
- Purchases

881
(84)
(6,652)
1,388
(2,500)
217
106
390

2,541
(2,272)
1,663
265
(1,878)
179
148
390

(b) Compensation of key management personnel
The remuneration of key management personnel is disclosed in Note 13.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

120

39. Fair values of financial assets and liabilities
A. Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value
The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:
Note
Quoted investments
Trade and other receivables
Held-to-maturity investments
Loans and borrowings
Trade and other payables

21
28
30
35
36

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re- priced to market interest rates on or near the reporting date.
The fair value of quoted investments is based on market price quotations at the reporting date.
The carrying amounts of the short term borrowings are reasonable approximations of fair values due to the insignificant impact of discounting.
The fair values of short term borrowings are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.
B. Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: Inputs that are based on observable market data, either directly or indirectly
Level 3: Inputs that are not based on observable market data
As at 31 December 2013, the Group held the following financial assets that are measured at fair value:
Level 1
RMʼ000

Level 2
RMʼ000

Total
RMʼ000

At 31 December 2013
Fair value through profit or loss
Quoted investments
Held-to-maturity investments

25
-

45,271

25
45,271

At 31 December 2012
Fair value through profit or loss
Quoted investments
Held-to-maturity investments

25
-

35,475

25
35,475

Group

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

121

39. Fair values of financial assets and liabilities (continued)
B. Fair value hierarchy (continued)
No transfers between any levels of the fair value hierarchy took place during the reporting period. There was also no changes in the purpose of any financial assets that subsequently resulted in a different classification of that asset.

40. Financial risk management objectives and policies
The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments.
The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk.
The Board of Directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Groupʼs key management personnel. The audit committee provides independent oversight to the effectiveness of the risk management process.
It is, and has been throughout the current and previous financial year, the Groupʼs policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost- efficient. The Group and the Company do not apply hedge accounting.
The following sections provide details regarding the Groupʼs and the Companyʼs exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.
(a) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Groupʼs and the Companyʼs exposure to credit risk arises primarily from trade and other receivables.
For other financial assets (including quoted investments and cash and bank balances), the Group and the Company minimise credit risk by dealing exclusively with credit worthy counterparties.
The Groupʼs objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Groupʼs policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Groupʼs exposure to bad debts is not significant.
Exposure to credit risk:
At the reporting date, the Groupʼs and the Companyʼs maximum exposure to credit risk is represented by:
(i)

The carrying amount of each class of financial assets recognised in the statements of financial position, with positive fair values; and

(ii) A nominal amount of RM225,108,000 (2012: RM222,263,000) relating to a corporate guarantee provided by the
Company to financial institutions for credit facilities granted to subsidiaries. At the reporting date, the counterparties to the financial guarantees do not have a right to demand cash as the defaults have not occurred.
Information regarding credit enhancements for trade and other receivables is disclosed in Note 28.
Exposure to credit risk:
The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial asset except for the Companyʼs exposure to amounts due from its subsidiaries which account for almost 100% (2012:100%) of the gross receivables of the Company.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

122

40. Financial risk management objectives and policies (continued)
(a) Credit risk (continued)
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 28.
Deposits with licensed banks and quoted investment are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in Note 28.
(b) Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Groupʼs and the Companyʼs exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Groupʼs and the Companyʼs objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.
The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group strives to maintain sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group maintains available banking facilities of a reasonable level to its overall debt position. As far as possible, the
Group raises committed funding from the capital market and financial institutions. The Group prudently balances its portfolio with some short term funding so as to achieve overall cost effectiveness and where necessary, re-schedules the repayment terms of certain borrowings to ease cash flow commitments.
Analysis of financial instruments by remaining contractual maturities
On demand or within one year
RMʼ000

One to five years
RMʼ000

Over five years RMʼ000

Total
RMʼ000

Trade and other payables
Interest-bearing loans and borrowings

57,288
190,185

57,331

19,035

57,288
266,551

Total undiscounted financial liabilities

247,473

57,331

19,035

323,839

Trade and other payables
Interest-bearing loans and borrowings

72,460
183,755

61,557

16,813

72,460
262,125

Total undiscounted financial liabilities

256,215

61,557

16,813

334,585

Group
At 31 December 2013

At 31 December 2012

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

123

40. Financial risk management objectives and policies (continued)
(b) Liquidity risk (continued)
On demand or within one year
RMʼ000

One to five years
RMʼ000

Over five years RMʼ000

Total
RMʼ000

Trade and other payables
Interest-bearing loans and borrowings

51,806
150,815

52,318

19,405

51,806
222,538

Total undiscounted financial liabilities

202,621

52,318

19,405

274,344

Group
At 1 January 2012

Company
Trade and other payables, excluding financial guarantees *
Interest-bearing loans and borrowings
Total undiscounted financial liabilities

*

On demand or within one year
31.12.2013 31.12.2012
RMʼ000
RMʼ000
8,948
5,760

6,198
8,958

14,708

15,156

At the reporting date, the counterparties to the financial guarantees do not have a right to demand cash as the defaults have not occurred. Accordingly, financial guarantees under the scope of FRS 139 are not included in the above maturity profile analysis.

(c) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Groupʼs and of the Companyʼs financial instruments will fluctuate because of changes in market interest rates.
The Groupʼs and the Companyʼs exposure to interest rate risk arises primarily from their loans and borrowings.
The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings and actively reviews its debt portfolio, taking into account the investment holding period and nature of its assets. This strategy allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection against interest rate hikes. Except for finance lease payables whose interest rates are fixed until maturity, the other interestbearing financial instruments are subject to floating interest rates which are contractually repriced at intervals of less than 6 months except for term loans which are repriced annually.
At the reporting date, if interest rates had been 50 basis points lower/higher, with all other variables held constant, the
Groupʼs profit net of tax would have been RM1,262,000 (2012: RM1,182,000) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate bank borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.
(d) 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. Exposure to the risk of changes in foreign exchange rates relates primarily to the operating activities when revenue or expense is denominated in a currency other than Ringgit Malaysia, notably the
United States Dollar (USD).

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

124

40. Financial risk management objectives and policies (continued)
(d) Foreign currency risk (continued)
The financial liabilities of the Group that are denominated in foreign currencies are as follows:
Financial liabilities held in non-functional currencies
USD
Group
Company
RMʼ000
RMʼ000
As at 31 December 2013
Trade and other payables
Borrowings

(1,598)
(793)

(793)

(2,391)

(793)

(1,220)
(1,327)

(1,327)

(2,547)

(1,327)

As at 31 December 2012
Trade and other payables
Borrowings

The following table demonstrates the sensitivity of the Groupʼs profit/(loss) before tax to a reasonably possible change in the USD exchange rates at the reporting date against the RM, with all other variables held constant.
Group
2013
2012
RMʼ000
RMʼ000
USD

- strengthened by 5%
- weakened by 5%

(119)
119

(124)
124

41. Capital management
The primary objective of the Groupʼs capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payments to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December
2013 and 31 December 2012.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Groupʼs policy is to keep the gearing ratio within acceptable levels. The Group includes within net debt, borrowings, trade and other payables, less cash and bank balances. Capital includes equity attributable to owners of the parent.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

125

41. Capital management (continued)

31.12.2013
RMʼ000

Loans and borrowings
Trade and other payables

Group
Company
31.12.2012 01.01.2012 31.12.2013 31.12.2012
RMʼ000
RMʼ000
RMʼ000
RMʼ000
(restated)
(restated)

Net debt
Equity attributable to owners of the parent, representing total capital
Capital and net debt

Gearing ratio

241,954
72,460

202,465
51,806

5,760
8,948

8,958
6,198

307,341
Less: Cash and bank balances 250,053
57,288

314,414

254,271

14,708

15,156

(4,170)

(4,695)

(3,235)

(3)

(2)

303,171

309,719

251,036

14,705

15,154

92,353

81,607

91,223

80,503

75,290

395,524

391,326

342,259

95,208

90,444

77%

79%

73%

15%

17%

42. Segment information
For management purposes, the Group is organised into business units based on their products and services, and has three reportable operating segments as follows:
(i)

Poultry - This consists of manufacturing and wholesale of animal feeds, poultry breeding, hatchery operations, contract farming, poultry processing and trading of feeds, day-old chicks, medications and vaccines.

(ii) Housing development - This consists of development and construction of residential and commercial properties.
(iii) Other business segments include investment holding and provision of management services, and trading of chemicals, medication and related equipment, none of which are of a sufficient size to be reported separately.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements.
The directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business and have been established on negotiated and mutually agreed terms.
All revenue and non-current assets information of the Group are attributed to Malaysia.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

126

42. Segment information (continued)
At 31 December 2013

Poultry
RMʼ000
Revenue
External sales
Inter-segment sales
Total revenue

Results
Interest income
Depreciation and amortisation Share of results of associates
Segment (loss)/ profit

Housing development RMʼ000

Others
RMʼ000

423,423
916,338

26,459
15,457

5,499
7,851

(939,646)

1,339,761

41,916

13,350

(939,646)

1,271

61

5

9,223
(490)
10,785

153
1,726

20
(2)
31,258

Eliminations
RMʼ000

Notes

A

455,381
455,381

(519)
(32,413)

Consolidated
RMʼ000

1,337

B

9,396
(1,011)
11,356

Assets
Investment in associates Additions to non-current assets
Segment assets

490

-

766

(1,011)

3,795
565,819

283
58,195

225
116,910

(319,988)

C
D

4,303
420,936

Liabilities
Segment liabilities

496,926

34,907

25,402

(235,232)

E

322,003

Poultry
RMʼ000

Housing development RMʼ000

Others
RMʼ000

377,201
746,905

16,720
9,904

6,593
10,812

(767,621)

1,124,106

26,624

17,405

(767,621)

245

At 31 December 2012

Revenue
External sales
Inter-segment sales
Total revenue

Results
Interest income
Depreciation and amortisation
Share of results of associates
Segment (loss)/ profit

ANNUAL REPORT 2013

541
9,164
(101)
(1,101)

41
152
1,282

304
(169)
625

Eliminations
RMʼ000

(311)
(8,950)

Notes

A

Consolidated
RMʼ000

400,514
400,514

B

582
9,620
(581)
(8,144)

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

127

42. Segment information (continued)
At 31 December 2012 (continued)

Poultry
RMʼ000

Housing development RMʼ000

Others
RMʼ000

Eliminations
RMʼ000

Notes

Consolidated
RMʼ000

Assets
Investment in associates
Additions to non-current assets
Segment assets

2,090

-

1,286

(2,120)

34,180
527,100

282
55,521

292
115,551

(284,988)

C
D

34,754
413,184

Liabilities
Segment liabilities

461,653

33,326

58,714

(228,776)

E

324,917

1,256

A

Inter-segment revenues are eliminated on consolidation.

B

The following items are added to/(deducted from) segment profit to arrive at “profit/(loss) before tax” presented in the consolidated statement of comprehensive income.
31.12.2013
RMʼ000
Share of results of associate
Impairment on goodwill
Inter-segment expenses

31.12.2012
RMʼ000
(581)
(8,369)

(32,413)

C

(1,011)
(2,160)
(29,242)

(8,950)

Additions to non-current assets consist of:
31.12.2013
RMʼ000
Property, plant and equipment

D

31.12.2012
RMʼ000

4,303

34,754

The following items are added to segment assets to arrive at total assets reported in the consolidated statement of financial position:
31.12.2013
RMʼ000
Deferred tax assets
Tax recoverable
Investments in associate
Goodwill
Inter-segment assets

31.12.2012
RMʼ000

2,259
1,876
245
2,302
(326,670)

4,159
1,406
1,256
4,462
(296,271)

(319,988)

(284,988)

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

128

42. Segment information (continued)
E

The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:
31.12.2013
RMʼ000
Deferred tax liabilities
Income tax payable
Loans and borrowings
Inter-segment liabilities

31.12.2012
RMʼ000

12,352
2,310
250,053
(499,947)

10,327
176
241,954
(481,233)

(235,232)

(228,776)

43. Event after the reporting period
On 20 January 2014, the Company had entered into a Heads of Agreement (“HoA”) with Zhu Zong Ying and Zheng Wendi
(“Target Shareholder”) as well as SHH (Malaysia) Sdn. Bhd. (“SHH Malaysia”) for their participation in the corporate exercise of the Company which, inter- alia shall encompass the following:
(i)

for the Target Shareholders to set up a Newco;

(ii) for the Company to conduct and implement the Proposed Par Value Reduction, Proposed Acquisition, Proposed
Securities Exchange, Proposed Offer for Sale, Proposed Special Issue and Proposed Transfer of Listing Status; and
(iii) for the Target Shareholders, SHH Malaysia and Newco to participate in the proposals to be undertaken by the Company and eventually to apply for the listing of an quotation for the entire issued and fully paid-up share capital of Newco and
Newco Warrants on the Main Market of Bursa Securities Malaysia Berhad (“Bursa Securities”), assuming the listing status of the Company.
The Target Shareholder and SHH Malaysia are principally involved in similar poultry business but their principal location of their business is in the Peopleʼs Republic of China. The Directors are optimistic that beneficial synegies will be derived if the corporate exercise is successfuly implemented.
44. Comparative and prior year adjustments
(a) Amount due to F.C.H. Holdings Sdn. Bhd. (“FCH Holdings”)
Included in the previously stated carrying amount of trade receivables as at 31 December 2012 was an amount due to
F.C.H. Holdings amounted to RM5,350,000 which was errorneously recorded as receipt from two separate trade receivables. The amount due to F.C.H. Holdings has now been accounted for separately as other payables.
Comparative amounts as at 31 December 2012 have been restated as follows:

Previously reported RMʼ000

Group
Reclassification
RMʼ000

Restated
RMʼ000

153,621
67,110

5,350
5,350

158,971
72,460

At 31 December 2012
Statement of financial position
Trade and other receivables
Trade and other payables

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

129

44. Comparative and prior year adjustments (continued)
(a) Amount due to F.C.H. Holdings Sdn. Bhd. (“FCH Holdings”)(continued)

Previously reported RMʼ000

Group
Reclassification
RMʼ000

Restated
RMʼ000

At 31 December 2012
Statement of cash flows
Increase in receivables
Increase in amount due to holding company

(14,984)
-

(5,350)
5,350

(20,334)
5,350

(b) Deposits placed with commercial banks
In the previous financial years, the Group has classified the deposits placed with commercial banks with maturity period of more than three months under cash and bank balances. These deposits with licensed banks of the Group are pledged to banks to secure banking facilities granted to the Group as disclosed in Note 30 and Note 35. The directors consider that the change to held-to-maturity investments gives a fairer presentation of the financial position and cash flows position of the Group.
Comparative amounts as at 31 December 2012, however, have been restated as follows:

Previously reported RMʼ000
At 31 December 2012
Statement of financial position
Held-to-maturity investments
Cash and bank balances

Statement of cash flows
Increase in held-to-maturity investment
Cash and cash equivalent as at:
- 1 January 2012
- 31 December 2012

Group
Reclassification
RMʼ000

Restated
RMʼ000

40,170

35,475
(35,475)

35,475
4,695

-

(17,259)

(17,259)

(18,216)
(35,475)

(18,284)
(15,932)

(68)
19,543

(c) Marketing staff cost
In the previous financial years, the Group has errorneously recorded staff cost related to marketing staffs under administrative expenses. The directors consider that the change to marketing staff cost gives a fairer presentation of the financial performance of the Group.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

130

44. Comparative and prior year adjustments (continued)
(c) Marketing staff cost (continued)
Comparative amounts as at 31 December 2012, however, have been restated as follows:

Previously reported RMʼ000

Group
Reclassification
RMʼ000

Restated
RMʼ000

At 31 December 2012
Statements of comprehensive income
Cost of sales
Administrative expenses
Selling and marketing expenses

(348,619)
(33,264)
(8,664)

(335)
2,747
(2,412)

(348,954)
(30,517)
(11,076)

The above reclassifications have no impact on the financial performance of the Group or of the Company.

45. Authorisation of financial statements for issue
The financial statements for the year ended 31 December 2013 were authorised for issue in accordance with a resolution of the directors on 29 April 2014.

ANNUAL REPORT 2013

Notes to the Financial Statements

FARM’S BEST BERHAD (301653-V)

For The Year Ended 31 December 2013 (Continued)

131

46. Supplementary information – Breakdown of realised and unrealised profits and losses
The breakdown of the accumulated losses of the Group and of the Company as at 31 December 2013 into realised and unrealised profits and losses is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and 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.

Group
31.12.2013 31.12.2012
RMʼ000
RMʼ000
Total accumulated losses of the Company and its subsidiaries:
- Realised
- Unrealised

Accumulated losses as per financial statements

98,724

5,401

2,270

75,936
Less: Consolidation adjustments

94,741
3,983

70,535
Total share of accumulated losses of associates
- Realised

62,689
7,846

100,994

(41,654)

(64,798)

34,282

36,196

Company
31.12.2013 31.12.2012
RMʼ000
RMʼ000
Total accumulated losses of the Company:
- Realised

46,696

42,881

Accumulated losses as per financial statements

46,696

42,881

ANNUAL REPORT 2013

Statistics on Shareholdings

FARM’S BEST BERHAD (301653-V)

As at 2 May 2014

132

AUTHORISED SHARE CAPITAL
ISSUED AND FULLY PAID UP CAPITAL
CLASS OF SHARES
VOTING RIGHTS

:
:
:
:

RM 500,000,000
RM 61,083,263
ORDINARY SHARES OF RM 1.00 EACH
ONE VOTE PER ORDINARY SHARE

ANALYSIS BY SIZE OF SHAREHOLDINGS
Size of Shareholdings

No. of Shareholders

%

No. of Shares

%

Less than 100
100 to 1,000
1,001 to 10,000
10,001 to 100,000
100,001 to less than 5% of issued shares
5% of issued shares and above

117
486
1,234
507
54
3

4.87
20.24
51.40
21.12
2.25
0.12

1,551
331,791
6,244,926
16,287,893
11,099,102
27,118,000

0.00
0.54
10.22
26.67
18.17
44.40

Total

2,401

100.00

61,083,263

100.00

THIRTY (30) LARGEST SHAREHOLDERS

Name of Shareholders
1

JF APEX Nominees (Tempatan) Sdn Bhd
AEH Capital Sdn Bhd for F.C.H. Holdings Sdn Bhd

2

No. of Ordinary
Shares held

Percentage of issued capital (%)

15,000,000

24.56

JF Apex Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for F.C.H. Holdings Sdn Bhd (Margin)

6,115,100

10.01

3

DB (Malaysia) Nominee (Asing) Sdn Bhd
Exempt An for Deutsche Bank AG London (PB Priam)

6,002,900

9.83

4

Inter-Pacific Equity Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Lim Ooi Tai

557,000

0.91

5

JF Apex Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Teo Siew Lai (Margin)

486,500

0.80

6

Onn Kok Puay (Weng Guopei)

483,700

0.79

7

Tee Kiam Heng

410,000

0.67

8

Chong Mei

400,100

0.66

9

JF Apex Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Teo Kwee Hock (Margin)

400,000

0.65

10

Yeap Min Seang

374,000

0.61

ANNUAL REPORT 2013

Statistics on Shareholdings

FARM’S BEST BERHAD (301653-V)

As at 2 May 2014 (Continued)

133

Name of Shareholders

No. of Ordinary
Shares held

Percentage of issued capital (%)

11

Low Ah Lin

350,000

0.57

12

Mercsec Nominees (Tempatan) Sdn Bhd
F.C.H. Holdings Sdn Bhd

348,705

0.57

13

Maybank Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Beh Hang Kong

300,000

0.49

14

Public Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Tan Chia Hong @ Gan Chia Hong (E-TMR)

300,000

0.49

15

Lim Pang Hoo

291,300

0.48

16

Malacca Equity Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Lee Ban Lye

281,000

0.46

17

Maybank Equity Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Lai Siew Leong

255,000

0.42

18

Chia Chin Fooi

250,200

0.41

19

Tan Geok Lan

250,000

0.41

20

Tan Yong Chiow

230,000

0.38

21

Toh Cheng Hai

220,000

0.36

22

Teo Geok Kiam

217,600

0.36

23

Yee Teng

205,000

0.34

24

Toh Ching Kang

200,000

0.33

25

Yap Chuan Lye

200,000

0.33

26

Maybank Nominees (Tempatan) Sdn Bhd
Chong Yoon Loong

193,400

0.32

27

Ong Kek Bing

183,000

0.30

28

Chia Siew Fung

168,900

0.28

29

Chang Hiong

155,000

0.25

30

Hoh Suay Chuan@ Oo Sin

155,000

0.25

34,983,405

57.29

TOTAL

ANNUAL REPORT 2013

Statistics on Shareholdings

FARM’S BEST BERHAD (301653-V)

As at 2 May 2014 (Continued)

134

DIRECTORS' SHAREHOLDINGS AS PER THE REGISTER OF DIRECTORS' SHAREHOLDINGS

Name

Direct

SHAREHOLDINGS
%
Indirect

Datuk Hj. Zainal Bin Hj. Shamsudin

-

-

Dato' Fong Kok Yong

-

-

21,463,805*

35.14

108,000

0.18

21,463,805*

35.14

Fong Ngan Teng

-

-

21,463,805*

35.14

Fong Choon Kai

-

-

21,463,805*

35.14

Ng Cheu Kuan

-

-

-

-

Datuk Ng Peng Hay @ Ng Peng Hong

-

-

-

-

4,500

0.01

-

-

-

-

-

-

SHAREHOLDINGS
%
Indirect

%

Datuk Fong Kiah Yeow

Tuan Haji Baharom Bin Abd. Wahab
Mohd Khasan Bin Ahmad
*

-

%
-

Deemed interest by virtue of his interest in F.C.H. Holdings Sdn Bhd.

SUBSTANTIAL SHAREHOLDERS AS PER THE REGISTER OF SUBSTANTIAL SHAREHOLDERS

Name
F.C.H. Holdings Sdn Bhd

Direct
21,463,805

35.14

-

-

21,463,805*

35.14

108,000

0.18

21,463,805*

35.14

Fong Ngan Teng

-

-

21,463,805*

35.14

Fong Choon Kai

-

-

21,463,805*

35.14

6,002,900

9.83

Dato' Fong Kok Yong
Datuk Fong Kiah Yeow

Priam Holdings Limited
*

Deemed interest by virtue of his interest in F.C.H. Holdings Sdn Bhd.

ANNUAL REPORT 2013

-

-

-

-

FARM’S BEST BERHAD (301653-V)

Statistics on ShareholdingsWarrant

135

As at 2 May 2014

TOTAL NUMBER OF WARRANTS ISSUED
OUTSTANDING WARRANT
EXERCISE PRICE OF WARRANTS

:
:
:

27,765,052
27,765,052
Warrants issued pursuant to bonus issue and private placement (RM1.00)

ANALYSIS BY SIZE OF SHAREHOLDINGS
Size of Shareholdings

No. of Shareholders

%

No. of Shares

%

239
969
432
313
59
1

11.87
48.14
21.46
15.55
2.93
0.05

5,489
441,233
1,672,207
12,355,023
11,741,100
1,550,000

0.02
1.59
6.02
44.50
42.29
5.58

2,013

100.00

27,765,052

100.00

Less than 100
100 to 1,000
1,001 to 10,000
10,001 to 100,000
100,001 to less than 5% of issued shares
5% of issued shares and above
Total

THIRTY (30) LARGEST SHAREHOLDERS

Name of Shareholders
1

Tee Kiam Heng

2

No. of Ordinary
Shares held

Percentage of issued capital (%)

1,550,000

5.58

Maybank Nominees (Tempatan) Sdn Bhd
Fua Kia Pha

579,200

2.09

3

Kenanga Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Young Ah Nyen (028)

476,000

1.71

4

Ng Chim Chi

427,340

1.54

5

Ambank (M) Berhad
Pledged Securities Account for Wong Ah Yong (SMART)

300,000

1.08

6

Cimsec Nominees (Tempatan) Sdn Bhd
CIMB Bank for Wong Ah Yong (MY1278)

300,000

1.08

7

Citigroup Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Wong Ah Yong

300,000

1.08

8

Lim Poh Hock

300,000

1.08

9

Wong Ah Yong

300,000

1.08

10

Wong Chee Kin

288,600

1.04

ANNUAL REPORT 2013

Statistics on Shareholdings-Warrant

FARM’S BEST BERHAD (301653-V)

As at 2 May 2014 (Continued)

136

Name of Shareholders

No. of Ordinary
Shares held

Percentage of issued capital (%)

11

Ong Chin Ling

285,000

1.03

12

Chia Chin Fooi

279,000

1.00

13

Maybank Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Lai Siew Leong

275,700

0.99

14

Teh Meng Kiang

250,000

0.90

15

Gan Cheng Swee

244,000

0.88

16

Public Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Lim Lian Hock (E-SPI)

241,000

0.87

17

Lim Chun Bin

240,300

0.87

18

DB (Malaysia) Nominee (Asing) Sdn Bhd
Exempt An for Deutsche Bank AG London (PB Priam)

230,700

0.83

19

Maybank Nominees (Tempatan) Sdn Bhd
Yap Chai

220,000

0.79

20

Chan Kwang Yew

210,000

0.76

21

Loh Eng Hock

210,000

0.76

22

Maybank Securities Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Lee Oh Tow @ Lee Eng (REM 178-Margin)

209,000

0.75

23

Lau Hong Sheng

204,000

0.73

24

Inter-Pacific Equity Nominees (Tempatan ) Sdn Bhd
Pledged Securities Account for Liang Tek Ling

202,000

0.73

25

Chua Yew Wang

200,000

0.72

26

Inter-Pacific Equity Nominees (Asing) Sdn Bhd
Pledged Securities Account for Koh Nai Wei Adrian

200,000

0.72

27

JF Apex Nominees (Tempatan) Sdn Bhd
AISB for Megat Sari Bin Megat Ali (STA 3)

200,000

0.72

28

Khoo Pui Sik

200,000

0.72

29

Malacca Equity Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Chan Kok How

200,000

0.72

30

HLB Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Wong Ah Yong

180,000

0.65

9,301,840

33.50

TOTAL

ANNUAL REPORT 2013

Statistics on Shareholdings-Warrant

FARM’S BEST BERHAD (301653-V)

As at 2 May 2014 (Continued)

137

DIRECTORSʼ SHAREHOLDINGS AS PER THE REGISTER OF DIRECTORSʼ SHAREHOLDINGS

Name

Direct

SHAREHOLDINGS
%
Indirect

%

Datuk Hj. Zainal Bin Hj. Shamsudin

-

-

-

Dato' Fong Kok Yong

-

-

41*

0.01

21,600

0.08

41*

0.01

Fong Ngan Teng

-

-

41*

0.01

Fong Choon Kai

-

-

41*

0.01

Ng Cheu Kuan

-

-

-

-

Datuk Ng Peng Hay @ Ng Peng Hong

-

-

-

-

900

-

-

-

-

-

-

-

SHAREHOLDINGS
%
Indirect

%

Datuk Fong Kiah Yeow

Tuan Haji Baharom Bin Abd. Wahab
Mohd Khasan Bin Ahmad
*

-

Deemed interest by virtue of his interest in F.C.H. Holdings Sdn Bhd.

SUBSTANTIAL SHAREHOLDERS AS PER THE REGISTER OF SUBSTANTIAL SHAREHOLDERS

Name
Tee Kiam Heng

Direct
1,550,000

5.58

-

-

ANNUAL REPORT 2013

FARM’S BEST BERHAD (301653-V)

List of Properties

138

LOCATION & DETAILS

DESCRIPTION

TENURE

NET BOOK
VALUE
RM

Date of
Revaluation/
Date of
Acquisition

THE COMPANY AND 100% OWNED SUBSIDIARIES
Lot No. 799 & 800
GRN 5523 & 5524
Mukim of Sungai Siput
District of Alor Gajah, Melaka

Breeder Farm

Freehold

2,600,379

1987

Lot No. 2893 - 2899
Mukim of Sungei Baru Ilir
District of Alor Gajah, Melaka

Breeder Farm

Freehold

3,219,245

1993

Lot 142
Mukim of Sungei Baru Ilir
District of Alor Gajah, Melaka

Breeder Farm

Freehold

1,668,640

1983

Lot No. 401 & 731
Mukim of Ramuan Cina Besar
District of Alor Gajah, Melaka

Breeder Farm

Freehold

1,082,071

1981

Lot 3689, 640, 639, 959, 1854,
3688 & 3687
GM 575, 1379, 1418, 91168, 4926,
53072 & 53077
Mukim of Lenga, District Of Muar
Johor

Breeder Farm

Freehold

1,160,028

1996

Lot 458 & 459
GRN 60152 & 60151
Mukim of Tebong
District of Tampin
Negeri Sembilan

Breeder Farm

Freehold

904,687

1994

Lot 9467
Q.T.(M) No. 182
Tanjong Sembrong
Batu Pahat, Johor

Broiler Farm

Freehold

1,612,063

1995

Lot No. 4160 & 4161
GM 2548 and GM 2547
Mukim of Gemencheh
District of Tampin
Negeri Sembilan

Broiler Farm

Freehold

1,265,897

2011

Lot 4163, GM 1799
Mukim of Gemencheh
District of Tampin
Negeri Sembilan

Broiler Farm

Freehold

1,286,798

2011

ANNUAL REPORT 2013

List of Properties

FARM’S BEST BERHAD (301653-V)

(Continued)

139

Date of
Revaluation/
Date of
Acquisition

LOCATION & DETAILS

DESCRIPTION

TENURE

NET BOOK
VALUE
RM

MLO 8663
H.S.(D) 2631
Mukim Sembrong, Johor

Broiler Farm

Freehold

502,388

1995

Lot 647
Mukim Tanjong Minyak, Melaka

Vacant Land

Freehold

849,271

1996

P.T. No. 197 H.S.(D) 33179
Kawasan Bandar XXXIX
Daerah Melaka Raya, Melaka

3 1/2 Storey
Intermediate shoplot

Leasehold
(expiring in 2075)

352,672

2003

No. 65 & 65-1, Jalam KU 12,
Taman Krubong Utama,
Krubong, Melaka

Double Storey
Shoplot

Leasehold
(expiring in 2105)

252,220

2013

Lot 1599, C.T. 6270
Port Dickson, Negeri Sembilan

Broiler Farm

Freehold

1,468,203

1995

GM2404, Lot No. 4967
Mukim Triang Ilir
District of Jelebu
Negeri Sembilan

Broiler Farm

Freehold

866,193

1995

Taman Mewah
Alor Gajah, Melaka

6 Units of
2- bedroom Apartment

Leasehold
(Expiring in 2091)

116,619

1995

PTD 64217
H.S.(D) 208128
Mukim Tebrau, Johor

1 1/2 Storey
Terrace Factory

Freehold

281,050

1995

P.T.No.20, Plot 6
Mukim Kelemak
District of Alor Gajah, Melaka

Industrial Land

Leasehold
(Expiring in 2073)

390,248

1994

P.T.No.18
H.S.(M) 1940
Mukim Kelemak
District of Alor Gajah, Melaka

Industrial Land

Leasehold
(Expiring in 2073)

3,533,036

1994

Lot 3, 4 & 5
Masjid Tanah Ind. Estate
Masjid Tanah, Alor Gajah, Melaka

Industrial Land

Leasehold
(Expiring in 2095)

9,041,032

1995

Lot No. 7688, HS(M) 1733
Tanjong Sembrong (VII)
District of Batu Pahat, Johor

Broiler Farm

Freehold

392,048

1996

ANNUAL REPORT 2013

List of Properties

FARM’S BEST BERHAD (301653-V)

(Continued)

140

Date of
Revaluation/
Date of
Acquisition

LOCATION & DETAILS

DESCRIPTION

TENURE

NET BOOK
VALUE
RM

MLO No. 8497
H.S.(M) 2270
Mukim Tanjong Sembrong VII
Batu Pahat, Johor

Broiler Farm

Freehold

555,281

1997

Holding No. 2628, SG574/62
Mukim Sungei Baru Tengah
Alor Gajah, Melaka

Industrial Land

Freehold

910,944

1997

H.S. (D) 24419, No PT11641
Mukim Rawang, Daerah Gombak
Negeri Selangor

Industrial land

Freehold

643,290

2006

H.S. (D) 24408, No PT11630
Mukim Rawang, Daerah Gombak
Negeri Selangor

Industrial land

Freehold

434,661

2005

Block D1-19, Type P2
Genting View Resort
Phase 4, Bentong
Pahang

1 unit of 3 bedrooms apartment Freehold

283,328

1998

H.S.(D) 43175, Lot No.PT2113,
Mukim of Krubong,
District of Melaka Tengah,
State of Melaka.

Held for development

Leasehold
(Expiring in 2105)

1,229,000

2006

PTD 2163, H.S.(D) 5124
Mukim Grisek
District of Muar, Johor

Layer farm

Freehold

831,162

1997

PTD 2164, H.S.(D) 5125
Mukim Grisek
District of Muar, Johor

Layer farm

Freehold

1,309,161

1997

PTD 2165, H.S.(D) 5126
Mukim Grisek
District of Muar, Johor

Agricultural land

Freehold

283,476

1997

PTD 2166, H.S.(D) 5127
Mukim Grisek
District of Muar, Johor

Agricultural land

Freehold

166,671

1997

PTD 2167, H.S.(D) 5128
Mukim Grisek
District of Muar, Johor

Layer farm

Freehold

900,258

1997

ANNUAL REPORT 2013

List of Properties

FARM’S BEST BERHAD (301653-V)

(Continued)

141

Date of
Revaluation/
Date of
Acquisition

LOCATION & DETAILS

DESCRIPTION

TENURE

NET BOOK
VALUE
RM

PTD 2168, H.S. (D) 5129
Mukim Grisek
District of Muar, Johor

Layer farm

Freehold

922,359

1997

PTD 2169, H.S. (D) 5130
Mukim Grisek
District of Muar, Johor

Layer farm

Freehold

551,446

1997

PTD 2170, H.S. (D) 5131
Mukim Grisek
District of Muar, Johor

Layer farm

Freehold

639,516

1997

PTD 2171, H.S. (D) 5132
Mukim Grisek
District of Muar, Johor

Layer farm

Freehold

407,486

1997

PTD 6321 Grant 4778
Mukim Grisek
District of Muar, Johor

Layer farm

Freehold

370,855

1997

H.S. (D) 302891, Lot No. PTD15511,
Mukim of Sedenak,
District of Johor Bahru
State of Johor Darul Ta'zim

Broiler Farm

Leasehold
(Expiring in 2030)

7,999

2000

H.S. (D) 44849, Lot No. PTD16818
Mukim of Bukit Batu, District of Kulaijaya
State of Johor Darul Ta'zim

Broiler Farm

Leasehold
(Expiring in 2036)

819,072

2008

H.S.(M) 1184, 1243, & 1244
Lot Nos. MLO 1367, 7119 & 7120
Kuala Kabong 1, Mukim of Bukit Baru
District of Kulaijaya, Johor

Broiler farm

Leasehold
(Expiring in 2084)

516,161

2009

No. H.S. (D) 2549, No. PT 1512
Mukim Kelemak
District of Alor Gajah, Melaka

Double storey shophouse Leasehold
(Expiring in 2091)

152,559

2006

Lot 345 & 346
GRN 76358 & 76359
Mukim of Keru
District of Tampin
Negeri Sembilan

Broiler Farm

Freehold

1,719,440

2012

Lot 423, GRN 20691
Mukim of Jelai
District of Jempol
Negeri Sembilan

Broiler Farm

Freehold

2,572,800

2012

ANNUAL REPORT 2013

List of Properties

FARM’S BEST BERHAD (301653-V)

(Continued)

142

LOCATION & DETAILS

DESCRIPTION

TENURE

NET BOOK
VALUE
RM

Date of
Revaluation/
Date of
Acquisition

Lot 4071 & 2619
GM 415 & 51
Mukim of Jementah
District of Segamat
Johor

Broiler Farm

Freehold

1,538,308

2012

Lot 1075/5
H.S. (M) 4096
Mukim of Bukit Serampang
District of Ledang
Johor

Broiler Farm

Freehold

1,414,742

2012

Plot No. 170 & 171
H.S. (M) 586 & 500
Mukim of Labis
District of Labis
Johor

Broiler Farm

Freehold

2,201,313

2012

Lot 3733 & 3734
GM2481 & 2482
Mukim of Labis
District of Labis
Johor

Broiler Farm

Freehold

2,240,487

2012

Lot 3200 & 3201
GRN 163132 & GRN 163133
Mukim Titian Bintangor
District of Rembau
Negeri Sembilan

Broiler Farm

Freehold

1,290,132

2012

Lot 967 & 968
GRN 29154 & GRN 29155
Mukim of Semerbok
District of Rembau
Negeri Sembilan

Broiler Farm

Freehold

1,550,956

2012

Lot 5541, GRN 19254
Mukim of Port Dickson
District of Port Dickson
Negeri Sembilan

Broiler Farm

Freehold

1,711,740

2012

Lot 4671 & 4672
GRN 71818 & 71819
Mukim of Gemencheh
District of Tampin
Negeri Sembilan

Broiler Farm

Freehold

1,796,298

2012

ANNUAL REPORT 2013

List of Properties

FARM’S BEST BERHAD (301653-V)

(Continued)

143

LOCATION & DETAILS

DESCRIPTION

TENURE

NET BOOK
VALUE
RM

Date of
Revaluation/
Date of
Acquisition

Lot 1105 & 1106
GM3228 & 3229
Mukim of Gemencheh
District of Tampin
Negeri Sembilan

Broiler Farm

Freehold

1,819,704

2012

MLO 5436, MLO 5437
Lot 1639 & Lot 3523
H.S. (D) 2447, H.S. (D) 2448
GM1333 & GM 364
Mukim of Lenga
District of Muar
Johor

Broiler Farm

Freehold

2,055,082

2012

Lot 663/5 & 664/5
H.S. (M) 4271 & H.S. (M) 4834
Mukim of Bukit Serampang
District of Ledang
Johor

Broiler Farm

Freehold

1,777,208

2012

PT 371 & Lot 2210
H.S. (D) 3512 & GRN 46887
Mukim of Tabong Naning
District of Alor Gajah
Melaka

Broiler Farm

Freehold

3,160,180

2012

Lot 1310, GN47071
Minyak Beku 6
Batu Pahat, Johor

Poultry processing plant & coldrooms / office block

Freehold

2,437,622

1991

H.S.(M) 1745, MLO 8674
Tanjung Sembrong 14
Batu Pahat, Johor

Broiler farm

Freehold

165,794

1995

Lot 3233, EMR 5066
Minyak Beku 6
Batu Pahat, Johor

Broiler farm

Freehold

601,939

1997

Lot 1730, CT 2851
Bandar Penggaram
District of Batu Pahat, Johor

Double storey terrace shophouse

Freehold

269,782

1998

JOINT VENTURE SUBSIDIARIES

ANNUAL REPORT 2013

Additional Compliance Information

FARM’S BEST BERHAD (301653-V)

144

1.

Corporate Proposals And Utilisation Of Proceeds
During the financial year ended 31 December 2013, the Company had completed its Proposed Private Placement Exercise which was disclosed in the previous yearʼs Annual Report. The utilization of proceeds from the Proposed Private Placement
Exercise is as stated in the Chairmanʼs Statement on page 19 of this Annual Report.
Subsequent to the financial year ended 31 December 2013, the Company had entered into Corporate Proposal as explained in the Chairmanʼs Statement on page 18 of this Annual Report.

2.

Share Buy-back
During the financial year, there was no share buy-back by the Company.

3.

Options or Convertible Securities
There were no new options or convertible securities issued during the financial year.

4.

Depository Receipt Programme
The Company did not sponsor any depository receipt programme during the financial year.

5.

Imposition of Sanctions and/or Penalties
There were no sanctions and/or penalties imposed on the Company and/or its subsidiaries, directors or management by any regulatory bodies for the financial year ended 31 December 2013 except for traffic offences.

6.

Non-Audit Fees
The total amount of non-audit fees paid or payable to the external auditors and their affiliated companies by the Company for the financial year ended 31 December 2013 mounted to RM41,000.

7.

Variation in Results
There was no deviation of 10% or more between the profit after taxation and minority interest stated in the 27 February 2014 announcement of unaudited results for the financial year ended 31 December 2013 and the audited financial statements of the Group for the financial year ended 31 December 2013.

8.

Profit Guarantee
The Company did not give any profit guarantee during the financial year.

9.

Material Contracts
There were no material contracts entered into by the Company and/or its subsidiaries involving Directorsʼ and major shareholdersʼ interests during the financial year.

10. Revaluation Policy on Landed Properties
The Company did not adopt any revaluation policy on landed properties during the financial year.

ANNUAL REPORT 2013

TWENTIETH ANNUAL GENERAL MEETING
FORM OF PROXY
No. of shares held

I/We _________________________________________________________________________________________________
(Full Name in Capital Letters) of ___________________________________________________________________________________________________
(Full Address) being a member of FARMʼS BEST BERHAD hereby appoint _____________________________________________________
(Full Name in Capital Letters) of ___________________________________________________________________________________________________
(Full Address) or failing him/her, ____________________________________________ of _________________________________________
(Full Name in Capital Letters)
_____________________________________________________________________________________________________
(Full Address) or failing him/her, the CHAIRMAN OF THE MEETING as my/our proxy to attend and vote for me/us on my/our behalf at the
Twentieth Annual General Meeting of the Company to be held at Function Room 2, Level 2, Holiday Inn Melaka, Jalan Syed
Abdul Aziz, 75000, Melaka on Friday, 27 June 2014 at 11.00 a.m. and at any adjournment thereof.
Please indicate with an “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 at his/her discretion.
No. Resolution
1.

For
N/A

To receive the Audited Financial Statements and Directorsʼ and
Auditorsʼ Reports for the financial year ended 31 December 2013.

2.

To approve the payment of Directorsʼ fees.
To re-elect Datuk Fong Kiah Yeow as Director.

Ordinary Resolution 2

4.

To re-elect Mr Fong Choon Kai as Director.

Ordinary Resolution 3

5.

To re-elect Encik Mohd Khasan bin Ahmad as Director.

Ordinary Resolution 4

6.

To re-appoint Tuan Haji Baharom Bin Abd Wahab as Director.

Ordinary Resolution 5

7.

To appoint Auditors and to authorise the Directors to fix their remuneration. Ordinary Resolution 6

To re-appoint Tuan Haji Baharom Bin Abd Wahab as
Independent Non-Executive Director.

Ordinary Resolution 7

To re-appoint En Mohd Khasan Bin Ahmad as Independent
Non-Executive Director.

Ordinary Resolution 8

Authority to Allot Shares pursuant to Section 132D of the
Companies Act, 1965

N/A

Ordinary Resolution 1

3.

Against

Ordinary Resolution 9

8.
9.
10.

Dated this ______ day of ________________ , 2014.

Notes :(i) A member entitled to attend and vote at the
Meeting is entitled to appoint a proxy or proxies to attend and vote on his (her) behalf. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(a), (b), (c) and (d) of the Companies Act, 1965 shall not apply to the Company.
(ii) Where a member appoints two (2) or more proxies, the appointment shall not be valid unless he (she) specifies the proportion of his (her) shareholdings to be represented by each proxy.

(iii) The Proxy Form shall be signed by the appointor or his (her) attorney duly authorised in writing or, if the member is a corporation, it must be executed under its common seal or by its authorised attorney or officers.
(iv) The instrument appointing a proxy shall be deposited at the office of the Companyʼs Share
Registrar at Level 6, Symphony House, Pusat
Dagangan Dana 1, Jalan PJU 1A/46, 47301
Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time set for the Meeting or any adjournment thereof.

_________________________________
(Signature/Common Seal of Shareholder)
(v) For the purpose of determining a member who shall be entitled to attend and vote in the forthcoming Twentieth Annual General Meeting, the Company shall be requesting the Record of
Depositors in accordance with Article 71(b) of the
Companyʼs Articles of Association and Section
34(1) of the Securities Industry (Central
Depositories) Act 1991, to issue a General
Meeting Record of Depositors as at 20 June
2014. Only a depositor whose name appears on the Record of Depositors as at 20 June 2014 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf. fold here

Stamp

Symphony Share Registrars Sdn. Bhd.
Level 6, Symphony House
Pusat Dagangan Dana 1
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor

fold here

Farmʼs Best Depots / Offices In
Peninsular Malaysia And Overseas Offices

DEPOTS

MARKETING OFFICE

RAWANG 1

TEMERLOH

RAWANG

25, Jalan BJ 7
Taman Perindustrian Belmas Johan
48000 Rawang, Selangor
Tel : 03-6092 2024
Fax: 03-6091 9936

53, Jalan Ahmad Shah
28000 Temerloh
Pahang
Tel : 09-296 8223
Fax: 09-296 6223

28, Jalan BJ 6
Taman Perindustrian Belmas Johan
48000 Rawang, Selangor
Tel : 03-6092 6077
Fax: 03-6092 3908

RAWANG 2

KUANTAN

REPRESENTATIVE OFFICES

1, Jalan BJ 7
Taman Perindustrian Belmas Johan
48000 Rawang, Selangor
Tel : 03-6093 2997
Fax: 03-6091 6819

B-32, Jalan Air Putih
25300 Kuantan
Pahang
Tel : 09-567 0223
Fax: 09-567 0221

KOTA BHARU

SEREMBAN

JOHOR BAHRU

No. 1, Taman Harapan Baru
Jalan Rasah
70300 Seremban
Negeri Sembilan
Tel : 06-632 5708
Fax: 06-632 5706

9, Jalan Bayu 2/5
Taman Perindustrian Tampoi Jaya
81200 Johor Bahru, Johor
Tel : 07-235 0310
Fax: 07-235 0306

No. 11, Jalan Hospital
Kedai MPKB, Barek 12
15200 Kota Bharu
Kelantan

MELAKA
No. 1-12, Block Dahlia 2
Jalan Zahir 6
Taman Malim Jaya
75250 Melaka

IPOH
BUTTERWORTH
No. 8, (Plot 48)
Taman Industri Beringin @
Juru Industrial Park
Juru Mukim 13
Seberang Prai Tengah
14100 Pulau Pinang
Tel : 04-507 6449
Fax: 04-507 7068

80, Jalan Leong Boon Siew
30000 Ipoh, Perak

OVERSEAS ADDRESSES
CHIX UNLIMITED INC.
Brgy. Casilagan, Mangatarem
Pangasinan 2413, Philippines
Tel : 00 639 737 54004
Fax: 00 639 737 54004

FB FOOD (NANJING) PTE LTD
SM ENTERPRISE (NANJING) PTE LTD
Room 5212, 25th Floor
Jiangsu International Mansion
50 Zhong Hua Lu
Nanjing, Jiangsu 210001 China
Tel : 0086 25-8468 0456
Fax: 0086 25-8468 0326

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