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TAI KWONG YOKOHAMA BERHAD

(292788-U)

TAI KWONG YOKOHAMA BERHAD


I ANNUAL REPORT 2009

ANNUAL REPORT
Tai Kwong Yokohama Berhad (292788-U)
Lot 1238, Batu 23, Jalan Kachau, Semenyih-Sg. Lalang, 43500 Semenyih, Selangor Darul Ehsan, Malaysia
tel : +603 8723 3327 fax : +603 8723 3341 / 8723 3342

http://www.tkyoko.com
contents Corporate Information ... 02
Corporate Structure ... 03
Statement of Corporate Governance ... 05
Statement on Internal Control ... 10
Audit Committee Report ... 13
Chairman’s Statement ... 17
Profile of the Board of Directors ... 19
Financial Statements ... 23
List of Properties ... 85
Analysis of Shareholdings ... 87
Notice of Annual General Meeting ... 90
Proxy Form ... Enclosed
Corporate Information

BOARD OF DIRECTORS PRINCIPAL PLACE Investors’ relation


OF BUSINESS Officer
Chow Siew Hon
Chairman Lot 1238, Batu 23 Tammy Tan
Jalan Kachau
Tel : 03-8723 3327
Yong Mian Thong Semenyih-Sg.lalang
Chief Executive Officer 43500 Semenyih
Selangor Darul Ehsan
PRINCIPAL BANKERS
Goh Swee Heng
Tel : 03-8723 3327
Non- Independent &
Fax : 03-8723 3341 Maybank Banking Berhad
Non-Executive Director
(Co. No. 3813-K)
1st & 2nd Floor
Abdu’R-Rani Bin Omar
REGISTERED OFFICE Maybank Building
Non-Independent &
28-30 Jalan Tukang
Non-Executive Director
Suite 13.03, 43000 Kajang, Selangor
13th Floor, Menara Tan & Tan
Khoo Khay Chye
207 Jalan Tun Razak OCBC Bank (M) Berhad
Independent &
50400 Kuala Lumpur (Co. No. 295400-W)
Non-Executive Director
Menara OCBC
Tel : 03-2164 0118
18, Jalan Tun Perak
Dato’IR. Nik Mohammed Bin Fax : 03-2164 0207
50050 Kuala Lumpur
Nik Abdullah
Independent &
Non-Executive Director REGISTRAR
AUDITORS
Battchoo Ratilal Bina Management (M) Sdn. Bhd.
Ernst & Young
Independent & (Co. No. : 50164-V)
Level 23A Menara Milenium
Non-Executive Director Lot 10, The Highway Centre
Jalan Damanlela
Jalan 51/205
Pusat Bandar Damansara
46050 Petaling Jaya
50490 Kuala Lumpur
Selangor, Malaysia
P.O. Box 11040
Tel : 03-7784 3922 50734 Kuala Lumpur
Fax : 03-7784 1988

STOCK EXCHANGE LISTING


COMPANY SECRETARIES
Main Market of
Tan Leh Kiah Bursa Malaysia Securities Berhad
Chan Yoke Peng

HomePage

www.tkyoko.com


TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Corporate Structure

100% 100%
Orient Batteries Sdn. Bhd Tai Kwong - Yokohama
100% Battery (Kuantan) Sdn. Bhd
(158934-A)
Tai Kwong - Yokohama (277042-X)
Dormant Dormant
Battery Industries Sdn. Bhd
(155552-M)
Manufacturing & Marketing 100%
of Batteries 20% TaiKwong
Tai Kwong Battery (Penang)
Battery (Penang) 100%
Sdn.Bhd
Sdn. Bhd (166142-V)
(166142-V)
Dormant
Tai Kwong - Yokohama
Dormant Battery (Tawau) Sdn. Bhd
100% 80% (327966-M)
Tai Kwong - Yokohama Dormant
Holding (M) Sdn. Bhd
(69769-M)
Investment Holding 50% Tai100%
Kwong Battery (JB) 100%
Tai Kwong
Sdn. Battery (JB)
Bhd (25032-T) Tai Kwong - Yokohama
Sdn. Bhd (25032-T) Marketing Sdn. Bhd
50% Dormant
Dormant Formerly known as Tai Kwong Yokohama
Battery (Sarawak) Sdn. Bhd)
100% (346065-H)
Retailing of Bateries & Related
Tai Kwong Battery (KL)
Products
Sdn. Bhd (292598-A)
Dormant
100%
Tai Kwong - Yokohama
Battery Co. Sdn. Bhd
100% (182913-P)
Tai Kwong Yokohama Dormant
Ventures Sdn. Bhd
(383461-W)
Dormant 100%
Tai Kwong - Yokohama
Battery (Sabah) Sdn. Bhd
100%
(172022-U)
TAI KWONG YOKOHAMA BERHAD TK Yokohama
Dormant
(292788-U) Reclamation Sdn. Bhd
(Formerly known as Evergreen
Reclamation Sdn. Bhd)
(406274-D)
Material Recovery 100%
Tai Kwong - Yokohama
Battery (Seremban) Sdn. Bhd
100% 100% (277084-M)
Dormant
Tai Kwong - Yokohama TK - Yokohama Technology
Management Sdn. Bhd Sdn. Bhd (349235-D)
(404320-P) Dormant
Dormant 100%
Tai Kwong Yokohama
Battery (Melaka) Sdn. Bhd
(362739-K)
100% Dormant
Tai Kwong Battery (Ipoh)
Sdn. Bhd (103807-M)
Dormant

100% 100%
Jendela Wira Sdn. Bhd Syarikat ZHK Sdn. Bhd
(239431-V) (102811-W)
Transportation Services Transportation Services


Recycled Lead Ingot
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Statement of Corporate Governance

The Board of Directors of Tai Kwong Yokohama Berhad is committed to ensure that the principles of corporate governance
and best practices as set out in Part 1 and Part 2 respectively of the Malaysian Code on Corporate Governance (“Code”)
are observed and practiced throughout the Group.

A. DIRECTORS

• Board Composition and Balance

The current Board has seven (7) members, comprising one (1) Executive Directors and six (6) Non-Executive
Directors. Of the six (6) Non-Executive Directors, three (3) are independent, hence the Company is in
compliance with the prescribed requirements for at least two directors or one-third of the total number of
Directors, whichever is higher, are to be Independent Directors.

The Group has complied throughout the financial year with all the best practices of Corporate Governance set
out in Part 2 of the Code, except for Best Practise AAVII (Nomination of a Senior Independent Non-Executive
Director). Given the current composition of the Board which reflects a strong independent element and
the separation of the roles of Chairman and Group Chief Executive Officer, the Board does not consider it
necessary at this juncture to nominate a Senior Independent Non-Executive Director.

The composition of the Board reflects a mix of members with international experience, and knowledge
in the areas of finance, business, general management and strategy that has been vital to the successful
direction of the Group. This balance has also enabled the Board to provide clear and effective leadership
to the Group and to bring informed and independent judgements to many aspects of the Group’s strategy
and performance so as to ensure that the Group is under the guidance of an accountable and competent
Board. None of the Non-Executive Directors participate in the day-to-day management of the Group.

The Independent Non-Executive Directors play a pivotal role in corporate accountability. They provide
unbiased and independent views, advice and judgements as well as safeguarding the interests, not only
of the Group, but also shareholders, employees and other communities in which the Group conducts its
business.

A brief description of the profile of each Director is contained on pages 19 to 22 of this Annual Report.

• Supply of information

The Board is provided with sufficient and timely information to enable it to discharge its duties effectively.
Senior Management is invited to attend the Board and Audit Committee meetings, as and when required
to provide further explanation and representation to the members of the Board and Audit Committee.

• Board Meetings

The Board had scheduled meetings at least four (4) times a year and additional Board meetings are convened
where necessary. During the financial year 2009, the Board has convened five (5) meetings. The details of
attendance of the Directors of the Company at Board meetings are as below: -


Statement of Corporate Governance (cont’d)

Name of Directors No. of Meetings Attended

Chow Siew Hon 5/5


Yong Mian Thong 5/5
Goh Swee Heng 5/5
Abdu’R-Rani Bin Omar 4/5
Khoo Khay Chye 5/5
Dato’ IR. Nik Mohammed Bin Nik Abdullah 4/5
Battchoo Ratilal (appointed w.e.f. 28/7/09) 2/2
Yeo Wee Thow (resigned w.e.f.11/8/09) 4/4
Bong Boon Fah (resigned w.e.f. 31/12/09) 5/5

The agenda and Board papers for deliberation by the Board are dispatched to the Directors in advance
to facilitate informed discussion and decision-making. As at to date, all Directors have complied with the
requirements in respect of Board Meeting attendance in accordance with the provision of the Company’s
Articles of Association.

• Directors’ Training

All Directors have attended the Mandatory Accreditation Progamme and are also encouged to attend course
whether in-house or external to help them in the discharge of their duties:-

Name of Directors
Dato’
Ir.Nik
Chow Yong Goh Khoo Abdu’R-Rani Mohammed
Siew Mian Swee Khay Bin Bin Battchoo
No. Nature of Training Hon Thong Heng Chye Omar Nik Abdullah Ratilal
1 Forum by Public Listed Companies:
CG Best Practices by Securities Commission X
2 Enterprise Risk Management -
An Awareness session by KPMG X X X X
3 Corporate Governance Guide -
Towards Boardroom Excellence
by Malaysian Institute of Accountants X X
4 Corporate Governance Revisited
by Bursa Malaysia X
5 ACI Roundtable Discussion X
6 Mandatory Accreditation Programme
(MAP) by Bursatra Sdn. Bhd. X
7 KPMG Evening Talk - Essential
Updates for Directors by KPMG X
8 SID-SGX-PWC AC Workshop 2 on
Composition Conduct of AC Meeting
by Singapore Institude of Director X
9 Directors’ Training :
Getting up to Speed with
Governance Part I & II by IIAM X
11 13th Asia Battery Conference X X
12 Corporate Governance Presentation by KPMG X X X X X X X


TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Statement of Corporate Governance (cont’d)

• Board Committees

The Audit committee consists of two (2) Independent and Non-Executive Directors. The Committee reviews
all published financial statements and post audit findings, focusing in particular on accounting policies,
compliance, management judgments and estimates. It also monitors the Group internal control and risk
management including internal audit function and financial reporting. Any significant findings or identified
weaknesses are closely examined so that appropriate action can be taken, monitored and reported to the
Board.

• Re-election of Directors

In accordance with Article 101 of the Company’s Articles of Association, all Directors shall retire from office
once at least three (3) years but shall be eligible for re-election at each Annual General Meeting (“AGM”).
The Article also provides that one-third (1/3) of the Directors, or, if their number is not in multiple of three
(3), the number nearest to one-third (1/3) with minimum of one (1) shall retire from office.

Pursuant to Section 129(2) of the Companies Act, 1965, the office of a director over the age of seventy years
becomes vacant at every AGM unless he is reappointed by a resolution passed in such an AGM of which
no shorter notice than that required for the AGM has been given and majority by which such resolution is
passed is not less then three-fourths (3/4) of all members present and voting at such AGM.

Directors who are appointed by the Board during the financial year are subject to re-election by the
shareholders at the next Annual General Meeting.

• Appointment

All appointments of Directors are recommended to the Board for approval. The Board periodically reviews
the board composition in terms of the required mix of skills and experience and other qualities of the
Directors to ensure the efficiency of the Board. The Board also assess issues such as international experience,
independence and skills relating of finance, legal and manufacturing issues.

• Principal Responsibilities

The principal responsibilities of the Board also include the following:-

a) Reviewing and adopting the strategic plans for the Group;


b) Overseeing the conduct of the Group’s business;
c) Identifying risks and ensure implementation of plans to manage such risks;
d) Ensure human capital management include succession planning, training and compensation;
e) Ensure there is a shareholder communications policy;
f) Review and ensure internal control systems are in place for compliance with applicable laws, regulations
risk, directives and guidelines.


Statement of Corporate Governance (cont’d)

B. DIRECTORS’ REMUNERATION AND NOMINATION

The Remuneration and Nomination Committees were combined as a single committee on 14 October 2009 and
it meets as and when required and comprises the following members:

Goh Swee Heng - Chairman and Director


Dato’ Ir. Nik Mohammed Bin Nik Abdullah - Independent Non-Executive Director
Khoo Khay Chye - Independent Non-Executive Director

The Committee is responsible to recommend to the Board a remuneration framework for Directors and Senior
Management with the objective to ensure that the Company attracts and retains the Director needed to run
the Group successfully. It is the ultimate responsibility of the entire Board to approve the remuneration of the
Executive Directors and Senior Management with individual Directors abstaining from decision in respect of their
remuneration.

The Committee is also responsible for nominating and recommending to the Board, candidates to be appointed
as directors of the Company as well as Directors to fill seats on Board Committees, assessing, on an annual basis,
the effectiveness of the Board, Board Committees and the contribution of each director and annual review of the
required mix of skills, experience and qualities of which Non-Executive Directors should bring to the Board.

The Executive Directors play no part in deciding their own remuneration and the respective Board members shall
abstain from all discussion pertaining to their remuneration.

Details of the Directors’ remuneration are set out in the Audited Financial Statements on pages 53 to 54 of the
Annual Report.

C. SHAREHOLDERS AND INVESTORS

The Board is committed in providing accurate, useful and timely information about the Company, its business
and its activities. Realising the importance of timely and equal dissemination of material information, the annual
report and financial statements, to the shareholders, investors and the public at large, the Company maintains an
open communications policy with its shareholders, individuals or institutional members, and welcome feedback
from them.

The key element of the Company’s dialogue with its shareholders is the opportunity to gather views of and answer
questions from, both private and institutional shareholders on all issues relevant to the Company at the AGM. The
shareholders are encouraged to ask questions about the resolutions being proposed or about the Company’s
operations in general. All the Directors are available to provide responses to questions from the shareholders during
these meetings. The Board believes that clear and consistent communication with them encourages a better
appreciation of the Company’s activities, reduces share price volatility, and allows the Company’s business and
prospects to be evaluated properly. This also ensures a high level of accountability, transparency and identification
with the Group’s business operations, strategy and goals.

The Group also maintains a website at www.tkyoko.com whereby shareholders and the general public can have
access to obtain the latest information of the Group.


TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Statement of Corporate Governance (cont’d)

D. ACCOUNTABILITY AND AUDIT

Audit Committee

The Audit Committee assists the Board in scrutinising information for disclosure to ensure accuracy, adequacy and
completeness. The statement by Directors pursuant to Section 169 of Companies Act 1965 is set out on pages
28 of the Annual Report.

Financial Reporting

The Board always aims to provide a balanced and fair assessment of the Group’s financial performance and
prospects primarily through the annual report and quarterly financial statements to shareholders. Directors also
strive to ensure that financial reporting presents a fair and understandable assessment of the Company’s financial
position and results.

Internal Control

The Board has overall responsibility for the Group’s system of internal control, which comprises a process for
identifying, evaluating and managing the risks faced by the Group and for regularly reviewing its effectiveness
in accordance with the Malaysian Code of Corporate Governance. Information on the Group’s Internal Control is
presented in the Statement of Internal Control laid out on pages 10 & 11.

Relationship with the Auditors

Key features underlying the relationship of the Audit Committee with external auditors are stated in the Report
on Audit Committee set out on pages 13 to 15. The Company has always maintained a close and transparent
relationship with its auditors in seeking professional advice and ensuring compliance with the accounting standards
in Malaysia

Whistle-Blowing Policy

The Group has during the financial year adopted a Whistle-Blowing Policy, as part of the commitment to upload
the highest standards, of ethics, integrity and accountability.

This Policy will enable employees and members of the Board to disclose internally any serious malpractice or
misconduct with fear or reprisal and also provide a Platform for them to channel their concerns about illegal,
unethical or improper business conduct affecting the Group


Statement of Internal Control

The Malaysian Code on Corporate Governance stipulates that the Board of a listed company should maintain a sound
system of internal control to safeguard shareholders’ investment and the Group’s assets. Paragraph 15.26(b) of the
Listing Requirements of Bursa Malaysia Securities Berhad requires Directors to include a statement about the state of
internal control of the public listed company, as a group, in their Annual Reports. The intention is that companies should
have the discretion to explain the governance policies in the light of the principles, including any special circumstances,
which have led the company to adopting a particular approach.

BOARD RESPONSIBILITY

The Board has an overall responsibility in reviewing the adequacy and integrity of the Group’s internal control systems and
management information systems, including systems for compliance with applicable laws, regulations, rules, directives
and guidelines. Because of the limitations that are inherent in any system of internal control, this system is designed
to manage rather that eliminate the risks that may impede the achievement of the Group’s objectives. Therefore, the
system of internal control can only provide reasonable and not absolute assurance against material misstatement or
loss to the company. As an integral part of the system of internal control, the Board confirms that there is an ongoing
process for identifying, evaluating and managing the significant risks faced by the Group and is subject to regular
reviews by the Board.

RISK MANAGEMENT

The Board recognizes the importance of establishing a formal risk management framework in order to identify principal
risks and implement appropriate controls to manage such risks. A structured approach to formalize the processes by
which risks are identified, assessed and reviewed by Management, with the involvement of the Audit Committee and
the Board, was established during the year with the appointment of an independent professional firm to provide the
requisite assistance to the Board. The Group has in place internal control procedures with clear lines of accountability
and delegated authority through a series of standard operating procedures to monitor the significant risks affecting it.

INTERNAL AUDIT FUNCTION

The Group has an in-house internal audit function which is independent of the activities it audits. In addition, the
Company appointed an independent professional firm, namely KPMG Business Advisory Sdn Bhd, on a co-sourced basis,
to augment the internal audit resources of the Group in conducting internal audit, covering the key processes within
the Group. The internal audit was undertaken to assess the adequacy and integrity of the system of internal controls
therein. Internal audit reports that highlighted areas of control deficiency for improvements were tabled before the Audit
Committee for remedial measures to be taken by Management. Such matters were followed up by the internal audit
function to determine the status of implementation of remedial measures by Management.

On a quarterly basis, the Internal Audit Department submits the audit report and the audit plan to the Audit Committee
for review and approval.

10
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Statement of Internal Control (cont’d)

OTHER KEY ELEMENTS OF INTERNAL CONTROL

Apart from risk management and internal audit, the Group also put in place the following elements as part of its internal
control system:

• An Organization Structure with formally defined lines of responsibilities, accountability and delegation of
authority;

• Financial Authority Limits were defined to ensure a clear line of responsibility for each level of Management;

• Regular Management Meetings involving the MD, COO and senior management were held to review performance
and to promptly address any operational issues that arose;

• BS EN MS ISO 9001:2000 Quality Management System was in place to monitor and ensure the quality requirements
of the Group’s products and services to meet customers’ expectation;

• BS EN MS ISO 14001:2004 Environment Management System was in place for continual improvement in
Environmental Management which strictly prevented pollution from our activities, products and services and
ensure they were in compliance with environmental and legal requirements;

• Established System Of Operation and Financial Reporting to Management Committee, Audit Committee and
Board based on quarterly results and budgets;

• Regular Training and Awareness Programmes were conducted to emphasize the importance of corporate
governance, risk management and internal control; and

• Formal Employee Annual Appraisal System to evaluate and measure employee’s performance and their
competency.

CONCLUSION

The Board is of the opinion that the internal control systems are in place for the year under review and up to the date
of issuance of annual report and financial statements, based on the issues highlighted by the Management, Internal
and External Auditors.

11
Grid Casting
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Audit Commitee’s Report

The Board of Directors is pleased to present its report on the Audit Committee and the activities carried out during the
financial year ended 31st December 2009.

COMPOSITION OF AUDIT COMMITTEE AND MEETINGS

During the financial year ended 31st December 2009, the Audit Committee held four (4) meetings. The members of
the committee together with their attendance are set out below:-

Member Directorship No. Of Meetings Attended

Battchoo Ratilal Independent & 2/2


(Chairman of the Committee) Non Executive Director
(Appointed w.e.f. 28/7/2009)

Khoo Khay Chye Independent & 4/4


Non-Executive Director

Abdu’R-Rani Bin Omar Non-Independent & 1/1


(Appointed w.e.f. 14/10/2009) Non-Executive Director

Dato’ IR. Nik Mohammed Independent & 2/3


Bin Nik Abdullah Non-Executive Director
(Chairman of the Committee)
(Resigned w.e.f. 14/10/2009)

Yeo Wee Thow Independent & 3/3
(Resigned w.e.f. 11/8/2009) Non-Executive Director


TERMS OF REFERENCE

The Terms of Reference for the Audit Committee (the “Committee”) as stipulated by the Board of Directors are as
follows:-

PRIMARY PURPOSE

The purposes of the Committee are as follows:-


• To provide assistance to the Board in fulfilling its fiduciary responsibilities relating to corporate accounting and
reporting practice for Tai Kwong Yokohama Berhad as a group (the “Group”);
• To maintain, through regularly scheduled meetings, a direct line of communication between the Board and the
External Auditors as well as the Internal Auditors;
• To act upon the Board’s request to investigate and report on any issue of concern in regard to the management
of the Group;
• Review existing practices and recommend to Management to formalize a code of ethics for all executives and
staff of the Group;
• To ensure compliance with any such changes/amendments/updates/insertions of the listing requirements and
any other applicable laws and regulations, arising thereof from time to time.

13
Audit Commitee’s Report (cont’d)

MEMBERSHIP

• The Committee shall be appointed by the Board from amongst their members and shall consist of not less than
two (2) members who must be non-executive directors, and are independent.
• All members shall be financial literate.

ROLES AND RESPONSIBILITY

The functions and duties are as follows: -

• To act as an intermediary between management or other employees, and the external auditors;
• To discuss problems and reservations arising from the interim and final audits, and any matters the External Auditors
may wish to discuss in the absence of the management where necessary;
• To recommend to the Board the appointment of the External Auditors and the audit fee thereof;
• To review the adequacy of the scope, functions, competency and resources of the internal audit functions and
that it has the necessary authority to carry out its work;
• To review the internal audit programme, processes, the results of the internal audit programme, processes or
investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal
audit function;
• To review the quarterly results and year-end financial statements prior to the approval by the Board, focusing
particularly on: -
(i) any changes in accounting policies and practice;
(ii) major judgmental areas;
(iii) significant and unusual events arising from the audit;
(iv) going concern assumption;
(v) compliance with the accounting standards, regulatory requirements and legal requirements;
(vi) the quality and effectiveness of the entire internal control system;
(vii) the accuracy and adequacy of the disclosure of information essential to a fair and full presentation of the
financial affairs of the Company.
• Carry out any other function that may be mutually agreed upon by the Committee and the Board which would
be beneficial to the Group and ensure the effective discharge of the Committee’s duties and responsibilities;
• Reports to Bursa Securities on any matter reported by it to the Board of the Group, which has not been satisfactorily,
resolved resulting in a breach of Bursa Securities Listing Requirements.
• Review and consider letter of resignation from external auditors;
• Consider any related party transaction and conflict of interest that may arise within the Group;
• Continuously engaging in discussions with Chairman of the Board of Directors, Senior Management and Finance
Director, External and Internal Auditors.

AUTHORITY

The Committee shall,

• have authority to investigate any matters of the Group and its subsidiaries, within its terms of reference;
• have full and unrestricted access to any information concerning the Group;
• have direct communication channels with the External Auditors and persons carrying out the internal audit
function;
• have the resource required to perform its duties as well as to obtain independent professional or other advice as
necessary;
• be able to convene meetings with External Auditors and Internal Auditors excluding the attendance of the Directors
and employees of the Group, whenever deemed necessary.

14
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Audit Commitee’s Report (cont’d)

MEETINGS AND QUORUM

• The quorum for the Committee Meeting shall be at least two (2) members; the majority present must be Independent
Directors.
• Meeting shall be held not less than 4 times a year and as when required during each financial year.
• The External Auditors has the right to appear and be heard at any meeting of the Audit Committee and request
a meeting if they deem necessary.
• The Chief Executive Officer, Director of Finance & Admin and representatives of the External and Internal
Auditors shall normally attend the meetings. Other Board members may attend meetings upon invitation of the
Committee.
• The Internal Auditors shall be in attendance at all meetings to present and discuss the audit findings, the
recommendations and the follow-up on all relevant decisions made.
• The secretary shall circulate the notice of meetings to the members of Committee prior to the meeting and shall
be entrusted to record, safekeeping and production of all proceedings and minutes of the Committee.
• A resolution in writing signed and approved by a majority of the Committee and who are sufficient to form a
quorum shall be as valid and effective as if it had been passed at a Meeting of the Committee duly called and
constituted.

MINUTES

The minutes of each meeting shall be kept and distributed to each member. All minutes of meetings shall be circulated
to every member of the Board. The Chairman of the Committee shall report on each meeting to the Board.

ACTIVITIES

The Committee carried out the following activities during the financial year ended 31 December 2009:-

• Review the audit reports of the Group prepared by the Internal and External Auditors and major findings by the
auditors and management responses thereon;
• Review the quarterly and annual reports of the Group prior to submission to the Board for consideration and
approval;
• Review the related party transactions entered into by the Group and the disclosure of such transactions in the
annual report, quarterly announcemment and circular on recurrent related party transactions to ensure compliance
with Listing Requirements;
• Review and approval granted for the External and Internal Auditors’ annual audit plans.

15
Yokohama Battery

16
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Chairman’s Statement

Market Overview

In general, the recovery from the global economic slowdown has given rise to
a higher demand in the automotive battery replacement market for the year
under review. To get a better balance in domestic and export ratio, the Group
will be exploring new markets overseas, especially when tariff barriers are being
lowered in certain countries.

Performance Review

The Group achieved a record profit before tax of RM18.4 million, a substantial
increase over the preceding year’s RM2.2million. Revenue showed a reduced
level to RM183.3million (6% decrease against RM195.1million in the previous
year) due to a downtrend in lead prices, pushing down selling prices.

Despite a lower revenue, the Group recorded higher profit margins, as a result
On behalf of The Board of higher production volume and more efficient utilization of banking facilities.
of Directors, it is my The receipt of a judgment sum and interest of RM1.9million in respect of a legal
suit also contributed to the better results for 2009.
pleasure to present
the Annual Report The Group’s net tangible assets stood at RM1.64 per share as compared to
RM1.30 per share in 2008.
and Audited Financial
S t a t e m e n t s o f Ta i
Operations Review
K w o n g Yo k o h a m a
Berhad and its Learning from experience and growing based on knowledge, is the basic
philosophy of the TKY Group. The single largest non-controllable risk in our
subsidiary companies business is the sudden drop in the price of lead. This is the largest cost
for the financial year component of our batteries, and will impact us in drop of inventory value and
downward adjustment of sale prices. We plan to mitigate this by expanding the
ended 31 December capacity of our lead reclamation plant and also to introduce new equipment
2009. and methods of reclamation to further lower the cost of internally consumed
secondary lead.

Our newly established Electro-Chemistry Research Centre is also introducing


new alloys and paste formulae that may bring about lower cost of batteries
with higher quality. The introduction of our new Beta Series of MF batteries
with the new paste and alloy technology will spearhead our penetration into
local and export markets.

The usage of solar-powered battery plate curing ovens and introduction of deep
cycle batteries, confirms our determination towards having a share in the eco-
friendly and environmentally pie in this seemingly “dirty” industry.

The future looks bright, taking all into consideration and we look forward to
meeting the surge in demand for batteries in the hot zero emission mobility
market.

17
Chairman’s Statement (cont’d)

Prospects

The Group has continuously been taking proactive actions towards cost optimization and achieving economies of scale
and this has shown positive results in 2009 whereby the Group recorded a profit before tax of RM18.4million.

The latest changes in the shareholding in the Company by our major shareholder, HSG Investment Pte. Ltd., a subsidiary
of Hup Soon Global Corporation Limited (“HSGC”), a company listed in the Singapore Stock Exchange, has resulted in
the Company becoming a subsidiary of HSGC on 24 March 2010.

The Group is maintaining an optimistic outlook performance for the current year and will take the necessary measures
to meet any expected economic challenges.

Appreciation

On behalf of the Board of Directors, I would like to express my sincere appreciation to the management and staff for
their commitment and dedication. I also wish to extend my heartfelt thanks to our directors, Mr. Bong Boon Fah and
Mr Yeo Wee Thow who had resigned during the year for their past contributions to the Group.

CHOW SIEW HON


Chairman

26 April 2010

18
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Profile of the Board of Directors

Standing From Left to Right


Dato’ Ir. Nik Mohammed bin Nik Abdullah
En. Abdul’ R-Rani bin Omar
Mr Battchoo Ratilal
Mr Khoo Khay Chye

Seated From Left to Right


Mr Chow Siew Hon
Mr Goh Swee Heng
Dr. Patrick Yong Mian Thong

Mr Chow Siew Hon


Chairman & Director

Mr Chow Siew Hon, a Malaysian, aged 63, was appointed as Managing Director of Tai
Kwong Yokohama Berhad on 29 March 1995 and as the Chairman on 1 January 2010.

Mr Chow has over 40 years of working experience in the battery industry. His involvement in
the battery business started when he joined his father in setting up the battery reconditioning
operation in Kuala Lumpur in 1967. Over the last 40 years he has been intensively involved
in the development of the Group to become a leading battery manufacturer and distributor
in Malaysia. Mr Chow is the Chairman of the Battery Industries Association of Malaysia. He
also holds directorship in several other private limited companies in Malaysia.

Mr Chow has no family relationship with any Director and / or major shareholder of the Company. He has indirect
shareholding of 22,000 ordinary shares in the Company. He does not have any conflict of interest with the Company
and has not been convicted of any offences within the past 10 years. He has attended all five (5) board meetings held
in the financial year.

19
Profile of the Board of Directors (cont’d)

Dr. Patrick Yong Mian Thong,


Chief Executive Officer

Dr. Yong Mian Thong, a Malaysian, aged 57, was appointed as the Chief Executive Officer
of Tai Kwong Yokohama Berhad on 1 January 2010. Prior to that, and since 1 July 2008
was the Chief Operating Officer.

Prior to joining the Group, he was the founder and Managing Director of Sulfarid
Technologies since 2004 which was renamed Borid Technologies after it was sold to the
Hup Soon Global Corporate Group. Dr. Yong started his career as an engineer with the
National Electricity Board of Malaysia (LLN) upon graduating from the Polytech of Brighton
in the United Kingdom with a BSc(Hons) in Electronics and Electrical Engineering under
an LLN Scholarship. He left civil service in 1989 to join the corporate world and subsequently entered the field of
Consultancy in Electrical Engineering.

Throughout his line of work, he established his proficiency in electrical distributions systems and pursued research in
field of efficiency in energy conversion leading to a PhD in Electrical Engineering.

He has no family relationship with any Director and / or major shareholder of the Company. He does not have any
conflict of interest with the Company and has not been convicted of any offences within the past 10 years. He has
attended all five (5) board meetings held in the financial year.

Mr Goh Swee Heng


Non-independent & Non-Executive Director

Mr Goh Swee Heng, a Malaysian, aged 60, was appointed as a Non-Independent


and Non-Executive Director of Tai Kwong Yokohama Berhad on 5 March
2008.

Mr Goh is currently the Controlling Director for Automotive / Industrial Supplies


Business of Hup Soon Global Corporation and also Country Manager in Malaysia.
Mr Goh first joined the Borneo Company in 1967 and worked his way up to
various senior positions. Prior to assuming his position as Managing Director in
1990 of Borneo Technical Co. (M) Sdn. Bhd., Mr Goh held the positions of Divisional Manager, Deputy General Manager
and Executive Director. As part of his overall responsibilities, he also held positions of Managing Director, Borneo Technical
(Thailand) Ltd and Inchcape Technical Singapore Ptd. Ltd. Mr Goh has been involved in the automotive / industrial
supplies business for over 30 years and is instrumental in the start-up of Kwikpart Sdn. Bhd. He has also completed
various General Management Programmes at Sunridge Park-UK, Insead and Ashridge.

He has no family relationship with any Director and / or major shareholder of the Company. He does not have any
conflict of interest with the Company and has not been convicted of any offences within the past 10 years. He has
attended all five (5) board meetings held in the financial year.

20
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Profile of the Board of Directors (cont’d)

Encik Abdul’ R-Rani bin Omar


Non-Independent & Non-Executive Director

Encik Abdu’R-Rani Bin Omar, a Malaysian, aged 52, was appointed as an Non-Independent
and Non-Executive Director of Tai Kwong Yokohama Berhad on 17 November 2000 and as
a member of Audit Committee on 14 October 2009.

Encik Abdu’ R-Rani graduated with a Bachelor of Business Administration with Honours from
University of Malaya in 1981. He is the Executive Chairman for the Teguh Group of Companies.
The Group is principally involved in the supply, delivery, installation and commissioning of
electrical substations and other peripherals to the oil and gas industry. He is also a Director
of several other private limited companies in Malaysia.

He has no family relationship with any Director and / or major shareholder of the Company. He does not have any
conflict of interest with the Company and has not been convicted of any offences within the past 10 years. He has
attended four (4) out of the five (5) board meetings held in the financial year.

Mr Khoo Khay Chye


Independent & Non-Executive Director

Mr. Khoo Khay Chye, a Malaysian, aged 64, was appointed as an Independent and Non-
Executive Director of Tai Kwong Yokohama Berhad on 5 March 2008. He is a member of
the Audit Committee and Nomination & Remuneration Committee.

Mr Khoo graduated from Institute of Motor Industry, UK and a Commissioned Officer in


the Electrical and Mechanical Engineering Corps of the Malaysian Armed Forces.

He has no family relationship with any Director and / or major shareholder of the Company.
He does not have any conflict of interest with the Company and has not been convicted of any offences within the past
10 years. He has attended all five (5) board meetings held in the financial year.

21
Profile of the Board of Directors (cont’d)

Dato’ Ir. Nik Mohammed bin Nik Abdullah


DPMJ, JMK, PIS, PJM
Independent & Non-Executive

Dato’ Ir. Nik Mohammed bin Nik Abdullah, a Malaysian, aged 68, was appointed as the
Independent and Non-Executive Director of Tai Kwong Yokohama Berhad on 29 September
2008.

Dato’Ir. Nik Mohammed graduated from Brighton College of Technology in Electrical


Engineering in 1966 and is a Chartered Engineer and a corporate member of Institute of
Engineers Malaysia. He also holds a competent Electrical Engineer Certificate.

Dato’Ir. Nik Mohammed retired from the post of Deputy General Manager (Customer Services) department in TNB for
4 years, he was responsible for the continuous development and improvement of customer services in TNB apart from
handling the commercial and other matters. During his period, he was also exposed to the media and frequently
appear on live TV talk shows on behalf of TNB.

During his 30 years service with LLN/Tenaga Nasional, he had served in various capacities in Butterworth, Muar, Kuala
Lumpur and Johor Bahru. Most of his tenure within LLN was in distribution department, the longest being for 13 years
in Johor Bahru where he served as Senior District Manager, Deputy Area Manager (South) and Area Manager (South)
till early January 1993.

He has no family relationship with any Director and / or major shareholder of the Company. He does not have any
conflict of interest with the Company and has not been convicted of any offences within the past 10 years. He has
attended four (4) out of the five (5) board meetings held in the financial year.

Mr Battchoo Ratilal
C.A.(M), FTII, B.COM, CPA (Aust), CFP
Independent & Non-Executive Director

Mr Battchoo Ratilal, a Malaysian, aged 65, was appointed as an Independent Non-


Executive Director of Tai Kwong Yokohama Berhad on 28 July 2009 and as the
Chairman of the Audit Committee on 14 October 2009.

Mr Battchoo is a graduate of the University of Newcastle, Australia. A member of the


Malaysia Institute of Accountants, he is a Certified Practicing Accountant and a member
of the Malaysian Institute of Taxation. Upon graduation, he embarked on a career in
accounting as an internal auditor with the electronics giant, Philips in Australia. On
his return to Malaysia, he joined the Systems Division of Olivetti, Malaysia.

After a stint in marketing at Olivetti, he was appointed Finance Manager at United Manufacturing, a significant distributor
of construction and earth moving equipment. Thereafter, he was a manager with a notable public accounting firm.
In 1979, he founded SWA Management Consultants and in 1989, founded Battchoo & Co.

Battchoo Ratilal has over 36 years of experience in the field of professional accounting.

He has no family relationship with any Director and / or major shareholder of the Company. He does not have any
conflict of interest with the Company and has not been convicted of any offences within the past 10 years. He has
attended all two (2) board meetings held in the financial year.

22
financial Directors’ Report ... 24
statements Statement by Directors ... 28
Statutory Declaration ... 28
Report of the Auditors ... 29
Income Statements ... 31
Balance Sheets ... 32
Statements of Changes in Equity ... 34
Cash Flow Statements ... 35
Notes to the Financial Statements ... 37
Directors’ report

The directors have pleasure in presenting their report together with the audited financial statements of the Group and
of the Company for the year ended 31 December 2009.

Principal activities

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are shown in Note
15 to the financial statements.

There have been no significant changes in the nature of the principal activities during the year except that certain
subsidiaries have turned dormant as disclosed in Note 15 to the financial statement.

Results

Group Company
RM RM

Profit/(loss) for the year 14,817,864 4,768,546




Attributable to:
Equity holders of the Company 14,819,581 4,768,546
Minority interest (1,717) –

14,817,864 4,768,546

There were no material transfers to or from reserves or provisions during the year, other than as disclosed in the financial
statements.

In the opinion of the directors, the results of the operations of the Group and the Company during the 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 year.

At the forthcoming Annual General Meeting (“AGM”), a final dividend in respect of year ended 31 December 2009, of
5% less 25% taxation on 43,560,000 ordinary shares, amounting to a dividend payable of RM1,633,500 (5 sen per
ordinary share) will be proposed for shareholders’ approval. The financial statements for the current year do not reflect
this proposed dividend. Such dividend, if approved by shareholders, will be accounted for in equity as an appropriation
of retained earnings in the year ending 31 December 2010.







24
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Directors’ report (Cont’d)

Directors

The names of the directors of the Company in office since the date of the last report and at the date of this report are:

Chow Siew Hon


Yong Mian Thong
Goh Swee Heng
Abdu’R-Rani bin Omar
Khoo Khay Chye
Dato’Ir Nik Mohammed Bin Nik Abdullah
Battchoo Ratilal (appointed on 28 July 2009)
Yeo Wee Thow (resigned on 11 August 2009)
Bong Boon Fah (resigned on 31 December 2009)

Directors’ benefits

Neither at the end of the 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 the acquisition of shares in or debentures of the
Company or any other body corporate.

Since the end of the previous year, no director has received or become entitled to receive a benefit (other than benefits
included in the aggregate amount of emoluments received or due and receivable by directors or the fixed salary of a
full-time employee of the Company as shown in Note 9 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.


Directors’ interests

According to the register of directors’ shareholdings, the interests of directors in office at the end of the year in shares
in the Company and its related corporations during the year were as follows:

Number of ordinary shares of RM1 each
1.1.2009 Acquired Sold 31.12.2009

The Company

Direct interest:
Chow Siew Hon 3,921,802 – – 3,921,802
Abdu’R-Rani bin Omar 2,200,000 – – 2,200,000

Indirect interest:
Chow Siew Hon 652,519 – – 652,519
Goh Swee Heng – 31,800 – 31,800

The indirect interest was pursuant to Section 134(12)(c) of the Companies (Amendment) Act, 2007 in relation to shares
held by the spouse and/or children of the director.

The other directors in office at the end of the year had no interest in shares in the Company or its related corporations
during the year.



25
Directors’ report (Cont’d)

Other statutory information

(a) Before the income statements and balance sheets of the Group and of the Company were made out, the directors
took reasonable steps:

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

(ii) to ensure that any current assets which were unlikely to realise their value 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 render:

(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial
statements of the Group and the Company inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company
misleading.

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render
adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading
or inappropriate.

(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report
or financial statements of the Group and of the Company which would render any amount stated in the financial
statements misleading.

(e) As at the date of this report, there does not exist:

(i) any charge on the assets of the Group or of the Company which has arisen since the end of the 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 year.

(f) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the
period of twelve months after the end of the 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 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 year in which this report is made.

26
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Directors’ report (Cont’d)

Significant events

In addition to the significant events disclosed elsewhere in this report, other significant events are as follows:

(a) Distribution agreement with Borneo Technical Co (M) Sdn Bhd

During the year the Group entered into a Distribution Agreement with Borneo Technical Co (M) Sdn Bhd (“BTCM”),
a wholly owned subsidiary of HSGC for distribution of the Group’s brand, YOKOHAMA on the exclusive basis.

BTCM has a well established retail network across the Peninsular and the East of Malaysia in the battery replacement
market. The agreement is strategised towards substantial reduction in expenses associated with distribution,
improve effective and efficient distribution to the battery replacement market and to allow resouces and time to
be channelled towards attaining corporate objectives in the long term. The agreement also entitles the Group to
a share of distribution profits of BTCM, took effect from June 2009 and is renewable on the yearly basis.

(b) Change in principal activities of subsidiaries

Following the distribution strategy adopted by the Group, the existing retail subsidiaries of the Group have ceased
operations during the year and have turned dormant. Details of the subsidiaries are disclosed in Note 15 to the
financial statements.

Subsequent events

Details of subsequent events are disclosed in Note 34 to the financial statements.

Auditors

The auditors, Ernst & Young, have expressed their willingness to accept reappointment.

Signed in accordance with a resolution of the directors dated 31 March 2010.

Chow Siew Hon Yong Mian Thong

27
Statement by Directors
Pursuant to Section 169(15) of the Companies Act, 1965

We, Chow Siew Hon and Yong Mian Thong, being two of the directors of Tai Kwong Yokohama Berhad, do hereby state
that, in the opinion of the directors, the accompanying financial statements set out on pages 24 to 84 are drawn up in
accordance with the provisions of the Companies Act, 1965 and applicable Financial Reporting Standards 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 2009
and of the results and the cash flows of the Group and of the Company for the year then ended.

Signed in accordance with a resolution of the directors dated 31 March 2010.

Chow Siew Hon Yong Mian Thong


Statutory declaration
Pursuant to Section 169(16) of the Companies Act, 1965

I, Tan Ah Moi, being the officer primarily responsible for the financial management of Tai Kwong Yokohama Berhad, do
solemnly and sincerely declare that the accompanying financial statements set out on pages 24 to 84 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 Tan Ah Moi ) Tan Ah Moi
at Kuala Lumpur in the Federal Territory )
on 31 March 2010 )



Before me,
Pesuruhjaya Sumpah, Malaysia
R. Vasugi Ammal, PJK
No : (W480)

28
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Independent Auditors’ Report


to the members of Tai Kwong Yokohama Berhad (Incorporated in Malaysia)

Report on the financial statements

We have audited the financial statements of Tai Kwong Yokohama Berhad, which comprise the balance sheets as at
31 December 2009 of the Group and of the Company, and the income statements, statements of changes in equity
and cash flow statements 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 24 to 84.


Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation and fair presentation of these financial statements in
accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia. This responsibility includes:
designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement
of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the Company’s preparation and fair presentation of the financial statements 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
Company’s 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 have been properly drawn up in accordance with Financial Reporting Standards
and 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 2009 and of their financial performance and cash flows for the year then ended.

29
Independent Auditors’ Report
to the members of Tai Kwong Yokohama Berhad (Cont’d)

Report on other legal and regulatory requirements

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:

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

(b) We have considered the accounts and the auditors’ report of the subsidiary of which we have not acted as
auditors, which is indicated in Note 15 to the financial statements.

(c) We are satisfied that the accounts 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 auditors’ reports on the accounts 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 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 Yap Seng Chong


AF: 0039 No. 2190/12/11(J)
Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia


31 March 2010

30
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Income statements
for the year ended 31 December 2009

Group Company
2009 2008 2009 2008
Note RM RM RM RM

Revenue 3 183,333,378 195,126,243 7,876,400 2,942,340
Cost of sales 4 (147,043,327) (166,281,274) (18,253) (25,809)

Gross profit 36,290,051 28,844,969 7,858,147 2,916,531


Other income 5 5,770,546 4,652,235 654,197 400,750
Distribution expenses (6,764,234) (9,207,496) – –
Administrative expenses (13,288,683) (12,717,739) (2,120,048) (1,326,610)
Other expenses (597,883) (4,720,897) (72,809) (13,520)

Operating profit 21,409,797 6,851,072 6,319,487 1,977,151


Finance costs 6 (2,975,783) (4,609,341) – –

Profit before tax 7 18,434,014 2,241,731 6,319,487 1,977,151


Income tax expense 10 (3,616,150) (1,735,686) (1,550,941) (718,750)

Profit for the year 14,817,864 506,045 4,768,546 1,258,401




Attributable to:
Equity holders of the Company 14,819,581 507,670 4,768,546 1,258,401
Minority interest (1,717) (1,625) – –

14,817,864 506,045 4,768,546 1,258,401


Earnings per share attributable
to equity holders of
the Company (sen) 11 34.02 1.17

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

31
Balance Sheets
as at 31 December 2009

Group Company
2009 2008 2009 2008
Note RM RM RM RM

Assets
Non-current assets
Property, plant and equipment 12 50,880,420 46,890,611 8,167 3,795
Investment properties 13 658,714 673,068 581,886 595,111
Prepaid land lease payments 14 15,658,139 15,920,828 177,553 181,588
Investments in subsidiaries 15 – – 39,986,265 11,501,745
Investment in an associate 16 – – – –
Amounts due from subsidiaries 17 – – 7,077,232 33,219,194
Deferred tax assets 18 1,037,223 2,636,741 – –

68,234,496 66,121,248 47,831,103 45,501,433


Current assets
Inventories 19 59,337,708 36,295,632 – –
Trade and other receivables 17 29,447,895 27,294,621 6,851,945 2,169,236
Government grant receivable 20 83,518 33,276 – –
Tax recoverable 1,883,916 3,175,856 1,550,664 2,354,353
Cash and bank balances 21 1,856,848 7,267,422 29,679 40,385

92,609,885 74,066,807 8,432,288 4,563,974
Non-current asset classified
as held for sale 22 – 292,499 – 292,499

92,609,885 74,359,306 8,432,288 4,856,473

Total assets 160,844,381 140,480,554 56,263,391 50,357,906




Equity and liabilities
Equity attributable to equity
holders of the Company
Share capital 23 43,560,000 43,560,000 43,560,000 43,560,000
Share premium 2,167,580 2,167,580 2,167,580 2,167,580
Retained earnings 24 25,666,374 10,846,793 8,238,272 3,469,726

71,393,954 56,574,373 53,965,852 49,197,306
Minority interest 328 2,045 – –

Total equity 71,394,282 56,576,418 53,965,852 49,197,306










32
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Balance Sheets
as at 31 December 2009 (Cont’d)

Group Company
2009 2008 2009 2008
Note RM RM RM RM

Non-current liabilities
Borrowings 25 11,224,720 12,657,808 – –
Deferred tax liabilities 18 2,656,686 2,578,145 1,550,664 718,750

13,881,406 15,235,953 1,550,664 718,750


Current liabilities
Borrowings 25 62,354,197 56,857,626 – –
Trade and other payables 27 12,968,780 11,059,906 746,875 441,850
Income tax payable 245,716 750,651 – –

75,568,693 68,668,183 746,875 441,850

Total liabilities 89,450,099 83,904,136 2,297,539 1,160,600

Total equity and liabilities 160,844,381 140,480,554 56,263,391 50,357,906



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

33
Statement of Changes in Equity
for the year ended 31 December 2009

Attributable to equity holders of the Company


Non-
distributable Distributable
Share Share Retained
capital premium earnings Minority Total
(Note 23) (Note 24) Total interest equity
RM RM RM RM RM RM

Group

At 1 January 2008 43,560,000 2,167,580 12,917,875 58,645,455 3,670 58,649,125


Profit/(loss) for the year – – 507,670 507,670 (1,625) 506,045
Dividend (Note 28) – – (2,578,752) (2,578,752) – (2,578,752)

At 31 December 2008 43,560,000 2,167,580 10,846,793 56,574,373 2,045 56,576,418




At 1 January 2009 43,560,000 2,167,580 10,846,793 56,574,373 2,045 56,576,418
Profit/(loss) for the year – – 14,819,581 14,819,581 (1,717) 14,817,864

At 31 December 2009 43,560,000 2,167,580 25,666,374 71,393,954 328 71,394,282

Non-
distributable Distributable
Share Share Retained Total
capital premium earnings equity
(Note 23) (Note 24)
RM RM RM RM

Company

At 1 January 2008 43,560,000 2,167,580 4,790,077 50,517,657
Profit for the year – – 1,258,401 1,258,401
Dividend (Note 28) – – (2,578,752) (2,578,752)

At 31 December 2008 43,560,000 2,167,580 3,469,726 49,197,306




At 1 January 2009 43,560,000 2,167,580 3,469,726 49,197,306
Profit for the year – – 4,768,546 4,768,546

At 31 December 2009 43,560,000 2,167,580 8,238,272 53,965,852



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

34
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Cash Flow Statements


for the year ended 31 December 2009

Group Company
2009 2008 2009 2008
RM RM RM RM

Cash flows from operating activities

Profit before tax 18,434,014 2,241,731 6,319,487 1,977,151
Adjustments for:
Interest income (876,353) (12,242) – –
Dividend income – – (7,848,000) (2,875,000)
Gain on disposals of property, plant
and equipment (424,126) (50,782) – –
Gain on disposal of non-current
asset classified as held for sale (87,501) – (87,501) –
Gain on disposal of an
investment property – (400,750) – (400,750)
Unrealised foreign exchange gain (175,549) (116,126) – –
Interest expenses 2,975,783 4,609,341 – –
Depreciation of property, plant
and equipment 4,494,893 4,030,445 2,716 2,901
Property, plant and equipment
written off 388,581 807,962 – –
Depreciation of investment properties 14,354 20,354 13,225 20,997
Amortisation of prepaid land
lease payments 262,689 267,417 4,035 8,763
Write-down of inventories 225,664 1,626,462 – –
Allowance for doubtful debts 70,303 186,451 – 13,500
Reversal of allowance
for doubtful debts (391,783) (3,756,890) (566,696) –
Bad debts written off 70,279 3,624,521 70,279 –

Operating profit/(loss) before
working capital changes 24,981,248 13,077,894 (2,092,455) (1,252,438)
(Increase)/decrease in inventories (23,267,740) 17,187,980 – –
(Increase)/decrease in trade and
other receivables (1,703,843) 1,617,614 (837,100) 2,846,502
Increase in government grant receivable (50,242) (33,276) – –
Increase/(decrease) in trade and
other payables 1,883,624 (7,239,434) 305,025 179,903

Cash generated from/


(used in) operations 1,843,047 24,610,778 (2,624,530) 1,773,967
Taxes (paid)/refunded (1,151,086) (3,402,847) 84,662 –
Government grant received 25,250 15,000 – –

Net cash generated from/(used in)


operating activities 717,211 21,222,931 (2,539,868) 1,773,967

35
Cash Flow Statements
for the year ended 31 December 2009 (Cont’d)

Group Company
2009 2008 2009 2008
RM RM RM RM

Cash flows from investing activities

Purchase of property,
plant and equipment (7,405,995) (436,795) (7,088) (1,399)
Proceeds from disposals of
property, plant and equipment 764,647 285,333 – –
Proceed from disposal of
non-current asset classified as
held for sale 380,000 – 380,000 –
Proceed from disposal of an
investment property – 780,000 – 780,000
Interest received 876,353 12,242 – –
Dividend received – – 2,156,250 –

Net cash (used in)/generated from


investing activities (5,384,995) 640,780 2,529,162 778,601


Cash flows from financing activities

Repayment of hire purchase and
finance lease liabilities (2,827,000) (5,765,394) – –
Proceeds from term loans 2,767,303 – – –
Repayment of term loans (2,776,489) (2,732,971) – –
Proceeds from/(repayment of) other
short term borrowings 14,489,059 (1,248,146) – –
Interest paid (2,975,783) (4,609,341) – –
Dividend paid – (2,578,752) – (2,578,752)

Net cash generated from/


(used in) financing activities 8,677,090 (16,934,604) – (2,578,752)


Net increase/(decrease) in cash
and cash equivalents 4,009,306 4,929,107 (10,706) (26,184)
Effect of foreign exchange
rate changes (22,681) 89,914 – –
Cash and cash equivalents
at beginning of year (8,981,427) (14,000,448) 40,385 66,569

Cash and cash equivalents


at end of year (Note 21) (4,994,802) (8,981,427) 29,679 40,385

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

36
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009

1. Corporate information

The Company is a public limited 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 Suite 13.02, 13th
Floor, Menara Tan & Tan, 207 Jalan Tun Razak, 50400 Kuala Lumpur. The principal place of business of the
Company is located at Lot 1238, Batu 23, Jalan Kachau, Semenyih - Sungai Lalang, 43500 Semenyih, Selangor
Darul Ehsan.

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are shown
in Note 15. There have been no significant changes in the nature of the principal activities during the year except
that certain subsidiaries have turned dormant as disclosed in Note 15.

Related companies are companies within the Tai Kwong Yokohama Berhad group and the companies ultimately
controlled by Hup Soon Global Corporation Limited (“HSGC”).

HSG Investments Pte Ltd (“HSGI”), a wholly-owned subsidiary of HSGC, was a substantial corporate shareholder of
the Company. Both HSGI and HSGC are companies incorporated in the Republic of Singapore. HSGI is a private
limited company whilst HSGC is a public limited company listed on the Singapore Exchange Securities Trading
Limited. On 24 March 2010, based on a take-over offer, HSGI received unconditional and valid acceptances to
acquire the shares of the Company resulting in HSGI holding more than 50% interest in the Company. Accordingly,
HSGI and HSGC became the immediate and ultimate holding companies of the Company. Further details of the
take-over offer are disclosed in Note 34(b).

Mr Chow Siew Hon was a substantial shareholder of the Company up to 26 March 2010. Accordingly, individuals
connected and/or related to Mr Chow Siew Hon are referred to as related parties.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of
the directors on 31 March 2010.

2. Significant accounting policies

2.1 Basis of preparation

The financial statements comply with the provisions of the Companies Act, 1965 and applicable Financial
Reporting Standards (“FRSs”) in Malaysia.

The financial statements of the Company have also been prepared on the historical cost basis unless otherwise
indicated. The financial statements are presented in Ringgit Malaysia (RM).

2.2 Summary of significant accounting policies

(a) Subsidiaries and basis of consolidation

(i) Subsidiaries

Subsidiaries are entities over which the Group has the ability to control the financial and
operating policies so as to obtain benefits from their activities. The existence and effect of
potential voting rights that are currently exercisable or convertible are considered when
assessing whether the Group has such power over another entity.


In the Company’s separate financial statements, investments in subsidiaries are stated 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.

37
Notes to the Financial Statements
31 December 2009 (Cont’d)

2. Significant accounting policies (contd.)

2.2 Summary of significant accounting policies (contd.)

(a) Subsidiaries and basis of consolidation (contd.)



(ii) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and
its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are
prepared for the same reporting date as the Company.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group
obtains control, and continue to be consolidated until the date that such control ceases.
In preparing the consolidated financial statements, intragroup balances, transactions and
unrealised gains or losses are eliminated in full. Uniform accounting policies are adopted in the
consolidated financial statements for like transactions and events in similar circumstances.

Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method
of accounting involves allocating the cost of the acquisition to the fair value of the assets
acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost
of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of
the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs
directly attributable to the acquisition.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the
Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities
over the cost of acquisition is recognised immediately in profit or loss.


Minority interests represent the portion of profit or loss and net assets in subsidiaries not
held by the Group. It is measured at the minorities’ share of the fair value of the subsidiaries’
identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in
the subsidiaries’ equity since then.

(b) Associates

Associates are entities in which the Group has significant influence and that is neither a subsidiary
nor an interest in a joint venture. Significant influence is the power to participate in the financial and
operating policy decisions of the investee but not in control or joint control over those policies.

Investments in associates are accounted for in the consolidated financial statements using the
equity method of accounting. Under the equity method, the investment in associate is carried in
the consolidated balance sheet at cost adjusted for post-acquisition changes in the Group’s share
of net assets of the associate. The Group’s share of the profit or loss of the associate is recognised
in the consolidated profit or loss. Where there has been a change recognised directly in the equity
of the associate, the Group recognises its share of such changes. In applying the equity method,
unrealised gains and losses on transactions between the Group and the associate are eliminated to
the extent of the Group’s interest in the associate. After application of the equity method, the Group
determines whether it is necessary to recognise any additional impairment loss with respect to the
Group’s net investment in the associate. The associate is equity accounted for from the date the Group
obtains significant influence until the date the Group ceases to have significant influence over the
associate.

38
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

2. Significant accounting policies (contd.)

2.2 Summary of significant accounting policies (contd.)



(b) Associates (contd.)

When the Group’s share of losses in an associate equals or exceeds its interest in the associate,
including any long-term interests that, in substance, form part of the Group’s net investment in the
associates, the Group does not recognise further losses, unless it has incurred obligations or made
payments on behalf of the associate.

The most recent available audited financial statements of the associates are used by the Group
in applying the equity method. Where the dates of the audited financial statements used are not
coterminous with those of the Group, the share of results is arrived at from the last audited financial
statements available and management financial statements to the end of the accounting period.
Uniform accounting polices are adopted for like transactions and events in similar circumstances.

On disposal of such investments, the difference between net disposal proceeds and their carrying
amounts is included in profit or loss.

(c) Property, plant and equipment, and depreciation

All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included
in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All
other repairs and maintenance are charged to the income statement during the financial period in
which they are incurred.

Subsequent to recognition, property, plant and equipment except for freehold land are stated at cost
less accumulated depreciation and any accumulated impairment losses.

Freehold land has an unlimited useful life and therefore is not depreciated. Capital expenditure in
progress is stated at cost and is not depreciated as these assets are not available for use. Depreciation
of other property, plant and equipment is provided for on a straight line basis to write off the cost of
each asset to its residual value over the estimated useful life, at the following annual rates:

Buildings 2%
Building improvements 10% - 15%
Plant and machinery 10%
Moulds, tools and equipment 10% - 15%
Furniture, fittings and office equipment 10% - 20%
Motor vehicles 20%

The residual values, useful life and depreciation method are reviewed at each year end to ensure
that the amount, method and period of depreciation are consistent with previous estimates and the
expected pattern of consumption of the future economic benefits embodied in the items of property,
plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected from its use or disposal. The difference between the net disposal proceeds, if
any and the net carrying amount is recognised in profit or loss.

39
Notes to the Financial Statements
31 December 2009 (Cont’d)

2. Significant accounting policies (contd.)

2.2 Summary of significant accounting policies (contd.)

d) Investment properties


Investment properties are properties which are held either to earn rental income or for capital
appreciation or for both. Such properties are measured initially at cost, including transaction costs.
Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation
and any accumulated impairment losses. The depreciation policy for investment properties is in
accordance with that for depreciable property, plant and equipment as described in Note 2.2(c) and
the following annual rate apply:

Buildings 2%

Investment properties are derecognised when either they have been disposed of or when the
investment property is permanently withdrawn from use and no future economic benefit is expected
from its disposal. Any gains or losses on the retirement or disposal of an investment property are
recognised in profit or loss in the year in which they arise.

(e) Impairment of non-financial assets

The carrying amounts of assets, other than inventories, deferred tax assets and non-current asset
classified as held for sale, are reviewed at each balance sheet date to determine whether there is any
indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated to
determine the amount of impairment loss.

For the purpose of impairment testing of these assets, recoverable amount is determined on an
individual asset basis unless the asset does not generate cash flows that are largely independent of
those from other assets. If this is the case, recoverable amount is determined for the cash-generating
unit (CGU) to which the asset belongs to.

An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its
value in use. 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.

An impairment loss is recognised in profit or loss in the period in which it arises.

(f) Inventories

Inventories are stated at lower of cost and net realisable value.

Cost is determined using the weighted average method. The costs of raw materials, machinery parts
and tools comprise costs of purchase. The costs of finished goods and work-in-progress comprise
costs of raw materials, direct labour, other direct costs and appropriate proportions of production
overheads based on normal operating capacity.

Net realisable value represents the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale. The difference
between the cost of inventory and its net realisable value is recognised in the profit or loss as write-
down of inventories.

40
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

2. Significant accounting policies (contd.)

2.2 Summary of significant accounting policies (contd.)



(g) Financial instruments

Financial instruments are recognised in the balance sheet when the Group has become a party to
the contractual provisions of the instrument.

Financial instruments are classified as liabilities or equity in accordance with the substance of the
contractual arrangement. Interest, dividends and gains and losses relating to a financial instrument
classified as a liability, are reported as expense or income. Distributions to holders of financial
instruments classified as equity are recognised directly to equity. Financial instruments are offset when
the Group has a legally enforceable right to offset and intends to settle either on a net basis or to
realise the asset and settle the liability simultaneously.

(i) Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents include cash on hand
and at bank and deposits at call which have an insignificant risk of changes in value, net of
outstanding bank overdrafts.

(ii) Receivables

Receivables are carried at anticipated realisable values. Bad debts are written off when identified.
An estimate is made for doubtful debts based on a review of all outstanding amounts as at
the balance sheet date.

(iii) Payables

Payables are stated at the fair value of the consideration to be paid in the future for goods
and services received.

(iv) Interest bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received
less directly attributable transaction costs. After initial recognition, interest bearing loans
and borrowings are subsequently measured at amortised cost using the effective interest
method.

All borrowing costs are recognised as an expense in the income statement in the period in
which they are incurred.

(v) Equity instruments

Ordinary shares are classified as equity. Dividend on ordinary shares are recognised in equity
in the period in which they are declared.

(vi) Derivative financial instruments

Derivative financial instruments are not recognised in the financial statements.


41
Notes to the Financial Statements
31 December 2009 (Cont’d)

2. Significant accounting policies (contd.)

2.2 Summary of significant accounting policies (contd.)

(h) Leases

(i) Classification

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and
rewards incidental to ownership. Leases of land and buildings are classified as operating or
finance leases in the same way as leases of other assets and the land and buildings elements
of a lease of land and buildings are considered separately for the purpose of lease classification.
All leases that do not transfer substantially all the risks and rewards are classified as operating
leases.

(ii) Finance leases - the Group as lessee

Assets acquired by way of hire purchase are stated at an amount equal to the lower of their
fair values and the present value of the minimum lease payments at the inception of the leases,
less accumulated depreciation and impairment losses. The corresponding liability is included
in the balance sheet as borrowings. In calculating the present value of the minimum lease
payments, the discount factor used is the interest rate implicit in the lease, when it is practicable
to determine, otherwise, the Company’s incremental borrowing rate is used. Any initial direct
cost are also added to carrying amount of such assets.

Lease payments are apportioned between the finance costs and the reduction of the
outstanding liability. Finance cost, which represent the difference between the total leasing
commitments and the fair value of the assets acquired, are recognised in the profit or loss
over the term of the relevant lease so as to produce a constant periodic rate of charge on the
remaining balance of the obligations for each accounting period.

The depreciation policy for leased assets is in accordance with that for depreciable property,
plant and equipment as described in Note 2.2(c).

(iii) Operating leases - the Group as lessee

Operating lease payments are recognised as an expense on a straight-line basis over the term
of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised
as a reduction of rental expense over the lease term on a straight-line basis.

In the case of a lease of land and buildings, the minimum lease payments or the up-front
payments made are allocated, whenever necessary, between the land and the buildings
elements in proportion to the relative fair values for leasehold interests in the land element and
buildings element of the lease at the inception of the lease. The up-front payment represents
prepaid land lease payments and are amortised on a straight-line basis over the lease term.
Leasehold land with lease term of less than 60 years are classified as short term whereas
leasehold land with lease term more than 60 years are classified as long term.

(iv) Operating leases - the Group as lessor


Assets leased out under operating leases are presented on the balance sheets according to the
nature of the assets. Rental income from operating leases is recognised on a straight-line basis
over the term of the relevant lease (Note 2.2(m)(ii)). Initial direct costs incurred in negotiating
and arranging an operating lease are added to the carrying amount of the leased asset and
recognised on a straight-line basis over the lease term.

42
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

2. Significant accounting policies (contd.)

2.2 Summary of significant accounting policies (contd.)

(i) Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the
expected amount of income taxes payable in respect of the taxable profit for the year and is measured
using the tax rates that have been enacted at the balance sheet date.

Deferred tax is provided for, using the liability method. In principle, deferred tax liabilities are recognised
for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary
differences, unused tax losses and unused tax credits to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences, unused tax losses and
unused tax credits can be utilised.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is
realised or the liability is settled, based on tax rates that have been enacted or substantively enacted
at the balance sheet date. Deferred tax is recognised as income or expense and included in the profit
or loss for the period, except when it arises from a transaction which is recognised directly in equity,
in which case the deferred tax is also recognised directly in equity.

(j) Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and
it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each
balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time
value of money is material, 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 finance cost.

(k) 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


Defined contribution plans are post-employment benefit plans under which the Group pays
fixed contributions into separate entities or funds and will have no legal or constructive
obligation to pay further contributions if any of the funds do not hold sufficient assets to pay
all employee benefits relating to employee services in the current and preceding financial
years. Such contributions are recognised as an expense in the profit or loss as incurred. As
required by law, companies in Malaysia make such contributions to the Employees Provident
Fund (“EPF”).

43
Notes to the Financial Statements
31 December 2009 (Cont’d)

2. Significant accounting policies (contd.)

2.2 Summary of significant accounting policies (contd.)

(l) Foreign currency transactions

In preparing the financial statements of the individual entities, transactions in currencies other than
the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the
exchange rates prevailing at the dates of the transactions. At each balance sheet date, monetary items
denominated in foreign currencies are translated at the rates prevailing on the balance sheet date.
Non-monetary items carried at fair value that are denominated in foreign currencies are translated
at the rates prevailing on the date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are not translated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary
items, are included in profit or loss for the period.


The principal exchange rates used for every unit of foreign currency ruling at the balance sheet date
used are as follows:

2009 2008
RM RM

1 United States Dollar 3.42 3.46
1 Euro 4.92 4.88
1 Singapore Dollar 2.44 2.41
1 Sterling Pound 5.50 5.00
1 Japanese Yen 0.04 0.04

(m) Revenue and income recognition

Revenue and income are recognised to the extent that it is probable that the economic benefit will
flow to the Group and the revenue can be reliably measured. The following specific recognition
criteria must also be met before revenue and income are recognised:

(i) Sale of goods

Revenue relating to sale of goods is recognised net of sales taxes and discounts upon the
transfer of risks and rewards of ownership to the buyer. Revenue is not recognised to the
extent where there are significant uncertainties regarding recovery of the consideration due,
associated costs or the possible return of goods.

(ii) Rental income

Rental income is recognised on a straight-line basis over the term of the lease. The aggregate
cost of incentives provided to lessee is recognised as a reduction of rental income over the
lease term on a straight-line basis.

44
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

2. Significant accounting policies (contd.)

2.2 Summary of significant accounting policies (contd.)

(m) Revenue and income recognition (contd.)

(iii) Dividend income

Dividend income is recognised when the Company’s right to receive payment is established.

(iv) Interest income

Interest income is recognsied on an accrual basis using the effective interest method.

(v) Share of distribution profits

Share of distribution profits relates to the Group’s right of share of income in accordance with
the terms of distribution agreement with its distributor. Share of profits is accrued as income
by reference to the financial information provided by the distributor. The Group has appointed
an independent party to perform procedures on the financial information reported by its
distributor.

(n) Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the
grant will be received and all attaching conditions will be complied with. Grants that compensate
the Group for expenses incurred are recognised as income over the periods necessary to match the
grant on a systematic basis to the costs that it is intended to compensate. Grants that compensate
the Group for the cost of an asset are deducted from the carrying amount of the asset and released
to the income statement by way of a reduced depreciation charge.

(o) Non-current asset classified as held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only
when the sale is highly probable and the asset is available for immediate sale in its present condition
subject only to terms that are usual and customary.


Immediately before classification as held for sale, the measurement of the non-current asset is brought
up-to-date in accordance with applicable FRSs. Then, on initial classification as held for sale, non-
current assets are measured in accordance with FRS 5 that is at the lower of carrying amount and
fair value less costs to sell. Any differences are included in profit or loss.

45
Notes to the Financial Statements
31 December 2009 (Cont’d)

2. Significant accounting policies (contd.)

2.3 Standards and Interpretations issued but not yet effective

At the date of authorisation of these financial statements, the following new FRSs and Interpretations, and
amendments to certain Standards and Interpretations were issued but not yet effective and have not been
applied by the Group and the Company, which are:

Effective for financial periods beginning on or after 1 July 2009

• FRS 8: Operating Segments



Effective for financial periods beginning on or after 1 January 2010

• FRS 4: Insurance Contracts



• FRS 7: Financial Instruments: Disclosures

• FRS 101: Presentation of Financial Statements (revised)

• FRS 123: Borrowing Costs

• FRS 139: Financial Instruments: Recognition and Measurement

• Amendments to FRS 1: First-time Adoption of Financial Reporting Standards and FRS 127:
Consolidated and Separate Financial Statements: Cost of an Investment
in a Subsidiary, Jointly Controlled Entity or Associate

• Amendments to FRS 2: Share-based Payment – Vesting Conditions and Cancellations

• Amendments to FRS 132: Financial Instruments: Presentation



• Amendments to FRS 139: Financial Instruments: Recognition and Measurement, FRS 7: Financial
Instruments: Disclosures and IC Interpretation 9: Reassessment of
Embedded Derivatives

• Amendments to FRSs ‘Improvements to FRSs (2009)’

• IC Interpretation 9: Reassessment of Embedded Derivatives

• IC Interpretation 10: Interim Financial Reporting and Impairment

• IC Interpretation 11: FRS 2 – Group and Treasury Share Transactions

• IC Interpretation 13: Customer Loyalty Programmes

• IC Interpretation 14: FRS 119 – The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction

• TR i – 3: Presentation of Financial Statements of Islamic Financial Institutions

46
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

2. Significant accounting policies (contd.)

2.3 Standards and Interpretations issued but not yet effective (contd.)

Effective for financial periods beginning on or after 1 March 2010

• Amendment to FRS 132: Financial Instruments: Classification of Rights Issues

Effective for financial periods beginning on or after 1 July 2010

• FRS 1: First-time Adoption of Financial Reporting Standards



• FRS 3: Business Combinations (revised)

• FRS 127: Consolidated and Separate Financial Statements (amended)

• Amendments to FRS 2: Share-based Payment

• Amendments to FRS 5: Non-current Assets Held for Sale and Discontinued Operations

• Amendments to FRS 138: Intangible Assets



• Amendments to
IC Interpretation 9: Reassessment of Embedded Derivatives

• IC Interpretation 12: Service Concession Arrangements

• IC Interpretation 15: Agreements for the Construction of Real Estate

• IC Interpretation 16: Hedges of a Net Investment in a Foreign Operation

• IC Interpretation 17: Distributions of Non-cash Assets to Owners

Effective for financial periods beginning on or after 1 January 2011

• Amendment to FRS 1:
Limited Exemption from Comparative FRS 7 Disclosures for First-time
Adopters

• Amendments to FRS 7: Improving Disclosures about Financial Instruments

47
Notes to the Financial Statements
31 December 2009 (Cont’d)

2. Significant accounting policies (contd.)

2.3 Standards and Interpretations issued but not yet effective (contd.)

The Group and the Company plan to adopt the above pronouncements when they become effective in
the respective financial period. Unless otherwise described below, these pronouncements are expected
to have no significant impact to the financial statements of the Group and the Company upon their initial
application:

FRS 127: Consolidated and Separate Financial Statements (amended)

FRS 127 (amended) requires that a change in the ownership interest of a subsidiary (without loss of
control) is accounted for as a transaction with owners in their capacity as owners and to be recorded in
equity. Therefore, such transaction will no longer give rise to goodwill, nor will it give rise to a gain or loss.
Furthermore, the amended Standard changes the accounting for losses incurred by the subsidiary as well
as loss of control of a subsidiary. The changes by FRS 127 (amended) will be applied prospectively and only
affect future acquisition or loss of control of subsidiaries and transactions with non-controlling interests.

FRS 8: Operating Segment

FRS 8 replaces FRS 1142004: Segment Reporting and requires a ‘management approach’, under which
segment information is presented on a similar basis to that used for internal reporting purposes. As a result,
the Group’s external segmental reporting will be based on the internal reporting to the chief executive
officer, who makes decisions on the allocation of resources and assesses the performance of the reportable
segments. As this is a disclosure standard, there will be no impact on the financial position or results of the
Group.

FRS 101: Presentation of Financial Statements (revised)

The revised FRS 101 separates owner and non-owner changes in equity. Therefore, the consolidated
statement of changes in equity will now include only details of transactions with owners. All non-owner
changes in equity are presented as a single line labelled as total comprehensive income. The Standard also
introduces the statement of comprehensive income: presenting all items of income and expense recognised
in the income statement, together with all other items of recognised income and expense, either in one
single statement, or in two linked statements. The Group is currently evaluating the format to adopt. In
addition, a statement of financial position is required at the beginning of the earliest comparative period
following a change in accounting policy, the correction of an error or the reclassification of items in the
financial statements. This revised FRS does not have any impact on the financial position and results of the
Group and the Company.

FRS 123: Borrowing Costs

This Standard supersedes FRS 1232004: Borrowing Costs that removes the option of expensing borrowing
costs and requires capitalisation of such costs that are directly attributable to the acquisition, construction
or production of a qualifying asset as part of the cost of that asset. Other borrowing costs are recognised as
an expense. The Group’s current accounting policy is to expense the borrowing costs in the period which
they are incurred. In accordance with the transitional provisions of the Standard, the Group will apply the
change in accounting policy prospectively for which the commencement date for capitalisation of borrowing
cost on qualifying assets is on or after the financial period 1 January 2010.

48
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

2. Significant accounting policies (contd.)

2.3 Standards and Interpretations issued but not yet effective (contd.)

FRS 139: Financial Instruments: Recognition and Measurement, FRS 7: Financial Instruments: Disclosures
and Amendments to FRS 139: Financial Instruments: Recognition and Measurement, FRS 7: Financial
Instruments: Disclosures

The new Standard on FRS 139: Financial Instruments: Recognition and Measurement establishes principles
for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-
financial items. Requirements for presenting information about financial instruments are in FRS 132: Financial
Instruments: Presentation and the requirements for disclosing information about financial instruments are
in FRS 7: Financial Instruments: Disclosures.

FRS 7: Financial Instruments: Disclosures is a new Standard that requires new disclosures in relation to
financial instruments. The Standard is considered to result in increased disclosures, both quantitative and
qualitative of the Group’s exposure to risks, enhanced disclosure regarding components of the Group’s
financial position and performance, and possible changes to the way of presenting certain items in the
financial statements.
 
In accordance with the respective transitional provisions, the Group and the Company are exempted from
disclosing the possible impact to the financial statements upon the initial application.

Amendments to FRSs ‘Improvements to FRSs (2009)’

The Improvements to FRSs (2009) contain amendments to several FRSs, which the following amendments
may have an impact on the financial statements of the Group and of the Company:

- FRS 117 Leases: Clarifies on the classification of leases of land and buildings. The Group is still
assessing the potential implication as a result of the reclassification of its unexpired land leases as
operating or finance leases. For those land element held under operating leases that are required
to be reclassified as finance leases, the Group shall recognise a corresponding asset and liability in
the financial statements which will be applied retrospectively upon initial application. However, in
accordance with the transitional provision, the Group is permitted to reassess lease classification on
the basis of the facts and circumstances existing on the date it adopts the amendments; and recognise
the asset and liability related to a land lease newly classified as a finance lease at their fair values on
that date; any difference between those fair values is recognised in retained earnings. The Group is
currently in the process of assessing the impact of this amendment.

- FRS 140 Investment Property: Property under construction or development for future use as an
investment property is classified as investment property. Where the fair value model is applied, such
property is measured at fair value. If fair value cannot be reliably determined, the investment under
construction will be measured at cost until such time as fair value can be determined or construction is
complete. The Group has previously accounted for such assets using the cost model. The amendment
also includes changes in terminology in the Standard to be consistent with FRS 108. The change will
be applied prospectively.

- FRS 5 Non-current Assets Held for Sale and Discontinued Operations: Clarifies that the disclosures
required in respect of non-current assets and disposal groups classified as held for sale or discontinued
operations are only those described by the Standard. The disclosures requirements from other FRSs
only apply if specifically required for such non-current assets held for sale and disposal group or
discontinued operations.

49
Notes to the Financial Statements
31 December 2009 (Cont’d)

2. Significant accounting policies (contd.)

2.4 Significant accounting judgements and estimates

The preparation of financial statements in accordance with FRSs requires the use of certain accounting
estimates and exercise of judgements. Estimates and judgements are continually evaluated and are based
on past experiences, reasonable expectations of future events and other factors.

(a) Judgements

There were no significant judgements made in applying the accounting policies of the Group which
may have significant effects of the amounts recognised in the financial statements.

(b) Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the
balance sheet date, that have a significant potential risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next year are discussed below:

(i) Deferred tax assets

Deferred tax assets are recognised for unabsorbed capital allowances, unused tax losses and
utilised reinvestment allowance to the extent that it is probable that taxable profit will be
available against which the tax losses and allowances can be utilised. Significant management
judgement is required to determine the amount of deferred tax assets that can be recognised,
based upon the likely timing and level of future taxable profits. The carrying amount of deferred
tax assets of the Group as at 31 December 2009 was RM1,037,223 (2008: RM2,636,741).
Further details are disclosed in Note 18.

(ii) Carrying amounts of inventories

Due to the fluctuation of lead prices in recent years as traded in the London Metal Exchange,
the carrying amounts of inventories are exposed to risk of fluctuation in prices. The management
has carried out a review of all components in inventories at balance sheet date and has
recognised inventories write down of RM230,739 (2008: RM1,626,462) in the current year.
The review requires the Group to estimate the net realisable values of its inventories where
selling prices are based on latest approved prices by the management, net of estimated costs
to completion and costs necessary to make the sale. The carrying amount of inventories of
the Group as at 31 December 2009 was RM59,337,708 (2008: RM36,295,632).


3. Revenue

Group Company
2009 2008 2009 2008
RM RM RM RM

Sale of goods 183,310,578 195,062,503 – –
Rental income from
investment properties 22,800 63,740 28,400 67,340
Dividend income – – 7,848,000 2,875,000

183,333,378 195,126,243 7,876,400 2,942,340

50
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

4. Cost of sales

Group Company
2009 2008 2009 2008
RM RM RM RM

Cost of inventories sold 147,023,945 166,254,873 – –
Depreciation of investment
properties (Note 13) 14,354 20,354 13,225 20,997
Direct operating expenses of
investment properties 5,028 6,047 5,028 4,812

147,043,327 166,281,274 18,253 25,809

5. Other income

Included in other income are:

Group Company
2009 2008 2009 2008
RM RM RM RM

Interest income: 876,353 12,242 – –


- deposits with licensed bank 3,051 12,242 – –
- recovered from placement of
judgement sum in deposit* 24,771 – – –
- recovered from interest of
judgement sum* 848,531 – – –
Judgement sum recovered
from a legal case* 1,015,000 – – –
Gain on disposals of property,
plant and equipment 424,126 50,782 – –
Gain on disposal of non-current
asset classified as held for sale 87,501 – 87,501 –
Gain on disposal of an
investment property – 400,750 – 400,750
Reversal of allowance
for doubtful debts 391,783 3,756,890 566,696 –
Share of distribution profits
from a related party 2,435,114 – – –
Foreign exchange gains:
- realised 4,786 51,382 – –
- unrealised 175,549 116,126 – –

*
These other income pertain to the recovery of compensation amounts in relation to the legal case of the
Group with Banly Holdings Sdn Bhd (“BHSB”) in prior years. The recovery was following the decisions of the
Courts to unanimously allowed in favour of the Group’s appeal on all issues in relation to the case. Accordingly,
the Group has recovered the judgement sum together with all the rolled up interests thereof.


51
Notes to the Financial Statements
31 December 2009 (Cont’d)

6.
Finance costs

Group
2009 2008
RM RM

Interest expenses on:
- bank overdrafts 458,411 1,276,215
- revolving and export credits 198,658 256,275
- bankers’ acceptances 1,109,150 1,422,082
- term loans 684,206 984,519
- hire purchase and finance lease liabilities 525,358 670,250

2,975,783 4,609,341

7. Profit before tax

The following amounts have been included at arriving at profit before tax:

Group Company
2009 2008 2009 2008
RM RM RM RM

Employee benefits
expense (Note 8) 24,844,465 22,828,878 1,153,194 628,215
Non-executive directors’
remuneration (Note 9) 370,350 260,000 368,750 260,000
Auditors’ remuneration:
- statutory audits 250,953 250,953 38,000 38,000
- other services 84,000 70,000 84,000 70,000
Operating lease, minimum
lease payments for: 539,058 596,603 – –

- motor vehicles 22,370 81,348 – –
- premises 142,830 187,637 – –
- plant and machineries 373,858 327,618 – –
Depreciation of property, plant
and equipment (Note 12) 4,494,893 4,030,445 2,716 2,901
Property, plant and equipment
written off 388,581 807,962 – –
Amortisation of prepaid land
lease payments (Note 14) 262,689 267,417 4,035 8,763
Write-down of inventories 225,664 1,626,462 – –
Allowance for doubtful debts 70,303 186,451 – 13,500
Bad debts written off 70,279 3,624,521 70,279 –
Government grant
compensation (Note 20) (25,250) (39,875) – –
Compensation costs on a
legal case – 81,200 – –

52
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

8. Employee benefits expense

Group Company
2009 2008 2009 2008
RM RM RM RM

Wages and salaries 22,318,366 20,231,052 1,016,251 563,810
Social security contributions 174,916 177,533 2,670 1,811
Contributions to EPF 1,929,558 1,953,017 123,292 59,057
Other benefits 421,625 467,276 10,981 3,537

24,844,465 22,828,878 1,153,194 628,215

Included in employee benefits expense of the Group and the Company are executive directors’ remuneration
(excluding benefits-in-kind) amounting to RM1,666,484 (2008: RM1,880,272) and RM638,843 (2008: RM218,666)
respectively as further disclosed in Note 9.


9. Directors’ remuneration

Group Company
2009 2008 2009 2008
RM RM RM RM

Executive directors’
remuneration (Note 8):
- fees:
- current year – – – –
- overprovision in prior year – (31,000) – –
- other emoluments 1,666,484 1,911,272 638,843 218,666

1,666,484 1,880,272 638,843 218,666

Non-executive directors’
fees (Note 7):
- current year 381,600 260,000 380,000 260,000
- overprovision in prior year (11,250) – (11,250) –

370,350 260,000 368,750 260,000

Total directors’
remuneration (Note 31(c)) 2,036,834 2,140,272 1,007,593 478,666
Estimated money value of
benefits-in-kind 18,626 56,394 9,243 14,269

Total directors’ remuneration


including benefits-in-kind 2,055,460 2,196,666 1,016,836 492,935

53
Notes to the Financial Statements
31 December 2009 (Cont’d)

9. Directors’ remuneration (contd.)

The details of remuneration received or receivable by directors of the Company during the year are as follows:

Group Company
2009 2008 2009 2008
RM RM RM RM

Executive:
- salaries and other emoluments 820,063 668,886 390,443 180,266
- bonus 312,000 165,480 180,000 15,000
- contributions to EPF 141,330 103,875 68,400 23,400
- estimated money value of
benefits-in-kind 18,626 35,394 9,243 14,269

1,292,019 973,635 648,086 232,935
Non-executive:
- fees 370,350 260,000 368,750 260,000

1,662,369 1,233,635 1,016,836 492,935

The number of directors of the Company whose total remuneration during the year fell within the following
bands is analysed below:

Number of directors
2009 2008

Executive directors:
Less than RM100,000 – –
RM200,001 - RM250,000 – 1
RM600,001 - RM650,000 2 –
RM700,001 - RM750,000 – 1


Non-executive directors:
Less than RM100,000 7 6


10. Income tax expense

Group Company
2009 2008 2009 2008
RM RM RM RM

Current income tax:
- Malaysian income tax 1,865,973 1,640,594 718,750 –
- underprovision in prior years 72,118 1,816,240 277 –

1,938,091 3,456,834 719,027 –

54
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

10. Income tax expense (contd.)

Group Company
2009 2008 2009 2008
RM RM RM RM

Deferred tax (Note 18):


- relating to origination and
reversal of temporary
differences 1,845,451 (1,051,593) 831,914 747,500
- relating to changes in tax rates – 38,686 – (28,750)
- overprovision in prior years (167,392) (708,241) – –

1,678,059 (1,721,148) 831,914 718,750

Total income tax expense 3,616,150 1,735,686 1,550,941 718,750

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2008: 26%) of the estimated assessable
profit for the year. In prior years, subsidiaries which are Malaysian resident companies with paid-up share capital
of less than RM2.5 million applied the preferential tax rate of 20% on the first RM500,000 and the statutory tax
rate on the excess of RM500,000 of chargeable income pursuant to Paragraph 2A, Schedule 1 of the Income
Tax Act, 1967. Paragraph 2B, Schedule 1 was introduced with effect from Year of Assessment 2009 changing
the definition of companies qualifying for the preferential tax rate which rendered the chargeable income of the
subsidiaries to be taxed at the statutory tax rate.

A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income
tax expense at the effective income tax rate of the Group and of the Company is as follows:

2009 2008
RM RM

Group

Profit before tax 18,434,014 2,241,731

Taxation at Malaysian statutory tax rate of 25% (2008: 26%) 4,608,504 582,850
Effect of statutory tax rate of 20% for certain subsidiaries i n prior year – (123,560)
Effect of changes in tax rate of deferred tax – 38,686
Income not subject to tax (288,043) –
Expenses not deductible for tax purposes 600,646 1,012,993
Deferred tax assets not recognised in respect of current year’s:
- unused tax losses and unabsorbed capital allowances 108,673 –
- other deductible differences 173,339 –
Deferred tax assets recognised on:
- previously unrecognised unused tax losses and
unabsorbed capital allowances – (774,146)
- unutilised reinvestment allowance arising from current year (244,737) –

55
Notes to the Financial Statements
31 December 2009 (Cont’d)

10. Income tax expense (contd.)

2009 2008
RM RM

Group (contd.)

Utilisation of previously unrecognised tax losses, unabsorbed


capital allowances and unutilised reinvestment allowances (738,598) (109,136)
Utilisation of current year’s reinvestment allowances (508,360) –
Underprovision of income tax expense in prior years 72,118 1,816,240
Overprovision of deferred tax in prior years (167,392) (708,241)

Income tax expense for the year 3,616,150 1,735,686


2009 2008
RM RM

Company

Profit before tax 6,319,487 1,977,151


Taxation at Malaysian statutory tax rate of 25% (2008: 26%) 1,579,872 514,059
Effect of changes in tax rate – (28,750)
Income not subject to tax (411,336) –
Expenses not deductible for tax purposes 382,128 233,441
Underprovision of income tax expense in prior years 277 –

Income tax expense for the year 1,550,941 718,750


11. Earnings per share

Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity
holders of the Company by the weighted average number of ordinary shares in issue during the year.

Group
2009 2008
RM RM

Profit attributable to equity holders of the Company (RM) 14,819,581 507,670


Weighted average number of ordinary shares in issue (number) 43,560,000 43,560,000
Basic earnings per share (sen) 34.02 1.17

56
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

12. Property, plant and equipment

Plant and Furniture,


machinery, fittings,
Buildings moulds, office Capital
Freehold and building tools and equipment expenditure
land improvements equipment and vehicles in progress Total
RM RM RM RM RM RM

Group

2009

Cost

At 1 January 2009 255,000 27,950,521 56,302,270 8,515,539 1,294,626 94,317,956
Additions – 4,186,346 2,669,941 1,703,348 654,169 9,213,804
Disposals – (4,342) (351,786) (2,158,012) – (2,514,140)
Reclassification – 543,938 686,699 – (1,230,637) –
Written off – (172,442) (1,097,993) (1,577,996) (5,680) (2,854,111)

At 31 December 2009 255,000 32,504,021 58,209,131 6,482,879 712,478 98,163,509


Accumulated depreciation

At 1 January 2009 – 4,333,503 36,532,449 6,561,393 – 47,427,345
Charge for the year (Note 7) – 873,651 3,116,468 504,774 – 4,494,893
Disposals – (579) (295,648) (1,877,392) – (2,173,619)
Written off – (143,226) (951,246) (1,371,058) – (2,465,530)

At 31 December 2009 – 5,063,349 38,402,023 3,817,717 – 47,283,089

Net carrying amount 255,000 27,440,672 19,807,108 2,665,162 712,478 50,880,420

57
Notes to the Financial Statements
31 December 2009 (Cont’d)

12. Property, plant and equipment (contd.)

Plant and Furniture,


machinery, fittings,
Buildings moulds, office Capital
Freehold and building tools and equipment expenditure
land improvements equipment and vehicles in progress Total
RM RM RM RM RM RM

Group

2008

Cost
At 1 January 2008 255,000 27,960,670 55,308,201 8,610,231 4,727,787 96,861,889
Additions – 137,810 1,609,710 606,626 750,774 3,104,920
Disposals – – (162,648) (698,499) – (861,147)
Reclassification – – 3,944,798 – (3,944,798) –
Written off – (59,323) (4,397,791) (2,819) (239,137) (4,699,070)
Reclassified as held for sale
(Note 22) – (88,636) – – – (88,636)

At 31 December 2008 255,000 27,950,521 56,302,270 8,515,539 1,294,626 94,317,956




Accumulated depreciation
At 1 January 2008 – 3,475,952 37,864,784 6,582,732 – 47,923,468
Charge for the year (Note 7) – 866,415 2,710,070 453,960 – 4,030,445
Disposals – – (152,100) (474,496) – (626,596)
Written off – – (3,890,305) (803) – (3,891,108)
Reclassified as held for sale
(Note 22) – (8,864) – – – (8,864)

At 31 December 2008 – 4,333,503 36,532,449 6,561,393 – 47,427,345



Net carrying amount 255,000 23,617,018 19,769,821 1,954,146 1,294,626 46,890,611

58
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

12. Property, plant and equipment (contd.)

Furniture,
fittings and
Building office
improvements equipment Total
RM RM RM

Company

2009

Cost
At 1 January 2009 3,180 30,232 33,412
Additions – 7,088 7,088

At 31 December 2009 3,180 37,320 40,500


Accumulated depreciation
At 1 January 2009 2,781 26,836 29,617
Charge for the year (Note 7) 330 2,386 2,716

At 31 December 2009 3,111 29,222 32,333

Net carrying amount 69 8,098 8,167


2008

Cost
At 1 January 2008 3,180 28,833 32,013
Additions – 1,399 1,399

At 31 December 2008 3,180 30,232 33,412


Accumulated depreciation
At 1 January 2008 2,463 24,253 26,716
Charge for the year (Note 7) 318 2,583 2,901

At 31 December 2008 2,781 26,836 29,617

Net carrying amount 399 3,396 3,795

59
Notes to the Financial Statements
31 December 2009 (Cont’d)

12. Property, plant and equipment (contd.)

(a) The carrying amount of temporary idle equipment of the Group amounted to RM1,388,245 (2008:
RM1,481,115).

(b) Included in the carrying amount of capital expenditure in progress of RM712,478 (2008: RM1,294,626) is
a deduction of RM75,117 (2008: RM41,677) in the form of government grant compensation in relation to
information systems being developed for branding purposes. Further details on the government grant are
disclosed in Note 20.

(c) During the year, the Group acquired property, plant and equipment at aggregate costs of RM9,213,804
(2008: RM3,104,920) of which RM1,807,809 (2008: RM2,668,125) were acquired by means of hire purchase
and finance lease arrangements. Net carrying amounts of property, plant and equipment held under hire
purchase and finance lease arrangements are as follows:

Group
2009 2008
RM RM

Plant and machinery, moulds, tools and equipment 12,004,531 12,093,168


Furniture, fittings, office equipment and vehicles 836,293 200,638
Capital expenditure in progress – 486,352

12,840,824 12,780,158

Details of the terms and conditions of the hire purchase and finance lease arrangements are disclosed in
Note 26.

(d) The net carrying amounts of property, plant and equipment pledged as securities for borrowings (Note
25(c)) are as follows:

Group
2009 2008
RM RM

Buildings and building improvements 26,679,376 22,791,548
Plant and machinery, moulds, tools and equipment 8,134,730 7,588,211
Furniture, fittings, office equipment and vehicles 1,545,584 1,028,405
Capital expenditure in progress 712,478 808,274

37,072,168 32,216,438

13. Investment properties

Group Company
2009 2008 2009 2008
RM RM RM RM

Cost
At 1 January 777,693 1,277,693 661,234 1,249,870
Disposal – (500,000) – (500,000)
Reclassified as asset held for sale (Note 22) – – – (88,636)

At 31 December 777,693 777,693 661,234 661,234

60
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

13. Investment properties (contd.)

Group Company
2009 2008 2009 2008
RM RM RM RM

Accumulated depreciation
At 1 January 104,625 205,021 66,123 174,740
Charge for the year (Note 4) 14,354 20,354 13,225 20,997
Disposal – (120,750) – (120,750)
Reclassified as asset held
for sale (Note 22) – – – (8,864)

At 31 December 118,979 104,625 79,348 66,123

Net carrying amount 658,714 673,068 581,886 595,111


The estimated fair values of the investment properties and prepaid land lease payments held to earn rental
income (Note 14) for the Group and the Company are RM1,054,500 (2008: RM925,000) and RM875,000 (2008:
RM890,000) respectively.

Fair value is arrived by reference to market evidence of transaction prices for similar properties, published value
and/or based on valuation performed by the registered independent external valuer having an appropriate
recognised professional qualification and recent experience in the location and category of the properties being
valued. Investment properties comprise a number of commercial properties leased to third parties.

14. Prepaid land lease payments

Group Company
2009 2008 2009 2008
RM RM RM RM

At 1 January 15,920,828 16,400,972 181,588 403,078


Amortisation for the year (Note 7) (262,689) (267,417) (4,035) (8,763)
Reclassified as asset held for
sale (Note 22) – (212,727) – (212,727)

At 31 December 15,658,139 15,920,828 177,553 181,588




Analysed as:
- long term leasehold lands 15,300,187 15,561,212 177,553 181,588
- short term leasehold lands 357,952 359,616 – –

15,658,139 15,920,828 177,553 181,588

Included in the carrying amounts of long term leasehold lands of the Group and the Company is RM111,693
(2008: RM114,958) and RM177,553 (2008: RM181,588) respectively, being lands held to earn rental income
(Note 13).

Leasehold lands of a subsidiary with an aggregate carrying value of RM15,488,656 (2008: RM15,745,299) are
pledged as securities for the Group’s term loans and bank overdrafts (Note 25(c)).


61
Notes to the Financial Statements
31 December 2009 (Cont’d)

15. Investments in subsidiaries

Company
2009 2008
RM RM

Unquoted shares, at cost 39,986,265 11,501,745

Other than as separately disclosed below, the subsidiaries were incorporated in Malaysia and were audited by
Ernst & Young, Malaysia. The other details are as follows:

Name of subsidiaries Principal activities Equity interest held


2009 2008
% %

Held by the Company:

Tai Kwong-Yokohama Battery Manufacturing and marketing 100 100
Industries Sdn. Bhd. 1 of batteries and reclamation
of scrap batteries

Tai Kwong-Yokohama Holding Investment holding and 100 100
(M) Sdn. Bhd. marketing of batteries and
related products *

Tai Kwong Battery (K.L.) Retailing of batteries and 100 100


Sdn. Bhd. related products *

Tai Kwong Battery (Ipoh) Retailing of batteries and 100 100
Sdn. Bhd. related products *

Tai Kwong Battery (JB) Retailing of batteries and 50 50
Sdn. Bhd. (“TKBJB”) 2 related products *

Tai Kwong Battery (Penang) Retailing of batteries and 20 20
Sdn. Bhd. (“TKBP”) 2 related products *

Tai Kwong Yokohama Investment holding 100 100
Ventures Sdn. Bhd.

Tai Kwong Yokohama Investment holding 100 100


Management Sdn. Bhd.

Ikatan Intan Sdn. Bhd. Investment holding 100 100

Gaya Pesona Sdn. Bhd. 3 Dormant 100 100

TK Yokohama Reclamation Dormant 100 100


Sdn. Bhd.

62
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

15. Investments in subsidiaries (contd.)

Name of subsidiaries Principal activities Equity interest held


2009 2008
% %

Held through subsidiaries:

Tai Kwong Battery (JB) Retailing of batteries and 50 50


Sdn. Bhd. (“TKBJB”) 2 related products *

Tai Kwong Battery (Penang) Retailing of batteries and 80 80


Sdn. Bhd. (“TKBP”) 2 related products *

Orient Batteries Sdn. Bhd. Retailing of batteries and 100 100
related products

Tai Kwong Yokohama Marketing Marketing and trading of 100 100
Sdn. Bhd. (formerly known as batteries and
Tai Kwong Yokohama Battery related products
(Sarawak) Sdn. Bhd.)

Tai Kwong-Yokohama Battery Retailing of batteries and 100 100
(Kuantan) Sdn. Bhd. related products *

Tai Kwong-Yokohama Battery Retailing of batteries and 100 100
(Sabah) Sdn. Bhd. related products *

Tai Kwong-Yokohama Battery Retailing of batteries and 100 100


(Tawau) Sdn. Bhd. related products *

Tai Kwong Yokohama Battery Retailing of batteries and 100 100


Battery Co. Sdn. Bhd. related products *

Jendela Wira Sdn. Bhd. Transportation services 100 100



Syarikat ZHK Sdn. Bhd. Transportation services 100 100

Tai Kwong-Yokohama Battery Dormant 100 100


(Seremban) Sdn. Bhd.

Tai Kwong Yokohama Battery Dormant 100 100


(Melaka) Sdn. Bhd.

TK-Yokohama Technology Dormant 100 100
Sdn. Bhd.

Maramayang Sdn. Bhd. 3 Dormant 76 76

Tai Kwong Yokohama Dormant 100 100
Marketing (Singapore) Pte Ltd 4

63
Notes to the Financial Statements
31 December 2009 (Cont’d)

15. Investments in subsidiaries (contd.)


1
During the year, the Company increased its investment in a wholly owned subsidiary, Tai Kwong-Yokohama
Battery Industries Sdn. Bhd., for the increase in issued and paid up ordinary share capital from RM9,515,480
to RM38,000,000 by way of issuance of 28,484,520 ordinary shares of RM1 each, through capitalisation
of indebtedness due from subsidiaries, as disclosed in Note 17.


2
TKBJB and TKBP are deemed subsidiaries of the Company as the Company owns, directly and indirectly
through its subsidiaries, its entire equity interests


3
These subsidiaries have been disposed subsequent to year end as further disclosed in Note 34(a)


4
Incorporated in Singapore and audited by a firm other than Ernst & Young, Malaysia. The subsidiary has
filed for voluntary liquidation on 23 November 2009

* These subsidiaries have turned dormant during the year upon the appointment of BTCM as distributor for
its YOKOHAMA batteries

16. Investment in an associate

Group
2009 2008
RM RM

Unquoted shares, at cost 10,000 10,000
Less: Accumulated impairment loss (10,000) (10,000)

– –

Details of the associate is as follows:

Name of subsidiaries Principal activities Equity interest held


2009 2008
% %

Held through a subsidiary:



Ikatan Nagasari Sdn. Bhd. Dormant 40 40

Subsequent to year end, the Group has disposed of its entire equity interest in the associate as further disclosed
in Note 34(a).

64
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

16. Investment in an associate (contd.)



The financial statements of the above associate are coterminous with those of the Group. The summarised financial
information of the associate is as follows:

2009 2008
RM RM

Assets and liabilities


Current assets, representing total assets 10,165 197,597
Current liabilities, representing total liabilities 1,147,164 1,329,727

Results
Loss for the year (4,868) (5,093)


The Group has discontinued recognition of its share of losses of the associate as its cumulative share of losses
has exceeded the Group’s interest in the associate. The Group’s unrecognised share of losses of this associate
for the current year and cumulatively were RM1,947 (2008: RM2,037) and RM464,799 (2008: RM462,852)
respectively.

17. Trade and other receivables

Group Company
2009 2008 2009 2008
RM RM RM RM

Current

Trade receivables
Third parties 12,417,551 21,829,286 – –
Related companies 19,876,724 9,872,751 – -–

32,294,275 31,702,037 – –
Less: Accumulated allowance
for doubtful debts:
- third parties (6,117,141) (6,393,387) – –

Trade receivables, net 26,177,134 25,308,650 – –



65
Notes to the Financial Statements
31 December 2009 (Cont’d)

17. Trade and other receivables (contd.)

Group Company
2009 2008 2009 2008
RM RM RM RM

Other receivables
Amounts due from related parties:
- subsidiaries – – 7,904,008 3,792,911
- related companies 1,388,130 – 6,317 –
- associate 1,041,754 1,038,632 1,041,754 1,038,632

2,429,884 1,038,632 8,952,079 4,831,543
Deposits 112,964 190,606 1,270 1,270
Prepayments 1,235,407 1,052,831 7,193 11,716
Sundry receivables 3,866,623 4,123,253 – –

7,644,878 6,405,322 8,960,542 4,844,529

Less: Accumulated allowance
for doubtful debts:
- subsidiaries – – (1,066,843) (1,636,661)
- associate (1,041,754) (1,038,632) (1,041,754) (1,038,632)
- third parties (3,332,363) (3,380,719) – –

(4,374,117) (4,419,351) (2,108,597) (2,675,293)

Other receivables, net 3,270,761 1,985,971 6,851,945 2,169,236

Trade and other receivables 29,447,895 27,294,621 6,851,945 2,169,236




Non-current

Other receivables
Amounts due from subsidiaries – – 7,077,232 33,219,194


(a) Credit risk

The Group’s primary exposure to credit risk arises through its trade receivables. The Group’s trading terms
with its customers are mainly on credit, except for export customers where payment in advance is normally
required. The credit period in the current and prior years generally range from one to three months. Credit
risk is controlled by the application of credit approvals, limits and monitoring procedures.

During the year, the Group entered into a Distribution Agreement with Borneo Technical Co (M) Sdn Bhd
(“BTCM”) for distribution of the Group’s brand, YOKOHAMA. Resulting from the agreement, as at balance
sheet date, the amounts due from related companies including the amount due from BTCM represents
72% (2008: 39%) of trade and other receivables of the Group. These balances from related companies
have been fully received subsequent to financial year end.

(b) Amounts due from subsidiaries, related companies and associate (current and non-current)


Amounts due from subsidiaries, related companies and associate are non-interest bearing and are repayable
on demand, except for the non-current amounts due from subsidiaries which are not repayable within the
next 12 months. All amounts due from subsidiaries, related companies and associate are unsecured and
are to be settled in cash.


66
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

17. Trade and other receivables (contd.)

(c) Amount due from a related company (non-trade)

The amount due from a related company is unsecured, interest free and has a credit term of one month.

Further details on related party transactions are disclosed in Note 31.

18. Deferred tax



Group Company
2009 2008 2009 2008
RM RM RM RM

At 1 January (58,596) 1,662,552 718,750 –


Recognised in income
statement (Note 10) 1,678,059 (1,721,148) 831,914 718,750

At 31 December 1,619,463 (58,596) 1,550,664 718,750




Presented after appropriate
offsetting as follows:
Deferred tax assets (1,037,223) (2,636,741) – –
Deferred tax liabilities 2,656,686 2,578,145 1,550,664 718,750

1,619,463 (58,596) 1,550,664 718,750

The components and movements of deferred tax liabilities and assets during the year prior to offsetting are as
follows:

Deferred tax liabilities of the Group:

Property,
plant and
equipment Others Total
RM RM RM

At 1 January 2009 2,550,596 27,549 2,578,145
Recognised in income statement 105,154 (26,613) 78,541

At 31 December 2009 2,655,750 936 2,656,686

At 1 January 2008 1,955,552 41,000 1,996,552


Recognised in income statement 595,044 (13,451) 581,593

At 31 December 2008 2,550,596 27,549 2,578,145

67
Notes to the Financial Statements
31 December 2009 (Cont’d)

18. Deferred tax (contd.)

Deferred tax assets of the Group:

Unabsorbed Unutilised
capital Unused reinvestment
Provisions allowances tax losses allowance Total
RM RM RM RM RM

At 1 January 2009 (359,850) (1,595,929) (680,962) – (2,636,741)
Recognised in
income statement 161,783 1,572,454 110,019 (244,738) 1,599,518

At 31 December 2009 (198,067) (23,475) (570,943) (244,738) (1,037,223)


At 1 January 2008 (328,000) (1,000) (5,000) – (334,000)
Recognised in
income statement (31,850) (1,594,929) (675,962) – (2,302,741)

At 31 December 2008 (359,850) (1,595,929) (680,962) – (2,636,741)

Deferred tax liabilities of the Company:

Dividend receivable
2009 2008
RM RM

At 1 January 718,750 –
Recognised in income statement 831,914 718,750

At 31 December 1,550,664 718,750

Deferred tax assets have not been recognised in respect of the following items:

Group Company
2009 2008 2009 2008
RM RM RM RM

Unused tax losses 974,658 602,000 - -
Unabsorbed capital allowances 649,716 587,000 231,000 231,000
Unutilised reinvestment
allowance - 785,000 - -

1,624,374 1,974,000 231,000 231,000

68
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

19. Inventories

Group
2009 2008
RM RM

At cost
Raw materials 40,597,657 7,848,750
Work-in-progress 7,983,403 4,799,696
Finished goods 10,138,728 8,891,771
Machinery parts and tools 607,784 352,926

59,327,572 21,893,143


At net realisable value
Raw materials – 10,344,513
Work-in-progress – 770,460
Finished goods 10,136 3,287,516

10,136 14,402,489

59,337,708 36,295,632

20. Government grant receivable

Group
2009 2008
RM RM

Brand promotion grant receivable 83,518 33,276

The brand promotion grant was approved by the Malaysia External Trade Development Corporation (“MATRADE”)
following an application by the Company to trade its products under the brand name of “YOKOHAMA”. The grant
was approved for a maximum of RM2,000,000 and is to be utilized within 2 years from 28 January 2008. The
grant is recognised on approved branding expenditure incurred and claimed by a subsidiary.

The amounts of brand promotion grant recognised during the year are as follows:

Group
2009 2008
RM RM
Brand promotion grant recognised:
- compensation of branding expense (Note 7) 25,250 39,875
- deduction to branding capital expenditure (Note 12) 75,117 41,677

100,367 81,552

69
Notes to the Financial Statements
31 December 2009 (Cont’d)

21. Cash and cash equivalents

Group Company
2009 2008 2009 2008
RM RM RM RM

Cash on hand and at banks 1,839,132 7,149,394 29,679 40,385


Deposits with licensed banks 17,716 118,028 – –

1,856,848 7,267,422 29,679 40,385

Included in deposits with licensed banks of the Group is a deposit of RM11,000 (2008: RM11,000) being pledged
as security for a bank guarantee of the same amount issued to a third party. The bank guarantee has been lifted
subsequent to year end.

The weighted average effective interest rate and average maturity of deposits with licensed banks at the balance
sheet date were as follows:

Group
2009 2008
RM RM

Weighted average effective interest rate (%) 2.50 2.67


Average maturity (days) 31 79

For the purpose of the cash flow statements, cash and cash equivalents comprise the following as at the balance
sheet date:

Group Company
2009 2008 2009 2008
RM RM RM RM

Cash and bank balances 1,856,848 7,267,422 29,679 40,385
Bank overdrafts (Note 25) (6,851,650) (16,248,849) – –

Cash and cash equivalents (4,994,802) (8,981,427) 29,679 40,385


22. Non-current asset classified as held for sale



In prior year, the asset classified as held for sale as at balance sheet date of RM292,499 of the Group and the
Company relates to a leasehold land and building which carrying amount approximates its value immediately before
being classified as held for sale. The asset had been disposed to a third party during the year for RM380,000.

70
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

23. Share capital



Group/Company
Number of ordinary
shares of RM1 each Amount
2009 2008 2009 2008
RM RM

At 1 January/31 December:

Authorised 100,000,000 100,000,000 100,000,000 100,000,000


Issued and fully paid 43,560,000 43,560,000 43,560,000 43,560,000

The holders of ordinary shares are entitled to receive dividend as declared from time to time and are entitled to
one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s
residual assets.

24. Retained earnings

Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with
the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax
on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the
hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31
December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances.
Companies also have an irrevocable option to disregard the 108 balance and opt to pay dividends under the
single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31
December 2007 in accordance with Section 39 of the Finance Act 2007.

The Company did not elect for the irrevocable option to disregard the 108 balance. Accordingly, during the
transitional period, the Company may utilise the available credit in the 108 balance to distribute cash dividend
payments to ordinary shareholders as defined under the Finance Act 2007. As at 31 December 2009 and 2008, the
Company has sufficient credit in the 108 balance to pay franked dividends out of its entire retained earnings.

25. Borrowings

Group
2009 2008
RM RM

Short term borrowings

Secured:
Bank overdrafts (Note 21) 6,851,650 16,248,849
Revolving and export credits 3,000,000 3,000,000
Bankers’ acceptances 46,889,059 32,400,000
Term loans 2,944,219 2,865,662
Hire purchase and finance lease liabilities (Note 26) 2,669,269 2,343,115

62,354,197 56,857,626

71
Notes to the Financial Statements
31 December 2009 (Cont’d)

25. Borrowings (contd.)



Group
2009 2008
RM RM

Long term borrowings



Secured:
Term loans 7,991,057 8,078,800
Hire purchase and finance lease liabilities (Note 26) 3,233,663 4,579,008

11,224,720 12,657,808


Total borrowings

Secured:
Bank overdrafts (Note 21) 6,851,650 16,248,849
Revolving and export credits 3,000,000 3,000,000
Bankers’ acceptances 46,889,059 32,400,000
Term loans 10,935,276 10,944,462
Hire purchase and finance lease liabilities (Note 26) 5,902,932 6,922,123

73,578,917 69,515,434

Details of borrowings (excluding hire purchase and finance lease liabilities) are as follows:

(a) Maturity periods

Group
2009 2008
RM RM

Not later than 1 year 59,684,928 54,514,511
Later than 1 year and not later than 2 years 5,663,736 5,385,600
Later than 2 years and not later than 5 years 2,327,321 2,693,200

67,675,985 62,593,311

(b) Weighted average effective interest rates

Group
2009 2008
% %

Bank overdrafts 6.94 7.84
Revolving and export credits 5.31 6.25
Bankers’ acceptances 2.86 4.49
Term loans 7.05 8.00

72
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

25. Borrowings (contd.)

(c) Securities

The Group’s borrowings (excluding hire purchase and finance lease liabilities) are secured by a corporate
guarantee by the Company. In addition, the term loans and bank overdrafts are secured over the property,
plant and equipment and prepaid land lease payments as described in Notes 12(d) and 14, including a
debenture against its future movable and immovable assets.

(d) Significant loan covenants

The term loans are subject to fulfillment of loan covenants by the Group which include the following:

(i) To maintain a ratio of total liabilities to shareholders’ fund of the Group of not more than 1.50 times;
and

(ii) To maintain a minimum Group shareholders’ fund of RM45 million.

At 31 December 2009, the Group has met both the above covenants with a ratio of 1.25 times (2008:
1.48 times) and Group shareholders’ fund of RM71,393,942 (2008: RM56,574,373).

26. Hire purchase and finance lease liabilities

Group
2009 2008
RM RM

Future minimum lease payments:


Not later than 1 year 3,004,661 2,807,620
Later than 1 year and not later than 2 years 3,129,673 4,248,932
Later than 2 years and not later than 5 years 293,695 711,519

6,428,029 7,768,071
Less: Future finance charges (525,097) (845,948)

Present value of finance lease liabilities (Note 25) 5,902,932 6,922,123

Analysis of present value of finance lease liabilities:


Not later than 1 year 2,669,269 2,343,115
Later than 1 year and not later than 2 years 2,954,103 3,883,223
Later than 2 years and not later than 5 years 279,560 695,785

5,902,932 6,922,123
Less: Amounts due within 12 months (Note 25) (2,669,269) (2,343,115)

Amounts due after 12 months (Note 25) 3,233,663 4,579,008


The Group has finance leases and hire purchase contracts for various items of property, plant and equipment (Note
12(c)). These leases have terms of renewal but no purchase options and escalation clauses. Renewals are at the
option of the specific entity which holds the lease. There are no restrictions placed upon the Group by entering
into these leases and no arrangements have been entered into for contingent rental payments.

73
Notes to the Financial Statements
31 December 2009 (Cont’d)

26. Hire purchase and finance lease liabilities (contd.)

Other information of financial risks of hire purchase and finance lease liabilities are as follows:

2009 2008

Weighted average effective interest rate (%) 3.66 3.79
Fair value (RM) 7,038,471 8,802,277

27. Trade and other payables

Group Company
2009 2008 2009 2008
RM RM RM RM

Trade payables
Third parties 4,456,315 4,203,369 - -
Related companies 231,829 80,717 - -

4,688,144 4,284,086 - -


Other payables
Amounts due to related parties:
- subsidiaries - - 10,010 14,025
- a related company 110,547 9,800 - -

110,547 9,800 10,010 14,025
Accruals 4,527,685 4,786,182 698,753 370,295
Sundry payables 3,642,404 1,979,838 38,112 57,530

8,280,636 6,775,820 746,875 441,850

12,968,780 11,059,906 746,875 441,850

(a) Trade payables (third parties and related companies)

Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range
from one to three (2008: one to three) months.

(b) Amounts due to subsidiaries

Amounts due to subsidiaries are non-interest bearing and are repayable on demand. These amounts are
unsecured and are to be settled in cash.

(c) Amount due to a related company (non-trade)

Amount due to a related company is non-interest bearing and the normal credit term granted to the
Company is one (2008: one) month.

Further details on related party transactions are disclosed in Note 31.



74
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

28. Dividend

In respect of year Recognised in year


2009 2007 2009 2008
RM RM RM RM

Recognised during the year:
Final dividend for 2007: 8% less
26% taxation, on 43,560,000
ordinary shares (8 sen per
ordinary share) – 2,578,752 – 2,578,752

Proposed for approval at AGM
(not recognised as at
31 December 2009):
Final dividend for 2009: 5% less
25% taxation, on 43,560,000
ordinary shares (5 sen per
ordinary share) 1,633,500 – – –

1,633,500 2,578,752 – 2,578,752

At the forthcoming Annual General Meeting (“AGM”), a final dividend in respect of the year ended 31 December
2009, of 5% less 25% taxation on 43,560,000 ordinary shares, amounting to a dividend payable of RM1,633,500
(5 sen per ordinary share) will be proposed for shareholders’ approval. The financial statements for the current
year do not reflect this proposed dividend. Such dividend, if approved by shareholders, will be accounted for in
equity as an appropriation of retained earnings in the year ending 31 December 2010.

29. Capital commitments



Group
2009 2008
RM RM

Property, plant and equipment:


- approved and contracted for 1,295,717 776,378
- approved but not contracted for 14,179,500 2,829,123

15,475,217 3,605,501

30. Contingent liabilities

Group Company
2009 2008 2009 2008
RM RM RM RM

Unsecured
Indemnities given to third parties
in respect of bank guarantees 1,368,000 1,314,250 – –
Corporate guarantees given to
banks for credit facilities
granted to subsidiaries – – 67,675,985 62,593,311

1,368,000 1,314,250 67,675,985 62,593,311

75
Notes to the Financial Statements
31 December 2009 (Cont’d)

31. Related party disclosures

(a) Significant transactions with related companies

In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company
had the following transactions with related companies during the year:

2009 2008
RM RM

Group

Sale of products to wholly owned subsidiaries of Hup Soon:
- Borneo Technical Co. (M) Sdn. Bhd. (“BTCM”) 73,545,708 28,787,022
- Borneo Technical (Thailand) Limited 3,854,852 1,696,862
- Borid Energy (M) Sdn. Bhd. 26,018 48,381
- Borid Energy (S) Pte Ltd – 44,038


Purchase of product from a wholly owned subsidiary o f Hup Soon:
- Borid Energy (M) Sdn. Bhd. – 37,500
- Borneo Technical Co. (M) Sdn. Bhd. (“BTCM”) 281,280 –


Share of distribution profits from a wholly owned subsidiary of HSGC:
- Borneo Technical Co. (M) Sdn. Bhd. (“BTCM”) 2,435,114 –


Sale of property, plant and equipment to a wholly owned
subsidiary of HSGC:
- Borneo Technical Co. (M) Sdn. Bhd. 623,189 –


Rendering of battery charging services by a wholly owned
subsidiary of HSGC:
- Borid Energy (M) Sdn. Bhd. 636,450 –


Operating lease, minimum lease payments to a wholly
owned subsidiary of HSGC:
- Borneo Technical Co. (M) Sdn. Bhd. 225,786 32,121


Rental income received from a wholly owned subsidiary
of HSGC:
- Borneo Technical Co. (M) Sdn. Bhd. 88,881 –

76
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

31. Related party disclosures (contd.)



(a) Significant transactions with related companies (contd.)

2009 2008
RM RM

Company

Rental income from a subsidiary on investment property:
- Tai Kwong Yokohama Battery Co. Sdn. Bhd. 20,000 30,000


Dividend income from subsidiaries:
- Tai Kwong-Yokohama Holding (M) Sdn. Bhd. 5,500,000 1,500,000
- Tai Kwong Battery (Penang) Sdn. Bhd. 148,000 125,000
- Tai Kwong Battery (JB) Sdn. Bhd. 400,000 400,000
- Tai Kwong Battery (KL) Sdn. Bhd. 550,000 250,000
- Tai Kwong Battery (Ipoh) Sdn. Bhd. 1,250,000 600,000

All transactions with related companies are made on arms’ length basis, on the Group’s normal commercial
terms and on terms that are not more favourable to the related parties than those generally available to
the public.

Information regarding outstanding balances arising from related party transactions as at 31 December 2009
are disclosed in Notes 17 and 27.

(b) Significant transaction with other related party

During the year, the Group had the following expenses, paid or due payable to CY Liong Enterprise Sdn.
Bhd., a firm of which certain directors and shareholders of the firm are the sister and brother in law to a
director of the Company, Chow Siew Hon:

2009 2008
RM RM

Rendering of labour services 636,184 959,289


Operating lease, minimum lease payments 45,000 72,000

The outstanding balance with the firm as at 31 December 2009 was RM86,773 (2008: RM80,717) and
was included in trade payables in Note 27.

77
Notes to the Financial Statements
31 December 2009 (Cont’d)

31. Related party disclosures (contd.)

(c) Compensation of key management personnel


The remuneration of directors and other members of key management during the year was as follows:

Group Company
2009 2008 2009 2008
RM RM RM RM

Short-term employee benefits 2,145,039 2,008,650 1,191,536 455,266


Contributions to EPF 236,243 190,885 98,616 23,400

2,381,282 2,199,535 1,290,152 478,666

Included in the total key management personnel are directors remuneration (excluding benefits-in-kind) of
the Group and the Company of RM2,036,834 (2008: RM2,140,272) and RM1,007,593 (2008: RM478,666)
respectively (Note 9).

32. Financial instruments

(a) Financial risk management objectives and policies

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available
for the development of the Group’s businesses whilst managing its interest rate risks (both fair value and cash
flow), foreign currency risk, liquidity risk and credit risk. The Board reviews and agrees policies for managing
each of these risks and they are summarised below. It is, and has been throughout the year under review,
the Group’s policy that no trading in derivative financial instruments shall be undertaken.

(b) Interest rate risk

Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial
instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-
bearing financial assets, the Group’s income and operating cash flows are substantially independent of
changes in market interest rates. The Group’s interest-bearing financial assets are mainly short term in nature
and have been mostly placed in fixed deposits.

The Group’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates
expose the Group to cash flow interest rate risk whereas borrowings at fixed rates expose the Group to
fair value interest rate risk. The Group manages its interest rate exposure by maintaining a mix of fixed and
floating rate borrowings.

At balance sheet date, all borrowings of the Group other than hire purchase and finance lease liabilities are
based on floating-rate. The weighted average effective interest rates as at the balance sheet date and the
remaining maturities of the Group’s financial instruments that are exposed to interest rate risk have been
disclosed in the respective notes.

(c) Foreign currency risk


The Group is exposed to transactional currency risk primarily through sales and purchases that are
denominated in a currency other than the functional currency of the operations to which they relate. The
currencies giving rise to this risk are primarily United States Dollars, Singapore Dollars, Euro, Sterling Pound
and Japanese Yen. Foreign exchange exposures in transactional currencies other than functional currencies
of the operating entities are kept to an acceptable level. The Group does not hedge these exposures.
However, the Board keeps this policy under review.

78
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

32. Financial instruments (contd.)

(c) Foreign currency risk (contd.)


The net unhedged financial assets and financial liabilities of the Group that are not denominated in their
functional currencies are as follows:

2009 2008
RM RM

Trade receivables:
United States Dollar 538,294 –
Singapore Dollar 260,368 185,271
Sterling Pound 10,427 12,910

809,089 198,181

Trade payables:
United States Dollar – (843,030)
Euro (2,962) (3,131)
Japanese Yen (35,043) –

(38,005) (846,161)

771,084 (647,980)

(d) Liquidity risk

The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to
ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management,
the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital
requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to
its overall debt position. As far as possible, the Group raises committed funding from both capital markets
and financial institutions and balances its portfolio with some short term funding so as to achieve overall
cost effectiveness.

(e) Credit risk

Credit risk, or the risk of counterparties defaulting is controlled by the application of credit approvals, limits and
monitoring procedures. Receivable balances are monitored on an ongoing basis and the Group’s exposure
to bad debts is not significant. For export transactions, the Group requires payment in advance.

The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents and other
receivables arises from default of the counterparty, with a maximum exposure equal to the carrying amount
of these financial assets.

As at balance sheet date, the Group has significant exposure on credit risks to related companies. These
related companies balances have been received subsequent to year end.

79
Notes to the Financial Statements
31 December 2009 (Cont’d)

32. Financial instruments (contd.)

(f) Fair value

It is not practical to determine the fair values of balances with all related parties due principally to a lack of
fixed repayment term entered into by the parties involved and without incurring excessive costs. However,
the directors do not anticipate the carrying amounts recorded at the balance sheet date to be significantly
different from the values that would eventually be received or settled.

The carrying amounts of other financial assets and liabilities approximate their fair values except as indicated
in their respective notes.

33. Segment information

(a) Reporting format

The primary segment reporting format is determined to be business segments as the Group’s risks and
rates of return are affected predominantly by differences in the products and services produced. Secondary
information is reported geographically. The operating businesses are organised and managed separately
according to the nature of the products and services provided, with each segment representing a strategic
business unit that offers different products and serves different markets.

(b) Business segment

The Group comprises the following main business segments:

(i) Batteries- manufacturing, reclamation, retailing and marketing of batteries

(ii) Others- investment holding, transportation services and dormant companies

(c) Geographical segments

The Group’s geographical segments are based on the location of the Group’s assets. Sales to external
customers disclosed in geographical segments are based on the geographical location of its customers.

(d) Allocation basis and transfer pricing

Segment results, assets and liabilities include items directly attributable to a segment as well as those that
can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, liabilities and
expenses.

80
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

33. Segment information (contd.)

Business segments

The following table provides an analysis of the Group’s revenue, results, assets, liabilities and other information
by business segments:

Batteries Others Eliminations Consolidated


RM RM RM RM

31 December 2009

Revenue
Sales to external customers 105,875,058 22,800 – 105,897,858
Sales to related companies 77,435,520 – – 77,435,520
Inter-segment sales – 402,674 (402,674) –

Total revenue 183,310,578 425,474 (402,674) 183,333,378


Results
Segment results 22,617,963 (1,208,166) – 21,409,797
Finance costs (2,975,783)

Profit before tax 18,434,014


Income tax expense (3,616,150)

Profit for the year 14,817,864




Assets
Segment assets, representing
total assets 154,836,336 51,226,522 (45,218,477) 160,844,381


Liabilities
Segment liabilities, representing
total liabilities 123,331,395 2,592,434 (36,473,730) 89,450,099


Other segment information
Capital expenditure 9,206,716 7,088 – 9,213,804
Depreciation of property, plant
and equipment 4,469,147 25,746 – 4,494,893
Depreciation of investment
properties 9,179 13,225 (8,050) 14,354
Amortisation of prepaid land
lease payments 258,654 4,035 – 262,689
Other significant non-cash
expenses:
- Property, plant and equipment
written off 388,581 – – 388,581
- Write-down of inventories 225,664 – – 225,664


81
Notes to the Financial Statements
31 December 2009 (Cont’d)

33. Segment information (contd.)

Business segments (contd.)



Batteries Others Eliminations Consolidated
RM RM RM RM

31 December 2009 (contd.)

Other segment information (contd.)
Other significant non-cash
expenses: (contd.)
- Bad debts written off 70,279 – – 70,279
- Allowance for doubtful debts 70,303 – – 70,303
- Reversal of allowance for
doubtful debts (391,783) – – (391,783)

31 December 2008

Revenue
Sales to external customers 163,794,345 63,740 – 163,858,085
Sales to related companies 31,268,158 – – 31,268,158
Inter-segment sales – 199,696 (199,696) –

Total revenue 195,062,503 263,436 (199,696) 195,126,243


Results
Segment results 7,781,958 (930,886) – 6,851,072
Finance costs (4,609,341)

Profit before tax 2,241,731


Income tax expense (1,735,686)

Profit for the year 506,045




Assets
Segment assets, representing
total assets 164,127,367 48,098,692 (71,745,505) 140,480,554

Liabilities
Segment liabilities, representing
total liabilities 143,604,761 2,158,843 (61,859,468) 83,904,136


Other segment information
Capital expenditure 3,103,521 1,399 – 3,104,920
Depreciation of property, plant
and equipment 4,027,544 2,901 – 4,030,445
Depreciation of investment
properties 5,476 14,878 – 20,354

82
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notes to the Financial Statements


31 December 2009 (Cont’d)

33. Segment information (contd.)



Business segments (contd.)

Batteries Others Eliminations Consolidated
RM RM RM RM

31 December 2008 (contd.)

Other segment information (contd.)
Amortisation of prepaid
lease payments 256,643 10,774 – 267,417
Other significant non-cash
expenses: (contd.)
- Property, plant and equipment
written off 807,962 – – 807,962
- Inventories written off 1,626,462 – – 1,626,462
- Bad debts written off 3,624,521 – – 3,624,521
- Allowance for doubtful debts 186,451 – – 186,451
- Reversal of allowance for
doubtful debts 3,756,890 – – 3,756,890

Geographical segments

The following table provides an analysis of the Group’s revenue by geographical segments:

2009 2008
RM RM

Malaysia 141,447,973 151,760,576
Asia Pacific 17,799,452 18,250,893
Others 24,085,953 25,114,774

183,333,378 195,126,243

The following is an analysis of the carrying amount of segment assets and capital expenditure, analysed by
geographical segments:

Segment assets Capital expenditure


2009 2008 2009 2008
RM RM RM RM

Malaysia 160,844,381 140,480,554 9,213,804 3,104,920

83
Notes to the Financial Statements
31 December 2009 (Cont’d)

34. Subsequent events

(a) On 22 January 2010, the Company had announced the disposals of the following subsidiaries and associate
to third parties, details as follow:

Equity interest
held at Cash
Name of entities 31 December 2009 consideration
% RM

Subsidiaries:

Gaya Pesona Sdn. Bhd. 100 2
Maramayang Sdn. Bhd. 76 2

Associate:
Ikatan Nagasari Sdn. Bhd. 40 2

The disposals are not expected to have a material impact on the earnings of the Group for the year ending
31 December 2010. It is also not expected to have a material impact on the net assets of the Group as at
31 December 2009.

(b) On 1 February 2010, the Board of Directors of the Company received a Notice of Conditional
Mandatory Take-Over Offer from HSG Investments Pte Ltd (“the offeror” or “HSGI”) to acquire all the
remaining ordinary shares of RM1 each in the Company not already owned by HSGI and the person
acting in concert with the offeror, for a cash consideration of RM1.09 per Offer Share. The Form of
Acceptance and Transfer have been despatched to shareholders on 22 February 2010. The Offer
is open for acceptances until 15 March 2010, unless revised and extended in accordance with the
Malaysian Code on Take-Overs and Mergers 1998. On 12 March 2010, the offer price for each Offer
Share has been revised from RM1.09 to RM1.35, and the Revised Offer is to remain open up to 7
April 2010. On 24 March 2010, HSGI has received valid acceptances in respect of the Revised Offer
resulting in HSGI holding more than 50% of the voting shares of the Company. Accordingly, the
Revised Order has become unconditional as to the level of acceptances on 24 March 2010.

(c) Subsequent to year end, one of the subsidiaries of the Group had entered into a Sale and Purchase
Agreement with a third party for the disposal of a freehold land and building for RM420,000, where
deposit of RM42,000 has been received. The disposal is expected to be completed within 3 months
from the date of agreement. Furthermore, there are 4 other land and buildings of certain subsidiaries
had been reclassified as held for sale subsequent to year end as the Group has committed to dispose
those properties and has been actively locating for buyers.

35. Reclassification

Certain comparatives have been reclassified to be consistent with current year’s presentation. Such reclassifications
have no financial impact to the Group and the Company.

84
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Property List
31 December 2009

Registered Age of Year of NBV Use of


Owner & Location Type & Area Tenure Building Acquisition (RM) Property

1. TAI KWONG YOKOHAMA 3 Units 1½-storey 66 years 16 years 2004 469,040 Vacant
BERHAD Warehouse-Office Leasehold
PT No.388,389 & 390 8,106 sq ft 23/8/2043
Mukim of Kemumin
District of Kota Bahru
Kelantan

2. TAI KWONG YOKOHAMA 1½-storey 99 years 14 years 2004 290,400 Vacant


BERHAD Detached Workshop Leasehold
PN No. 20335, Lot 1021 5,995 sq ft 14/8/2096
Mukim of Bertam
District of Melaka Tengah
Melaka

3. TAI KWONG-YOKOHAMA Industrial Land 99 years 7 years 2002 2,598,077 Own Use
BATTERY INDUSTRIES 5.649 acres Leasehold
SDN BHD 21/2/2088
H.S. (M) 2228, PT No.59
Mukim of Hulu Semenyih
District of Ulu Langat
Selangor

4. TAI KWONG-YOKOHAMA Industrial Land 99 years 7 years 2002 1,425,286 Own Use
BATTERY INDUSTRIES 3.099 acres Leasehold
SDN BHD 21/2/2088
H.S. (M) 2230, PT No.80
Mukim of Hulu Semenyih
District of Ulu Langat
Selangor

5. TAI KWONG-YOKOHAMA Industrial Land 99 years 7 years 2002 233,178 Own Use
BATTERY INDUSTRIES 0.507 acres Leasehold
SDN BHD 21/2/2088
H.S. (M) 2231, PT No.81
Mukim of Hulu Semenyih
District of Ulu Langat
Selangor

6. TAI KWONG-YOKOHAMA Industrial Land 99 years 7 years 2002 31,125,015 Own Use
BATTERY INDUSTRIES together with Leasehold
SDN BHD Factory Buildings 03/06/2103
H.S.(D) 83762, PT No.350 and Structures
Mukim of Hulu Semenyih 26.520 acres
District of Ulu Langat
Selangor

85
Property List
31 December 2009 (Cont’d)

Registered Age of Year of NBV Use of


Owner & Location Type & Area Tenure Building Acquisition (RM) Property

7. TAI KWONG-YOKOHAMA Factory cum Office 60 years 12 years 1995 4,952,468 Own Use
BATTERY INDUSTRIES 217,643 sq.ft. Leasehold
SDN BHD 06/05/2056
H.S. (D) 48718 PT 8291
Mukim of Sungai Terap
District of Kinta
Perak

8. TAI KWONG BATTERY 1½-storey Semi Freehold 16 years 1994 360,233 Vacant
(PENANG) SDN BHD Detached Factory
GRN 93651, Lot 4116 13,562 sq ft
Town of Sungai Petani
District of Kuala Muda
Kedah

9. TAI KWONG BATTERY 1½-storey Semi Freehold 16 years 1994 312,314 Vacant
(JB) SDN BHD Detached Workshop
PT No.25401 7,000 sq ft
Mukim of Tebrau
District of Johor Bahru
Johor

10. TAI KWONG BATTERY 1½-storey Terrace Freehold 12 years 1996 268,088 Rented Out
(KL) SDN BHD Factory
HS (D) No.15349, 2,400 sq ft
PT No. 11211
Mukim & District of Klang
Selangor

11. TK-YOKOHAMA Semi-detached 60 years 14 years 1996 215,192 Rented Out


MARKETING SDN. BHD 2-storey Shophouse Leasehold
(f.k.a: Tai Kwong Yokohama 4,559.59 sq ft 18/5/2043
Battery (Sarawak) Sdn. Bhd.
Lot 1762, Block 5
Lambir Land District
Miri, Sarawak

86
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Analysis of Shareholdings
as at 22 April 2010

Shareholdings Statistic

Authorised Share Capital : RM100,000,000.00

Issued and Paid-Up Share Capital : RM43,560,000.00

Class of Shares : Ordinary shares of RM1.00 each

Voting Rights : One vote per share

No. of Shareholders : 1,518

Analysis of Ordinary Shareholdings

No. of Total % of
Holdings Holders Holdings Shares

Less than 100 118 3,538 0.01


100 to 1,000 117 84,435 0.19
1,001 to 10,000 1,065 3,701,518 8.50
10,001 to 100,000 197 4,986,300 11.45
100,001 and below 5% 19 8,527,300 19.57
5% and above 2 26,256,909 60.28

Total 1,518 43,560,000 100.00

Substantial Shareholders

No. of % of Indirect No. % of


No. Name Shares Shares of Shares Shares

1. HSG Investments Pte. Ltd. 26,256,909 60.27 – –

* Deemed interest by virtue of Section 6A(4) Companies Act, 1965.

87
Analysis of Shareholdings
as at 22 April 2010 (Cont’d)

Thirty Largest Shareholders

No. of % of
No. Name Shares Shares
1. HSG Investments Pte. Ltd 13,268,000 30.46
2. HSG Investments Pte. Ltd. 12,988,909 29.82
3. HSBC Nominees (Asing) Sdn. Bhd 1,811,400 4.16
Beneficiary : Exempt An For HSBC Private Bank (SUISSE) S.A.
(Spore TST AC CL)
4. DB (Malaysia) Nominee (Asing) 1,500,000 3.44
Beneficiary : BNP Paribas Nominees Singapore Pte. Ltd. For
Cablestar Limited
5. DB (Malaysia) Nominee (Asing) Sdn. Bhd. 1,153,100 2.65
Beneficiary : Exempt an For Deutsche Bank AG Singapore (PWM Asing)
6. HDM Nominees (Asing) Sdn. Bhd. 1,125,800 2.58
Beneficiary : UOB Kay Hian Pte Ltd for Wong Siew Kim (Margin)
7. TA Nominees (Tempatan) Sdn. Bhd. 350,000 0.80
Beneficiary : Pledged Securities Account For You Swee Lang @
Yeo Swee Lan
8. Public Nominees (Tempatan) Sdn. Bhd. 300,000 0.69
Beneficiary : Pledged Securities Accounts For Surinder Singh A/L Wassan
Sin GH (E-IMO)
9. Daniel Tang Chi Kuan 274,300 0.63
10. Tan Teong Lim 266,000 0.61
11. CIMB Group Nominees (Tempatan) Sdn. Bhd. 247,000 0.57
Beneficiary : Pledged Securities Account For Lim Seng Kow (49618 JKPR)
12. HDM Nominees (Tempatan) Sdn. Bhd. 192,300 0.44
Beneficiary : Pledged Securities Account For Lim Seng Kow (M15)
13. HLB Nominees (Tempatan) Sdn. Bhd. 184,000 0.42
Beneficiary : Pledged Securities Account For Loh Eng Cheang
14. Wong Siew Kim 170,000 0.39
15. Tang Chi Hoong Darren 163,100 0.37
16. Wah Nyok Choo 160,100 0.37
17. Ong Kim Suan 157,100 0.36
18. Lim Hui Huat @ Lim Hooi Chang 157,000 0.36
19. Lim Ka Huat 110,000 0.25
20. Lim Sang Hee 105,000 0.24
21. Lee Seng 101,200 0.23
22. Cheah Suan Lee 100,000 0.23
23. Goh Sian Cheng 100,000 0.23
24. Kerjaya Usaha Sdn. Bhd. 100,000 0.23
25. Lim Sim Sing @ Ling Siew Sing 100,000 0.23
26. Tang Kok Heng 100,000 0.23
27. Public Nominees (Tampatan) Sdn. Bhd. 95,000 0.22
Beneficiary : Pledged Securities Account For Leon Ah Sang (E-TJJ)
28. Nirma Singh S/O Gurnam Singh 88,000 0.20
29. Syarikat Rimba Timur (RT) Sdn. Bhd. 88,000 0.20
30. Ean Hooi Kim 86,800 0.20

88
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Analysis of Shareholdings
as at 22 April 2010 (Cont’d)

Directors’ Shareholdings

Direct Shareholdings Indirect Shareholdings


No. of % of No. of % of
No. Name of Director Shares Shares Shares Shares

1. Chow Siew Hon – – *22,000 0.05


2. Yong Mian Thong – – – –
3. Goh Swee Heng – – – –
4. Battchoo Ratilal – – – –
5. Dato’Ir. Nik Mohammed Bin Nik Abdullah – – – –
6. Khoo Khay Chye – – – –
7. Abdu’R-Rani Bin Omar – – – –

* Deemed interest by virtue of his son, Mr Chow Jin Yian’s direct shareholdings in Tai Kwong Yokohama Berhad.

89
Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the SIXTEENTH ANNUAL GENERAL MEETING of TAI KWONG
YOKOHAMA BERHAD will be held at the Auditorium, Lot 1238, Batu 23, Jalan Kachau, Semenyih-Sg.Lalang, 43500
Semenyih, Selangor Darul Ehsan on 26 May 2010 at 10.00 a.m. for the following purposes:-

AGENDA
As Ordinary Business

1. To receive and consider the Audited Financial Statements for the financial year ended 31
December 2009 together with the Reports of the Directors and Auditors thereon. Resolution 1

2. To approve the payment of a final dividend of 5% less 25% Malaysian Tax for the financial
year ended 31 December 2009. Resolution 2

3. To approve the Directors’ Fees for the financial year ended 31 December 2009. Resolution 3

4. To re-elect the following Directors who retire by rotation and being eligible, offer themselves
for re-election in accordance with Article 83 of the Company’s Articles of Association:-

3.1 Mr Khoo Khay Chye Resolution 4

3.2 Mr Goh Swee Heng Resolution 5

5. To re-elect Mr Battchoo Ratilal who retires by rotation and being eligible, offer himself for
re-election in accordance with Article 90 of the Company’s Articles of Association Resolution 6

6. To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the Directors
to fix their remuneration. Resolution 7

As Special Business
To consider and if thought fit, to pass, with or without any modifications, the following
resolutions:-

7. Authority to Directors to Issue Shares

“That subject always to the Companies Act, 1965, the Articles of Association of the Company
and the approvals of the relevant government and/or regulatory authorities, the Directors be
and are hereby authorised, pursuant to Section 132D of the Companies Act, 1965, to allot and
issue shares in the Company from time to time at such price, upon such terms and conditions,
for such purposes and to such person or persons whomsoever as the Directors may, at their
absolute discretion deem fit and expedient in the interest of the Company, provided that the
aggregate number of shares to be issued pursuant to this resolution does not exceed 10%
of the issued and paid-up 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
from the Bursa Malaysia Securities Berhad for the listing of and quotation for the additional
shares so issued.” Resolution 8

90
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notice of Annual General Meeting (Cont’d)

8. Proposed Renewal of Shareholders’ Mandate and Additional Mandate for


Recurrent Related Party Transactions of A Revenue or Trading Nature

“THAT authority be and is hereby given in line with Chapter 10.09 of the Main Market Listing
Requirements of Bursa Malaysia Securities Berhad, for the Company, its subsidiaries or any of
them to enter into any of the transactions falling within the types of the Recurrent Related
Party Transactions, particulars of which are set out in the Circular to Shareholders dated 4 May
2010 with the Related Parties as described in the said Circular, provided that such transactions
are of revenue or trading nature, which are necessary for the day-to-day operations of the
Company and/or its subsidiaries within the ordinary course of business of the Company and/or
its subsidiaries, made on an arm’s length basis and on normal commercial terms which are
those generally available to the public and are not detrimental to the minority shareholders
of the Company;

AND THAT such authority shall commence immediately upon the passing of this Ordinary
Resolution until:

i. the conclusion of the next annual general meeting of the Company at which time the
authority shall lapse unless by a resolution passed at a general meeting, the authority
is renewed; or

ii. the expiration of the period within which the next annual general meeting after the
date that is required by law to be held pursuant to Section 143(1) of the Companies
Act, 1965; or

iii. revoked or varied by a resolution passed by the shareholders of the Company at a


general meeting,

whichever is earlier.

AND FURTHER THAT the Board of Directors be and is hereby authorised to do all acts,
deeds and things as may be deemed fit, necessary, expedient and/or appropriate in order
to implement the Proposed Shareholders’ Mandate with full power to assent to all or any
conditions, variations, modifications and/or amendments in any manner as may be required
by any relevant authorities or otherwise and to deal with all matters relating thereto and to
take all such steps and to execute, sign and deliver for and on behalf of the Company all such
documents, agreements, arrangements and/or undertakings, with any party or parties and to
carry out any other matters as may be required to implement, finalise and complete, and give
full effect to the Proposed Shareholders’ Mandate in the best interest of the Company.” Resolution 9

9. To transact any other ordinary business of which due notice shall have been given.

NOTICE OF FINAL DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS ALSO HEREBY GIVEN THAT a final dividend of 5% less 25% income tax for the financial year ended 31
December 2009, if approved by shareholders at the Sixteenth Annual General Meeting, will be paid on 15 June 2010
to the depositors whose names appear in the Record of Depositors of the Company at the close of business on 17 May
2010.

A depositor shall qualify for entitlement to the dividend in respect of:-

(a) Shares transferred to the Depositor’s Securities Account before 4.00 p.m. on 17 May 2010 in respect if the transfers;
and

(b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa
Malaysia Securities Berhad.

91
Notice of Annual General Meeting (Cont’d)

By Order of the Board

TAN LEH KIAH


CHAN YOKE PENG
Company Secretaries

Kuala Lumpur
Date: 4 May 2010

Notes:

1. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Act shall
not apply.

2. To be valid the Form of Proxy, duly completed must be deposited at the Registered Office of the Company at
Suite 13.03, 13th Floor, Menara Tan & Tan, 207, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia not less than
48 hours before the time appointed for holding the meeting.

3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting provided
that the provisions of Section 149(1)(d) of the Act are complied with.

4. Where a member appoints more than one (1) proxy, the appointments shall be invalid unless he specifies the
proportions of his holdings to be represented by each proxy.

5. If the appointor is a corporation, the Form of Proxy must be executed under its common seal or under the hand
of an officer or its attorney duly authorised.

6. Explanatory Notes on Special Business

Ordinary Resolution 8 – Authority to Directors to Issue Shares

The proposed ordinary resolution 8, if passed, will give powers to the Directors to issue up to a maximum of
10% of the issued share capital of the Company for the time being for such purposes as the Directors consider
would be in the interests of the Company. The authority will, unless revoked or varied by the Company in a
General Meeting, expire at the conclusion of the next Annual General Meeting or the expiration of the period
within which the next Annual General Meeting is required by law to be held, whichever is earlier.

The Company wishes to renew the mandate on the authority to issue shares in general pursuant to the Section
132D of the Companies Act, 1965 at the 15th Annual General Meeting (hereinafter referred to as the “General
Mandate”). The previous mandate granted by the shareholders had not been utilised and hence no proceeds
was raised therefrom.

The purpose to seek the General Mandate is to enable the Directors to issue and allot shares at any time for
possible fund raising activities, including but not limited to private placement to such persons in their absolute
discretion so as to avoid delay and cost of convening further general meeting to approve the issuance of such
shares, for purpose of funding future investment project(s), working capital and/or acquisitions.

Ordinary Resolution 9 – Proposed Renewal of Shareholders’ Mandate and Additional Mandate for Recurrent
Related Party Transactions.

This resolution if passed, will enable the Company and its subsidiary companies to enter into recurrent transactions
involving the interests of related parties, which are of revenue or trading nature and necessary for the Tai Kwong
Group’s day-to-day operations, subject to the transactions being carried out in the ordinary course of business
and on terms not to the detriment of the minority shareholders of the Company.

92
TAI KWONG YOKOHAMA BERHAD Annual Report 2009

Notice of Annual General Meeting (Cont’d)

Statement Accompanying Notice of Sixteenth Annual General Meeting

1. Directors who are standing for re-election at the Sixteenth Annual General Meeting of the Company pursuant to
the Article of Association of the Company.

a) Mr Khoo Khay Chye


b) Mr Goh Swee Heng
c) Mr Battchoo Ratilal

2. Details of the above Directors are as follow :-

Please refer to Directors’ profile on pages 19 to 22 and as for interest in the shares of the Company, refer to
page 25.

93
(This page has been intentionally left blank)
Form of Proxy
TAI KWONG YOKOHAMA BERHAD (292788-U)
(Incorporated In Malaysia)

I/We,________________________________________________________________________________________________
of___________________________________________________________________________________________________
being a *member/members of TAI KWONG YOKOHAMA BERHAD hereby appoint Mr/Mrs/Madam/Miss______

_____________________________ of_ ____________________________________________________________________
or failing him/her,_____________________________________________________________________________________
of___________________________________________________________________________________________________
as my/our proxy to vote for me/us on my/our behalf at Sixteenth Annual General Meeting of the Company to be held
at the Auditorium, Lot 1238, Batu 23, Jalan Kachau, Semenyih-Sg.Lalang, 43500 Semenyih, Selangor Darul Ehsan on
26 May 2010 at 10.00 a.m. and at any adjournment thereof.

My/Our proxy(ies) is/are to vote as indicated below:-

RESOLUTION FOR AGAINST



1 Audited Financial Statements 31 December 2009

2 Final Dividend of 5% less 25% tax

3 Directors’ Fees

4 Re-election of Directors pursuant to Article 83 :
- Mr Khoo Khay Chye

5 Re-election of Directors pursuant to Article 83 :
- Mr Goh Swee Heng

6 Re-election of Directors pursuant to Article 90 :
- Mr Battchoo Ratilal

7 Re-appointment of Auditors, ERNST & YOUNG

SPECIAL BUSINESS

8 Authority to Directors to Issue Shares

9 Renewal of Shareholders’ Mandate and additional mandate for
Recurrent Related Party Transactions of Revenue or Trading Nature

(Please indicate with an “X” in the space provided, how you wish your vote to be cast. In the absence of specific directions,
the proxy may vote or abstain at his /her discretion)

As witness my/our hand(s) this_ _____________ day of_ ______________________, 2010

________________________________________
Signature of Member(s)

NO. OF SHARES HELD

NOTES:
1. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Act shall not apply.
2. To be valid this form, duly completed must be deposited at the Registered Office of the Company at Suite 13.03, 13th Floor,
Menara Tan & Tan, 207, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia not less than 48 hours before the time appointed for
holding the meeting.
3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting provided that the
provisions of Section 149(1)(d) of the Act are complied with.
4. Where a member appoints more than one (1) proxy, the appointments shall be invalid unless he specifies the proportions of
his holdings to be represented by each proxy.
5. If the appointor is a corporation, this form must be executed under its common seal or under the hand of an officer or its
attorney duly authorised.

Please fold here

Postage
Stamp

The Company Secretary


Tai Kwong Yokohama Berhad (292788-U)
Suite 13.03,
13th Floor, Menara Tan & Tan
207, Jalan Tun Razak
50400 Kuala Lumpur.

Please fold here