annual report - silk holdings

Transcription

SILK Holdings Berhad (405897-V)
ANNUAL REPORT
ANNUAL REPORT 2013
2013
Operating
Subsidiaries
Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd (“SILK”) is the
concession owner of Kajang Traffic Dispersal Ring Road, better
known as Kajang SILK Highway. The concession runs for a period
of 33 years, ending in 2037. Kajang SILK Highway stretches for 37
km and is a primary urban road serving south eastern corridor of
Klang Valley, linking Balakong, Sg. Long, Kajang, Bangi, Serdang
and Putrajaya as well as these townships to the Sungai Besi
Highway (Besraya), the North South Expressway, Cheras-Kajang
Highway, Kajang-Seremban Highway (LEKAS), South Klang Valley
Expressway, and in the future, to the KL Outer Ring Road.
Jasa Merin (Malaysia) Sdn Bhd, (“Jasa Merin”) commenced
operation in 1982. For over 30 years, Jasa Merin has been providing
offshore support vessel services to oil majors such as PETRONAS
Carigali Sdn Bhd, ExxonMobil Exploration and Production Malaysia
Inc. and SHELL. Presently, Jasa Merin operates a fleet of 20
vessels comprising 3 Straight Supply Vessels - vessels specifically
designed to transport dry bulk cargo and fluids to and from offshore
installations, and 17 Anchor Handling Tug Supply Vessels (“AHTS”).
In addition, Jasa Merin has 3 AHTS vessels under various stages of
construction with deliveries by middle of 2014 to meet the growing
demand of OSV in the Oil and Gas industry.
AHTS vessels undertake anchor handling functions (positioning and
retrieval of drilling rig anchors) and towing activities (repositioning
of rigs to other drilling locations) beside also functioning as supply
vessels. Jasa Merin operates two classes of AHTS, namely 60
MTBP AHTS which are the standard AHTS deployed in shallow
waters, and 120 MTBP AHTS equipped with Dynamic Positioning
System that support both shallow and deep water operations.
Content
Corporate Information
2
Profile of Board of Directors
3
Chairman’s Statement
6
Five-Year Group Financial Summary
10
Corporate Governance Statement
11
Audit Committee Report
18
Statement on Risk Management and Internal Control
24
Statement of Corporate Social Responsibility
27
Financial Statements
28
Additional Compliance Information
93
Substantial Shareholders
95
Directors’ Interests in Shares and Loan Stocks
96
Analysis of Shareholdings
97
Notice of 16th Annual General Meeting
99
Proxy Form
02
ANNUAL REPORT 2013
Corporate
Information
AUDIT COMMITTEE
Executive Chairman,
Non-Independent Executive
Director
Tai Keat Chai (Chairman)
Dato’ Harun bin Md Idris
Abdul Hamid bin Sh. Mohamed
Dato’ Mohd Azlan Hashim
RISK MANAGEMENT
COMMITTEE
Deputy Chairman,
Independent Non-Executive
Director
Johan Zainuddin bin Dzulkifli
(Chairman)
Nik Abdul Malik bin Nik Mohd Amin
Jamaludin Mohd Nor
Datuk Seri Razman M Hashim
Non-Independent Non-Executive
Director
Independent Non-Executive
Directors
Tai Keat Chai
NOMINATION AND
REMUNERATION
COMMITTEE
(Chairman)
INFRASTRUCTURE
COMMITTEE
(Chairman)
Dato’ Hj. Din bin Adam
Jamaludin Mohd Nor
Adzmi Shafie
PRINCIPAL PLACE OF
BUSINESS
Infrastructure Division:
Sistem Lingkaran-Lebuhraya
Kajang Sdn Bhd
Plaza Tol Sungai Balak
KM28.3A, Lebuhraya KAJANG SILK
43000 Kajang
Selangor Darul Ehsan
Malaysia
Tel No : (03) 8921 0000
Fax No : (03) 8921 0001
Oil & Gas Support Services
Division:
Jasa Merin (Malaysia) Sdn
Bhd
No. 7776, Jalan Kubang Kurus
24000 Kemaman
Terengganu Darul Iman
Malaysia
Tel
: (09) 851 1100
Fax
: (09) 858 3237
AUDITORS
Ernst & Young
Chartered Accountants
SOLICITORS
Christopher & Lee Ong
COMPANY SECRETARIES
PRINCIPAL BANKERS
Kwan Wai Kein (MAICSA 7055765)
Sothirajen a/l S.Paranjothi
(LS 0005734)
Affin Bank Berhad
Affin Islamic Bank Berhad
Bank Pembangunan Malaysia Berhad
Malayan Banking Berhad
Maybank Islamic Berhad
REGISTERED OFFICE
D2-3-2, Solaris Dutamas
1, Jalan Dutamas 1
50480 Kuala Lumpur
Malaysia
Tel No. : (03) 6207 8080
Fax No.: (03) 6207 9933
SHARE REGISTRAR
Symphony Share Registrars
Sdn Bhd
Level 6, Symphony House
Pusat Dagangan Dana 1
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor Darul Ehsan
Malaysia
Tel No : (03) 7841 8000
Fax No : (03) 7841 8151
(03) 7841 8152
STOCK EXCHANGE
LISTING
Main Market of Bursa Malaysia
Securities Berhad
WEBSITE ADDRESS
www.silk.my
ANNUAL REPORT 2013
03
Profile of
Board of Directors
Malaysian, aged 56
Executive Chairman
(Non-Independent)
Member, Nomination and
Remuneration Committee
Dato’ Mohd Azlan Hashim was appointed to the Board of SHB as Non-Executive
Director on 4 June 2008 and was subsequently appointed as Executive Chairman
on 24 June 2008.
A Chartered Accountant by profession, he graduated with a Bachelor of
Economics from Monash University, Australia. He is a Fellow Member of the
Institute of Chartered Accountants, Australia, member of Malaysian Institute of
Accountants, Fellow Member of Malaysian Institute of Directors, Fellow Member
of the Institute of Chartered Secretaries and Administrators and Honorary Member
of The Institute of Internal Auditors, Malaysia. He has extensive experience in the
corporate sector including financial services and investments. Among others, he
has served as Chief Executive of Bumiputra Merchant Bankers Berhad, Group
Managing Director of Amanah Capital Malaysia Berhad and Executive Chairman
of Bursa Malaysia Berhad Group.
Current directorships in public companies and other organisations include
Khazanah Nasional Berhad, D&O Green Technologies Berhad, Scomi Group
Berhad, IHH Healthcare Berhad and Labuan Financial Services Authority. He is
also a member of Employees Provident Fund and the Government Retirement
Fund Inc. Investment Panels.
He has attended all of the 5 Board Meetings held in the financial year.
Datuk Seri Razman M
Hashim
Malaysian, aged 74
Independent
Non-Executive
Deputy Chairman
Chairman, Nomination and
Datuk Seri Razman M Hashim was appointed to the Board of SHB as NonExecutive Deputy Chairman on 10 June 2002.
A Member of Australian Institute of Bankers with more than 39 years of
experiences in the banking industry. Joined Standard Chartered Bank Malaysia
Berhad in 1964 and served in various capacities including secondments to the
Bank’s branches in London, Europe, Hong Kong and Singapore. In 1994, was
appointed as Executive Director / Deputy Chief Executive of Standard Chartered
Bank Malaysia Berhad until his retirement in June 1999. In the same month
in 1999, was appointed as Chairman of MBf Finance Berhad by Bank Negara
Malaysia as its nominee until January 2002 when the finance company was sold
to Arab-Malaysian Group.
Current directorships in other public companies include Sunway Berhad, Sunway
Medical Centre Berhad, Berjaya Land Berhad, MAA Group Berhad, MAA Takaful
Berhad and Mycron Steel Berhad.
Malaysian, aged 62
Independent
Non-Executive Director
Member, Audit Committee
Member, Nomination and
Dato’ Harun bin Md Idris was appointed to the Board of SHB as Independent
Non-Executive Director on 12 August 2009.
Graduate of the University Kebangsaan Malaysia with Diploma of Police Science,
Dato’ Harun joined the Royal Malaysian Police (RMP) on 1 June 1970 as a
Probationary Inspector. He served the RMP for 39 years and retired on 9 April
2009 with the rank of Deputy Commissioner of Police (DCP). His last post was
as the Deputy Director 1, Special Branch.
In his long and distinguished career with the RMP, Dato’ Harun had served in
various capacity including as the head of Special Branch of Perak, Kedah and
Sarawak.
He has no directorship in other public companies.
04
ANNUAL REPORT 2013
Profile of Board of Directors (cont’d)
Johan Zainuddin bin
Dzulkifli
Malaysian, aged 51
(Non-Independent)
Chairman, Risk
Management Committee
Member, Infrastructure
Committee
Johan Zainuddin bin Dzulkifli was appointed to the Board of SHB as NonExecutive Director on 4 June 2008.
He is a Fellow of the Association of Chartered Certified Accountants and attained
a Post Graduate Diploma in Islamic Banking and Finance from the International
Islamic University, Malaysia. He began his career as a Financial Accountant
with a multinational company in 1986 after his graduation. In 1989, he joined a
merchant bank as an Assistant Manager in the Corporate Advisory department.
He subsequently left and joined a public listed company as Vice President of
Corporate and Business Development in 1992 and, in 1997 he joined another
public listed company as the Head of Corporate Services until 2002. He is well
versed in areas of corporate advisory and business development.
Tai Keat Chai
Malaysian, aged 59
Tai Keat Chai was appointed to the Board of SHB as Independent Non-Executive
Director on 18 August 2008.
Independent
He is a member of the Institute of Chartered Accountants in England & Wales
and the Malaysian Institute of Accountants.
Chairman, Audit
Committee
He began his career with KPMG in London in 1977 and a year later joined Price
Waterhouse (now known as PwC) in Kuala Lumpur. In 1981, he joined Amanah
Merchant Bank Berhad (now known as Alliance Investment Bank Berhad) where
he worked for seven years. In 1990, he ventured into the stockbroking industry
and has worked in SJ Securities Sdn Bhd, JB Securities Sdn Bhd (now known
as A.A.Anthony Securities Sdn Bhd) and BBMB Securities Sdn Bhd (now known
as ECM Libra Investment Bank Berhad) as General Manager, Director and
dealer’s representative respectively. Currently he is a Director of Fiscal Corporate
Services Sdn Bhd.
Current directorships in other public listed companies include Chuan Huat
Resources Berhad, Cuscapi Berhad, Formis Resources Berhad and Microlink
Solutions Berhad.
He has attended 4 out of the 5 Board Meetings held in the financial year.
Abdul Hamid bin Sh.
Mohamed
Malaysian, aged 48
Independent
Member, Audit Committee
Abdul Hamid bin Sh. Mohamed was appointed to the Board of SHB as
Independent Non-Executive Director on 18 August 2008.
He is a Fellow of the Association of Chartered Certified Accountants. A graduate
of the Emile Woolf School of Accountancy, London he began his career as Officer
in the Corporate Banking department in Bumiputra Merchant Bankers Berhad
in1989 and rose to the position of Manager. In 1994, he joined Amanah Capital
Malaysia Berhad (formerly known as Komplek Kewangan Malaysia Berhad)
as Senior Manager Corporate Planning, heading the newly created Corporate
Planning department under the Corporate Services division and promoted
to Assistant General Manager, Corporate Planning in 1997 and to Head of
Corporate Services division in January 1998.
He joined Kuala Lumpur Stock Exchange (now known as Bursa Malaysia) in May
1998 as Senior Vice President in charge of Strategic Planning & International
Affairs division and was promoted to Deputy President (Strategy & Development)
in 2002. He was re-designated as Chief Financial Officer in 2003. Currently he
serves as the Executive Director of Symphony House Berhad.
Current directorships in other public companies include Symphony House
Berhad, MMC Corporation Berhad, Scomi Engineering Berhad, Pos Malaysia
Berhad and Kuwait Finance House (Labuan) Berhad.
He has attended 4 out of the 5 Board Meetings held in the financial year.
ANNUAL REPORT 2013
05
Profile of Board of Directors (cont’d)
Nik Abdul Malik bin Nik
Mohd Amin
Malaysian, aged 55
Independent
Chairman, Infrastructure
Committee
Member, Risk Management
Committee
Nik Abdul Malik bin Nik Mohd Amin was appointed to the Board of SHB as
Independent Non-Executive Director on 24 February 2009.
He graduated from the University of Leeds, United Kingdom with Bachelor of
Science (Honours) in Civil Engineering. He is a graduate member of The Institute
of Engineers Malaysia and Board of Engineers Malaysia.
He started his career as Project Engineer with FAO/United Nations Development
Programme in 1981 in a pilot project collaboration with the Drainage and Irrigation
Department of Terengganu Darul Iman (“DID Terengganu”). He subsequently
joined DID Terengganu in 1983 as District Engineer, and was subsequently
promoted to Planning and Design Engineer in 1984. Between 1986 and 1989,
he served as Project Engineer and Executive Director in two private construction
companies, before assuming his current position as Managing Director of ND
Group of companies, an established property developer and Class A contractor.
NOTES:
1.
Family Relationship with Director and/or Major Shareholder
None of the Directors has any family relationship with any director and/or major shareholder of SHB.
2.
Conflict of Interest
None of the Directors has any conflict of interest with SHB Group.
3.
Conviction for Offences
None of the Directors has been convicted for offences within the past 10 years other than traffic offences,
if any.
ANNUAL REPORT 2013
Chairman’s
Statement
“
“
06
On behalf of the board of directors, i am
pleased to present the annual report and
audited financial statements of silk holdings
berhad for the year ended 31 july 2013.
FINANCIAL PERFORMANCE
SILK Holdings Berhad (“SHB” or “the Group”) posted
a revenue of RM 383.3 million for the financial year
ended 31 July 2013, surpassing the RM 341.1 million
recorded previously. The 12.3% advancement in
revenue helped the Group improve its earnings before
interest, taxation, depreciation and amortisation
(“EBITDA”) for the financial year ended 31 July
2013 by 20% to RM 231.9 million, exceeding the
EBITDA of RM 193.5 million recorded in the previous
corresponding period.
The top-line improvement has enabled the Group
to record a pre-tax profit of RM 26.4 million for the
financial year, compared with the pre-tax profit of RM
17.3 million recorded in the previous financial year.
This improvement has led to the Group recording a
profit after tax and minority interest (“PATMI”) of RM
4.4 million for the year ended 31 July 2013, reversing
the loss after tax and minority interest (“LATMI”) of
RM 0.68 million recorded the year before.
The Oil & Gas Support Services Division continues
to be the main contributor to the Group’s revenue
performance, contributing 80% of the Group’s revenue
for the financial year. Comparatively, the Division
also enjoyed an improvement in its performance
for the financial year by registering a revenue of
RM 306.5 million compared to RM 273.4 million
recorded previously. This 12% improvement in
revenue, mainly driven by the deployment of additional
vessels pursuant to the fleet expansion and improved
charter rates, allowed the Oil & Gas Support Services
Division to record a pre-tax profit performance of RM
41.7 million for the full year compared to a pre-tax
profit of RM 37.5 million recorded previously.
The Highway Infrastructure Division also experienced
an improvement. Its loss position reduced, mainly
due to increase in revenue as a result of higher traffic
volume. For the financial year ended 31 July 2013, the
Highway Infrastructure Division’s revenue advanced to
RM 76.8 million compared to the revenue of RM 67.6
million recorded in the previous year’s corresponding
period. This enabled the full year segment pre-tax
loss to contract to RM 16.5 million from RM 19.4
million recorded previously.
On a longer five financial year term basis, Group
revenue has been climbing steadily, signifying
consistency in top-line improvement (see Chart 1).
Group Annual Revenue (RM Mil)
341.1
223.9
383.3
247.7
40.9
FY 09
FY 10
FY 11
FY 12
FY 13
Chart 1
With the exception of the slight dip in EBITDA for the
financial year ended 2011, the Group has recorded
good and steady growth in EBITDA over the last five
financial years (see Chart 2).
Group Annual EBITDA (RM Mil)
232.3
193.5
131.7
129.4
FY 10
FY 11
29.5
FY 09
Chart 2
FY 12
FY 13
ANNUAL REPORT 2013
07
Chairman’s Statement (cont’d)
Although the trend in profitability has not been as
steady, it has been improving more recently over the
last three financial years (see Chart 3 and 4).
Group Annual PBT (RM Mil)
34.5
17.3
26.4
(5.7)
(37.3)
FY 10
FY 11
FY 12
FY 13
FY 09
The profitability trends at the two Divisions however,
have not been as steady. The Highway Infrastructure
Division’s bottom-line was impacted by high
finance costs and increasing amortisation charges.
Meanwhile, the bottom-line performance of the Oil
& Gas Support Services Division was tempered by
increasing depreciation charges and finance costs.
These costs and charges are a natural outcome of
the higher traffic volume at the Highway Infrastructure
Division and expanded fleet at the Oil & Gas Support
Services Division. The Board continues to explore
opportunities to reduce these costs, particularly the
Group’s finance costs. It is nevertheless confident
the bottom-line performance of these two Divisions
remains sustainable.
Chart 3
OPERATING CONDITIONS
Group Annual PATMI (RM Mil)
10.0
(37.4)
(11.2)
FY 10
(0.7)
FY 12
4.4
FY 13
FY 11
FY 09
Chart 4
Over the same five year timeframe, both the Highway
Infrastructure Division and Oil & Gas Support Services
Division have also enjoyed steady growth in its topline performance (see Chart 5 and 6) brought about
by improvements in traffic volume at the Highway
Infrastructure Division and fleet expansion coupled
with improving charter rates at the Oil & Gas Support
Services Division.
Highway Infrastructure Division
Traffic volume during the financial year generally
remained robust throughout the period. The
concession operated by Sistem Lingkaran-Lebuhraya
Kajang Sdn Bhd (“SILK”) recorded total traffic volume
of approximately 62.9 million vehicles for the financial
year ended 31 July 2013, an increase over the total
traffic volume of 55.7 million recorded in the previous
financial year. Average Daily Traffic Volume (“ADTV”) for
the financial year improved to approximately 173,000
vehicles per day, which is a 14% improvement over
the ADTV of 152,000 vehicles per day recorded in
the previous financial year. This 14% growth in ADTV
continues the double-digit growth trend in ADTV set
by the Division over the last few years (see Chart 7)
Highway ADTV (Units ’000)
Highway Annual Revenue (RM Mil)
65.0
40.1
67.6
76.8
99
FY 10
FY 11
FY 12
FY 09
181.3
182.7
FY 10
FY 11
Chart 6
FY 12
FY 11
FY 12
FY 13
Chart 7
306.5
It is noted that there was growth in the ADTV figures
for each of the four quarters of the financial year when
compared to the previous corresponding period. This
has translated into improved financial performance
for the Division, whereby it has steadily reduced its
losses at the end of each quarter of the financial year.
The Board is extremely pleased with this trend and is
confident that the Division will be able to show similar
improvements in the following financial year.
O&G Annual Revenue (RM Mil)
273.4
FY 10
FY 13
Chart 5
206.7
136
173
51.0
FY 09
FY 09
116
152
FY 13
08
ANNUAL REPORT 2013
Oil & Gas Support Services Division
PROSPECTS
Jasa Merin (Malaysia) Sdn Bhd (“Jasa Merin”), the
main operating company under the Oil & Gas Support
Services Division, continues to be a competitive oil &
gas services provider during the financial year under
review. Its status as a preferred service provider
remained strong during that period, whereby the
Division announced a total of 7 new contracts for
vessels and 2 extensions to previous mandates. The
Division deployed a total of 23 vessels to various clients
during the financial year under review, compared with
22 vessels during the previous financial year (see
Chart 8). The increase in vessel deployment helped
improve total charter days. This improvement in total
charter days, coupled with improvement in charter
rates has enabled the Division to improve its top-line
financial performance.
Highway Infrastructure Division
Oil & Gas Annual Vessel Deployment (Units)
6
2
2
2
10
10
FY 09
FY 10
Own
16
5
Growth prospects at the Highway Infrastructure
Division continues to be good as evident in the 14%
growth in ADTV for the financial year. Given this and
barring any unforeseen circumstances, it is reasonable
to expect further traffic growth going forward as the
area being served continues to mature and as more
road users opt to make use of the highway’s excellent
connectivity.
The expected increase in traffic volume will however
continue to see an increase in amortisation charges,
maintenance costs as well as other operating
expenses. With that in mind, the Division will continue
to be vigilant in managing the costs associated with
growth. The Board will be monitoring the situation
and the related financial demands closely to ensure
the Division remains on-track to achieve its long-term
targets.
18
12
FY 11
FY 12
FY 13
3rd Party
Chart 8
Jasa Merin continues to be a preferred partner for
many oil majors partly due to its commitment to
providing high standards of safety in the working
conditions for its employees and its ability to deliver
to its clients. During the financial year under review,
vessels operated by Jasa Merin, were given recognition
by various oil majors for their contributions. JM
Bayu and IDS Darul-Ehsan were recognised for their
achievements in safety and efficiency by Lundin
(Malaysia) BV, whilst JM Indah was awarded Vessel
of the Quarter for Quarter 2, 2013 for its safety and
reliability track record by ExxonMobil Exploration
and Production Malaysia Inc. The entire Group is
extremely pleased with this recognition and hopes it
will spur the crew of other vessels within the fleet to
similar success.
Uniten Interchange, Kajang SILK Highway.
Moving forward, the Highway Infrastructure Division
is expected to continue to incur accounting losses in
the immediate to medium term, albeit on a declining
trend, as the traffic volume increases and its borrowing
cost is further trimmed down. The Division is also
expected to remain cashflow positive as a result of
the restructuring of the long-term debt undertaken in
2008.
ANNUAL REPORT 2013
09
Oil & Gas Support Services Division
ACKNOWLEDGEMENT
Oil & Gas Support Services Division is set to remain
the Group’s main revenue contributor as it continues
to strengthen its position in the market. With an
excellent safety and delivery track record and its fairly
young and modern fleet, the Division, via Jasa Merin,
is likely to retain its position as a preferred partner
for many exploration and production specialists
operating in Malaysian waters. As such, barring any
unforeseen circumstances, the Division is expected
to continue to contribute positively to the Group in
the current financial year.
On behalf of the Board of Directors, I wish to extend
our sincere appreciation to the Group’s management,
staff and employees, at all levels and across the
various functions. The Board is indeed appreciative
of the efforts shown by the Group staff throughout the
financial year. It is my hope that the entire SHB family
will sustain this level of effort to propel the Group
further forward.
My sincerest appreciation also goes out to our Board
of Directors for their vision and counsel in guiding
the Group forward. The contribution of the Board to
the Group’s progress is also deeply appreciated. It is
hoped that the Board will continue to be committed
to the Group as it charts its way forward.
I would also like to take this opportunity to convey
the Board’s appreciation to all our valued customers,
business partners and financiers to both Divisions for
their continued support. Their continued confidence
and support have been instrumental in allowing the
Group to progress to where it is now.
Launching of MV JM Gemilang in August 2013
Lastly, on behalf of the Board, I would also like to
convey our gratitude to all our shareholders for their
patience and unwavering support. I sincerely thank
you all and hope that you will continue to support the
Board in its objective to take the Group forward.
DIVIDENDS
In order to continue building the foundations for
the Group to enable it to achieve long-term and
sustainable growth, the Board of Directors are not
able to recommend the declaration of any dividend
for the financial year ended 31 July 2013. With
sustained growth and expected improved operating
and financial performance in the future, the Board will
revisit and review this position for the benefit of its
shareholders.
Thank you.
Executive Chairman
10
ANNUAL REPORT 2013
Five-Year Group
Financial Summary
2009*
2010
2011
2012
2013
RM'000
RM'000
RM'000
RM'000
RM'000
40,926
223,939
247,726
341,063
383,346
(37,323)
34,499
(5,725)
17,343
26,439
RESULTS
REVENUE
(Loss)/profit before taxation
Taxation
(Loss)/profit after taxation
Less non-controlling interests
(Loss)/profit ATTRIBUTABLE
TO SHAREHOLDERS
Basic(Loss)/EARNING PER SHARE
(SEN)
(95)
(12,861)
(6,176)
(7,953)
(7,682)
(37,418)
21,638
(11,901)
9,390
18,757
-
(11,604)
665
(10,069)
(14,344)
(37,418)
10,034
(11,236)
(679)
4,413
(20.8)
3.1
(2.9)
(0.2)
1.1
FINANCIAL POSITION
Property, vessels and equipment
Concession intangible assets
Goodwill
Available for sale financial assets
Current assets
Non-current assets classified as held for sale
TOTAL ASSETS
Current liabilities
2,797
684,765
871,329
898,553
1,146,114
920,277
912,242
901,648
890,458
876,382
-
647
647
647
647
-
600
600
-
-
5,893
118,916
123,035
158,167
156,140
-
-
1,071
630
189
928,967
1,717,170
1,898,330
1,948,455
2,179,472
60,931
296,225
186,427
171,563
245,937
Long-term liabilities
764,736
1,237,791
1,520,182
1,573,655
1,706,149
TOTAL LIABILITIES
825,667
1,534,016
1,706,609
1,745,218
1,952,086
TOTAL NET ASSETS/
SHAREHOLDERS’ FUNDS
103,300
183,154
191,721
203,237
227,386
90,000
96,959
99,262
99,262
108,333
57.4
35.4
32.3
32.1
31.8
SHARE CAPITAL
NET ASSETS PER SHARE
ATTRIBUTABLE TO SHAREHOLDERS
OF THE COMPANY (SEN)
*
The Company changed its financial year end from 30 June to 31 July with effect from the financial period ended 31 July
2009 and accordingly, results for that financial period are for 13 months.
ANNUAL REPORT 2013
11
Corporate Governance
Statement
The Board of Directors of SILK Holdings Berhad (hereinafter “the Company”) and its Group of companies
(hereinafter “the Group”) fully appreciates the role good governance plays in enhancing shareholders value. The
Board is committed towards compliance with the requirements set out in the Malaysian Code on Corporate
Governance 2012 (hereinafter “the Code”) and strives to adopt the substance behind the corporate governance
prescriptions to the best of its ability.
The Board is pleased to report to its shareholders on the application of the 8 Principles as set out in the Code
within the Company during the financial year.
PRINCIPLE 1: ESTABLISH CLEAR ROLES AND RESPONSIBILITIES
Functions of the Board and Management
The Board takes it upon itself to ensure that shareholders’ interests and its goal of creating sustainable value
over the long-term are always kept in view in any major decision it makes. The Board does so by segregating its
role to that of overall stewardship and setting the strategic direction for the Company.
The Management manages the day-to-day operations of the Company, in accordance with the strategic direction
and delegations of the Board. The Board continuously oversees the activities of Management in carrying out
these delegated duties.
Roles and responsibilities of the Board
The Company is led and controlled by a balanced and effective Board where it assumes, amongst others, the
following principal responsibilities in discharging its stewardship role and fiduciary and leadership functions:
a)
Setting the objectives, goals and strategic plans with a view to maximising shareholder value;
b)
Adopting and monitoring progress of strategies, budgets, plans and policies;
c)
Overseeing the conduct of businesses to evaluate whether the businesses are properly managed;
d)
Identifying principal risks and ensuring the implementation of appropriate systems to mitigate and manage
these risks. The Board through the Audit Committee sets, where appropriate, objectives, performance
targets and policies to manage the key risks faced;
e)
Considering Management’s recommendations on key issues including acquisitions, divestments,
restructuring, funding and significant capital expenditure;
f)
Human resources planning and development; and
g)
Reviewing the adequacy and integrity of internal control systems and management information systems,
including systems for compliance with applicable laws, regulations, rules, directives and guidelines.
The Board has set up the following Committees and will periodically review their terms of reference and operating
procedures. The Committees are required to report to the Board on all their deliberations and recommendations
and such reports are incorporated in the minutes of the Board Meetings.
Audit Committee
The Audit Committee comprises Tai Keat Chai as Chairman, Dato’ Harun bin Md Idris and Abdul Hamid bin
Sh. Mohamed. The Audit Committee is set up to play an active role in assisting the Board in discharging its
governance responsibilities. The composition of the Audit Committee, its terms of reference, attendance of
meetings and a summary of its activities are set out on pages 18 to 23 of the Annual Report.
Risk Management Committee
The Risk Management Committee comprises Johan Zainuddin bin Dzulkifli as Chairman, Nik Abdul Malik bin
Nik Mohd Amin and Jamaludin Mohd Nor. The Risk Management Committee is tasked with the responsibility to
oversee the investment activities of the Group, approving appropriate investment appraisal as well as identification
of strategic investment opportunities for the Company and its businesses.
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ANNUAL REPORT 2013
Corporate Governance Statement (cont’d)
Nomination & Remuneration Committee
The Nomination and Remuneration Committee comprises Datuk Seri Razman M Hashim as Chairman, Dato’
Mohd Azlan Hashim and Dato’ Harun bin Md Idris.
The Board recognises the need for a suitable Code of Conduct which provides the framework to ensure that
those who represent the Group conduct themselves in compliance with laws and ethical values in interactions
with customers, suppliers, shareholders, fellow employees and business partners to be clearly articulated,
internalised and publicised. At present, the Board has yet to formally adopt and publish these norms into a
suitable Code of Conduct. The need will be reviewed periodically. Should the need for a formal Code of Conduct
arise, the Board will formulate and adopt it.
Access to information and advice
The Board recognises that the decision making process is highly contingent on the quality of information
furnished. As such, all Directors have unrestricted access to any information pertaining to the Company and the
Group. The Directors are also notified of any corporate announcements released to Bursa Securities and the
impending restriction in dealing with the securities of the Company prior to the announcement of the financial
results or corporate proposals.
All Directors have full and timely access to information with Board papers distributed in advance of meetings.
Every Director also has unhindered access to the Senior Management and the advice and services of the
Company Secretaries as well as independent professional advisers including the external auditors. The Board
is regularly updated by the Company Secretaries on new statutory and regulatory requirements relating to the
duties and responsibilities of Directors.
Where necessary, the Board also has access to external advice. There is a formal procedure approved by the
Board for all Directors, whether as a full Board or in their individual capacity, to obtain independent professional
advice, when necessary, at the Company’s expense.
Qualified and competent Company Secretary
In order to assist the Board with its functions, the Company has appointed two (2) qualified Company Secretaries.
Details of the two persons can be found on page 2 of this Annual Report.
Board Charter
The Board recognises the need for the functions, powers and responsibilities of the Board and its various
Committees to be clearly articulated, internalised and publicised. At present, the Board has yet to formally adopt
and publish these into a suitable Board Charter. This will be reviewed periodically. Should the need for a formal
Board Charter arise, the Board will formulate and adopt it.
PRINCIPLE 2: STRENGTHEN COMPOSITION
Nomination & Remuneration Committee
The Nomination & Remuneration Committee currently comprises the following:
1)
2)
3)
Datuk Seri Razman M Hashim (Chairman)
The Nomination & Remuneration Committee is made up of three (3) members, the majority of whom are
independent. The Nomination & Remuneration Committee is empowered by the Board and its terms of reference
include bringing to the Board recommendations on the appointment of new directors besides assessing the
effectiveness of Board Committees and the Board as a whole.
The Nomination & Remuneration Committee is also entrusted to systematically assess the contribution of each
Director due for retirement before recommending to the Board for their re-election in accordance with the
provisions of the Articles of Association of the Company and the relevant provisions of the Companies Act, 1965.
ANNUAL REPORT 2013
13
The Board takes note of the recommendation in the Malaysian Code of Corporate Governance for the Nomination
& Remuneration Committee to comprise exclusively of non-executive directors, a majority of whom must be
independent. The Board is of the opinion however, that there are sufficient safeguards against conflicts of interest
within the Nomination & Remuneration Committee and as such will be maintaining the current arrangement.
Criteria for recruitment and annual assessment of Directors
The Board, through the Nomination & Remuneration Committee, appraises the composition and effectiveness of
the Board on an annual basis and believes that the current composition brings the required mix of skills and core
competencies required for the Board to discharge its duties effectively.
New appointees will be considered and evaluated by the Nomination & Remuneration Committee based on a
set of criteria. Such evaluation criteria does not take into account the ethnicity or gender of the proposed new
director in keeping with norms set by the Board that neither the ethnicity nor gender of a particular candidate
for appointment to the Board is an influencing factor. The Nomination & Remuneration Committee will then
recommend the candidates to be approved and appointed by the Board. The Company Secretary will ensure that
all appointments are properly made and that legal and regulatory obligations are met.
New Directors are expected to have such expertise so as to qualify them to make positive contribution to the
Board, performance of its duties and to give sufficient commitment, time and attention to the affairs of the
Company. They are also briefed by the Chairman, Company Secretary and members of the management on the
nature of business and current issues within the Company and the Group.
Formal and transparent remuneration policies and procedures
The remuneration of the Executive Directors is structured on the basis of linking rewards to corporate and
individual performance. For Non-Executive Directors, the level of remuneration reflects the experience and level of
responsibilities. The Board as a whole recommends the fees for the Directors with individual Directors abstaining
from decisions in respect of their individual remuneration. The fees payable to the Directors are subject to the
approval of shareholders.
The breakdown of the remuneration for the Directors of the Company during the financial year is as follows:-
Salaries
Fees
Executive Director
Non-Executive Directors
RM’000
RM’000
193
-
Total
RM’000
193
-
96
96
Other emoluments
76
60
136
Total remunerations
269
156
425
The number of directors whose remunerations fall under the following bands is as follows:Executive Director
Non-Executive Directors
Total
Up to RM50,000
-
6
6
RM250,001 to RM300,000
1
-
1
Range of remunerations:
PRINCIPLE 3: REINFORCE INDEPENDENCE
Composition of the Board
The current Board comprises seven (7) Directors who possess the necessary skills and experience relevant to the
business operations of the Company. The composition of the Board is broadly balanced to reflect the interests
of major shareholders, management and minority shareholders.
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ANNUAL REPORT 2013
Of the seven (7) Directors, one (1) is non-independent and performs an executive function, namely Dato’ Mohd
Azlan Hashim. One (1) director, namely Johan Zainuddin bin Dzulkifli is also non-independent but performs
no executive function at Company level. The remaining members of the Board of Directors are non-executive
independent Directors. The profile for each of the members of the Board is contained on pages 3 to 5 of this
Annual Report.
The Company’s Articles of Association provides that 1/3 of the Board are subject to retirement by rotation at
each Annual General Meeting. Each Director shall retire at least once every 3 years but shall be eligible for reelection. The Directors to retire in each year are those who have been longest in office since their last election
or appointment. To assist the shareholders in their decision, sufficient information such as personal profile,
attendance of meetings and the shareholding of each Director standing for re-election are disclosed in the
Statement Accompanying Notice of Annual General Meeting.
Separation of positions of Chairman and CEO/Managing Director
The Board is headed by Dato’ Mohd Azlan Hashim, acting as the Executive Chairman of the Company. Given
Dato’ Mohd Azlan’s strong leadership, business acumen and wide experience, the Board continues to maintain
this arrangement which it feels is in the best interest of the Company. The Company has opted to address the
issue of adequate check and balances by having a majority independent Board. 5 out of 7 Board members are
Independent Directors with diverse professional and business backgrounds. Decisions by the Board are only
made after the issues had been deliberated at length by the Board, wherein the views of each Board member
are sought.
Annual assessment of Independent Directors
The Board, with the assistance of the Nomination & Remuneration Committee, assesses the Independent
Directors on an annual basis with the aim of ensuring the Independent Directors continue to bring independent
and objective judgement to the Board thereby mitigating conflict of interest and undue influence from interested
parties.
Tenure of an Independent Director
The tenure of the service of an Independent Director is capped at nine years. Upon completion of nine years of
service, an Independent Director may continue to serve on the Board subject to the Director’s re-designation as
a Non-Independent Director. However, subject to the assessment of the Nomination & Remuneration Committee,
an Independent Director can remain as an Independent Director after serving a cumulative term of nine years
subject to the shareholders’ approval in a general meeting.
Currently, there are no Independent Directors on the Board who have served in that capacity for more than nine
years.
Board meetings
The Board normally meets at least once every quarter to review the Company and Group’s financial, operational
and business performances. Notices and agenda of meetings duly endorsed by the Executive Chairman together
with relevant board papers are given prior to the meetings, for the Directors to study and evaluate.
A total of 5 Board meetings were held during the financial year. A summary of attendance for each member of
the Board of Directors is as follows:
Name of Director
Number of Meetings Attended
Percentage of Attendance (%)
5/5
100
5/5
100
5/5
100
5/5
100
Tai Keat Chai
4/5
80
4/5
80
5/5
100
ANNUAL REPORT 2013
15
PRINCIPLE 4: FOSTER COMMITMENT
Time commitment and acceptance of new directorships
The Board complies with Paragraph 15.06 of the Main Market Listing Rules on the restriction on the number
of directorships in listed companies held by the Directors. The Company Secretary monitors the number of
directorships held by each Director to ensure compliance at all times. The list of directorships of each Director is
updated regularly and is tabled for the notation of the Board on a quarterly basis. The Board is satisfied that the
external directorships of the Board members have not impaired their ability to devote sufficient time in discharging
their roles and responsibilities effectively as well as regularly updating and enhancing their knowledge and skills.
Access to appropriate continuing education programmes
During the financial year, the Directors attended various training programmes and seminars organised by the
relevant regulatory authorities and professional bodies to broaden their knowledge and to keep abreast with
the relevant changes in law, regulations and the business environment. The training programmes, seminars
and workshops attended by the Directors during the financial year are, inter-alia, on areas relating to business
environment, corporate governance, capital markets and financial reporting.
Topic / Organiser
Date
IHH Healthcare Berhad: New Listing Dialogue with Securities Commission
Malaysia and Bursa Malaysia (Securities Commission / Bursa Malaysia)
27 August 2012
Risk-Based Capital For Takaful (RBCT) Framework (MAA Takaful Berhad)
19 September 2012
Understanding Upstream Oil & Gas Economics Evaluation
(Financial Planning Association of Malaysia)
22 September 2012
Khazanah Megatrends Forum 2012 – “The Big Shift: Traversing the
Complexities of a New World” (Khazanah Nasional Berhad)
1 and 2 October 2012
Labuan IBFC: Asia Pacific’s Preferred IFC : A Road Show in Hong Kong
and Shanghai October 2012 (Labuan IBFC)
9 October 2012
Keynote Speech “Labuan IBFC: Malaysia’s Engine of Foreign Investment:
by Dato’ Mohd Azlan Hashim, Authority Member, LFSA, Chairman,
Labuan IBFC Inc. Sdn. Bhd. (Labuan IBFC)
11 October 2012
Techventure 2012 - The New Age of Asian Innovation
(Asiasons WFG Financial Ltd)
17 and 18 October 2012
Sunway Managers Conference (Sunway Group)
18 October 2012
Market Rigging & Insider Trading Movement Through Moving Average
(Indicators for Trader’s & Investors Psyche)
(Advancement in Business Training)
7 November 2012
In-house Directors’ Training Programme for D&O Green Technologies
Berhad (D&O) on Stress Management: Transforming Business Pressure
into Productive Energy (HRD Gateway Management Development Centre)
21 November 2012
Khazanah Global Lectures 2012 – Lecture by Dr. Victor K. Fung, Founding
Chairman, Fung Global Institute and Group Chairman, Fund Group
(Khazanah Nasional Berhad)
29 November 2012
3rd Annual Offshore Indonesia Oil & Gas (IBC Asia)
28 February to 1 March 2013
9th Private Banking Asia 2013 (Terrapinn Pte Limited)
12 to 14 March, 2013
5th Offshore Drilling Rigs (IBC Asia)
8 to 10 April, 2013
Asia Oil & Gas Conference 2013 (Petronas)
9 to 11 June 2013
Governance In Groups (The Iclif Leadership and Governance Centre)
10 June 2013
Corporate Governance Guide - Towards Boardroom Excellence
(Bursa Malaysia Berhad)
14 June 2013
Advocacy Session On Corporate Disclosure For Directors
(Bursa Malaysia Berhad)
20 June 2013
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ANNUAL REPORT 2013
PRINCIPLE 5: UPHOLD INTEGRITY IN FINANCIAL REPORTING
Compliance with applicable financial reporting standards
In presenting the annual financial statements, annual report and quarterly announcement of results to
shareholders, the Board aims to provide a balanced and understandable assessment of the Group’s financial
position, performance and prospects. The Board is assisted by the Audit Committee to oversee the Group’s
financial reporting processes and the quality of its financial reporting.
The Directors are responsible in the preparation of the Annual Audited Financial Statements to give a true and fair
view of the state of affairs, results and cash flows of the Company and of the Group at the end of the financial
year. In preparing the financial statements, the Directors ensure that suitable accounting policies have been
applied consistently, and that reasonable and prudent judgments and estimates have been made. All applicable
approved accounting standards and provisions of the Companies Act, 1965 have been complied with.
Policies and procedures to assess the suitability and independence of external auditors
The Board maintains, via the Audit Committee, an active, transparent and professional relationship with the
Auditors. The role of the Audit Committee in relation to the Independent Auditors is disclosed in the Audit
Committee Report set out on pages 18 to 23 of the Annual Report.
PRINCIPLE 6: RECOGNISE AND MANAGE RISKS
Framework to manage risks
The Board acknowledges its overall responsibility for ensuring that a sound system of internal control is maintained
throughout the Group and the need to review its effectiveness regularly. The Board recognises that risks cannot
be totally eliminated and the system of internal controls instituted can only help to minimise and manage risks
and provide some assurance that the assets of the Company and of the Group are safeguarded against material
loss and unauthorised use and that the financial statements are not materially misstated. The Statement on Risk
Management and Internal Control set out on pages 24 to 26 of this Annual Report provides an overview on the
state of internal controls within the Group.
Establishment of an internal audit function reporting directly to the Audit Committee
The Group’s Internal Audit function has been outsourced to an external consultant, Columbus Advisory Sdn.
Bhd., who reports directly to the Audit Committee. The Internal Audit function currently reviews and appraises
the risk management and internal control processes of the Group. The Statement on Risk Management and
Internal Control set out on pages 24 to 26 of this Annual Report provides an overview of the Group’s approach
to ensuring the effectiveness of the risk management and internal control processes within the Group.
PRINCIPLE 7: ENSURE TIMELY AND HIGH QUALITY DISCLOSURE
Existence of appropriate corporate disclosure policies and procedures
The Board acknowledges the importance of ensuring that it has in place appropriate corporate disclosure
policies and procedures which leverage on information technology as recommended by the Code. The Company
currently observes and complies with the disclosure requirements as set out in Bursa Malaysia’s Main Market
Listing Requirements, guided by Bursa’s Corporate Disclosure Guide. The Board has also approved and adopted
a Corporate Disclosure Policy which outlines the Group’s approach towards the determination and dissemination
of material information, the circumstances under which the confidentiality of information will be maintained,
response to market rumours and restrictions on insider trading. This Policy also provides guidance and structure
in disseminating corporate information to, and in dealing with, investors, analysts, media and the investing public.
Leverage on information technology for effective dissemination of information
The Company has established a website at http://www.silk.my from which investors and shareholders can
access for information relating to the Company, its businesses and periodic performance reports.
ANNUAL REPORT 2013
17
PRINCIPLE 8: STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS
Promote effective communication and proactive engagements with shareholders
The Board values constant dialogue and is committed to clear communication with its stakeholders. In this
respect, the Company encourages active investor relations programme, discussions and dialogues with fund
managers, financial analysts and shareholders to convey information about the Company and the Group’s
performance, corporate strategy and other matters affecting shareholders’ interests.
While the Group endeavours to provide as much information as possible to its shareholders and stakeholders, it
is mindful of the legal and regulatory framework governing the release of material and price-sensitive information.
Encouraging shareholder participation at general meetings
The annual general meeting of the Company provides the principal forum for dialogue and interaction between
the Board and the shareholders. The participation of shareholders, both individual and institutional, at general
meetings on clarifications of pertinent and relevant information is encouraged.
Encouraging poll voting
The Board is cognisant of the move to encourage more voting by poll. As it stands, resolutions are generally
passed by show of hands unless otherwise required by law. The Board can encourage voting by poll by indicating
that shareholders can demand for it at commencement of the annual general meeting.
COMPLIANCE STATEMENT
The Board recognises and views that Corporate Governance is an on-going process and is of the view that the
Company has substantially complied with the recommendations of the Code and will take appropriate steps
towards embracing the Principles and Recommendations under the Code at a pace and time frame consistent
with the size, priority and dynamics of the Group.
This statement is made in accordance with a resolution of the Board of Directors dated 27 September 2013.
Executive Chairman
18
ANNUAL REPORT 2013
AUDIT COMMITTEE
REPORT
FORMATION
The Audit Committee was formed by the Board of Directors at its meeting on 16 August 2002.
The objective of the Audit Committee is to assist the Board of Directors in fulfilling its fiduciary responsibilities
relating to internal controls, financial and accounting records and policies as well as financial reporting practices
of the Company and its subsidiaries (“the Group”).
COMPOSITION
The members of the Audit Committee during the year were as follows:
1.
Tai Keat Chai – Chairman
(Independent Non-Executive Director)
2.
3.
MEETING AND ATTENDANCE
The Audit Committee held 4 meetings during the financial year and the attendance of the Committee Members
was as follows :
Name of Committee Member
Number of Meetings
Attended
Tai Keat Chai
4/4
4/4
4/4
The Company Secretaries, the Internal Auditors and the Chief Financial Officer were present at all meetings. At
two of the meetings, the Independent Auditors were present.
TERMS OF REFERENCE
1.
Membership
1.1
The Committee shall be appointed by the Board of Directors from amongst the Directors of the
Company and shall consist of not less than 3 members.
1.2
The majority of the members including the Chairman of the Committee shall be Independent
Directors as defined in Chapter 15 of the Main Market Listing Requirements of Bursa Malaysia
Securities Berhad (“Bursa Securities”).
1.3
The Committee shall include at least 1 person:
(a)
who is a member of the Malaysian Institute of Accountants; or
(b)
who must have at least 3 years working experience and:(i)
have passed the examinations specified in Part I of the 1st Schedule of the Accountants
Act, 1967; or
(ii)
is a member of one of the Associations specified in Part II of the 1st Schedule of the
Accountants Act, 1967; or
ANNUAL REPORT 2013
19
AUDIT COMMITTEE REPORT (cont’d)
(c)
(d)
who must have at least 3 years post qualification experience in accounting or finance and:(i)
has a degree/masters/doctorate in accounting or finance; or
(ii)
is a member of one of the professional accountancy organisations which has been
admitted as a full member of the International Federation of Accountants; or
who must have at least 7 years experience being a chief financial officer of a corporation or
having the function of being primarily responsible for the management of the financial affairs
of a corporation.
1.4
No Alternate Director shall be appointed as a member of the Committee.
1.5
The members of the Committee shall elect a Chairman from amongst their number.
1.6
If a member of the Committee resigns, dies or for any reason ceases to be a member with the result
that the number of members is reduced below 3, the Board shall, within 3 months appoint such
number of new members as may be required to make up the minimum of 3 members.
1.7
The terms of office and performance of the Committee and each of its members shall be reviewed
by the Board no less than once every 3 years. However, the appointment terminates when a
member ceases to be a Director.
1.8
Each member of the Committee is entitled to one (1) vote in deciding the matters deliberated at the
meeting. The decision that gained the majority votes shall be the decision of the Committee.
1.9
Chairman’s casting vote
In the event of an equality of votes, the Chairman of the Committee shall be entitled to a second
or casting vote.
2.
Meetings
2.1
The quorum for a Committee Meeting shall be at least 2 members, the majority of whom must be
Independent Directors.
2.2
The Committee shall meet at least 4 times a year and such additional meetings as the Chairman
shall decide.
2.3
Notwithstanding paragraph 2.2 above, upon the request of any member of the Committee, nonmember Directors, the Internal or Independent Auditors, the Chairman shall convene a meeting of
the Committee to consider the matters brought to its attention.
2.4
Members’ Circular Resolution
A Resolution in writing signed by all members shall be effectual as if it had been passed at a
meeting of the Committee.
All such resolutions shall be described as “Members’ Circular Resolutions” and shall be forwarded
or otherwise delivered to the Company Secretaries without delay and shall be recorded by the
Company Secretaries in the Minutes Book. Any such resolution may consist of several documents
in the like form, each signed by one (1) or more members.
The expressions “in writing” or “signed” include approval by legible confirmed transmission by
facsimile, telex, cable, telegram or other forms of electronic communications.
2.5
Participation at Committee Meeting by way of electronic means
Members may participate in a meeting of the Committee by means of a conference telephone or
similar electronic tele-communicating equipment by means of which all persons participating in
the meeting can hear each other and participate throughout the duration of the communication
between the members and participation in a meeting pursuant to this provision shall constitute
presence in person at such meeting.
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ANNUAL REPORT 2013
2.6
The Independent Auditors have the right to appear and be heard at any meeting of the Committee
and shall appear before the Committee when required to do so.
2.7
The non-member Directors and employees of the Company and of the Group shall normally attend
the meetings to assist in its deliberations and resolutions of matters raised. However, at least
twice a year, the Committee shall meet with the Independent Auditors without the presence of the
executive members of the Committee.
2.8
The Internal Auditors shall be in attendance at all meetings to present and discuss the audit reports
and other related matters as well as the recommendations relating thereto and to follow-up on all
relevant decisions made.
2.9
The Company Secretaries shall act as Secretaries of the Committee and shall be responsible,
with the concurrence of the Chairman, for drawing up and circulating the agenda and the notice
of meetings together with the supporting explanatory documentation to members prior to each
meeting.
2.10 The Secretaries of the Committee shall be entrusted to record all proceedings and minutes of all
meetings of the Committee.
2.11 In addition to the availability of detailed minutes of the Committee Meetings to all Board members,
the Committee at each Board Meeting will report a summary of significant matters and resolutions.
3.
Rights and Authority
The Committee is authorized to:-
4.
3.1
Investigate any matter within its terms of reference.
3.2
Have adequate resources required to perform its duties.
3.3
Have full and unrestricted access to information, records and documents relevant to its activities.
3.4
Have direct communication channels with the Independent and Internal Auditors.
3.5
Engage, consult and obtain outside legal or other independent professional advise and to secure
the attendance of outsiders with relevant experience and expertise it considers necessary.
Functions and Duties
4.1
4.2
To review and recommend for the Board’s approval, the Internal Audit Charter which defines
the independent purpose, authority, scope and responsibility of the internal audit function in the
Company and the Group.
To review the following and report to the Board:(a)
With the Independent Auditors:(i)
the audit plan and audit report and the extent of assistance rendered by employees
of the Group;
(ii)
the audit fees and on matters concerning their suitability for nomination, appointment
and re-appointment and the underlying reasons for resignation or dismissal as
Auditors;
(iii)
the management letter and management’s response; and
(iv)
issues and reservations arising from audits.
ANNUAL REPORT 2013
21
(b)
(c)
With the Internal Auditors:(i)
the adequacy and relevance of the scope, functions and resources of the Internal
Auditors and the necessary authority to carry out its work;
(ii)
the results of internal audit processes including recommendations and actions taken;
(iii)
the extent of cooperation and assistance rendered by employees of the Group; and
(iv)
the appraisal of the performance of the internal audit including that of the senior staff
and any matter concerning their appointment and termination.
The quarterly results and year end financial statements prior to the approval by the Board,
focusing particularly on:(i)
changes and implementation of major accounting policies and practices;
(ii)
significant and unusual issues;
(iii)
going concern assumption; and
(iv)
compliance with accounting standards, regulatory and other legal requirements.
(d)
The major findings of investigations and management response.
(e)
The propriety of any related party transaction and conflict of interest situation that may arise
within the Company or the Group including any transaction, procedure or course of conduct
that raises questions of management integrity.
4.3
To report any breaches of the Main Market Listing Requirements which have not been satisfactorily
resolved, to Bursa Securities.
4.4
To prepare the Audit Committee Report for inclusion in the Company’s Annual Report covering:-
4.5
(a)
the composition of the Committee including the name, designation and directorship of the
members;
(b)
the terms of reference of the Committee;
(c)
the number of meetings held and details of attendance of each members;
(d)
a summary of the activities of the Committee in the discharge of its functions and duties; and
(e)
a summary of the activities of the internal audit function.
To review the following for publication in the Company’s Annual Report:(a)
(b)
the disclosure statement of the Board on:(i)
the Company’s applications of the principles set out in Part I of the Malaysian Code
on Corporate Governance; and
(ii)
the extent of compliance with the best practices set out in Part II of the Malaysian
Code on Corporate Governance, specifying reasons for any area of non-compliance
and the alternative measures adopted in such areas.
the statement on the Board’s responsibility for the preparation of the annual audited financial
statements.
22
ANNUAL REPORT 2013
(c)
(d)
the disclosure statement on the state of the risk management and internal control system of
the Company and of the Group.
other disclosure forming the contents of the annual report spelt out in Part A of Appendix 9C
of the Main Market Listing Requirements of Bursa Securities.
The above functions and duties are in addition to such other functions as may be agreed to from
time to time by the Committee and the Board.
5.
Internal Audit Functions
5.1
The Company had appointed Messrs. Columbus Advisory Sdn. Bhd. as the Internal Auditor to
undertake the Group’s internal audit function.
5.2
The Internal Auditor shall have unrestricted access to the Committee Members and report
to the Committee whose scope of responsibility includes overseeing the development and the
establishment of the internal audit function.
5.3
In respect of routine administrative matters, the Internal Auditor shall report to the Executive
Chairman or his designate.
5.4
The total costs incurred for the internal audit function of the Group for the financial year ended 31
July 2013 was RM50,000.
ACTIVITIES OF THE COMMITTEE FOR THE FINANCIAL YEAR ENDED 31 JULY 2013
The summary of activities of the Committee in the discharge of its duties and responsibilities is as follows:(a)
Reviewed the adequacy and relevance of the scope, functions, resources, risk based internal audit plan
and results of the internal audit processes with the Internal Auditor.
(b)
Reviewed the audit activities carried out by the Internal Auditor and the audit reports to ensure corrective
actions were taken in addressing the risk issues reported.
(c)
Reviewed with the Independent Auditors, the audit plan of the Company and of the Group for the year
(inclusive of risk and audit approach, audit fees and issues) prior to the commencement of the annual
statutory audit.
(d)
Reviewed the financial statements, the audit report, issues and reservations arising from the statutory
audit with the Independent Auditors.
(e)
Reviewed and discussed the management accounts with Management.
(f)
Discussed the implications of any latest changes and pronouncements on the Company and the Group
issued by the statutory and regulatory bodies.
(g)
Reported to the Board on significant issues and concerns discussed during the Committee’s meetings
together with applicable recommendations. Minutes of meetings were tabled, discussed and noted by all
Board members.
ANNUAL REPORT 2013
23
INTERNAL AUDIT ACTIVITIES REPORT FOR THE FINANCIAL YEAR ENDED 31 JULY 2013
The summary of activities of the Internal Auditor is as follows:(a)
Prepared the annual audit plan for approval by the Audit Committee.
(b)
Performed risk based audits on strategic business units of the Company and of the Group, which covered
assessment on adequacy and integrity of the internal control systems for the management and key
operating processes.
(c)
Performed follow-up on status of management’s implementation on internal audit recommendations.
(d)
Issued audit reports to the Committee and management by identifying weaknesses and improvement
opportunities as well as highlighting recommendations for improvements.
(e)
Reported to the Committee on results of audit assessment on the adequacy and appropriateness of
internal controls (including compliance with the procedures established) on the management and key
operating processes of strategic management, toll operations, highway maintenance, traffic safety &
security, vessel operations, health, safety & environmental management and human capital development.
(f)
Reviewed the appropriateness of the disclosure statements in regard to compliance with the Malaysian
Code on Corporate Governance and the state of internal controls as well as the Audit Committee Report.
(g)
Attended Committee meetings to table and discuss the audit reports and followed up on matters raised.
24
ANNUAL REPORT 2013
Statement on Risk Management
and Internal Control
INTRODUCTION
The Malaysian Code on Corporate Governance 2012 stipulates that the Board of Directors of listed companies
shall maintain a sound system of internal control to safeguard shareholders’ investment and the Group’s assets.
Set out below is the Group’s Statement on Risk Management and Internal Control (“Statement”), made in
compliance with Paragraph 15.26(b) and Practice Note 9 of the Main Market Listing Requirements of Bursa
Malaysia Securities Berhad and the Statement on Risk Management and Internal Control: Guidelines for Directors
of Listed Issuers.
THE BOARD’S RESPONSIBILITY
The Board places importance on, and is committed to maintaining effective risk management practices and a
sound system of internal control within the Group to ensure good corporate governance. The Board affirms its
responsibility for reviewing the adequacy and integrity of the Group’s system of internal control and management
information systems, including systems for compliance with applicable laws, rules, directives, guidelines and risk
management practices.
Notwithstanding this, as with any internal control system, the Group’s system of internal control is designed to
manage rather than to eliminate the risk of failure to achieve business objectives. It follows, therefore, that the
system of internal control can only provide reasonable but not absolute assurance against material misstatement
or loss.
The Group has in place an on-going process of identifying, evaluating, monitoring and managing the key risks
affecting the achievement of its business objectives throughout the year.
ASSURANCE MECHANISM
The Audit Committee (“AC”) is tasked by the Board with the duty of reviewing and monitoring the effectiveness
of the Group’s system of internal control. In carrying out its responsibilities, the Group has appointed Messrs.
Columbus Advisory Sdn. Bhd. (“CASB”) to carry out internal audits based on a risk-based audit plan approved
by the AC. Based on these audits, the AC is provided by CASB with periodic reports highlighting observations,
recommendations and management action plans to improve the system of internal control.
In addition, the AC also reviews and deliberates on any matters relating to internal control highlighted by the
Independent Auditors in the course of their statutory audit of the financial statements of the Group. There were
no major internal control weaknesses identified during the financial year.
The Report of the AC is set out on pages 18 to 23 of the Annual Report.
THE GROUP’S SYSTEM OF INTERNAL CONTROL
Monitoring Mechanisms and Management Style
Scheduled periodic meetings of the Board, Board Committees and Management represent the main platform by
which the Group’s performance and conduct is monitored.
The daily running of the business is entrusted to the respective Chief Operating Officers and their management
team. Under the purview of the Chief Operating Officers, the Heads of Department are empowered with the
responsibility of managing their respective operations. The Chief Operating Officers actively communicate the
Board’s expectations to management at Operations Meetings. At these meetings, operational and financial risks
are discussed and dealt with.
The Board is responsible for setting the business direction and overseeing the conduct of the Group’s operations
through various management reporting mechanisms. Through these mechanisms, the Board is informed of all
major control issues pertaining to internal controls, regulatory compliance and risk taking.
ANNUAL REPORT 2013
25
Statement on Risk Management and Internal Control (cont’d)
Enterprise Risk Management Framework
In dealing with its stewardship responsibilities, the Board recognises that effective risk management is part of
good business management practice. The Board acknowledges that all areas of the Group’s activities involve
some degree of risk, and is committed to ensuring that the Group has an effective risk management framework
which will allow the Group to be able to identify, evaluate and manage risks that affect the achievement of the
Group’s business objectives within defined risk parameters in a timely and effective manner.
The risk management framework has been embedded in the Company’s management systems. The Management
assists the Board in implementing the process of identifying, evaluating and managing significant risks applicable
to their respective areas of business and in formulating suitable internal controls to mitigate and control these
risks.
The key elements of the Enterprise Risk Management (“ERM”) activities include:
•
Establishing ERM framework
•
Risk assessment process
•
Risk action implementation process
•
Risk action monitoring process
•
Continuous ERM monitoring and communication
The Group has completed a comprehensive risk assessment process whereby significant risks are summarised
into a risk map and presented to the Audit Committee for its consideration. Detailed risk registers have been
developed for each of the risks identified. Having identified those risks that can significantly affect the business
and operations, dedicated risk owners were appointed (from the management team) to work on the development
of key risk action plans required (as well as the implementation of such action plans) together with a group of
risk co-owners across the departments. New developments in businesses and operations are subject to the risk
assessment process as the risk profile of the business changes.
Key Elements of the Group’s System of Internal Control
The current system of internal control in the Group has within it, the following key elements:
•
Clear Group vision, mission and corporate philosophy and strategic direction, which are communicated to
employees at all levels.
•
An effective Board which retains control over the Group with appropriate management reporting
mechanisms which enable the Board to review the Group’s progress.
•
Board approved annual budgets and management plans.
•
Management meetings involving discussions on operational issues at subsidiary level.
•
Comprehensive and clearly documented standard operating policies and procedures manuals that provide
guidelines and authority limits over various operating, financial and human resource matters, which are
subject to regular review for improvement.
•
The use of the intranet as an effective means of communication and knowledge sharing.
•
Communication of policies and guidelines in relation to human resource matters to all employees through
a staff handbook which is also available on the intranet.
•
A systematic performance appraisal system for all levels of staff.
•
Relevant training provided to personnel across all functions to maintain a high level of competency and
capability.
26
ANNUAL REPORT 2013
Statement on Risk Management and Internal Control (cont’d)
THE BOARD’S COMMITMENT
The Board recognises that the Group operates in a dynamic business environment in which the internal control
system must be responsive in order to be able to support its business objectives. To this end, the Board remains
committed towards maintaining a sound system of internal control and believes that a balanced achievement of
its business objectives and operational efficiency can be attained.
ADEQUACY AND EFFECTIVENESS OF RISK MANAGEMENT AND INTERNAL CONTROL
The Executive Director of the operating subsidiaries and the Chief Financial Officer have provided the Board
with assurance that the Group risk management and internal control systems are operating adequately and
effectively, in all material aspects, to ensure achievement of corporate objectives.
Taking into consideration the assurance from the management team, the Board is of the view that the system
of risk management and internal controls in place for the year under review is sound and adequate to safeguard
the Group’s assets.
REVIEW OF THE STATEMENT BY INDEPENDENT AUDITORS
Pursuant to paragraph 15.23 of Bursa Malaysia Securities Berhad’s Main Market Listing Requirements, the
Independent Auditors have reviewed the Statement on Risk Management and Internal Control. Their review was
performed in accordance with Recommended Practice Guide 5 (“RPG 5”) issued by the Malaysian Institute of
Accountants. Based on their review, the Independent Auditors have reported that nothing has come to their
attention that causes them to believe that this Statement is inconsistent with their understanding of the process
the Board of Directors has adopted in the review of the adequacy and integrity of internal control of the Group.
RPG 5 does not require the Independent Auditors to and they did not consider whether this Statement covers all
risks and controls, or to form an opinion on the effectiveness of the Group’s risk and control procedures.
This Statement is made in accordance with the resolution of the Board of Directors dated 27 September 2013.
Executive Chairman
ANNUAL REPORT 2013
27
Statement of Corporate
Social Responsibility
The Group is committed to meeting its aspirations of improving the long-term shareholder value of the Company.
In meeting this objective, it will do so via policies and arrangements that recognise its social, economic and
environmental responsibilities.
In giving effect to this, the Group is committed to:
•
Setting high standards and expectations for its employees to act ethically, professionally and with integrity
whenever dealing with external stakeholders;
•
Support collaborations with stakeholders, particularly those that are most affected by the Group’s business
activities, where it is feasible to do so; and
•
Pursuing a culture of delivering value for the funds invested in its activities whilst effectively managing risks
to the organisation and its stakeholders.
The Group is also committed to providing high standards of safety in the working conditions for its employees
and to the continual improvement of its safety performance. During the financial year under review, the Group’s
Oil & Gas Support Services Division, via Jasa Merin, conducted workplace and community safety campaigns.
The Group is pleased to continue to ensure safety remains a priority in how it operates.
The well-being of external stakeholders is another area of concern to the Group. Hence, during the financial year
under review, the Group’s Highway Infrastructure Division introduced “Contra Traffic Flow” at the busy stretch of
Kajang SILK Highway, from Sg. Ramal Toll Plaza to Hospital Serdang, to alleviate traffic congestions during the
morning rush-hour. The Division also took the opportunity to distribute free Touch n Go cards among motorists
plying the Kajang SILK Highway as a means to encourage them to use the non-cash lanes at the toll booth to
cut their waiting time at the toll booths thereby providing them with a more pleasant journey, particularly during
rush-hour.
The well-being of the communities in which the Group operates is also important to its long-term development
and success. It is with this in mind that during the financial year under review, the Group undertook numerous
steps to further strengthen ties with its immediate community by contributing to various local community activities
and infrastructure. Some of these activities include:
•
blood donation campaign at Plaza Tol Sg. Balak, Kajang with the co-operation of Pusat Darah Negara,
•
provision of financial assistance to several needy families, mosques and suraus near the areas where the
Group operates, and
•
the hosting of Raya celebrations for orphanages situated in and around Kajang.
It is the Group’s aspiration for initiatives such as these to continue well into the future.
Financial
Statements
Directors’ Report
29
Statement by Directors
33
Statutory Declaration
33
Independent Auditors’ Report
34
Consolidated Statement of Financial Position
36
Statement of Financial Position
38
Statements of Comprehensive Income
39
Statements of Changes In Equity
40
Statements of Cash Flows
42
Notes to the Financial Statements
43
Supplementary Information - Breakdown of
Retained Earnings into Realised and Unrealised
92
ANNUAL REPORT 2013
29
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 financial year ended 31 July 2013.
Principal activities
The principal activity of the Company is investment holding. The principal activities of the subsidiaries are tolled
highway concessionaire and the provision of offshore marine support services.
There have been no significant changes in the nature of these principal activities during the financial year.
Results
Profit net of tax
Group
RM’000
Company
RM’000
18,757
706
4,413
706
14,344
-
18,757
706
Profit attributable to:
Owners of the parent
Minority interests
There were no material transfers to or from reserves or provision during the financial year other than as disclosed
in the financial statements.
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial
year were not substantially affected by any item, transaction or event of a material and unusual nature.
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:
Tai Keat Chai
Abdul Hamid bin Sh Mohamed
Directors’ benefits
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to
which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of
shares in or debentures of the Company or any other body corporate.
Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other
than benefits included in the aggregate amount of emoluments received or due and receivable by the directors
or the fixed salary of a full time employee of the Company as shown in Note 26(b) to the financial statements) by
reason of a contract made by the Company or a related corporation with any director or with a firm of which he
is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 31
to the financial statements.
30
ANNUAL REPORT 2013
Directors’ report
Directors’ interest
According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial
year in shares, Cumulative Convertible Redeemable Preference Shares (“CC-RPS”) and Redeemable Convertible
Unsecured Loan Stocks (“RCULS”) in the Company during the financial year were as follows:
Number of ordinary shares of RM0.25 each
1.8.2012
Acquired
Sold
31.7.2013
Direct interest
Abdul Hamid bin Sh Mohamed
Deemed interest
Dato' Mohd Azlan Hashim
Tai Keat Chai
28,200,000
1,000,000
-
79,555,426
117,155,426
5,280,243*
-
1,000,000
2,357,369*
-
28,200,000
1,000,000
84,835,669
- 117,155,426
(1,607,369)
1,750,000
Number of CC-RPS of RM0.10 each
1.8.2012 Transferred
Converted
31.7.2013
Direct interest
Deemed interest
Tai Keat Chai
1,111,111
-
500,000
(1,111,111)*
-
500,000
-
500,000
(500,000)*
-
Number of RCULS of RM1.00 each
1.8.2012
Acquired
Sold
31.7.2013
Direct interest
7,050,000
-
-
7,050,000
Deemed interest
9,400,000
-
-
9,400,000
* T
he acquisition of ordinary shares was by way of conversion of CC-RPS together with their attendant accrued
dividends.
By virtue of their interests in shares in the Company, Dato’ Mohd Azlan Hashim, Johan Zainuddin bin Dzulkifli,
Abdul Hamid bin Sh Mohamed and Tai Keat Chai are also deemed interested in shares of all the Company’s
subsidiaries to the extent the Company has an interest.
None of the other directors in office at the end of the financial year had any interest in shares in the Company or
its related corporations during the financial year.
ANNUAL REPORT 2013
31
Directors’ report
Issue of shares
During the financial year, the Company increased its issued and paid-up ordinary share capital from RM99,262,349
to RM108,333,119 by way of:
(a)
the conversion of 4,111,111 Cumulative Convertible Redeemable Preference Shares and dividends
payable to 19,484,187 ordinary shares at RM0.25 each; and
(b)the conversion of 3,800,000 Redeemable Convertible Unsecured Loan Stocks and dividends payable to
16,798,893 ordinary shares at RM0.25 each.
Other statutory information
(a)
(b)
Before the statements of financial position and statements of comprehensive income of the Group and of
the Company were made out, the directors took reasonable steps:
(i)
to ascertain that proper action had been taken in relation to the writing off of bad debts and the
making of allowance for impairment and satisfied themselves that there were no known bad debts
and that no allowance for doubtful debts was necessary; and
(ii)
to ensure that any current assets which were unlikely to realise their values as shown in the
accounting records in the ordinary course of business had been written down to an amount which
they might be expected so to realise.
At the date of this report, the directors are not aware of any circumstances which would render:
(i)
it necessary to write off any bad debts or to make any allowance for doubtful debts in respect of
the financial statements of the Company; 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)
At the date of this report, there does not exist:
(f)
(i)
any charge on the assets of the Group or of the Company which has arisen since the end of the
financial year which secures the liabilities of any other person; or
(ii)
any contingent liability of the Group or of the Company which has arisen since the end of the
financial year.
In the opinion of the directors:
(i)
no contingent or other liability has become enforceable or is likely to become enforceable within
the period of twelve months after the end of the financial year which will or may affect the ability of
the Group or of the Company to meet their obligations when they fall due; and
(ii)
no item, transaction or event of a material and unusual nature has arisen in the interval between the
end of the financial year and the date of this report which is likely to affect substantially the results
of the operations of the Group or of the Company for the financial year in which this report is made.
32
ANNUAL REPORT 2013
Directors’ report
Auditors
The auditors, Ernst & Young, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the directors dated 27 September 2013.
DATO’ MOHD AZLAN HASHIM
JOHAN ZAINUDDIN BIN DZULKIFLI
ANNUAL REPORT 2013
33
Statement by directors
Pursuant to Section 169(15) of the Companies Act, 1965
We, DATO’ MOHD AZLAN HASHIM and JOHAN ZAINUDDIN BIN DZULKIFLI, being two of the directors of
SILK HOLDINGS BERHAD, do hereby state that, in the opinion of the directors, the accompanying financial
statements set out on pages 36 to 91 are drawn up in accordance with Malaysian Financial Reporting Standards,
International 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 July 2013 and of the results and the
cash flows of the Group and of the Company for the year then ended.
Further to the statement by directors pursuant to Section 169(15) of the Companies Act, 1965, the information
set out in Note 38 on page 92 to the financial statements have been prepared in accordance with Guidance on
Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure
Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of
Accountants.
Signed on behalf of the Board in accordance with a resolution of the directors dated 27 September 2013.
DATO’ MOHD AZLAN HASHIM
JOHAN ZAINUDDIN BIN DZULKIFLI
Statutory declaration
Pursuant to Section 169(16) of the Companies Act, 1965
I, JAMALUDIN MOHD NOR, being the officer primarily responsible for the financial management of SILK
HOLDINGS BERHAD, do solemnly and sincerely declare that the accompanying financial statements set out on
pages 36 to 92 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 JAMALUDIN MOHD NOR at
Kuala Lumpur in the Federal Territory on 27
September 2013
Before me,
ZULKIFLI MOHD DAHLIM (W 541)
COMMISSIONER OF OATH
Kuala Lumpur
JAMALUDIN MOHD NOR
34
ANNUAL REPORT 2013
Independent auditors’ report to the members of
SILK Holdings Berhad (Incorporated in Malaysia)
Report on the financial statements
We have audited the financial statements of SILK Holdings Berhad, which comprise the statements of financial
position as at 31 July 2013 of the Group and of the Company, and the statements of comprehensive income,
statements of changes in equity and statements of cash flows of the Group and of the Company for the year
then ended, and a summary of significant accounting policies and other explanatory information, as set out on
pages 36 to 91.
Directors’ responsibility for the financial statements
The directors of the Company are responsible for the preparation of financial statements so as to give a true
and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting
Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for
such internal control as the directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on our 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 entity’s preparation of financial statements that give a true and fair
view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of
the Company as at 31 July 2013 and of their financial performance and cash flows for the year then ended in
accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the
requirements of the Companies Act, 1965 in Malaysia.
Report on other legal and regulatory requirements
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a)
In our opinion, the accounting and other records and the registers required by the Act to be kept by the
Company and its subsidiaries have been properly kept in accordance with the provisions of the Act.
(b)
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the
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.
(c)
The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification
and did not include any comment required to be made under Section 174(3) of the Act.
ANNUAL REPORT 2013
35
Independent auditors’ report to the members of
SILK Holdings Berhad (Incorporated in Malaysia)
Other reporting responsibilities
The supplementary information set out in Note 38 on page 92 is disclosed to meet the requirement of Bursa
Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the
preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination
of Realised and Unrealised Profits of Losses in Context of Disclosure Pursuant to Bursa Malaysia Securities
Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the
directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all
material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
Other matters
1.
As stated in Note 2.2 to the financial statements, SILK Holdings Berhad adopted Malaysian Financial
Reporting Standards on 1 August 2012 with a transition date of 1 August 2011. These standards were
applied retrospectively by directors to the comparative information in these financial statements, including
the statements of financial position as at 31 July 2012 and 1 August 2011, and the statements of
comprehensive income, statements of changes in equity and statements of cash flows for the year ended
31 July 2012 and related disclosures. We were not engaged to report on the comparative information and
it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of
the Company for the year ended 31 July 2013 have, in these circumstances, included obtaining sufficient
appropriate audit evidence that the opening balances as at 1 August 2012 do not contain misstatements
that materially affect the financial position as of 31 July 2013 and financial performance and cash flows
for the year then ended.
2.
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of
the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any
other person for the content of this report.
Ernst & Young
AF: 0039
Chartered Accountants
Kuala Lumpur, Malaysia
27 September 2013
Ismed Darwis Bahatiar
No. 2921/04/14(J)
Chartered Accountant
36
ANNUAL REPORT 2013
Consolidated statement of financial position
as at 31 JULY 2013
Note
31.7.2013
RM’000
Group
31.7.2012
RM’000
1.8.2011
RM’000
Non-current assets
5
1,146,114
898,553
871,329
6
876,382
890,458
901,648
Goodwill on consolidation
7
647
647
647
Assets
Available for sale financial assets
Current assets
Inventories
Trade and other receivables
Tax recoverable
Cash and bank balances
9
10
Non-current assets classified as held for sale
Total assets
Equity and liabilities
Equity attributable to owners of the parent
Share capital
Share premium
Equity component of convertible preference shares
Equity component of convertible loan stocks
Reverse acquisition deficit
Retained earnings
Employee trust shares
Non-controlling interest
Total equity
11
12
13
14
12
15
-
-
600
2,023,143
1,789,658
1,774,224
735
63,048
551
91,806
156,140
939
85,009
804
71,415
158,167
168
56,380
1,743
64,744
123,035
189
156,329
630
158,797
1,071
124,106
2,179,472
1,948,455
1,898,330
108,333
54,045
1,384
34,034
(92,791)
39,270
99,262
53,670
1,901
37,271
(92,791)
34,857
99,262
53,670
1,901
37,271
(92,791)
35,536
144,275
134,170
134,849
(6,688)
137,587
89,799
227,386
(6,688)
127,482
75,755
203,237
(6,688)
128,161
63,560
191,721
ANNUAL REPORT 2013
37
Consolidated statement of financial position
As at 31 July 2013 (cont’d.)
Note
31.7.2013
RM’000
Group
31.7.2012
RM’000
1.8.2011
RM’000
Non-current liabilities
Loans and borrowings
16
1,503,725
1,375,115
1,348,694
Ijarah rental payable
23
136,492
118,604
98,988
Liability component of convertible preference shares
13
14,132
13,426
Liability component of convertible loan stocks
Deferred tax liabilities
Retirement benefits obligation
Provision for heavy repairs
14
19
20
21
5,867
59,173
892
1,706,149
5,971
52,660
4,637
1,494
1,572,613
5,547
46,490
3,334
1,941
1,518,420
Current liabilities
Trade and other payables
16
22
13
23
146,132
69,253
10,837
92,466
64,488
-
82,015
91,169
-
16,895
13,354
13,207
21
2,181
639
245,937
1,952,086
1,042
1,255
172,605
1,745,218
1,762
36
188,189
1,706,609
2,179,472
1,948,455
1,898,330
Provision for taxation
Total liabilities
Total equity and liabilities
The accompanying accounting policies and explanatory information form an integral part of the financial
statements.
38
ANNUAL REPORT 2013
Statement of financial position
As at 31 July 2013
31.7.2013
RM’000
Company
31.7.2012
RM’000
1.8.2011
RM’000
8
249,658
249,658
249,658
9
10
6,850
2,073
8,923
1,942
2,042
3,984
1,157
509
1,666
258,581
253,642
251,324
11
12
13
14
12
108,333
54,045
1,384
34,034
36,297
598
234,691
99,262
53,670
1,901
37,271
36,297
(108)
228,293
99,262
53,670
1,901
37,271
36,297
(1,226)
227,175
15
(6,688)
(6,688)
(6,688)
228,003
221,605
220,487
Note
Assets
Non-current asset
Investment in subsidiaries
Current assets
Other receivables
Total assets
Equity and liabilities
Equity attributable to owners of the parent
Share capital
Share premium
Equity component of convertible preference shares
Equity component of convertible loan stocks
Capital reserve
Retained earnings/(accumulated losses)
Total equity
Non-current liabilities
13
-
14,132
13,426
Liability component of convertible loan stocks
14
5,867
5,971
5,547
Deferred tax liabilities
19
1,041
1,343
1,626
6,908
21,446
20,599
10,555
10,202
Current liabilities
Other payables
22
12,378
13
10,837
-
-
455
36
36
23,670
10,591
10,238
Provision for taxation
Total liabilities
Total equity and liabilities
30,578
32,037
30,837
258,581
253,642
251,324
statements.
ANNUAL REPORT 2013
39
Statements of comprehensive income
For the year ended 31 July 2013
Note
Revenue
Direct costs
24
Gross profit
Other items of income:
Interest income
Other income
Other items of expenses:
Administrative expenses
Finance costs
Profit before tax
Income tax (expense)/benefit
Profit net of tax, representing
total comprehensive income for
the year
25
26
27
Total comprehensive income for the
year attributable to:
Owners of the parent
Minority interests
Earnings/(loss) per share (sen)
Basic
Diluted
28
28
Group
2013
2012
RM’000
RM’000
Company
2013
2012
RM’000
RM’000
383,346
(223,714)
341,063
(198,396)
3,253
-
3,145
-
159,632
142,667
3,253
3,145
1,811
1,045
2,856
1,179
1,060
2,239
59
2
61
8
8
(24,102)
(111,947)
26,439
(7,682)
(24,923)
(102,640)
17,343
(7,953)
(804)
(1,355)
1,155
(449)
(886)
(1,432)
835
283
18,757
9,390
706
1,118
4,413
14,344
18,757
(679)
10,069
9,390
706
706
1,118
1,118
1.1
0.8
(0.2)
0.1
statements.
At 1 August 2011
Total comprehensive income
Transactions with owners:
Contribution by minority
shareholders
Dividends paid to minority
shareholders
Total transactions with owners
At 31 July 2012
Conversion of convertible
preference shares
loan stocks
Dividends paid to minority
shareholders
At 31 July 2013
At 1 August 2012
Group
53,670
-
53,670
-
99,262
375
54,045
9,071
108,333
99,262
-
(5)
4,200
14
380
53,670
-
4,871
99,262
-
13
Note
Share
capital
RM’000
(6,688)
-
(6,688)
-
(6,688)
-
-
(6,688)
-
1,901
-
1,901
-
(517)
1,384
-
(517)
1,901
-
37,271
-
37,271
-
(3,237)
34,034
(3,237)
-
37,271
-
(92,791)
-
(92,791)
-
(92,791)
-
-
(92,791)
-
34,857
-
35,536
(679)
39,270
-
-
34,857
4,413
|-------------------------- Non-distributable -----------------------| Distributable
Equity
component
Equity
Employee
of component
Reverse
Share
trust
preference
of loan acquisition
Retained
premium
shares
shares
stocks
deficit
earnings
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
|--------------- Attributable to equity holders of the Company ---------------|
Statements of changes in equity
(1,500)
2,126
75,755
3,626
63,560
10,069
(300)
(300)
89,799
-
-
75,755
14,344
Minority
interests
RM’000
(1,500)
2,126
203,237
3,626
191,721
9,390
(300)
5,392
227,386
958
4,734
203,237
18,757
Total
RM’000
40
ANNUAL REPORT 2013
53,670
53,670
375
54,045
(5)
380
53,670
-
Share
premium
RM’000
(6,688)
(6,688)
(6,688)
-
-
(6,688)
-
Employee
trust
shares
RM’000
1,901
1,901
(517)
1,384
-
(517)
1,901
-
37,271
37,271
(3,237)
34,034
(3,237)
-
37,271
-
36,297
36,297
36,297
-
-
36,297
-
Capital
reserve
RM’000
(1,226)
1,118
(108)
598
-
-
(108)
706
(Accumulated
losses)/
distributable
retained
earnings
RM’000
220,487
1,118
221,605
5,692
228,003
958
4,734
221,605
706
Total
RM’000
ANNUAL REPORT 2013
The accompanying accounting policies and explanatory information form an integral part of the financial statements.
99,262
99,262
At 1 August 2011
At 31 July 2012
4,200
14
9,071
108,333
4,871
13
preference shares
loan stocks
At 31 July 2013
99,262
-
Note
At 1 August 2012
Company
Share
capital
RM’000
Equity
component
Equity
of component
preference
of loan
shares
stocks
RM’000
RM’000
|------------------- Non-distributable ---------------|
|------- Attributable to equity holders of the Company --------|
For the year ended 31 July 2013 (cont’d.)
Statements of changes in equity
41
42
ANNUAL REPORT 2013
Statements of cash flows
Group
2013
2012
RM’000
RM’000
Company
2013
2012
RM’000
RM’000
Cash flows from operating activities
Collection of revenue
Collection of other income
Payment of expenses
Taxes (paid)/recovered
Net cash generated from operating
activities
Cash flows from investing activities
Proceeds from disposal of investment
Proceeds from sale of property,
vessels and equipment
Proceeds from sale of non-current assets
classified as held for sale
Investment in subsidiaries by
409,041
316,859
1,082
2,351
3,235
2,173
38
9
412,276
319,032
1,120
2,360
(156,376)
(1,492)
(155,714)
375
(797)
(292)
(827)
-
254,408
163,693
31
1,533
-
600
-
-
76
172
-
-
197
504
-
-
a non-controlling shareholder
Purchase of property, vessels and
equipment
Payment of expressway heavy repairs
Payment for concession intangible assets
-
3,626
-
-
(326,340)
(931)
-
(108,900)
(1,361)
(723)
-
-
Net cash used in investing activities
(326,998)
(106,082)
-
-
262,665
(80,389)
(88,995)
101,185
(64,314)
(86,311)
-
-
(300)
(1,500)
-
-
92,981
(50,940)
-
-
20,391
6,671
31
1,533
71,415
64,744
2,042
509
91,806
71,415
2,073
2,042
Cash flows from financing activities
Drawdown of borrowings
Repayment of borrowings
Payment of finance costs
Dividends paid by a subsidiary to
a non-controlling shareholder
Net cash generated from/(used in)
financing activities
Net increase in cash and
cash equivalents
Cash and cash equivalents at
beginning of the year
Cash and cash equivalents at
end of the year (Note 10)
statements.
ANNUAL REPORT 2013
43
Notes to the financial statements
31 July 2013
1.
Corporate information
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on
the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at
D2-3-2 Solaris Dutamas, 1, Jalan Dutamas 1, 50480 Kuala Lumpur, Wilayah Persekutuan. The principal
place of business of the Company is located at Plaza Tol Sungai Balak, KM28.3A, Lebuhraya Kajang SILK,
43000 Kajang, Selangor Darul Ehsan.
The principal activity of the Company is investment holding. The principal activities of the subsidiaries are
tolled highway concessionaire and the provision of offshore marine support services. There have been no
significant changes in the nature of these principal activities during the financial year.
2.
Summary of significant accounting policies
2.1
Basis of preparation
These financial statements of the Group and of the Company have been prepared in accordance
with Malaysian Financial Reporting Standards (“MFRS”) and the Companies Act, 1965 in Malaysia.
These financial statements also comply with International Financial Reporting Standards (“IFRS”)
issued by the International Accounting Standards Board. For the periods up to and including the
year ended 31 July 2012, the Group prepared its financial statements in accordance with Financial
Reporting Standards (“FRS”).
These financial statements of the Group and of the Company have also been prepared on historical
cost basis except as disclosed in the accounting policies below.
These financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the
nearest thousand (RM’000), except otherwise indicated.
2.2
First-time adoption of MFRS
These financial statements of the Group and the Company are the first MFRS financial statements
for the year ended 31 July 2013. MFRS 1 First-time Adoption of Malaysian Financial Reporting
Standards (“MFRS 1”) has been applied.
For the years up to and including the year ended 31 July 2012, the Group and the Company
prepared their financial statements in accordance with Financial Reporting Standards (“FRS”). In
preparing its opening MFRS statements of financial position as at 1 August 2011 (which is also
the date of transition), the Group and the Company have considered the transition from FRS to
MFRS and no adjustment was required to be made to the amounts previously reported in financial
statements prepared in accordance with FRS. Accordingly, notes related to the statements of
financial position as at date of transition to MFRS are not presented.
The significant accounting policies adopted in preparing these financial statements are consistent
with those of financial statements for the year ended 31 July 2012.
44
ANNUAL REPORT 2013
31 July 2013
2.
Summary of significant accounting policies (cont’d.)
2.3
New and revised Pronouncements issued but not yet effective
The new and revised MFRS, Amendments to MFRS and IC Interpretation (collectively referred to as
“Pronouncements”) that are issued but not yet effective up to the date of issuance of the Group’s
and the Company’s financial statements are disclosed below. The Group and the Company intend
to adopt these standards, if applicable, when they become effective.
Description
Amendments to MFRS 101: Presentation of Financial
Statements (Annual Improvements 2009-2011 Cycle)
MFRS 3 Business Combinations (IFRS 3 Business
Combinations issued by IASB in March 2004)
MFRS 10 Consolidated Financial Statements
MFRS 11 Joint Arrangements
MFRS 12 Disclosure of interests in Other Entities
MFRS 13 Fair Value Measurement
MFRS 119 Employee Benefits
MFRS 127 Separate Financial Statements
MFRS 128 Investment in Associates and Joint Ventures
MFRS 127 Consolidated and Separate Financial Statements
(IAS 27 as revised by IASB in December 2003)
Amendment to IC Interpretation 2: Members’ Shares in
Co-operative Entities and Similar Instruments
(Annual Improvements 2009-2011 Cycle)
IC Interpretation 20 Stripping Costs in the Production
Phase of a Surface Mine
Amendments to MFRS 7: Disclosures – Offsetting Financial
Assets and Financial Liabilities
Amendments to MFRS 1: First-time Adoption of Malaysian
Financial Reporting Standards – Government Loans
Amendments to MFRS 1: First-time Adoption of Malaysian
Financial Reporting Standards (Annual Improvements
2009-2011 Cycle)
Amendments to MFRS 116: Property, Plant and Equipment
Amendments to MFRS 132: Financial Instruments:
Presentation (Annual Improvements 2009-2011 Cycle)
Amendments to MFRS 134: Interim Financial Reporting
Amendments to MFRS 10: Consolidated Financial Statements:
Transition Guidance
Amendments to MFRS 11: Joint Arrangements:
Transition Guidance
Amendments to MFRS 12: Disclosure of Interests in Other
Entities: Transition Guidance
Amendments to MFRS 132: Offsetting Financial Assets and
Financial Liabilities
Effective for annual
periods beginning
on or after
1 January 2013
1
1
1
1
1
1
1
1
January
January
January
January
January
January
January
January
2013
2013
2013
2013
2013
2013
2013
2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2014
ANNUAL REPORT 2013
45
31 July 2013
2.
2.3
New and revised Pronouncements issued but not yet effective (cont’d.)
Description
Amendments to MFRS 10, MFRS 12 and MFRS 127:
Investment Entities
Amendments to MFRS 136: Recoverable Amount Disclosure
for Non-Financial Assets
Amendments to MFRS 139: Novation of Derivatives and
Continuation of Hedge Accounting
IC Interpretation 21 Levies
MFRS 9 Financial Instruments
Effective for annual
periods beginning
on or after
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2015
The directors expect that the adoption of the above standards and interpretations will have no
material impact on the financial statements in the period of initial application.
2.4
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its
subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the
preparation of the consolidated financial statements are prepared for the same reporting date as
the Company. Consistent accounting policies are applied to like transactions and events in similar
circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from
intra-group transactions are eliminated in full.
Acquisitions of subsidiaries are accounted for by applying the purchase method. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. Adjustments to those fair values relating to
previously held interests are treated as a revaluation and recognised in other comprehensive
income. The cost of a business combination 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 business combination.
Any excess of the cost of business combination over the Group’s share in the net fair value of the
acquired subsidiary’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill
on the statement of financial position. The accounting policy for goodwill is set out in Note 2.8(b).
Any excess of the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets,
liabilities and contingent liabilities over the cost of business combination is recognised as income
in profit or loss on the date of acquisition.
When the Group acquires a business, embedded derivatives separated from the host contract by
the acquiree are reassessed on acquisition unless the business combination results in a change in
the terms of the contract that significantly modifies the cash flows that would otherwise be required
under the contract.
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.
The acquisition of AQL Aman Sdn. Bhd. (“AQL”) was completed on 14 October 2009. Pursuant to
Appendix B of MFRS 3 – Business Combinations, this acquisition was deemed a reverse acquisition
arrangement. Due to the application of MFRS 3 rules relating to reverse acquisitions, AQL, the
legal subsidiary, became the acquirer of the Group for accounting purposes. Accordingly, the
consolidated financial statements have been prepared as a continuation of the financial statements
of AQL, but under the name of the Company, the legal parent.
46
ANNUAL REPORT 2013
31 July 2013
2.
2.5
Transactions with minority interests
Minority interests represent the portion of profit or loss and net assets in subsidiaries not held
by the Group and are presented separately in profit or loss of the Group and within equity in
the consolidated statements of financial position, separately from parent shareholders’ equity.
Transactions with minority interests are accounted for using the entity concept method, whereby
transactions with minority interests are accounted for as transactions with owners. On acquisition
of minority interests, the difference between the consideration and book value of the share of the
net assets acquired is recognised directly in equity. Gain or loss on disposal to minority interests is
recognised directly in equity.
2.6
Foreign currency
(a)
Functional and presentation currency
The individual financial statements of each entity in the Group are measured using the
currency of the primary economic environment in which the entity operates (“the functional
currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”),
which is also the Company’s functional currency.
(b)
Foreign currency transactions
Transactions in foreign currencies are measured in the respective functional currencies of
the Company and its subsidiaries and are recorded on initial recognition in the functional
currencies at exchange rates approximating those ruling at the transaction dates. Monetary
assets and liabilities denominated in foreign currencies are translated at the rate of exchange
ruling at the reporting date. Non-monetary items denominated in foreign currencies that
are measured at historical cost are translated using the exchange rates as at the dates of
the initial transactions. Non-monetary items denominated in foreign currencies measured
at fair value are translated using the exchange rates at the date when the fair value was
determined.
Exchange differences arising on the settlement of monetary items or on translating monetary
items at the reporting date are recognised in profit or loss except for exchange differences
arising on monetary items that form part of the Group’s net investment in foreign operations,
which are recognised initially in other comprehensive income and accumulated under foreign
currency translation reserve in equity. The foreign currency translation reserve is reclassified
from equity to profit or loss of the Group on disposal of the foreign operation.
Exchange differences arising on the translation of non-monetary items carried at fair value
are included in profit or loss for the period except for the differences arising on the translation
of non-monetary items in respect of which gains and losses are recognised directly in equity.
Exchange differences arising from such non-monetary items are also recognised directly in
equity.
2.7
All items of property, vessels and equipment are initially recorded at cost. The cost of an item of
property, vessels and equipment is recognised as an asset if, and only if, 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.
Subsequent to recognition, property, vessels and equipment are measured at cost less accumulated
depreciation and accumulated impairment losses. When significant parts of property, vessels and
equipment are required to be replaced in intervals, the Group recognises such parts as individual
assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection
is performed, its cost is recognised in the carrying amount of the plant and equipment as a
replacement if the recognition criteria are satisfied. All other repair and maintenance costs are
recognised in profit or loss as incurred.
47
ANNUAL REPORT 2013
31 July 2013
2.
2.7
Property, vessels and equipment (cont’d.)
Vessels under construction are not depreciated as these assets are not yet available for use.
Depreciation of other property, vessels and equipment is computed on a straight-line basis over
the estimated useful lives of the assets, at the following annual rates:
Buildings
Vessels
Vessels equipment
Dry docking expenditure
Motor vehicles
Boat
Renovation
Computer system, furniture, fittings and other equipment
2%
7%
2%
40%
20% - 25%
10%
8% - 10%
10% - 60%
The dry docking expenditure is capitalised and depreciated over a period of 30 months or over the
period until the next dry docking date, whichever is shorter.
The carrying values of property, vessels and equipment are reviewed for impairment when events
or changes in circumstances indicate that the carrying value may not be recoverable. The residual
value, useful life and depreciation method are reviewed at each financial year-end, and adjusted
prospectively, if appropriate.
An item of property, vessels and equipment is derecognised upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the
asset is included in the profit or loss in the year the asset is derecognised.
2.8
Intangible assets
(a)
Concession intangible assets comprise expressway development expenditure (including
borrowing costs during the period of construction, net of interest income) incurred in
connection with the concession, net of Government grants.
Concession assets are stated at cost less accumulated amortisation and accumulated
impairment losses and are assessed for impairment whenever there is an indication that the
concession asset may be impaired.
Upon commencement of tolling operations, at each reporting date, the cumulative actual
expenditure on the concession assets incurred is amortised to profit or loss based on the
following formula:
Current year actual traffic volume
(Current year actual traffic volume
+ projected total traffic volume for
the remaining concession period)
X
(Opening net carrying amount
of concession intangible asset +
current year additions)
The projected total traffic volume of the concession is based on the “Base Case” traffic
volumes of the latest available independent traffic projection. The traffic volume projection is
updated from time to time to reflect the latest available information.
Changes in the expected pattern of consumption of future economic benefits embodied in
the assets are accounted for by changing the projected total traffic volume of the concession.
The amortisation expense on concession assets is recognised in profit or loss.
48
ANNUAL REPORT 2013
31 July 2013
2.
2.8
Intangible assets (cont’d.)
(b)Goodwill
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at
cost less accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition
date, to each of the Group’s cash-generating units that are expected to benefit from the
synergies of the combination.
The cash-generating unit to which goodwill has been allocated is tested for impairment
annually and whenever there is an indication that the cash-generating unit may be impaired,
by comparing the carrying amount of the cash-generating unit, including the allocated
goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable
amount of the cash-generating unit is less than the carrying amount, an impairment loss is
recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed
in subsequent periods.
Where goodwill forms part of a cash-generating unit and part of the operation within that
cash-generating unit is disposed, the goodwill associated with the operation disposed is
included in the carrying amount of the operation when determining the gain or loss on
disposal of the operation. Goodwill disposed in this circumstance is measured based on the
relative fair values of the operations disposed and the portion of the cash-generating unit
retained.
2.9
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be
impaired. If any such indication exists, or when an annual impairment assessment for an asset is
required, the Group makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value
in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash-generating units (“CGU”)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset
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. Where the carrying
amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable
amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to
reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to
reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. Impairment losses are recognised in profit or loss.
An assessment is made at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. A previously recognised
impairment loss is reversed only if there has been a change in the estimates used to determine the
asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the
carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed
the carrying amount that would have been determined, net of depreciation, had no impairment
loss been recognised previously. Such reversal is recognised in profit or loss. Impairment loss on
goodwill is not reversed in a subsequent period.
ANNUAL REPORT 2013
49
31 July 2013
2.
2.10Subsidiaries
A subsidiary is an entity over which the Group has the power to govern the financial and operating
policies so as to obtain benefits from its activities.
In the Company’s separate financial statements, investments in subsidiaries are accounted for at
cost less impairment losses.
2.11 Financial assets
Financial assets are recognised in the statements of financial position when, and only when,
the Group and the Company become a party to the contractual provisions of the financial
instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of
financial assets not at fair value through profit or loss, directly attributable transaction costs. The Group and the Company determine the classification of their financial assets at initial recognition,
and the categories include loans and receivables and available-for-sale financial assets.
(a)
Loans and receivables
Financial assets with fixed or determinable payments that are not quoted in an active market
are classified as loans and receivables. The Group’s and Company’s loans and receivables
include trade and other receivables and cash and bank balances.
Subsequent to initial recognition, loans and receivables are measured at amortised cost
using the effective interest method. Gains and losses are recognised in profit or loss when
the loans and receivables are derecognised or impaired, and through the amortisation
process.
Loans and receivables are classified as current assets, except for those having maturity
dates later than 12 months after the reporting date which are classified as non-current.
(b)
Available-for-sale financial assets
Available-for-sale financial assets are financial assets that are designated as available for
sale or are not classified as financial assets as fair value through profit or loss, loans and
receivables or held to maturity investments. After initial recognition, available-for-sale financial assets are measured at fair value. Any
gains or losses from changes in fair value of the financial assets are recognised in other
comprehensive income, except that impairment losses, foreign exchange gains and losses
on monetary instruments and interest calculated using the effective interest method are
recognised in profit or loss. The cumulative gain or loss previously recognised in other
comprehensive income is reclassified from equity to profit or loss as a reclassification
adjustment when the financial asset is derecognised. Interest income calculated using the
effective interest method is recognised in profit or loss. Dividends on an available-for-sale
equity instrument are recognised in profit or loss when the Group and the Company’s right
to receive payment is established.
Investments in equity instruments whose fair value cannot be reliably measured are measured
at cost less impairment loss.
Available-for-sale financial assets are classified as non-current assets unless they are
expected to be realised within 12 months after the reporting date.
50
ANNUAL REPORT 2013
31 July 2013
2.
2.11 Financial assets (cont’d.)
A financial asset is derecognised when the contractual right to receive cash flows from the asset
has expired. On derecognition of a financial asset in its entirety, the difference between the carrying
amount and the sum of the consideration received and any cumulative gain or loss that had been
recognised in other comprehensive income is recognised in profit or loss. Regular way purchases or sales are purchases or sales of financial assets that require delivery
of assets within the period generally established by regulation or convention in the marketplace
concerned. All regular way purchases and sales of financial assets are recognised or derecognised
on the trade date i.e. the date that the Group and the Company commit to purchase or sell the
asset. 2.12 Impairment of financial assets
The Group and the Company assess at each reporting date whether there is any objective evidence
that a financial asset is impaired.
(a)
Trade and other receivables and other financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets
has been incurred, the Group and the Company consider factors such as the probability of
insolvency or significant financial difficulties of the debtor and default or significant delay in
payments. For certain categories of financial assets, such as trade receivables, assets that
are assessed not to be impaired individually are subsequently assessed for impairment on
a collective basis based on similar risk characteristics. Objective evidence of impairment for
a portfolio of receivables could include the Group’s and the Company’s past experience of
collecting payments, an increase in the number of delayed payments in the portfolio past the
average credit period and observable changes in national or local economic conditions that
correlate with default on receivables.
If any such evidence exists, the amount of impairment loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows
discounted at the financial asset’s original effective interest rate. The impairment loss is
recognised in profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for
all financial assets with the exception of trade receivables, where the carrying amount
is reduced through the use of an allowance account. When a trade receivable becomes
uncollectible, it is written off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed to the extent that the carrying amount of
the asset does not exceed its amortised cost at the reversal date. The amount of reversal is
recognised in profit or loss.
(b) Available-for-sale financial assets
Significant or prolonged decline in fair value below cost, significant financial difficulties of
the issuer or obligor, and the disappearance of an active trading market are considerations
to determine whether there is objective evidence that investment securities classified as
available-for-sale financial assets are impaired.
If an available-for-sale financial asset is impaired, an amount comprising the difference
between its cost (net of any principal payment and amortisation) and its current fair value,
less any impairment loss previously recognised in profit or loss, is transferred from equity to
profit or loss.
ANNUAL REPORT 2013
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31 July 2013
2.
2.12 Impairment of financial assets (cont’d.)
(b) Available-for-sale financial assets (cont’d.)
Impairment losses on available-for-sale equity investments are not reversed in profit or
loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment
loss is recognised in other comprehensive income. For available-for-sale debt investments,
impairment losses are subsequently reversed in profit or loss if an increase in the fair value
of the investment can be objectively related to an event occurring after the recognition of the
impairment loss in profit or loss.
2.13 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand and demand deposits that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value. These also include bank overdrafts that form an integral part of the Group’s cash
management.
2.14Inventories
Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the
inventories to their present location and condition are accounted for as follows:
Cost is determined using the first in, first out method. The cost comprises all direct and indirect
costs incurred to bring the inventories to their present location.
Net realisable value is the estimated selling price in the ordinary course of business less estimated
costs of completion and the estimated costs necessary to make the sale.
2.15Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a
result of a past event and it is probable that an outflow of economic resources will be required to
settle the obligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
If it is no longer probable that an outflow of economic resources will be required to settle the
obligation, the provision is reversed. If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to
the liability. Where discounting is used, the increase in the provision due to the passage of time is
recognised as a finance cost.
Provision for heavy repairs being the contractual obligations to maintain and restore the infrastructure
to a specified standard of serviceability, is recognised and measured at the present value of the
estimated expenditure required to settle the obligation at the reporting date. The unwinding of
discount is expensed as incurred and recognised in profit or loss as a finance cost.
2.16 Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements
entered into and the definitions of a financial liability.
Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial
position when, and only when, the Group and the Company become a party to the contractual
provisions of the financial instrument. Financial liabilities are classified as either financial liabilities
at fair value through profit or loss or other financial liabilities.
52
ANNUAL REPORT 2013
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2.
2.16 Financial liabilities (cont’d.)
The Group’s and the Company’s financial liabilities include trade payables, other payables and
loans and borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction
costs and subsequently measured at amortised cost using the effective interest method.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and
subsequently measured at amortised cost using the effective interest method. Borrowings are
classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are
derecognised, and through the amortisation process.
A financial liability is derecognised when the obligation under the liability is extinguished. When an
existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification
is treated as a derecognition of the original liability and the recognition of a new liability, and the
difference in the respective carrying amounts is recognised in profit or loss.
2.17 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when
due.
Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction
costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income
in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to a
financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse
the holder for the associated loss, the liability is measured at the higher of the best estimate of the
expenditure required to settle the present obligation at the reporting date and the amount initially
recognised less cumulative amortisation.
As at reporting date, no values are placed on corporate guarantees provided by the Company to
secure bank loans and other banking facilities granted to its subsidiaries where such loans and
banking facilities are fully collaterised by fixed and floating charges over the property, vessels and
equipment and other assets of the subsidiaries and the directors regard the value of the credit
enhancement provided by the corporate guarantees as minimal.
2.18 Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly
attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing
costs commences when the activities to prepare the asset for its intended use or sale are in
progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised
until the assets are substantially completed for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing
costs consist of interest and other costs that the Group incurs in connection with the borrowing of
funds.
ANNUAL REPORT 2013
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31 July 2013
2.
2.19
Cumulative Convertible Redeemable Preference Shares
Redeemable Convertible Unsecured Loan Stocks (“RCULS”)
(“CC-RPS”)
and
The CC-RPS and RCULS are regarded as compound instruments, consisting of a liability component
and an equity component. The component of CC-RPS and RCULS that exhibits characteristics of a
liability is recognised as a financial liability in the statements of financial position, net of transaction
costs. The dividends on those shares are recognised as interest expense in profit or loss using the
effective interest rate method. On issuance of the CC-RPS and RCULS, the fair value of the liability
component is determined using a market rate for an equivalent non-convertible debt and this
amount is carried as a financial liability in accordance with the accounting policy for other payables
set out in Note 2.16. The residual amount, after deducting the fair value of the liability component, is recognised and
included in shareholder’s equity, net of transaction costs. Transaction costs are apportioned between the liability and equity components of the CC-RPS
and RCULS based on the allocation of proceeds to the liability and equity components when the
instruments were first recognised.
2.20Employee benefits
(a) Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as expenses
in the period in which the associated services are rendered by employees. Short term
accumulating compensated absences such as paid annual leave are recognised when
services are rendered by employees that increase their entitlement to future compensated
absences, and short term non-accumulating compensated absences such as sick leave are
recognised when the absences occur.
(b)
Defined contributions plan
The Group participates in the national pension schemes as defined by the laws of the countries
in which it has operations. The Malaysian companies in the Group make contributions to the
Employee Provident Fund in Malaysia, a defined contribution pension scheme. Contributions
to defined contribution pension schemes are recognised as an expense in the period in
which the related service is performed.
(c)
Retirement benefit plan
A subsidiary of the Group operates a retirement benefit scheme for its eligible employees.
The Group sets aside provisions for retirement benefits based on the entitlement rate each
eligible employee is entitled to at the end of each financial year of service over the employee’s
period of employment.
2.21Leases
(a)
As lessee
Finance leases, which transfer to the Group substantially all the risks and rewards incidental
to ownership of the leased item, are capitalised at the inception of the lease at the fair value
of the leased asset or, if lower, at the present value of the minimum lease payments. Any
initial direct costs are also added to the amount capitalised. Lease payments are apportioned
between the finance charges and reduction of the lease liability so as to achieve a constant
rate of interest on the remaining balance of the liability. Finance charges are charged to profit
or loss. Contingent rents, if any, are charged as expenses in the periods in which they are
incurred.
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2.
2.21 Leases (cont’d.)
(a)
As lessee (cont’d.)
Leased assets are depreciated over the estimated useful life of the asset. However, if there
is no reasonable certainty that the Group will obtain ownership by the end of the lease term,
the asset is depreciated over the shorter of the estimated useful life and the lease term.
Operating lease payments are recognised as an expense in profit or loss on a straight-line
basis over the lease term. 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.
(b)
As lessor
Leases where the Group retains substantially all the risks and rewards of ownership of
the asset are classified as operating leases. Initial direct costs incurred in negotiating an
operating lease are added to the carrying amount of the leased asset and recognised over
the lease term on the same bases as rental income. The accounting policy for rental income
is set out in Note 2.22(h).
2.22Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to
the Group and the revenue can be reliably measured. Revenue is measured at the fair value of
consideration received or receivable.
(a)
Vessel charter
Revenue from vessel charters is recognised on a time-apportionment basis.
(b)
Toll revenue
Toll revenue is accounted for as and when toll is chargeable for the usage of the Kajang
Traffic Dispersal Ring Road (the “Expressway”). The amount of toll compensation revenue is
recognised as revenue when recovery is probable and the amount that is recoverable can
be estimated reliably.
(c)
Interest income/profits from Syariah deposits
Interest income/profits from Syariah deposits are recognised on an accrual basis using the
effective interest method.
(d)
Dividend income
Dividend income is recognised when the Group’s right to receive payment is established.
(e)
License fees
License fees are recognised based on contract value over the remaining period of the toll
concession upon the transfer of significant risks and rewards of ownership of the rights.
(f)
Advertising income and highway access fees
Advertising income and highway access fees are recognised when services are rendered.
ANNUAL REPORT 2013
55
31 July 2013
2.
2.22Revenue (cont’d.)
(g)
Management fees
Management fees are recognised when services are rendered.
(h)
Rental income
Rental income is accounted for on a straight-line basis over the lease terms. The aggregate
costs of incentives provided to lessees are recognised as a reduction of rental income over
the lease term on a straight-line basis.
2.23Income taxes
(a)
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from
or paid to the taxation authorities. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted by the reporting date.
Current taxes are recognised in profit or loss except to the extent that the tax relates to
items recognised outside profit or loss, either in other comprehensive income or directly in
equity.
(b)
Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting
date between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, except:
-where the deferred tax liability arises from the initial recognition of goodwill or of an
asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss;
and
-in respect of taxable temporary differences associated with investments in subsidiaries,
where the timing of the reversal of the temporary differences can be controlled and it
is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of
unused tax credits and unused tax losses, to the extent that it is probable that taxable profit
will be available against which the deductible temporary differences, and the carry forward
of unused tax credits and unused tax losses can be utilised except:
-where the deferred tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit
nor taxable profit or loss; and -
in respect of deductible temporary differences associated with investments in
subsidiaries, deferred tax assets are recognised only to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and taxable profit
will be available against which the temporary differences can be utilised. .
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ANNUAL REPORT 2013
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2.
2.23Income taxes (cont’d.)
(b)
Deferred tax (cont’d.)
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to
allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets
are reassessed at each reporting date and are recognised to the extent that it has become
probable that future taxable profit will allow the deferred tax assets to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates and tax laws
that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit
or loss. Deferred tax items are recognised in correlation to the underlying transaction either
in other comprehensive income or directly in equity and deferred tax arising from a business
combination is adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists
to set off current tax assets against current tax liabilities and the deferred taxes relate to the
same taxable entity and the same taxation authority.
2.24 Segment reporting
For management purposes, the Group is organised into operating segments based on their
products and services which are independently managed by the respective segment managers
responsible for the performance of the respective segments under their charge. The segment
managers report directly to the management of the Group who regularly review the segment results
in order to allocate resources to the segments and to assess the segment performance. Additional
disclosures on each of these segments are shown in Note 33, including the factors used to identify
the reportable segments and the measurement basis of segment information.
2.25 Share capital and share issuance expenses
An equity instrument is any contract that evidences a residual interest in the assets of the Group
and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.
Ordinary shares are recorded at the proceeds received, net of directly attributable incremental
transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are
recognised in equity in the period in which they are declared.
2.26Contingencies
A contingent liability or asset is a possible obligation or asset that arises from past events and
whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future
event(s) not wholly within the control of the Group.
Contingent liabilities and assets are not recognised in the statements of financial position of the
Group.
ANNUAL REPORT 2013
57
31 July 2013
3.
Changes in estimates
In the prior years, concession intangible assets were amortised based on the following formula:
Cumulative actual traffic
volume to date
Projected total traffic volume of
the concession
X
Cumulative
concession
assets
Less
Accumulated
amortisation at
beginning of the
financial year
During the year, the Group adopted the following formula to better reflect the prospective nature of
change in estimate of traffic volume for the concession period:
Current year actual traffic volume
(Current year actual traffic volume
+ projected total traffic volume
for the remaining concession
period)
X
(Opening net carrying
amount of concession
intangible asset +
current year additions)
The change was accounted for prospectively as a change in accounting estimate. As a result, the
amortisation charge of the Group for the current financial year has been decreased by RM1,748,000.
4.
Significant accounting judgements and estimates
The preparation of the Group’s financial statements requires management to make judgements, estimates
and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the
disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions
and estimates could result in outcomes that could require a material adjustment to the carrying amount of
the asset or liability affected in the future.
4.1
Judgements made in applying accounting policies
There are no critical judgements made by management in the process of applying the Group’s
accounting policies that have significant effect on the amounts recognised in the financial
statements.
4.2
Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the
reporting date that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are discussed below.
(a)
Amortisation of concession intangible assets
The cost of the concession intangible assets and government grant received is amortised
over the concession period by applying the formula in Note 2.8(a). The denominator of
the formula includes projected total traffic volume for subsequent years to the end of
the concession period and is based on the latest traffic volume projections prepared by
independent traffic consultants. The traffic volume projection is updated from time to time
to reflect latest available information. Changes in the socio-economic and the demographic
trends could impact the expected traffic volumes, therefore, future amortisation charges
could be revised. The carrying amount of the Group’s concession assets at the reporting
date is disclosed in Note 6.
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ANNUAL REPORT 2013
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4.
Significant accounting judgements and estimates (cont’d.)
4.2
Key sources of estimation uncertainty (cont’d.)
(b)Impairment of investment in subsidiaries and concession intangible assets
The Group carried out the impairment test based on the value in use of investment in
subsidiaries and the concession intangible assets. Estimating the value in use requires
the Group to make an estimate of the expected future cash flows from the investment in
subsidiaries and the concession intangible assets and also to choose a suitable discount
rate in order to calculate the present value of those cash flows.
The carrying amounts of investment in subsidiaries of the Company and the concession
intangible assets of the Group as at 31 July 2013 was RM249,658,000 (2012: RM249,658,000)
and RM876,382,000 (2012: RM890,458,000) respectively. Further details are disclosed in
Notes 8 and 6.
(c)
Deferred tax assets
Deferred tax assets are only recognised for all unused tax losses and unabsorbed capital
allowances to the extent that it is probable that taxable profit will be available against which the
losses and capital allowances can be utilised. Significant judgement is required to determine the
amount of deferred tax assets that can be recognised, based on the likely timing and level of
future taxable profits together with future tax planning strategies.
The unrecognised unused tax losses of the Group at 31 July 2013 are disclosed in Note 19.
(d)
Useful lives of vessels and vessels equipment
The cost of vessels and vessels equipment are depreciated on a straight-line basis over the
assets’ estimated economic useful lives. Management estimates the useful lives of the Group’s
vessels to be 15 years. This is in line with the general assumptions by major charterers of
vessels. Changes in the expected level of usage could impact the economic useful lives and
residual values of these assets, therefore, future depreciation charges could be revised. The
carrying amount of the Group’s vessels at the reporting date is disclosed in Note 5.
(e)
The Group has recognised a provision for heavy repairs based on independent pavement
condition assessment that estimates the future requirements for pavement re-surfacing and
management’s estimate of the incidental costs. In determining the amount of the provision,
assumptions and estimates are made in relation to the discount rate, the expected cost to
be incurred and the expected timing of those costs. The carrying amount of the provision as
at 31 July 2013 is RM3,073,000 (2012: RM2,536,000).
(f)
Impairment of goodwill
Goodwill is tested for impairment annually and at other times when such indicators exist.
This requires an estimation of the value in use of the cash-generating units to which the
goodwill is allocated.
When value in use calculations are undertaken, management estimates the expected future
cash flows from the asset or cash-generating unit and choose a suitable discount rate in
order to calculate the present value of those cash flows. Further details of the carrying value
and the key assumptions applied in the impairment assessment of goodwill are disclosed
in Note 7.
ANNUAL REPORT 2013
59
31 July 2013
4.
Significant accounting judgements and estimates (cont’d.)
4.2
Key sources of estimation uncertainty (cont’d.)
(g)
Impairment of loans and receivables
The Group assesses at each reporting date whether there is any objective evidence that a
financial asset is impaired. To determine whether there is objective evidence of impairment,
the Group considers factors such as the probability of insolvency or significant financial
difficulties of the debtor and default or significant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash
flows are estimated based on historical loss experience for assets with similar credit risk
characteristics. The carrying amount of the Group’s loans and receivables at the reporting
date is disclosed in Note 9.
(h)
Toll compensation
Toll compensation is receivable from the Government of Malaysia in the event the Government
approves and publishes in the Gazette lower toll rates than the agreed toll rates. Judgement
is involved in estimating the aggregate toll collection in the following year which would
depend on the estimated traffic volume for that year.
The carrying amount of advance toll compensation from Government as at 31 July 2013 of
RM3,634,000 (2012: RM1,637,000) is included in other payables as disclosed in Note 22 to
the financial statements. The amount recognised in profit and loss is disclosed in Note 24.
(i)
Effective interest of the Sukuk Mudharabah
The Group measures the Sukuk Mudharabah at amortised cost using the effective interest
method. The effective interest method is a method of calculating the amortised cost of
the Sukuk Mudharabah and allocating the interest expense over the relevant period of the
Sukuk Mudharabah.
The effective interest rate is the rate that exactly discounts the estimated future
cash payments through the expected period of the Sukuk Mudharabah, or when
appropriate, a shorter period to the net carrying amount of the Sukuk Mudharabah.
In calculating the effective interest rate of the Sukuk Mudharabah, the Group estimated the
future cash payments of the Sukuk Mudharabah based on the assumption that the Sukuk
Mudharabah will be refinanced prior to its maturity, including the estimated refinancing costs
based on competitive quotes.
740
759
At 31 July 2012
162
19
181
19
200
At 31 July 2013
Net carrying amount
At 1 August 2011
Charge for the year
Disposals
At 31 July 2012
Charge for the year
Disposal
At 31 July 2013
Accumulated
depreciation and
amortisation
940
940
940
Buildings
RM’000
884,310
1,035,888
78,991
56,048
135,039
68,946
203,985
646,001
373,348
1,019,349
220,524
1,239,873
-
82,592
-
291,589
81,759
(373,348)
82,592
82,592
Vessels
under
Vessels construction
RM’000
RM’000
At 1 August 2011
Additions
Disposals
Transfers
At 31 July 2012
Additions
Disposal
Reclassification
At 31 July 2013
Cost
Group
5.
31 July 2013
836
2,666
1,417
139
1,556
283
1,839
1,417
975
2,392
1,707
406
4,505
Vessels
equipment
RM’000
9,144
20,407
2,370
4,465
6,835
9,156
15,991
11,079
4,900
15,979
20,419
36,398
Dry docking
expenditure
RM’000
1,697
1,671
1,853
589
(825)
1,617
644
(142)
2,119
3,765
375
(826)
3,314
668
(192)
3,790
711
593
689
178
867
160
1,027
1,535
43
1,578
42
1,620
Motor
vehicles
and boat Renovations
RM’000
RM’000
1,096
1,557
1,775
189
(70)
1,894
289
2,183
2,260
807
(77)
2,990
1,156
(406)
3,740
Computer
system,
furniture,
fittings
and other
equipment
RM’000
898,553
1,146,114
87,257
61,627
(895)
147,989
79,497
(142)
227,344
958,586
88,859
(903)
1,046,542
327,108
(192)
1,373,458
Total
RM’000
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ANNUAL REPORT 2013
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ANNUAL REPORT 2013
61
31 July 2013
5.
Property, vessels and equipment (cont’d.)
(a)
The net carrying amount and cash outflow on acquisition of motor vehicles held under finance
leases are as follows:
Group
2013
RM'000
Net carrying amount
Cash outflow on acquisitions
661
95
2012
RM'000
693
293
Leased assets are pledged as security for the related finance lease liabilities as disclosed in Note 17.
6.
(b)
All other property, vessels and equipment of the Group are pledged as securities for borrowings as
disclosed in Notes 16 and 18.
((c)
The Group’s property, vessels and equipment include borrowing costs from bank loans borrowed
specifically for the purpose of the construction of the vessels. During the financial year, the borrowing
costs capitalised as cost of property, vessels and equipment amounted to RM321,000 (2012:
RM5,061,000).
Cost
At beginning of year
Additions
Adjustment
At end of year
Accumulated amortisation
Amortisation for the year (Note 26)
At end of year
Net carrying amount
Group
2013
RM'000
2012
RM'000
920,282
(100)
920,182
919,559
723
920,282
29,824
13,976
43,800
17,911
11,913
29,824
876,382
890,458
On 8 October 1997, a subsidiary of the Group, Sistem Lingkaran-Lebuhraya Kajang Sdn. Bhd.
(“SILK”) signed a Concession Agreement with the Government of Malaysia pertaining to the
privatisation of the Kajang Traffic Dispersal Ring Road (the “Expressway”). By virtue of the
Concession Agreement, SILK is responsible for the construction of the Expressway which involves
the upgrading and widening of existing roads, and the design and construction of a new alignment
and thereafter its operation, including deriving toll revenue and maintenance, for 33 years.
On 1 August 2001, SILK entered into a Supplemental Concession Agreement with the Government of
Malaysia whereby the concession period was extended from 33 years to 36 years.
The Concession Agreement may be terminated by either the Government or SILK if either
party fails to remedy its default within the period specified in the Concession Agreement.
62
ANNUAL REPORT 2013
31 July 2013
6.
Concession intangible assets (cont’d.)
The Government may terminate the Concession Agreement by expropriation of the Concession
or the Company by giving notice not less than three months to that effect to SILK if it considers
that such expropriation is in the national interest. On expiry of the concession period, SILK
is to hand over the concession area to the Government in a well-maintained condition and
make good any defects at SILK’s own expenses within one year after the date of hand over.
Expressway development expenditure incurred in connection with the concession is classified as
“Concession intangible asset” while the amortisation of concession intangible assets is included in the
“Direct costs” line item in the statements of comprehensive income.
7.
Goodwill on consolidation
The goodwill relates to the offshore marine support services business. Management has performed
impairment assessment on goodwill based on value in use calculations using cash flow projections from
financial budget approved by directors covering a five-year period, with cash flows beyond the five-year
period extrapolated using growth rate based on management’s estimation. The other key assumptions
are:
-
budgeted gross margin is based on margin achieved in the year immediately before the budgeted
year, adjusted for expected growth; and
-
discount rate used is pre-tax and reflects the risks specific to the offshore marine support services
business. Since the recoverable amount exceeds the carrying amount of the goodwill, the Directors’ are of the
opinion that there is no impairment to the goodwill.
The management believes that there are no reasonable foreseeable changes in key assumptions that
would cause the carrying amount of the goodwill to exceed its recoverable amount.
8.
Investment in subsidiaries
Company
2013
2012
RM'000
RM'000
Unquoted shares, at cost
249,658
249,658
Details of the subsidiaries which are incorporated in Malaysia and audited by Ernst & Young, Malaysia are
as follows:
Name of subsidiaries
Proportion (%) of ownership
interest
2013
2012
Held by the Company:
(i) Sistem Lingkaran-Lebuhraya
Kajang Sdn. Bhd. (“SILK”)
Tolled highway concessionaire
100
100
(ii) AQL Aman Sdn. Bhd. (“AQL”)
Investment holding
100
100
(iii) Red Centennial Sdn. Bhd. (“RCSB”)
Ship broking services
100
100
ANNUAL REPORT 2013
63
31 July 2013
8.
Investment in subsidiaries (cont’d.)
Name of subsidiaries
Proportion (%) of
ownership interest
2013
2012
Held through subsidiaries
Held through SILK:
(i) Manfaat Tetap Sdn. Bhd. (“MTSB”)
Special Purpose Vehicle
to facilitate the issuance of
Sukuk Mudharabah (Note 18)
100
100
(i) J asa Merin (Malaysia) Sdn. Bhd.
(“Jasa Merin”)
70
70
(ii) JM Global 1 (Labuan) Plc
51
51
51
51
(iv) JM Global 3 (Labuan) Plc
51
51
(v) JM Global 4 (Labuan) Plc
51
51
100
100
Held through AQL:
(iii) JM Global 2 (Labuan) Plc
Provision of offshore
marine support services
(vi) Jasa Merin (Labuan) Plc
9.
Dormant
Note
Trade receivables
Charter hire income from
national oil corporations
Charter hire income from
multinational oil corporations
Other trade receivables
Company
2013
2012
RM’000
RM’000
(a)
Less: Allowance for impairment
Trade receivables, net
Other receivables
Amounts due from subsidiaries
Advances to staff
Sundry receivables
Interest receivable
Prepayments
Deposits
Group
2013
2012
RM’000
RM’000
(b)
(b)
19,727
35,508
-
-
32,572
1,522
53,821
53,821
17,466
26,603
79,577
(61)
79,516
-
-
68
6,678
329
1,894
258
9,227
63,048
47
2,197
93
2,811
345
5,493
85,009
6,811
13
24
2
6,850
6,850
1,927
1
12
2
1,942
1,942
64
ANNUAL REPORT 2013
31 July 2013
9.
Trade and other receivables (cont’d.)
Note
Total trade and other receivables
Add: Cash and bank balances
(Note 10)
Less: Prepayments
Total loans and receivables
(a)
Group
2013
2012
RM’000
RM’000
Company
2013
2012
RM’000
RM’000
63,048
85,009
6,850
1,942
91,806
(1,894)
152,960
71,415
(2,811)
153,613
2,073
8,923
2,042
(12)
3,972
Trade receivables
The trade receivables are non-interest bearing.
The Group’s normal trade credit terms for trade debtors range from 30 to 90 days (2012: 30 to 90
days). Other credit terms are assessed and approved on case-to-case basis. Overdue balances are
reviewed regularly by senior management. Trade receivables are recognised at their original invoice
amounts which represent their fair values on initial recognition.
The Group has no significant concentration of credit risk that may arise from exposures to a
single debtor or to groups of debtors other than vessel charter receivable of RM19,727,000 (2012:
RM35,508,000) representing 37% (2012: 45%) of total trade receivables.
Ageing analysis of trade receivables
The ageing analysis of the Group’s trade receivables is as follows:
Group
Neither past due nor impaired
1 to 30 days past due not impaired
More than 91 days past due not impaired
Impaired
2013
RM’000
2012
RM’000
23,223
21,482
6,071
610
2,435
30,598
53,821
62,976
8,565
4,290
3,685
16,540
61
79,577
Receivables that are neither past due nor impaired
Trade receivables that are neither past due nor impaired are creditworthy debtors with good
payment records with the Group. Most of the Group’s trade receivables arise from customers with
many years of experience with the Group and losses have occurred infrequently.
None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated
during the financial year.
ANNUAL REPORT 2013
65
31 July 2013
9.
Trade and other receivables (cont’d.)
(a)
Trade receivables (cont’d.)
Receivables that are past due but not impaired
The Group has trade receivables amounting RM30,598,000 (2012: RM16,540,000) that are past due
at the reporting date but not impaired. These balances relate mainly to national and multinational oil
corporations who have never defaulted on payments.
At the reporting date, trade receivable arising from the provision of offshore marine services
amounting to RM1,403,000 (2012: RM nil) have been arranged to be settled on instalment basis.
The receivables that are past due but not impaired are unsecured in nature.
Receivables that are impaired
The Group’s trade receivables that are individually impaired at the reporting date and the movement
of the allowance account used to record the impairment are as follows:
Group
Trade receivables - nominal amount
Less: Allowance for impairment
2013
RM’000
2012
RM’000
-
61
(61)
-
61
(61)
-
61
61
Movement in allowance accounts:
Charge for the year (Note 26)
Written off
At end of year
Trade receivables that are individually determined to be impaired at the reporting date relate
to debtors that are in significant financial difficulties and have defaulted on payments. These
receivables are not secured by any collateral or credit enchancements.
(b)
Amounts due from subsidiaries and advances to staff
Amounts due from subsidiaries are unsecured, non-interest bearing and are repayable on demand.
Advances to staff are unsecured and non-interest bearing.
66
ANNUAL REPORT 2013
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10.
Group
2013
2012
RM’000
RM’000
Cash at bank and on hand
Deposits with licensed financial institutions
Cash and bank balances (Note 9)
Weighted average effective profit/
interest rate of deposit at the
reporting date (%)
Average maturity of deposits
at the reporting date (days)
Company
2013
2012
RM’000
RM’000
20,938
70,868
91,806
19,669
51,746
71,415
273
1,800
2,073
1,891
151
2,042
3.20
3.12
3.20
3.10
58
136
6
20
Included in the deposits with licensed financial institutions is RM1,650,000 (2012: RM1,592,000) charged
to a performance bond in favour of Lembaga Lebuhraya Malaysia.
Deposits with licensed financial institutions of the Group amounting to RM5,612,000 (2012: RM5,698,000)
are pledged as securities for banking facilities granted to the Group.
11.
Share capital
Note
Number of ordinary
shares of RM 0.25 each
2013
2012
’000
’000
Amount
2013
2012
RM’000
RM’000
3,992,000
3,992,000
998,000
998,000
397,050
397,050
99,262
99,262
19,484
16,799
433,333
397,050
4,871
4,200
108,333
99,262
Authorised
At beginning/end of year
Issued and fully paid-up
Issued upon conversion of:
Preference shares
Loan stocks
At end of year
(a)
(a)
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company.
All ordinary shares carry one vote per share without restrictions and rank equally with regard to the
Company’s residual assets. Ordinary shares issued upon conversion of preference shares and loan stocks
During the financial year, the Company converted 4,111,111 (2012: nil) CC-RPS and 3,800,000 (2012: nil)
RCULS together with their attendant accrued dividends into 36,283,080 (2012: nil) new ordinary shares
of RM0.25 each. The new ordinary shares were subsequently granted listing and quotation by Bursa
Malaysia.
The new ordinary shares rank pari passu in all respects with the existing ordinary shares of the Company.
ANNUAL REPORT 2013
67
31 July 2013
12.
Share premium, reverse acquisition deficit and capital reserve
Share premium arose from the issuance of ordinary shares and conversion of preference shares. As
disclosed in Note 11, the Company issued 36,283,080 (2012: nil) ordinary shares upon conversion of
4,111,111 (2012: nil) CC-RPS and 3,800,000 (2012: nil) RCULS together with their attendant accrued
dividends. The share premium of RM375,000 (2012: RM nil) arising from the issuance of the shares has
been included in the share premium account.
Reverse acquisition deficit arose from the reverse acquisition of the Company by AQL.
Capital reserve arose from capital reduction exercise in prior years.
13.
Preference shares
Preference shares consist of 10-Year Cumulative Convertible Redeemable Preference Shares (“CCRPS”).
Number of preference
shares of RM0.10 each
2013
2012
’000
’000
Amount
2013
2012
RM’000
RM’000
Group/Company
Authorised
At beginning/end of year
20,000
20,000
2,000
2,000
15,100
(4,111)
10,989
15,100
15,100
1,510
(411)
1,099
1,510
1,510
13,590
(3,700)
9,890
10,989
13,590
13,590
15,100
Issued and fully paid-up
Nominal value of RM0.10 each
Converted into ordinary shares
At end of year
CC-RPS premium
Converted into ordinary shares
At end of year
The CC-RPS were initially issued on 6 November 2003 as Cumulative Non-Convertible Redeemable
Preference Shares (“CN-RPS”). The CN-RPS have been varied to CC-RPS upon approval by the holders
of the CN-RPS on 30 October 2009.
The salient terms of the CC-RPS are as follows:
(a)
the CC-RPS shall be redeemable at the option of the Company for cash at RM1 per share at any
time from the date commencing from the 5th anniversary of the issue date of 6 November 2003;
(b)
the CC-RPS are transferable and are convertible at the holders’ option at the rate of one (1) CCRPS for four (4) fully paid-up new ordinary shares of RM0.25 each in the Company. Unless earlier
redeemed or converted, each CC-RPS shall be redeemed on the maturity date of 6 November
2013;
(c)
the CC-RPS shall rank in priority to the ordinary shares of the Company in a return of capital in the
event of winding-up/liquidation of the Company and payment of dividends. The CC-RPS shall not
have any right to participate further in the distribution of the surplus in assets and profits of the
Company; and
68
ANNUAL REPORT 2013
31 July 2013
13.
Preference shares (cont’d.)
The salient terms of the CC-RPS are as follows (cont’d.):
(d)
The holders of CC-RPS shall be entitled to vote at any general meeting of the Company at which a
resolution is relating to:
(i)
the reduction of capital of the Company;
(ii) the winding up of the Company;
(iii) any abrogation or variation of the special rights and privileges attaching to the CC-RPS; and
(iv) the creation or issue of any further shares ranking in priority to or pari passu with the CCRPS (unless consented in writing by 75% of the CC-RPS holders).
The amounts recognised in the statements of financial position of the Group and of the Company may be
analysed as follows:
Note
Equity component at beginning of year
CC-RPS converted during the year
Equity component at end of year
Liability component at beginning of year
CC-RPS converted during the year
Interest expense recognised during the year
Dividends payable during the year
Liability component at end of year
25
16
Group/Company
2013
2012
RM’000
RM’000
1,901
(517)
1,384
1,901
1,901
14,132
(3,950)
916
(261)
10,837
13,426
1,008
(302)
14,132
Interest expense on the CC-RPS is calculated on the effective yield basis by applying the coupon interest
rate of 7.51% (2012: 7.51%) per annum for an equivalent preference share to the liability component of
the CC-RPS.
14.
Loan stocks
Group/Company
2013
2012
RM’000
RM’000
Liability component of Redeemable Convertible
Unsecured Loan Stocks ("RCULS") (Note 16)
5,867
5,971
(a)RCULS-B
RCULS-B were issued at nominal value of RM1 each (“Issue Price”) on 14 October 2009 (“Issue
Date”) with a maturity period of 5 years to 13 October 2014 (“Maturity Date”) and were constituted
by a Trust Deed dated 7 October 2009 made between the Company and the Trustee for the holders
of the RCULS-B. The main features of RCULS-B are as follows:
RCULS-B were issued pursuant to the Company’s Regularisation Scheme which was completed
on 14 October 2009.
(i)RCULS-B are redeemable at the option of the Company, in whole or in part at the Issue Price
at anytime from the Issue Date up to the Maturity Date of 13 October 2014.
ANNUAL REPORT 2013
69
31 July 2013
14.
Loan stocks (cont’d.)
(a)
RCULS-B (cont’d.)
(ii)RCULS-B are convertible into new ordinary shares in the Company at the option of RCULS-B
holders from the third anniversary to the maturity date of 13 October 2014 (“Conversion
Period”) at the rate of one RM1 nominal value RCULS-B for four new ordinary shares of
RM0.25 each of the Company. Unless earlier redeemed or converted, RCULS-B shall
automatically be converted into new ordinary shares in the Company at the conversion rate
on the Maturity Date.
(iii)Upon conversion of RCULS-B into new ordinary shares, such shares shall rank pari passu
in all respects with the existing ordinary shares of the Company in issue at the time of
conversion except that they shall not be entitled to any dividend or other distribution declared
in respect of a financial period prior to the financial period in which RCULS-B are converted
or any interim dividend declared prior to the date of conversion of the RCULS-B.
(iv)The coupon rate of 3% per annum is payable semi-annually in arrears on 14 April and 14
October. The coupon payment shall be satisfied by the issuance of RCULS (CR).
In the prior year, the Company with the concurrence of the holders amended the terms of RCULS-B
and RCULS (CR). Under this amendment, the date of coupon payment to be satisfied by the
issuance of RCULS (CR) shall now fall on the Maturity Date, the Conversion Date or the Redemption
Date, whichever is applicable.
(b)
RCULS (CR)
RCULS (CR) represent the coupon payments towards RCULS-B which were neither redeemed nor
converted up to the maturity date on 13 October 2014. RCULS (CR) are issued at nominal value
of RM1 each and were constituted by a Trust Deed dated 7 October 2009 made between the
Company and the Trustee for the holders of the RCULS-B. The main features of RCULS (CR) are
similar to that of the RCULS-B, except that RCULS (CR) were issued semi-annually from 14 April
2010 to 14 April 2014, and will mature on 13 October 2014.
As mentioned above, the Company with the concurrence of the holders amended the terms of
RCULS (CR) in prior year. Under this amendment, the date of coupon payment to be satisfied
by the issuance of RCULS (CR) shall now fall on the Maturity Date, the Conversion Date or the
Redemption Date, whichever is applicable.
The fair value of RCULS has been apportioned between the liability component and the equity component,
representing the fair value of the conversion option. Following the amendments to the terms of RCULS-B
and RCULS (CR) in prior year, the RCULS have been re-measured pursuant to MFRS 139, and are
accounted for in the statements of financial position of the Group and of the Company as follows:
RCULS-B
RCULS (CR)
Total
RM’000
RM’000
RM’000
At 1 August 2011 and 31 July 2012
Converted into ordinary shares during the year
At 31 July 2013
43,750
(3,800)
39,950
654
654
44,404
(3,800)
40,604
Equity component of RCULS, net of deferred tax
At 1 August 2011 and 31 July 2012
Converted into ordinary shares during the year
At 31 July 2013
36,721
(3,237)
33,484
550
550
37,271
(3,237)
34,034
Group/Company
Nominal value of RCULS
70
ANNUAL REPORT 2013
31 July 2013
14.
Loan stocks (cont’d.)
RCULS-B
RCULS (CR)
Total
RM’000
RM’000
RM’000
Liability component of RCULS
At 1 August 2011
Finance costs for the year (Note 25)
5,539
424
8
-
5,547
424
At 31 July 2012
Conversion of RCULS-B
Finance costs for the year (Note 25)
At 31 July 2013
5,963
(541)
424
5,846
8
(2)
15
21
5,971
(543)
439
5,867
Interest expense on RCULS-B is calculated on the effective yield basis by applying the coupon interest
rate of 7.51% (2012: 7.51%) per annum for equivalent loan stocks to the liability component of the RCULS.
15.
Employee trust shares of RM6,688,000 (2012: RM6,688,000) relate to 15,200,000 (2012: 15,200,000)
shares of the Company held by Jasa Merin Employee Trust, a trust set up by the subsidiary, Jasa Merin,
pursuant to the acquisition of AQL.
The main features of the trust include:
16.
•
all confirmed full time permanent employees of Jasa Merin at the time of the grant date shall be
eligible to participate in the trust;
•
the award to the participants is through the realisation of any gains arising from the disposal of the
shares held by the trust in accordance with the formula described by the trust rules and by laws;
•
the trust shall continue to be in force at the discretion of the committee set up to administer the
trust, for a maximum period of 12 months commencing from the date the trust purchases the
shares or 6 months after the listing of the shares purchased, whichever is later; and
•
the trust may be terminated at any time by the committee or, at the discretion of the committee
by a resolution of Jasa Merin in general meeting, subject to all relevant approvals which may be
required.
Group
2013
RM’000
2012
RM’000
18,895
7,500
15,354
89,973
37,035
229
146,132
52,420
16,940
252
92,466
Current
Secured:
Revolving credit
Sukuk Mudharabah
Term loans:
- fixed rate
- floating rate
Hire purchase payables (Note 17)
71
ANNUAL REPORT 2013
31 July 2013
16.
Loans and borrowings (cont’d.)
Group
Non-current
Secured:
Sukuk Mudharabah
Term loans:
- fixed rate
- floating rate
Total borrowings
Secured:
Revolving credit
Sukuk Mudharabah
Term loans:
- fixed rate
- floating rate
Add: Liability component of CC-RPS (Note 13)
Add: Liability component of RCULS (Note 14)
Total loans and borrowings (Note 22)
2013
RM’000
2012
RM’000
691,275
710,140
610,714
201,418
318
1,503,725
495,429
169,166
380
1,375,115
710,170
7,500
725,494
700,687
238,453
547
1,649,857
10,837
5,867
1,666,561
547,849
186,106
632
1,467,581
14,132
5,971
1,487,684
The remaining maturity of the loans and borrowings (excluding hire purchase payables) as at reporting
date are as follows:
Group
On demand or within one year
More than 1 year but less than 2 years
More than 2 years but less than 5 years
More than 5 years
2013
RM’000
2012
RM’000
156,603
140,912
373,730
994,769
1,666,014
92,214
116,634
365,779
912,425
1,487,052
The weighted average effective interest rates per annum for borrowings at the reporting date are as
follows:
Group
Revolving credit
Term loans:
- fixed rate
- floating rate
Hire purchase payable
Sukuk Mudharabah (Note 18(b)(i))
2013
%
2012
%
-
5.40
6.26
6.63
5.22
7.00
6.08
6.63
3.01
8.00
72
ANNUAL REPORT 2013
31 July 2013
16.
Loans and borrowings (cont’d.)
The term loans of the Group are secured by the following:
17.
(a) debentures created over fixed and floating assets of subsidiaries, Jasa Merin, up to RM34,534,000
(2012: RM34,534,000), JM Global 3 (Labuan) Plc and JM Global 4 (Labuan) Plc;
(b)
facilities agreements;
(c)
first legal/mortgage charge over the vessels;
(d)
corporate guarantee from the Company for RM493,711,000 (2012: RM85,520,000);
(e)
corporate guarantee from a subsidiary, AQL, for RM839,933,000 (2012: RM383,986,000);
(f)
corporate guarantee from a corporate shareholder of subsidiaries for RM199,530,000 (2012:
RM199,530,000);
(g)
corporate guarantee from a subsidiary, Jasa Merin for RM220,000,000 (2012: RM220,000,000); (h)
an irrevocable joint and several guarantee by AQL, certain directors of AQL and third parties for
certain term loans;
(i)
assignment of charter proceeds in respect of the vessels to the collection accounts;
(j)
assignment of all benefit, interest, rights and property over or in respect of the vessels under
construction contracts;
(k)
assignment of insurance policy for all vessels in favour of the banks;
(l)
1,715,000 (2012: 1,715,000) shares of Jasa Merin;
(m)
a first fixed and floating charge by way of debenture on present and future assets of two subsidiaries
for RM220,000,000 (2012: RM220,000,000) facilities financed by a bank; and
(n)
a proportionate corporate guarantee by Jasa Merin for RM220,000,000 (2012: RM220,000,000)
facilities of two subsidiaries.
Hire purchase payables
Group
Future minimum hire purchase payments:
Not later than 1 year
Later than 1 year and not later than 2 years
Later than 2 years and not later than 5 years
Total future minimum hire purchase payments
Less: Future finance charges
Present value of hire purchase liabilities (Note 16)
Analysis of present value of hire purchase liabilities:
Not later than 1 year
Later than 1 year and not later than 2 years
Later than 2 years and not later than 5 years
Amount due within 12 months (Note 16)
Amount due after 12 months (Note 16)
2013
RM’000
2012
RM’000
255
200
151
606
(59)
547
278
209
214
701
(69)
632
229
179
139
547
(229)
318
252
191
189
632
(252)
380
ANNUAL REPORT 2013
73
31 July 2013
17.
Hire purchase payables (cont’d.)
The Group has finance leases and hire purchase contracts for certain motor vehicles (Note 5). Other
information on financial risks of hire purchase and finance lease liabilities are disclosed in Note 34.
18.
Sukuk Mudharabah
Sukuk Mudharabah of RM752,236,660 was issued by MTSB on 25 January 2008, and is constituted by
a Trust Deed dated 17 January 2008 and Supplemental Trust Deed dated 15 March 2011 entered into by
MTSB, SILK and the Trustee for all the Sukuk holders.
The Sukuk Mudharabah, which was issued at par, has a tenure of up to twenty-one (21) years from the
date of issuance. The Sukuk Mudharabah is structured to be repaid progressively. It is:
(i)non-transferable;
(ii)
not listed;
(iii)
not underwritten;
(iv)
not rated; and
(v)non-tradable.
(a)
Capital repayment terms under Mudharabah contract
The Issuer (MTSB) shall refund the capital, subject to the availability of funds at the ratio of 1:99
for Issuer: Investor, provided at the outset of the venture in full to the Investors (Sukuk holders).
However, a minimum RM2.0 million per annum shall be paid annually commencing from 3rd
anniversary from the date of issuance (to be known as “Periodic Ijarah Rental B”).
The Periodic Ijarah Rental B is:
(i)
for the amount of RM2 million per annum;
(ii)
payable annually in arrears;
(iii)
payable commencing 3rd year from the issue date;
(iv)
RM38 million for the whole period of the Ijarah;
(v)not constitute an event of default for any non-payment of Periodic Ijarah Rental B from
the issue date until the 7th anniversary and continue to accrue notwithstanding the same;
and
(vi)constitute a default under the Ijarah Agreement for any non-payment of accrued and current
Periodic Ijarah Rental B from the 8th anniversary from the issue date.
(b)
Profit payment is by way of Periodic Ijarah (“lease”) Rental A as follows:
The Periodic Ijarah Rental A is:
(i)
the amount calculated at 8.0% per annum on the outstanding Sukuk Mudharabah;
(ii)
(iii)
payable commencing the 1st year from the issue date;
(iv)
up to RM1.49 billion for the period of the Ijarah;
payable semi-annually in arrears;
(v)subject to payment of minimum rental of 3.5% per annum calculated on the outstanding
Sukuk Mudharabah (“Minimum Ijarah Rental A”) that is payable commencing the 1st
anniversary from the issue date;
74
ANNUAL REPORT 2013
31 July 2013
18.
Sukuk Mudharabah (cont’d.)
(b)
Profit payment is by way of Periodic Ijarah (“lease”) Rental A as follows (cont’d.):
(vi)not constitute an event of default for non-payment of Minimum Ijarah Rental A from the issue
date until the 7th anniversary and continue to accrue notwithstanding the same;
(vii)not constitute an event of default for non-payment of Periodic Ijarah Rental A throughout the
Sukuk tenure; and
(viii)constitute a default under the Ijarah Agreement for any non-payment of accrued and current
Minimum Ijarah Rental A from the 8th anniversary from the issue date.
(c)Securities
The Sukuk Mudharabah is secured by:
(i)
(ii)
(iii)
(iv)
fixed and floating charge over all the assets and undertaking of SILK;
fixed and floating charge over all the assets and undertaking of MTSB;
corporate guarantee given by SILK; and
limited guarantee given by the Company.
Under the limited guarantee given by the Company:
(i)the total amount recoverable from the Company shall not exceed the amount actually realised
from the sale of its shares in SILK or the sale by SILK of the Ijarah Asset (the Concession);
(ii)
if the Company fails to make payment of the outstanding amount under the Sukuk
Mudharabah on demand, then the Company shall transfer its shares in SILK to the Security
Agent (Affin Investment Bank Berhad) in full settlement of its obligations under the limited
guarantee; and
(iii)if upon a sale thereafter by the Security Agent of the shares in SILK, the proceeds of sale
shall exceed the outstanding amount under the Sukuk Mudharabah, the Security Agent shall
refund to the Company an amount equivalent to such excess.
19.
Deferred tax
Group
2013
2012
RM’000
RM’000
Recognised in profit or loss (Note 27)
Reversal upon conversion of
preference shares and loan
stocks into ordinary shares
At end of year
Company
2013
2012
RM’000
RM’000
52,660
6,553
46,490
6,170
1,343
(262)
1,626
(283)
(40)
59,173
52,660
(40)
1,041
1,343
ANNUAL REPORT 2013
75
31 July 2013
19.
The components and movements of deferred tax liabilities and assets during the financial year prior to
offsetting are as follows:
Deferred tax liabilities of the Group:
Convertible
loan stocks
and
preference
shares
RM’000
Property,
vessels
and
equipment
RM’000
Concession
intangible
assets
RM’000
Total
RM’000
At 1 August 2012
Recognised in profit or loss
Reversal upon conversion of
preference shares and loan stocks
into ordinary shares
At 31 July 2013
1,343
(262)
80,719
28,435
165,293
8,520
247,355
36,693
(40)
1,041
109,154
173,813
(40)
284,008
At 1 August 2011
At 31 July 2012
1,626
(283)
1,343
60,001
20,718
80,719
160,250
5,043
165,293
221,877
25,478
247,355
Advance
license
and access
fees
RM’000
Provisions
and others
RM’000
Unused
business
losses and
unabsorbed
capital
allowances
RM’000
Total
RM’000
At 1 August 2012
At 31 July 2013
(2,709)
(1,385)
(4,094)
(1,931)
982
(949)
(190,055)
(29,737)
(219,792)
(194,695)
(30,140)
(224,835)
At 1 August 2011
At 31 July 2012
(2,537)
(172)
(2,709)
(918)
(1,013)
(1,931)
(171,932)
(18,123)
(190,055)
(175,387)
(19,308)
(194,695)
Deferred tax assets of the Group:
Deferred tax liabilities of the Company:
Convertible
loan stocks
RM’000
Preference
shares
RM’000
Total
RM’000
At 1 August 2012
Reversal upon conversion of preference shares
and loan stocks into ordinary shares
At 31 July 2013
1,131
(110)
212
(152)
1,343
(262)
(17)
1,004
(23)
37
(40)
1,041
At 1 August 2011
At 31 July 2012
1,237
(106)
1,131
389
(177)
212
1,626
(283)
1,343
76
ANNUAL REPORT 2013
31 July 2013
19.
Deferred tax assets have not been recognised in respect of the following item:
Group
Unused tax losses
2013
RM’000
2012
RM’000
402,360
392,390
The unused tax losses are available indefinitely for offset against future taxable profits of the subsidiaries
in which those items arose, subject to guidelines issued by the tax authority.
Deferred tax assets have not been recognised as it is not probable that future taxable profits will be
available against which the subsidiaries can utilise the benefits.
20.
Retirement benefits obligation
A subsidiary operates a retirement benefit scheme for its eligible employees. The Group sets aside
provision for retirement benefits based on the entitlement rate each eligible employee is entitled to at the
end of each financial year of service over the employee’s period of employment. The plan is limited to
those employees who were in employment with Jasa Merin as at 14 October 2009.
On 13 December 2011, the Board of Directors has approved the proposal by the management to abolish
the retirement benefits scheme. Subsequent to the abolishment, the subsidiary had made full payout to
all eligible employees during the year.
Movements in the net liability in the current year were as follows:
Group
Recognised in profit or loss (Note 26(a))
Benefits paid during the year
At end of year
21.
2013
RM’000
2012
RM’000
4,637
(29)
(4,608)
-
3,334
1,920
(617)
4,637
Provision for heavy repairs relates to the estimated costs of the contractual obligations to maintain and
restore the highway infrastructure to a specified standard of serviceability.
Group
Unwinding of discount (Note 25)
Provision during the year (Note 26)
Utilised during the year
At end of year
Analysed as:
Current
Non-current
2013
RM’000
2012
RM’000
2,536
168
1,300
(931)
3,073
3,703
194
(1,361)
2,536
2,181
892
3,073
1,042
1,494
2,536
ANNUAL REPORT 2013
77
31 July 2013
22.
Group
2013
2012
RM’000
RM’000
Note
Trade payables
Other payables
Advance toll compensation from
Government of Malaysia
Amount payable for new shipbuilding
Advance license and access fees
Preference shares dividends payable
Accruals
Deferred income
Sundry payables
Deposits received
Amounts due to subsidiaries
Total trade and other payables
Add: Loans and borrowings
(Note 16)
Add: Ijarah rental payable (Note 23)
Less: Advance license and
access fees
Total financial liabilities carried
at amortised cost
(a)
(a)
Company
2013
2012
RM’000
RM’000
29,082
29,591
-
-
3,634
3,109
12,740
2,139
17,560
945
44
40,171
69,253
1,637
2,340
12,333
2,639
15,181
735
32
34,897
64,488
2,139
289
2,713
2
7,235
12,378
12,378
2,639
657
3
7,256
10,555
10,555
69,253
64,488
12,378
10,555
1,666,561
153,387
1,487,684
131,958
-
-
(12,740)
(12,333)
-
-
1,876,461
1,671,797
12,378
10,555
(b)
(c)
(d)
Trade payables
These amounts are non-interest bearing. The normal trade credit term granted to the Group ranges
from 30 to 90 days (2012: 30 to 90 days).
(b)
Advance license and access fees
Advance license fees relate to fees charged for the transfer of all the rights to the licensees to enter
and occupy the designated land area for permitted use for the entire duration of the concession
period, subject to the terms and conditions specified in the license agreement (“Agreement”). The
license fees, after setting off against its associated costs, will be recognised in profit or loss over
the remaining concession period upon completion of the relevant terms in the Agreement.
(c)
Preference shares dividends payable
Preference shares dividends payable relates to the accumulated dividends accrued in respect of
10-year Cumulative Convertible Redeemable Preference Shares (“CC-RPS”) as disclosed in Note
13. CC-RPS and the attendant dividends payable are convertible into new ordinary shares.
78
ANNUAL REPORT 2013
31 July 2013
22.
Trade and other payables (cont’d.)
(d)
Amounts due to subsidiaries
Amounts due to subsidiaries are unsecured, interest-free and repayable on demand.
23.
Ijarah rental payable to Sukuk Mudharabah holders represents the balance due after payment of 3.5%
Minimum Ijarah Rental A as disclosed in Note 18(b)(v). Non-payment of the Ijarah Rental A does not
constitute an event of default of the Sukuk Mudharabah from the issue date until the 7th anniversary.
24.Revenue
Group
2013
2012
RM’000
RM’000
Vessel charter services
Highway toll collections
Toll compensation revenue
Management and guarantee fees
from subsidiaries
Dividend income from subsidiaries
25.
Company
2013
2012
RM’000
RM’000
306,538
65,756
11,052
273,448
58,102
9,513
-
-
383,346
341,063
3,183
70
3,253
1,575
1,570
3,145
Finance costs
Group
2013
2012
RM’000
RM’000
Finance costs on:
Term loans
Sukuk Mudharabah
Convertible preference shares
(Note 13)
Convertible loan stocks (Note 14)
Hire purchase payables
Unwinding of discount for provision
for heavy repairs (Note 21)
Less: Finance costs capitalised in
property, vessels and
equipment
Total finance costs
Company
2013
2012
RM’000
RM’000
50,903
59,807
47,417
58,630
-
-
916
439
35
1,008
424
28
916
439
-
1,008
424
-
168
112,268
194
107,701
1,355
1,432
(321)
111,947
(5,061)
102,640
1,355
1,432
ANNUAL REPORT 2013
79
31 July 2013
26.
Profit before tax
The following amounts have been included in arriving at profit before tax:
Group
2013
2012
RM’000
RM’000
Auditors' remuneration:
Statutory audit
Other services
Employee benefits expense (Note (a))
Non-executive directors'
remuneration (Note (b))
Amortisation of concession
intangible assets (Note 6)
Amortisation of dry-docking
expenditure
Depreciation of property, vessels
and equipment
Provision for heavy repairs (Note 21)
Impairment loss on trade
receivables (Note 9)
Rental of office and warehouse
Realised gain on foreign exchange
Unrealised loss on foreign exchange
Gain on disposal of property,
vessels and equipment
Gain on disposal of non-current assets
classified as held for sale
Interest income
Rental income
(a)
Company
2013
2012
RM’000
RM’000
195
11
49,678
211
5
41,926
37
5
269
37
5
193
221
215
156
152
13,976
11,913
-
-
9,156
4,465
-
-
70,341
1,300
57,162
-
-
-
152
(61)
161
61
144
-
(81)
125
-
(26)
(164)
-
-
(69)
(1,811)
(186)
(63)
(1,179)
(197)
(58)
-
(8)
-
Employee benefits expense
Group
2013
2012
RM’000
RM’000
Wages and salaries
Defined contribution plan
Social security contributions
Retirement benefits (Note 20)
Other staff related expenses
Short term accumulating
compensated absence
Company
2013
2012
RM’000
RM’000
43,247
2,920
235
(29)
3,238
34,289
2,892
236
1,920
2,418
257
12
-
187
6
-
67
49,678
171
41,926
269
193
80
ANNUAL REPORT 2013
31 July 2013
26.
Profit before tax (cont’d.)
(b)
Directors’ remuneration
Included in employee benefits expense of the Group and of the Company are executive directors’
remuneration amounting to RM2,722,000 (2012: RM4,002,000) and RM269,000 (2012: RM193,000)
respectively.
The details of remuneration receivable by directors of the Company during the year are as follows:
Group
2013
2012
RM’000
RM’000
Executive directors
- salaries
- bonus
- fees
- defined contribution plan
- defined benefits plan
- allowances and other emoluments
Total executive directors' remuneration,
excluding benefits-in-kind
Benefits-in-kind
Total executive directors' remuneration,
including benefits-in-kind
Non-executive directors
- fees
- other emoluments
Total non-executive directors'
remuneration
Total directors’ remuneration (Note 31(b))
27.
Company
2013
2012
RM’000
RM’000
1,739
701
10
234
-
1,338
1,650
10
227
324
407
193
64
12
-
92
6
95
2,684
38
3,956
46
269
-
193
-
2,722
4,002
269
193
150
71
150
65
96
60
96
56
221
2,943
215
4,217
156
425
152
345
Income tax expense/(benefit)
The major components of income tax expense/(benefit) for the years ended 31 July 2013 and 2012 are:
Group
2013
2012
RM’000
RM’000
Statements of comprehensive
income:
Current income tax:
Malaysian income tax
(Over)/underprovision in prior years
Deferred income tax (Note 19):
Relating to origination and reversal
of temporary differences
Underprovision in prior years
Company
2013
2012
RM’000
RM’000
1,186
(57)
1,129
1,740
43
1,783
711
711
-
6,552
1
6,553
7,682
6,092
78
6,170
7,953
(262)
(262)
449
(283)
(283)
(283)
ANNUAL REPORT 2013
81
31 July 2013
27.
Income tax expense/(benefit) (cont’d.)
The reconciliation between tax expense and the product of accounting profit multiplied by the applicable
corporate tax rate for the years ended 31 July 2013 and 2012 are as follows:
Group
2013
2012
RM’000
RM’000
Profit before tax
Tax at Malaysian statutory tax
rate of 25% (2012: 25%)
Effect of different tax rate in Labuan
Non-deductible expenses
Income not subject to tax
Group relief
Deferred tax assets not recognised
Underprovision of deferred income
tax in prior years
(Over)/underprovision of current
income tax expense in prior year
Income tax expense/(benefit) for
the year
Company
2013
2012
RM’000
RM’000
26,439
17,343
1,155
835
6,610
(3,346)
2,057
(75)
2,492
4,336
(1,541)
2,080
(66)
3,023
289
160
-
209
121
(613)
-
1
78
-
-
(57)
43
-
-
7,682
7,953
449
(283)
Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2012: 25%) on the estimated
assessable profit for the year.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. Certain
subsidiaries of the Company being Malaysian tax residents incorporated in Labuan under the Offshore
Companies Act, 1990 are taxed at 3% of profit before tax, or RM20,000 in accordance with the Labuan
Offshore Business Activity Tax Act, 1990.
28.
Earnings/(loss) per share
(a)Basic
Basic earnings per share amounts are calculated by dividing profit for the financial year, net of tax,
attributable to owners of the parent by the weighted average number of ordinary shares outstanding
during the financial year, excluding employee trust shares held by the Company.
Group
Profit/(loss) attributable to owners of the parent (RM'000)
Weighted average number of ordinary shares in issue ('000)
Basic earnings/(loss) per share (sen)
2013
2012
4,413
398,501
1.1
(679)
381,849
(0.2)
(b)Diluted
For the purpose of calculating diluted earnings per share, the profit for the financial year, net of
tax, attributable to owners of the parent and the weighted average number of ordinary shares
outstanding during the financial year have been adjusted for the dilutive effects of convertible loan
stocks, convertible preference shares and the attached dividends payable.
82
ANNUAL REPORT 2013
31 July 2013
28.
Earnings/(loss) per share (cont’d.)
(b)
Diluted (cont’d.)
Group
Profit/(loss) attributable to owners of the parent
After-tax effect of interest on convertible loan stocks and
convertible preference shares
Profit attributable to owners of the parent including
assumed conversion
2013
RM’000
2012
RM’000
4,413
(679)
1,094
1,150
5,507
471
Number of shares
'000
‘000
Weighted average number of ordinary shares in issue
Effect of dilution:
Convertible loan stocks
Convertible preference shares and its dividends payable
Adjusted weighted average number of ordinary shares
in issue and issuable
398,501
381,849
190,191
70,956
184,651
69,748
659,648
636,248
Group
Diluted earnings per share
29.
2013
sen
2012
sen
0.8
0.1
Capital commitments
Capital expenditure as at the reporting date is as follows:
Group
Capital expenditure
Approved and contracted for:
Vessels and equipment
Approved but not contracted for:
Vessels and equipment
Highway lane expansion
Highway repairs and other concession assets
30.
2013
RM’000
2012
RM’000
150,687
2,429
112,658
18,000
9,500
127,060
18,800
-
Contingent liabilities
Group
Performance bond for expressway maintenance cost
2013
RM’000
2012
RM’000
1,500
1,500
ANNUAL REPORT 2013
83
31 July 2013
31.
Related party disclosures
(a)
Significant related party transactions
In addition to the related party information disclosed elsewhere in the financial statements, the
following significant transactions between the Group and related parties took place at terms agreed
between the parties during the financial year:
Name of companies
Nature of transactions
2013
RM’000
2012
RM’000
70
70
420
2,583
420
855
180
1,500
300
22
3
-
320
Company
AQL
CRPS dividends
Jasa Merin
Management fees
Corporate guarantee fees
Red Centennial
Interim dividend
Management fees
SILK
Payment on behalf by the Company
Group
Dekon Tajul Nursery
& Landscaping
Sdn Bhd (Note (i))
Routine highway maintenance and
landscaping
(i)Dekon Tajul Nursery & Landscaping Sdn. Bhd. (“Dekon”) is a 100% subsidiary of Dekon
Holdings Sdn. Bhd. (“DHSB”). Dekon is deemed related to the Group by virtue of Datuk Seri
Razman M Hashim’s mutual interest in DHSB and the Group. Datuk Seri Razman M Hashim
ceased to be director of DHSB since November 2011.
The directors of the Company are of the opinion that the above transactions have been entered
into in the normal course of business and have been established on terms and conditions that are
mutually agreed between the companies.
(b)
Compensation of key management personnel
The remuneration of directors and other members of key management during the year is as follows:
Group
2013
2012
RM’000
RM’000
Salaries and bonus
Fees
Allowance and other
emoluments
Defined contribution plan
Other benefits
Company
2013
2012
RM’000
RM’000
5,306
230
5,914
223
496
-
92
96
146
541
60
6,283
625
439
1,286
8,487
11
46
15
568
95
6
56
345
84
ANNUAL REPORT 2013
31 July 2013
31.
Related party disclosures (cont’d.)
(b)
Compensation of key management personnel (cont’d.)
Included in the total compensation of key management personnel are:
Group
2013
2012
RM’000
RM’000
Remuneration of directors
of the Company (Note 26(b))
32.
2,943
4,217
Company
2013
2012
RM’000
RM’000
425
345
Material litigations
Following the compulsory acquisition of land falling under the Expressway that was undertaken by SILK
pursuant to the Concession Agreement, certain land owners whose land have been acquired, have filed
their objection in Court against the Land Administrator’s award of compensation. In the SILK’s funded
stretch, there are 240 cases comprising 238 cases with claims amounting to RM485.96 million while
the land owners’ claims for 2 cases were undetermined. Out of the 240 cases, 8 cases with claims of
RM131.2 million and 2 undetermined cases are still pending Court hearing.
Pursuant to the Turnkey Contract dated 31 July 2001 between SILK and Sunway Construction Sdn.
Bhd. (“SCSB”), the amount payable by SILK to SCSB for the land use payments (including expenses and
charges incurred by SCSB for the acquisition of land and for removal or resettling of squatters or other
occupants on the Expressway) has been contracted at a ceiling amount of RM215 million. Any further
amounts that may be awarded by the courts beyond RM215 million will therefore be borne by SCSB.
33.
Segmental reporting
For management purposes, the Group is organised into business units based on their services, and has
two reportable operating segments as follows:
-
-
tolled highway concessionaire
offshore marine support services
Management monitors the operating results of its business units separately for the purpose of making
decisions about resource allocation and performance assessment. Segment performance is evaluated
based on operating profit or loss which, in certain respects as explained in the table below, is measured
differently from operating profit or loss in the consolidated financial statements.
-
(19,361)
-
(16,489)
889
906,886
887,006
Assets and liabilities
Additions to noncurrent assets
Segment assets
Segment liabilities
1,165
913,931
877,826
(19,361)
(590)
(11,913)
(58,845)
(1,271)
(680)
(13,976)
(59,994)
(16,489)
949
1,122
67,615
67,615
(Loss)/profit
before tax
Income tax
(expense)/benefit
(Loss)/profit for
the year
Segment results:
Interest income
Other non-cash
expenses
Depreciation
Amortisation
Finance costs
76,808
76,808
Tolled highway
concessionaire
2013
2012
RM’000
RM’000
Segmental reporting (cont’d.)
Revenue
External customers
Inter-segment
Total revenue
33.
31 July 2013
326,219
1,261,035
1,050,728
34,517
(7,226)
41,743
(69,661)
(9,156)
(53,211)
630
306,538
306,538
88,417
1,021,124
844,831
29,230
(8,229)
37,459
1,981
(56,572)
(4,465)
(43,315)
222
273,448
273,448
Offshore marine
support services
2013
2012
RM’000
RM’000
258,581
30,578
706
(449)
1,155
(1,355)
59
3,253
3,253
253,642
32,037
1,118
283
835
(1,432)
8
3,145
3,145
Others
2013
2012
RM'000
RM'000
(247,030)
(16,226)
23
(7)
30
2,613
-
(3,253)
(3,253)
(240,242)
(9,476)
(1,597)
(7)
(1,590)
952
-
(3,145)
(3,145)
Adjustments
and eliminations
2013
2012
RM'000
RM'000
(d)
(a)
(a)
(c)
(b)
(a)
327,108
2,179,472
1,952,086
18,757
(7,682)
26,439
(1,271)
(70,341)
(23,132)
(111,947)
1,811
383,346
383,346
89,582
1,948,455
1,745,218
9,390
(7,953)
17,343
1,981
(57,162)
(16,378)
(102,640)
1,179
341,063
341,063
Per consolidated
financial statements
2013
2012
Note RM'000
RM'000
ANNUAL REPORT 2013
85
31 July 2013
86
ANNUAL REPORT 2013
31 July 2013
33.
Segmental reporting (cont’d.)
Note:
Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial
statements:
(a)
Inter-segment transactions and balances are eliminated on consolidation.
(b)Other material non-cash expenses consist of the following items as presented in the respective
notes to the financial statements:
Group
Note
Impairment loss on financial assets
Provision for retirement benefits
(c)
26
26
26(a)
2013
RM’000
2012
RM’000
1,300
(29)
1,271
61
1,920
1,981
Finance costs include unwinding of interest for provision for heavy repairs amounting to RM168,000
(2012: RM194,000).
Inter-segment transactions are eliminated on consolidation.
(d)
Additions to non-current assets consist of:
Group
Note
5
6
2013
RM’000
2012
RM’000
327,108
327,108
88,859
723
89,582
Geographical information
100% (2012: 96%) of the Group’s revenue is attributable to customers in Malaysia.
All of the Group’s non-current assets are located in Malaysia.
Information about major customers
Revenue from two (2012: one) major customers amount to RM189,637,000 (2012: RM133,824,000)
arising from the offshore marine support services segment.
34.
Financial risk management objectives and policies
The Group and the Company are exposed to financial risks arising from their operations and the use of
financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign
currency risk.
The following sections provide details regarding the Group’s and the Company’s exposure to the abovementioned financial risks and the objectives, policies and processes for the management of these risks.
ANNUAL REPORT 2013
87
31 July 2013
34.
Financial risk management objectives and policies (cont’d.)
(a)
Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty
default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily
from trade and other receivables. For other financial assets (including cash and bank balances),
the Group and the Company minimise credit risk by dealing exclusively with high credit rating
counterparties.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due
to increased credit risk exposure. The Group trades only with recognised and creditworthy third
parties. In addition, receivable balances are monitored on an ongoing basis with the result that the
Group’s exposure to bad debts is not significant.
Credit risk concentration profile
The Group’s concentration of risk also includes the receivable balances as disclosed in Note 9
to the financial statements and the Group minimises its credit risk by continuous monitoring of
receivable balances.
Exposure to credit risk
At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is
represented by:
-The carrying amount of each class of financial assets recognised in the statements of
financial position.
-
A nominal amount of RM493,711,000 (2012: RM85,520,000) relating to corporate
guarantees provided by the Company to financial institutions for credit facilities granted to
its subsidiaries.
Financial assets that are neither past due nor impaired
Information regarding trade and other receivables that are neither past due nor impaired is disclosed
in Note 9. Deposits with licensed financial institutions are placed with or entered into with reputable
financial institutions with high credit ratings and no history of default.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in Note 9.
(b)
Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial
obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk
arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s
and the Company’s objective is to maintain a balance between continuity of funding and flexibility
through the use of stand-by credit facilities. 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.
88
ANNUAL REPORT 2013
31 July 2013
34.
(b)
Liquidity risk (cont’d.)
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the
reporting date based on contractual undiscounted repayment obligations.
Note
l--------------------------- 2013 --------------------------l
On demand
or within
One to
Over five
one year
five years
years
Total
RM’000
RM’000
RM’000
RM’000
Group
Financial liabilities:
Trade and other
payables, excluding
financial guarantees
Total undiscounted
financial liabilities
(i)
(ii)
56,513
16,895
155,316
136,492
699,892
1,761,442
56,513
153,387
2,616,650
228,724
836,384
1,761,442
2,826,550
12,378
-
-
12,378
12,378
-
-
12,378
Company
Trade and other
payables, excluding
Total undiscounted
(i)
Note
l--------------------------- 2012 --------------------------l
On demand
or within
One to
Over five
one year
five years
years
Total
RM’000
RM’000
RM’000
RM’000
Group
Trade and other
payables, excluding
Total undiscounted
(i)
(ii)
52,155
13,354
125,906
118,604
954,890
1,943,790
52,155
131,958
3,024,586
191,415
1,073,494
1,943,790
3,208,699
10,555
-
-
10,555
10,555
-
-
10,555
Company
Trade and other
payables, excluding
Total undiscounted
(i)
ANNUAL REPORT 2013
89
31 July 2013
34.
(b)
Liquidity risk (cont’d.)
(i)At the reporting date, the counterparty to the financial guarantees does not have a right to
demand cash as the default has not occurred. Accordingly, financial guarantees under the
scope of MFRS 139 are not included in the above maturity profile analysis.
(ii)Ijarah rental payable to Sukuk Mudharabah holders represents the balance due after payment
of 3.5% Minimum Ijarah Rental A as disclosed in Note 18(b)(v). Non-payment of the Minimum
Ijarah Rental A does not constitute an event of default of the Sukuk Mudharabah from the
issue date until the 7th anniversary on 25 January 2015.
(iii)The above table excludes the liability components of the convertible preference shares and
loan stocks. As disclosed in Notes 13 and 14:
-the convertible preference shares shall be redeemable at the option of the Company
at any time from the date commencing from the 5th anniversary of the issue date of 6
November 2003. Unless earlier redeemed or converted, each convertible preference
share shall be redeemed on maturity date.
-the convertible loan stocks are redeemable at the option of the Company at any time
from the issue date up to the maturity date. Unless earlier redeemed or converted, the
convertible loan stock shall be automatically converted into new ordinary shares of the
Company on the maturity date.
(c)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s
financial instruments will fluctuate because of changes in market interest rates.
The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and
borrowings. All of the Group’s and the Company’s financial assets and liabilities at floating rates
are contractually re-priced at intervals of less than 6 months (2012: less than 6 months) from the
reporting date.
At the reporting date, approximately 86% (2012: 87%) of the Group’s loans and borrowings are
fixed rate instruments. The Group considers that it has minimal exposure to movement in interest
rate on its floating rate instruments.
(d)
Foreign currency risk
The Group has transactional currency exposures arising from purchases that are denominated in a
currency other than the functional currency of Group entities, RM. The foreign currencies in which
these transactions are denominated are mainly US Dollars (“USD”), Singapore Dollars (“SGD”)
and EURO (“EUR”). Foreign exchange exposures in transactional currencies other than functional
currency of the Group are kept to an acceptable level.
The net unhedged financial liabilities of the Group companies that are not denominated in their
functional currency are as follows:
Group
US Dollars
Singapore Dollars
EURO
2013
RM’000
2012
RM’000
561
57
618
427
39
466
The Group also holds cash and cash equivalents denominated in foreign currencies for working
capital purposes. At the reporting date, such foreign currency balances (mainly in USD) amount to
RM2,635,000 (2012: RM61,000) for the Group.
90
ANNUAL REPORT 2013
31 July 2013
35.
Fair value of financial instruments
A.Fair value of financial instruments by classes that are not carried at fair value
and whose carrying amounts are not reasonable approximation of fair value
Note
2013
Carrying
amount
RM’000
Fair
value
RM’000
2012
Carrying
amount
RM’000
Fair
value
RM’000
Group
- Sukuk Mudharabah
- Term loans: fixed rate
- Hire purchase
- Ijarah Rental A
- Convertible loan
stocks
- Convertible preference
shares
18
16
17
23
710,170
700,687
547
153,387
728,508
641,756
534
154,722
725,494
547,849
632
131,958
792,116
522,068
628
144,077
14
5,867
5,796
5,971
5,873
13
-
-
14,132
13,958
14
5,867
5,796
5,971
5,873
13
-
-
14,132
13,958
Company
- Convertible loan
stocks
- Convertible preference
shares
B.
Determination of fair value
Financial instruments that are not carried at fair value and whose carrying amounts are reasonable
approximation of fair value
The following are classes of financial instruments that are not carried at fair value and whose
carrying amounts are reasonable approximation of fair value:
Term loans: floating rate
Note
9
16
22
The carrying amounts of these financial assets and liabilities are reasonable approximation of fair
values due to their short-term nature.
The carrying amounts of the current portion of loans and borrowings are reasonable approximations
of fair values due to the insignificant impact of discounting.
The fair values of loans and borrowings are estimated by discounting expected future cash flows
at market incremental lending rate for similar types of lending, borrowing or leasing arrangements
at the reporting date.
ANNUAL REPORT 2013
91
31 July 2013
36.
Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit
rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic
conditions. To maintain or adjust the capital structure, the Group may return capital to shareholders or
issue new shares. No changes were made in the objectives, policies or processes during the years ended
31 July 2013 and 31 July 2012.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net
debt. The Group considers the net debt as loans and borrowings, trade and other payables, ijarah rental
payable, less cash and bank balances.
Note
Trade and other
payables
Less: Cash and bank balances
Net debt
Company
2013
2012
RM’000
RM’000
16
1,666,561
1,487,684
-
-
22
23
10
69,253
153,387
(91,806)
1,797,395
64,488
131,958
(71,415)
1,612,715
12,378
(2,073)
10,305
10,555
(2,042)
8,513
137,587
127,482
228,003
221,605
1,934,982
1,740,197
238,308
230,118
93%
93%
4%
4%
Total equity attributable to
the owners of the parent
Capital and net debt
Gearing ratio
37.
Group
2013
2012
RM’000
RM’000
Authorisation of financial statements
The financial statements for the year ended 31 July 2013 were authorised for issue in accordance with a
resolution of the directors on 27 September 2013.
92
ANNUAL REPORT 2013
31 July 2013
38.
Supplementary information - breakdown of retained earnings into realised and unrealised
The breakdown of the retained earnings of the Group and of the Company as at 31 July 2013 and 31
July 2012 into realised and unrealised earnings is presented as follows, in accordance with the directive
issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with
Guidance on Special Matter No. 1 - Determination of Realised and Unrealised Profits or Losses in the
Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by
the Malaysian Institute of Accountants:
Group
2013
2012
RM’000
RM’000
(Accumulated losses)/retained
earnings of the Company
and its subsidiaries
Realised
Unrealised
Add: Consolidation adjustments
Retained earnings/(accumulated
losses) as per financial statements
Company
2013
2012
RM’000
RM’000
(24,650)
(64,623)
(89,273)
128,543
(54,536)
(39,459)
(93,995)
128,852
1,639
(1,041)
598
-
(1,084)
976
(108)
-
39,270
34,857
598
(108)
The determination of realised and unrealised profits as above are solely for complying with the disclosure
requirements as stipulated in the directive of Bursa Malaysia Securities Berhad and should not be applied
for any other purpose.
ANNUAL REPORT 2013
93
The information set out below is disclosed in compliance with the Main Market Listing Requirements of Bursa
Securities:-
1.
STATUS OF UTILISATION OF PROCEEDS RAISED FROM CORPORATE PROPOSAL
There is no corporate exercise that has been completed during the current financial year or is pending as
at the end of the current financial year.
2.
SHARE BUY-BACK
The Company does not have a scheme to buy-back its own shares.
3.
OPTIONS OVER ORDINARY SHARES, WARRANTS OR CONVERTIBLE SECURITIES
EXERCISED
During the financial year, the Company increased its issued and paid up share capital from RM99,262,349
to RM108,333,119 by way of:
•
he conversion of 4,111,111 Cumulative Convertible Redeemable Preference Shares and
T
dividends payable to 19,484,187 ordinary shares at RM0.25 each, and
•
T he conversion of 3,800,000 Redeemable Convertible Unsecured Loan Stocks and dividends
payable to 16,798,893 ordinary shares at RM0.25 each.
Apart from the loan stocks and preference shares, the Company did not issue any convertible securities
or grant any options over ordinary shares.
4.
AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT
(“GDR”) PROGRAMME
The Company did not sponsor any ADR or GDR programme during the financial year ended 31 July 2013.
5.
SANCTIONS AND/OR PENALTIES
There were no public sanctions and/or penalties imposed on the Company and its subsidiaries, Directors
or Management by the relevant regulatory bodies during the financial year ended 31 July 2013.
6.
NON-AUDIT FEES
The non-audit fees paid/payable to the independent auditors of the Company and its subsidiaries for the
financial year ended 31 July 2013 amounted to RM11,500.
7.
VARIATION IN RESULTS
There was no variance of 10% or more between the audited results for the financial year ended 31 July
2013 and the unaudited results previously announced by the Company.
8.
PROFIT GUARANTEE
There was no profit guarantee given by the Company during the financial year ended 31 July 2013.
9.
MATERIAL CONTRACTS INVOLVING DIRECTORS’ AND MAJOR SHAREHOLDERS’
INTERESTS
There were no material contracts (not being contracts entered into in the ordinary course of business)
entered into by the Company and/or its subsidiaries involving directors’ and major shareholders’ interests
during the financial year ended 31 July 2013.
10.
REVALUATION POLICY ON LANDED PROPERTIES
The Company does not have a revaluation policy on landed properties.
94
ANNUAL REPORT 2013
11.
STATEMENT BY AUDIT COMMITTEE IN RELATION TO THE ALLOCATION OF OPTIONS
OVER ORDINARY SHARES PURSUANT TO THE EMPLOYEES’ SHARE OPTION SCHEME
As at 31 July 2013, the Company has not allocated any options over ordinary shares pursuant to
Employees’ Share Option Scheme.
12.
RECURRENT RELATED PARTY TRANSACTIONS
There were no recurrent related party transactions of a revenue nature entered into during the financial
year ended 31 July 2013.
95
ANNUAL REPORT 2013
Substantial shareholders
as at 10 October 2013
No. of Shares
1. Johan Zainuddin bin Dzulkifli*
%
145,355,426
33.54%
2. Abdul Rahman bin Ali**
94,000,000
21.69%
3. Dato' Mohd Azlan Hashim***
84,835,669
19.58%
4. Infra Bumitek Sdn Bhd
79,555,426
18.36%
5. Bijak Permai Sdn Bhd
37,600,000
8.68%
6. Mohd Noor Ismardi Idris
31,998,893
7.38%
Notes:
*
Direct and deemed interest through Infra Bumitek Sdn Bhd and Bijak Permai Sdn Bhd
** Direct and deemed interest through Temuras Jaya Sdn Bhd
***
Deemed interest through Infra Bumitek Sdn Bhd and RHB Capital Nominees (Tempatan) Sdn Bhd
96
ANNUAL REPORT 2013
Directors’ interests in shares and loan stocks
Ordinary Shares of RM0.25 each
No. of Shares
1. Johan Zainuddin bin Dzulkifli
- direct interest
- deemed interest*
%
28,200,000
117,155,426
145,355,426
6.51%
27.04%
33.54%
84,835,669
19.58%
3. Tai Keat Chai
- deemed interest***
1,000,000
0.23%
4. Abdul Hamid bin Sh. Mohamed
- direct interest
1,000,000
0.23%
2. Dato' Mohd Azlan Hashim
- deemed interest**
Preference Shares of RM0.10
each
No. of Shares
1. Nik Abdul Malik bin Nik Mohd Amin
- direct interest
500,000
%
4.55%
Loan Stocks of RM1.00 each
No. of Shares
- direct interest
- deemed interest****
7,050,000
9,400,000
16,450,000
Notes:
*
**
***
****
Deemed interest through Infra Bumitek Sdn Bhd and Bijak Permai Sdn Bhd
Deemed interest through Infra Bumitek Sdn Bhd
Deemed interest through the shares held by his spouse
Deemed interest through Bijak Permai Sdn Bhd
%
17.65%
23.53%
41.18%
ANNUAL REPORT 2013
97
Analysis of shareholdings
Ordinary Shares Cumulative Convertible
- Redeemable
Preference Shares
("CC-RPS")
Authorised share capital
3,992,000,000
20,000,000
1,000,000,000
433,332,477
10,988,889
109,432,008
Ordinary Shares of
RM0.25 each
CC-RPS of RM0.10 each
One vote per ordinary
share
One vote per CC-RPS
Issued and paid up share capital
Class of shares
Voting rights
Total (RM)
Note: Each holder of CC-RPS shall have one vote per CC-RPS only if the business of the general meeting
includes the reduction of capital of the Company, winding up of the Company, and abrogation or variation
of the special rights and priviledges attached to the CC-RPS and the creation or issue of any further
shares ranking in priority to or pari passu with the CC-RPS but shall otherwise have no right to vote at
general meetings of the Company
(a)
ORDINARY SHARES
Distribution of shareholdings
Size of Shareholdings
No. of
Shareholders
% of
Shareholders
No. of Shares
Held
% of
Shareholdings
22
1.00%
893
0.00%
100 - 1,000
586
26.73%
510,840
0.12%
1,001 - 10,000
703
32.07%
4,186,271
0.97%
10,001 - 100,000
709
32.34%
26,531,652
6.12%
100,001 -21,666,622*
167
7.62%
154,613,126
35.68%
5
0.23%
247,489,695
57.11%
2,192
100.00%
433,332,477
100.00%
1 - 99
21,666,623 and above**
* Less than 5% of issued shares
** 5% and above of the issued shares
98
ANNUAL REPORT 2013
Analysis of shareholdings
Thirty Largest Shareholders as per the Register of Depositors
Name of Shareholders
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Abdul Rahman bin Ali
ABB Nominee (Tempatan) Sdn Bhd
Bijak Permai Sdn Bhd
Mohd Noor Ismardi bin Idris
Infra Bumitek Sdn Bhd
EB Nominees (Tempatan) Sendirian Berhad
Tey Chee Thong
Temuras Jaya Sdn Bhd
Yeo Kim Soon
Lew Mew Choi
TA Nominees (Tempatan) Sdn Bhd
RHB Capital Nominees (Tempatan) Sdn Bhd
Dayang Nor Camelia Binti Abang Khalid
Mazlan bin Ismail
CIMSEC Nominees (Tempatan) Sdn Bhd
17.
18.
MIDF Amanah Investment Nominees
(Tempatan) Sdn Bhd
Abdul Radzim bin Abdul Rahman
Public Nominees (Tempatan) Sdn Bhd
How Wong Yuh
Maybank Nominees (Tempatan) Sdn Bhd
Seah Tin Kim
Teo Kwee Hock
Yeo Kian
JF Apex Nominees (Tempatan) Sdn Bhd
Yeo Kian
HSBC Nominees (Tempatan) Sdn Bhd
Maybank Securities Nominees (Tempatan)
Sdn Bhd
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
(b)
%
84,600,000
65,090,802
37,600,000
31,998,893
28,200,000
14,464,624
10,500,000
10,072,321
9,400,000
9,271,123
6,231,327
5,900,000
5,280,243
4,597,300
3,893,000
3,267,100
19.52%
15.02%
8.68%
7.38%
6.51%
3.34%
2.42%
2.32%
2.17%
2.14%
1.44%
1.36%
1.22%
1.06%
0.90%
0.75%
3,055,552
2,540,000
0.71%
0.59%
2,375,452
2,365,100
2,300,000
2,174,100
1,775,800
1,769,500
1,672,000
1,525,500
1,500,000
1,428,900
1,388,300
1,337,500
0.55%
0.55%
0.53%
0.50%
0.41%
0.41%
0.39%
0.35%
0.35%
0.33%
0.32%
0.31%
Infra Bumitek Sdn Bhd
Tey Chee Thong
Liew Ah Yoong
Mohammed Amin bin
Mahmud
Lai Siew Wah
Intan Ainirawati binti Abdul
Razak
Wong Choo Mok
Wee Seng Yeen
Teo Siew Lai
Caroline Ann Teoh
Amanah Saham Sarawak
Liew Thin Sang
20% CUMULATIVE CONVERTIBLE REDEEMABLE PREFERENCE SHARES
Name of Shareholders
1.
2.
3.
4.
5.
Name of Beneficial Owners No. of Share
Harizar Hakimi
Dato' Wan Zakaria bin Abd Rahman
Dato' Mohtar bin Nong
Dato' Adzlan bin Mohd Dagang
No. of Share
%
8,988,889
500,000
500,000
500,000
500,000
10,988,889
81.80%
4.55%
4.55%
4.55%
4.55%
100.00%
ANNUAL REPORT 2013
99
NOTICE OF 16 TH ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the Sixteenth Annual General Meeting of SILK Holdings Berhad (“the
Company”) will be held at Dewan Berjaya, Bukit Kiara Equestrian & Country Resort, Jalan Bukit Kiara, Off Jalan
Damansara, 60000 Kuala Lumpur on Friday, 13 December 2013 at 10.00 am for the following purposes:
AS ORDINARY BUSINESS
1.
To receive the Audited Financial Statements of the Company for the financial year ended
31 July 2013 together with the Reports of the Directors and Auditors thereon.
2.
To re-elect the following Directors who retire by rotation pursuant to Article 107 of the
Company’s Articles of Association, and being eligible, offer themselves for re-election:
(i) Dato’ Mohd Azlan Hashim
(ii) Johan Zainuddin bin Dzulkifli
(Resolution 1)
(Resolution 2)
(Resolution 3)
3.
To approve the Directors’ fees amounting to RM160,000 in respect of the financial year
ended 31 July 2013.
(Resolution 4)
4.
To re-appoint Messrs Ernst & Young as Auditors and to authorise the Directors to
determine their remuneration.
(Resolution 5)
AS SPECIAL BUSINESS
To consider and, if thought fit, to pass with or without modifications, the following Resolutions:5.
Re-Appointment of Datuk Seri Razman M Hashim as a Director Pursuant to
Section 129(6) of the Companies Act, 1965
(Special
Resolution 6)
“THAT Datuk Seri Razman M Hashim, being over the age of 70 years and retiring in
accordance with Section 129(6) of the Companies Act 1965, be and is hereby reappointed as director of the Company to hold office until the conclusion of the next
Annual General Meeting of the Company.”
6.
Authority to Allot and Issue Shares Pursuant to Section 132D of the Companies
Act, 1965
“THAT pursuant to Section 132D of the Companies Act, 1965 and approvals from Bursa
Malaysia Securities Berhad for the listing of and quotation for the additional shares so
issued and other relevant authorities, where approval is necessary, authority be and is
hereby given to the Directors to allot and issue shares in the Company at any point of
time upon such terms and conditions and for such purposes as the Directors may in their
absolute discretion deem fit provided always that the aggregate number of shares to be
issued shall not exceed 10% of the issued share capital of the Company for the time
being AND THAT such authority shall continue to be in force until the conclusion of the
next Annual General Meeting of the Company.”
7.
To transact any other business of the Company of which due notice shall have
been given.
By Order of the Board
KWAN WAI KEIN (MAICSA 7055765)
SOTHIRAJEN a/l S. PARANJOTHI (LS 0005734)
Company Secretaries
Kuala Lumpur
20 November 2013
(Resolution 7)
100
ANNUAL REPORT 2013
NOTICE OF 16 TH ANNUAL GENERAL MEETING
NOTES:
1. Appointment of Proxy
(i)A member of the Company entitled to attend and vote, is entitled to appoint a proxy or proxies to
attend and vote in his stead. A proxy need not be a member of the Company.
(ii)The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney
duly authorised in writing, or if the appointer is a corporation, either under the corporation’s seal,
or under the hand of an officer or attorney duly authorised.
(iii)If a member appoints 2 proxies, the appointment will be invalid unless he states the percentage of
his shareholding to be represented by each proxy.
(iv)The instrument appointing a proxy must be deposited at the Registered office of the Company
at D2-3-2, Solaris Dutamas, 1 Jalan Dutamas 1, 50480 Kuala Lumpur not less than 48 hours
before the time appointed for holding the meeting or any adjournment thereof, either by hand,
post, electronic mail or fax to (03) 6207-9933. In the case where the member is a corporation and
the proxy form is delivered by fax or electronic mail, the original form shall also be deposited at
the Registered office, either by hand or post not less than 48 hours before the time appointed for
holding the meeting or any adjournment thereof.
2.
Explanatory Notes on Special Businesses
i)
Special Resolution 6 – Section 129(6) of the Companies Act, 1965
The Special Resolution proposed under Agenda 5 is to seek shareholders approval for the
appointment of a Director who is over the age of 70 years.
ii)
O rdinary Resolution 7 – Authority to Allot and Issue new Ordinary Shares pursuant to
Section 132D of the Companies Act 1965
The Ordinary Resolution proposed under Agenda 6 is to seek a renewal of the general mandate
which was approved at the 15 th Annual General Meeting of the Company held on 23 November
2012 and will lapse at the conclusion of the forthcoming Annual General Meeting to be held on
13 December 2013.
The general mandate, if approved, will provide flexibility to the Company for any possible fund
raising activities, including but not limited to placing of shares for the purpose of funding future
investment project(s) and acquisition(s) and for strategic reasons.
In order to eliminate any delay and costs in convening a general meeting to specifically approve
such issuance of shares, it is considered appropriate that the Directors be empowered, as proposed
under item 6 of the Agenda, to allot and issue new shares in the Company up to an amount not
exceeding in total ten percent (10%) of the issued share capital of the Company for the time being.
This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the
next annual general meeting of the Company.
The Company has not issued any new shares pursuant to Section 132D of the Companies Act,
1965 under the general mandate which was approved at the 15 th Annual General Meeting of the
Company.
STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING
DIRECTORS WHO ARE STANDING FOR RE-ELECTION
(a)
(b)
(c)
The details of the above Directors who are standing for re-election are set out on pages 3 and 4 of the Annual
Report.
Their interests in the securities of the Company are set out on page 96 of the Annual Report.
FORM OF PROXY
SILK HOLDINGS BERHAD (405897-V)
(Incorporated in Malaysia)
Registered Office :
1, Jalan Dutamas 1
50480 Kuala Lumpur, Malaysia
Tel : 03-6207-8080
Fax : 03-6207-9933
16th Annual General Meeting
Number of share(s) held
CDS Account No.
PROXY “A”
I/We……………………………...….............………..*NRIC No./Passport No./Company No…………………….....………………
Tel./HP No …………………………..………………………………. of ……………………………………...……...…..………….……
………………………………......................................….. being a member of SILK HOLDINGS BERHAD and entitled to vote
hereby appoint ……………………………....................…. *NRIC No./Passport No ……………….…………………………….…
Tel./HP No ……………………………………..................………. of …………………………...……………………………..…….…
or failing him/her, the Chairman of the Meeting as my/our proxy to attend and vote for me/us on my/our behalf at the 16th
Annual General Meeting of the Company to be held at Dewan Berjaya, Bukit Kiara Equestrian & Country Resort, Jalan
Bukit Kiara Off Jalan Damansara, 60000 Kuala Lumpur on Friday, 13 December 2013 at 10.00 am and at any adjournment
thereof.
WHERE THE MEMBER DESIRES TO APPOINT A 2ND PROXY, THIS SECTION MUST ALSO BE COMPLETED,
OTHERWISE IT SHOULD BE DELETED
PROXY “B”
I/We ………………………………………….. *NRIC No./Passport No./Company No…………………….…….…….…………..…
Tel./HP No …………………………..………………………………………. of ……………………………….…….…………...……...
…………………………..........................................……. being a member of SILK HOLDINGS BERHAD and entitled to vote
hereby appoint………………....................................…. *NRIC No./Passport No ……………………….................…………..
Tel./HP No ……………………………………………. of …………………………...………………………….…….………..………...
or failing him/her, the Chairman of the Meeting as my/our proxy to attend and vote for me/us on my/our behalf at the 16th
Annual General Meeting of the Company to be held at Dewan Berjaya, Bukit Kiara Equestrian & Country Resort, Jalan Bukit
Kiara Off Jalan Damansara, 60000 Kuala Lumpur on Friday, 13 December 2013 at 10.00 am and at any adjournment thereof.
The proportions of my/our holding to be represented by my/our proxies are as follows :
1st Proxy “A” %
(to be completed)
2nd Proxy “B” %
(to be completed)
Total:
100 %
In case of a vote taken by a show of hands, *1st Proxy “A” / *2nd Proxy “B” shall vote on my/our behalf.
* Delete if inapplicable
My/our proxy/proxies shall vote as follows :
(Please indicate with an “X” in the space below how you wish your votes to be cast. If no specific direction as to voting is
given, the proxy/proxies will vote or abstain from voting on the resolutions at his/their discretion)
1ST PROXY "A"
No.
RESOLUTIONS
1. To receive the Audited Financial Statements of the Company for
the financial year ended 31 July 2013 together with the Directors'
and Auditors Reports thereon.
2. To re-elect the following Directors:Dato' Mohd Azlan Hashim
4.
To approve the payment of Directors' fees
5.
To re-appoint Messrs. Ernst & Young as Auditors and to authorise
the Directors to fix their remuneration
To re-elect Datuk Seri Razman M Hashim as Director
6.
7
FOR
AGAINST
2ND PROXY "B"
FOR
AGAINST
To authorise the issue of shares pursuant to Section 132D of the
Companies Act, 1965
Dated this ………………………day of …………………………2013

Signature of Member……………………………………………………
NOTES:
1.A member of the Company entitled to attend and vote, is entitled to appoint a proxy or proxy to attend and vote in his stead. A proxy need not be a
member of the Company.
2.The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing, or if the appointer is
a corporation, either under the corporation’s seal, or under the hand of an officer or attorney duly authorised.
3.If a member appoints 2 proxies, the appointment will be invalid unless he states the percentage of his shareholding to be represented by each proxy.
4.The instrument appointing a proxy must be deposited at the Registered Office of the Company at D2-3-2, Solaris Dutamas, 1 Jalan Dutamas 1, 50480
Kuala Lumpur, Malaysia not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof, either by hand, post,
electronic mail or fax to 03-6207-9933. In the case where the member is a corporation and the proxy form is delivered by fax or electronic mail, the
original form shall also be deposited at the Registered Office, either by hand or post not less than 48 hours before the time appointed for holding the
meeting or any adjournment thereof.
FOLD THIS FLAP FOR SEALING
FOLD HERE
AFFIX
STAMP
HERE
The Company Secretary
SILK HOLDING BERHAD (405897-V)
1, Jalan Dutamas 1
50480 Kuala Lumpur
Malaysia
FOLD HERE
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This page has been intentionally left blank.
Operating
Subsidiaries
Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd (“SILK”) is the
concession owner of Kajang Traffic Dispersal Ring Road, better
known as Kajang SILK Highway. The concession runs for a period
of 33 years, ending in 2037. Kajang SILK Highway stretches for 37
km and is a primary urban road serving south eastern corridor of
Klang Valley, linking Balakong, Sg. Long, Kajang, Bangi, Serdang
and Putrajaya as well as these townships to the Sungai Besi
Highway (Besraya), the North South Expressway, Cheras-Kajang
Highway, Kajang-Seremban Highway (LEKAS), South Klang Valley
Expressway, and in the future, to the KL Outer Ring Road.
Jasa Merin (Malaysia) Sdn Bhd, (“Jasa Merin”) commenced
operation in 1982. For over 30 years, Jasa Merin has been providing
offshore support vessel services to oil majors such as PETRONAS
Carigali Sdn Bhd, ExxonMobil Exploration and Production Malaysia
Inc. and SHELL. Presently, Jasa Merin operates a fleet of 20
vessels comprising 3 Straight Supply Vessels - vessels specifically
designed to transport dry bulk cargo and fluids to and from offshore
installations, and 17 Anchor Handling Tug Supply Vessels (“AHTS”).
In addition, Jasa Merin has 3 AHTS vessels under various stages of
construction with deliveries by middle of 2014 to meet the growing
demand of OSV in the Oil and Gas industry.
AHTS vessels undertake anchor handling functions (positioning and
retrieval of drilling rig anchors) and towing activities (repositioning
of rigs to other drilling locations) beside also functioning as supply
vessels. Jasa Merin operates two classes of AHTS, namely 60
MTBP AHTS which are the standard AHTS deployed in shallow
waters, and 120 MTBP AHTS equipped with Dynamic Positioning
System that support both shallow and deep water operations.
ANNUAL REPORT
ANNUAL REPORT 2013
2013

annual report - silk holdings

Transcription

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