we deliver we care - Daya Materials Berhad

Transcription

DAYA MATERIALS BERHAD
(636357-W)
ANNUAL REPORT 2015
DAYA MATERIALS BERHAD (636357-W)
Level U1, Block D5, Solaris Dutamas
No. 1, Jalan Dutamas 1, 50480 Kuala Lumpur
Tel: 03 6205 3170 Fax: 03 6205 3171
w w w. d a y a g r o u p . c o m . m y
WE
DELIVER
ANNUAL REPORT 2015
WE CARE
Co n t en t s
WE DELIVER
WE CARE
At Daya Materials Berhad, we work
hand in hand with our clients to
deliver our products, services and
solutions any time, any place.
Financial Statements
Corporate Information
02
Corporate Structure
03
Financial Information
07
Profile of Directors
08
Chairman’s Statement
12
Corporate Social Responsibility
16
Corporate Governance Statement
17
Statement on Risk Management
and Internal Control
29
Audit Committee Report
32
36
143
Directors’ Responsibilities
Statement on Financial Statements
Analysis of Shareholdings
144
Additional Compliance Information
147
List of Properties
150
Notice of Thirteenth Annual General
Meeting
153
Statement Accompanying Notice
of Annual General Meeting
157
Form of Proxy
COMMITTED
ACCOUNTABLE
RESOLUTE
ETHICAL
CORPORATE INFORMATION
BOARD OF DIRECTORS
Dato’ Dr. Azmil Khalili Bin Dato’ Khalid
Independent Non-Executive Chairman
Tan Sri Dato’ Sri Koh Kin Lip JP
Independent Non-Executive Director
Nathan Tham Jooi Loon
Executive Vice Chairman
Datuk Lim Soon Foo
Datuk Lim Thean Shiang
Group Chief Executvie Officer
Aminuddin Bin Mohd Arif
Fazrin Azwar Bin Md. Nor
Senior Independent Non-Executive Director
Ronnie Lim Hai Liang
Alternate Director to Datuk Lim Soon Foo
AUDIT COMMITTEE
PRINCIPAL BANKERS
Chairman
Fazrin Azwar bin Md. Nor
(Senior Independent Non-Executive Director)
Export-Import Bank of Malaysia Berhad
Hong Leong Bank Berhad
Malayan Banking Berhad
AmIslamic Bank Berhad
AmBank (M) Berhad
Members
(Independent Non-Executive Director)
COMPANY SECRETARIES
Chen Bee Ling (MAICSA 7046517)
Tan Lai Hong (MAICSA 7057707)
REGISTERED OFFICE
Level 8, Symphony House
Pusat Dagangan Dana 1
Jalan PJU 1A/46
47301 Petaling Jaya
Selangor Darul Ehsan
Tel : 03-7841 8000
Fax : 03-7841 8199
AUDITORS
Deloitte (AF 0080)
Chartered Accountants
Level 16, Menara LGB
1 Jalan Wan Kadir
Taman Tun Dr. Ismail
60000 Kuala Lumpur
Tel : 03-7610 8888
Fax : 03-7726 8986
SHARE REGISTRAR
Symphony Share Registrars Sdn Bhd
Jalan PJU 1A/46
47301 Petaling Jaya
Tel : 03-7849 0777
Fax : 03-7841 8151/8152
HEAD/MANAGEMENT OFFICE
Level U1, Block D5, Solaris Dutamas
No. 1, Jalan Dutamas 1
50480 Kuala Lumpur
Malaysia
Tel
: 03-6205 3170
Fax
: 03-6205 3171
Email : [email protected]
Website : www.dayagroup.com.my
2
STOCK EXCHANGE LISTING
Main Market of Bursa Malaysia Securities Berhad
Stock Short Name : Daya
Stock Code
: 0091
CORPORATE STRUCTURE
Daya Materials Berhad (“DMB”) was incorporated in Malaysia under the Companies Act, 1965 on 8 December 2003 as
a public limited company. The principal activities of DMB are that of investment holding and provision of management
services to its subsidiary companies. The particulars of the subsidiaries and joint venture, are as follows:-
Subsidiary Companies
Date and
Place of
Incorporation
Authorised
Share Capital
Issued and
Paid-up Share
Capital
Effective
Equity
Interest
Principal Activities
1
Daya Polymer Sdn. Bhd.
(324073-U) (“DPSB”)
21-11-1994 /
Malaysia
RM10,000,000
RM6,000,000
100.00%
Manufacture of semi-conductive and XLPE compounds for cable
and wire and trading in specialty chemicals, related polymer
compounds and hardware. It has temporarily ceased its trading
activities since the financial year ended 31 December 2007.
2
DMB Marketing & Trading
Sdn. Bhd. (724943-U)
(“DMTSB”)
27-02-2006 /
Malaysia
RM100,000
RM2.00
100.00%
General trading, marketing and investment holding.
3
Meridian Orbit Sdn. Bhd.
(780242-P) (“MOSB”)
09-07-2007 /
Malaysia
RM100,000
RM100,000
100.00%
Investment holding company.
4
Daya Secadyme Sdn. Bhd.
(188542-W) (“DSSB”)
25-10-1989 /
Malaysia
RM5,000,000
RM1,008,000
55.00%
Supplying industrial chemicals and catalysts for the oil and gas
industry, blending, mixing, and supplying of oilfield chemicals,
environmental chemicals and other related products for the oil
and gas industry.
5
Daya CMT Sdn. Bhd.
(208646-U) (“DCMT”)
28-11-1990 /
Malaysia
RM10,000,000
RM8,000,000
51.00%
Providing industrial facilities management including builder
works, facility operation and maintenance services, upgrade,
retrofit, design and build plant facilities.
6
Daya Offshore
Construction Limited
(formerly known as DMB
International Limited)
(“DOCL”)
13-08-2008 /
Hong Kong
HKD 3,000,000
HKD 3,000,000
100.00%
Center for regional procurement and trading as well as
international investments.
7
Daya Proffscorp Sdn. Bhd.
(173309-T) (“DPRO”)
24-08-1988 /
Malaysia
RM5,000,000
RM1,650,000
58.50%
Hiring of lorries, trucks, forklifts, cranes and heavy machineries
for loading and unloading, tally services and general trading.
8
Daya Urusharta Sdn. Bhd.
(863073-M) (“DUSB”)
03-07-2009 /
Malaysia
RM100,000
RM100,000
100.00%
Property investment holding.
9
Daya OCI Sdn. Bhd.
(291138-U) (“DOCI”)
02-03-1994 /
Malaysia
RM10,000,000
RM10,000,000
67.00%
Supply agent of equipment and specialty chemicals for oil &
gas process plants, a provider of installation and maintenance
services for air-conditioning and ventilation system, a provider
for automatic welding services for offshore pipeline installation,
a provider for maintenance services for both onshore plants and
offshore facilities and warehousing and forwarding agency.
10 Daya Clarimax Sdn. Bhd.
(597108-K) (“DCLX”)
28-10-2002 /
Malaysia
RM5,000,000
RM2,000,000
100.00%
Providing recycling of waste solvent and manufacturing of high
purity electronics and technical solvents.
11 Seca Chemicals and
Catalysts Sdn. Bhd.
(710772-A) (“SCCSB”)
26-09-2005 /
Malaysia
RM100,000
RM100,000
100.00%
Dealing in petroleum, oil & gas products and consulting services.
12 Daya Offshore
Construction Sdn Bhd
(651398-P) (“DOCSB”)
05-05-2004 /
Malaysia
RM5,000,000
RM5,000,000
100.00%
Dealing in project management, installation and design
engineering, fabrication, procurement and logistics, vessels
chartering, vessel operations, survey and diving operations.
13 Daya Petroleum Ventures
Sdn. Bhd. (736674-D)
(“DPV”)
06-06-2006 /
Malaysia
RM500,000
RM350,000
51.00%
Provision of drilling services, geological, petroleum engineering,
subsea and deep-water support services and operations and
maintenance services.
14 Daya Maritime Limited
(LL10243) (“DML”)
27-12-2013 /
Malaysia
No Limit
USD10
100.00%
Shipping leasing business and other related services to the oil
and gas industry.
15 Daya Global 1 Pte. Ltd.
(201430876D) (“DG1PL”)
15-10-2014 /
Singapore
No Limit
SGD2
100.00%
Vessel ownership, shipping leasing business and other related
services to the oil and gas industry.
16 Daya Global 2 Pte. Ltd.
(201430874C) (“DG2PL”)
15-10-2014 /
Singapore
No Limit
SGD50,000
100.00%
Vessel ownership, shipping leasing business and other related
services to the oil and gas industry.
ANNUAL REPORT 2015
3
CORPORATE STRUCTURE
Cont’d
Date and
Place of
Incorporation
Authorised
Share Capital
Issued and
Paid-up Share
Capital
Effective
Equity
Interest
17 Daya Global 1 Limited
(LL11253) (“DG1L”)
03-10-2014 /
Malaysia
No Limit
USD10
100.00%
and gas industry.
18 Daya Global 2 Limited
(LL11254) (“DG2L”)
03-10-2014 /
Malaysia
No Limit
USD10
100.00%
and gas industry.
19 Daya PNG Limited
(1-109522) (“DPNGL”)
18-01-2016
/ Papau New
Guinea
PGK1
PGK1
100.00%
Investment holding and/or undertaking business activities in
Papau New Guinea.
20 Daya Hightech Sdn. Bhd.
(791561-V) (“DHSB”)
10-10-2007 /
Malaysia
RM100,000
RM100,000
100.00%
Manufacturing of polymer compounds for cables and wires.
The Company has ceased operation with effect from January
2013 and become dormant.
21 Seca Engineering and
Manpower Services
Sdn. Bhd. (704437-A)
(“SEMSSB”)
28-07-2005 /
Malaysia
RM100,000
RM100,000
55.00%
Providing engineering and manpower services. (in the midst of
striking off)
22 Daya FMM Sdn. Bhd.
(418776-U) (“DFMM”)
27-01-1997 /
Malaysia
RM500,000
RM350,004
51.00%
General contractors and related services.
23 PT Daya Secadyme
Indonesia (“PTDSI”)
14-01-2010 /
Indonesia
USD100,000
USD100,000
55.00%
Trading in petrochemicals products.
24 Daya Proffscorp (Sabah)
Sdn. Bhd. (922055-P)
(“DPROS”)
15-11-2010 /
Malaysia
RM500,000
RM450,002.00
58.50%
Hiring of lorries, trucks, forklifts, cranes and heavy machineries,
for loading and unloading, tally services and general trading.
25 Ultrafest Sdn. Bhd.
(968989-X) (“USB”)
20-11-2011 /
Malaysia
RM1,000,000
RM1,000,000
51.00%
Property development.
26 Terra Hill Development
Sdn. Bhd. (971347-V)
(“THDSB”)
12-12-2011 /
Malaysia
RM100,000
RM2.00
51.00%
Property development. The company has not commenced its
operation since the date of incorporation.
27 Zen Projects Sdn. Bhd.
(974746-K ) (“ZPSB”)
11-01-2012 /
Malaysia
RM100,000
RM2.00
51.00%
Investment holding. The company has not commenced its
operation since the date of incorporation.
28 Daya SMG Engineering
Sdn. Bhd. (1024254-V )
(“DSMG”)
09-11-2012 /
Malaysia
RM100,000
RM2.00
51.00%
To provide project engineering services to the oil and gas industry
in particular and other industries in general.
29 Daya Vessels Limited.
(LL09292 ) (“DVL”)
19-11-2012 /
Malaysia
No Limit
USD10.00
67.00%
and gas industry.
30 Daya Maxflo Sdn. Bhd.
(681714-M)
(“DMSB”)
21-02-2005 /
Malaysia
RM1,500,000
RM1,420,000
31.60%
Providing products and services for exploration, drilling and well
intervention and production specifically for oil and gas, refining
and petro-chemical.
31 PT. Daya Maxflo (“PTDM”)
24-12-2013 /
Indonesia
USD250,000
USD250,000
25.28%
Provision, trade, import and distribute oil and gas products and
services to the oil & gas industry.
32 Daya Offshore
Construction AS
(“DOCAS”)
23-01-2014 /
Norway
NOK 30,000
NOK 30,000
100.00%
Onshore and offshore operations including contracting,
purchasing possession and activities associated.
33 Daya Land & Development
Sdn. Bhd. (524602-D)
(“DLDSB”)
25-08-2000 /
Malaysia
RM500,000
RM500,000
51.00%
Property development and project management agent.
Held through subsidiaries
4
CORPORATE STRUCTURE
Cont’d
Date and
Place of
Incorporation
Authorised
Share Capital
Issued and
Paid-up Share
Capital
Effective
Equity
Interest
Joint Venture Company
34 Daya Sheffield Sdn. Bhd.
(919845-U) (“DSFSB”)
26-10-2010 /
Malaysia
RM500,000
RM350,000
34.17%
Recruiting and providing specialised, qualified and professional
personnel for the onshore and offshore oil and gas industries.
35 Daya NCHO Sdn. Bhd.
(933292-U) (“DNSB”)
22-02-2011 /
Malaysia
RM1,000,000
RM1,000,000
60.00%
Providing ISO tank cleaning, repair and maintenance services.
36 Daya Campo (Sabah) Sdn.
Bhd. (956357-W) (“DCSB”)
09-08-2011 /
Malaysia
RM1,000,000
RM10,000
40.20%
Provide all services related to oil and gas, infrastructure and
property development in Sabah (in the midst of striking off)
37 Daya Sheffield Pte. Ltd.
(201415457R) (“DSPL”)
29-05-2014 /
Singapore
No Limit
SGD1.00
34.17%
Provision for technical & engineering services in global oil & gas
industries as well as overseas consultancy services to oil & gas or
any other industries.
38 Semangat Global Sdn.
Bhd. (802160-P) (“SGSB”)
08-01-2008 /
Malaysia
RM500,000
RM200,000
35.70%
Construction and development of Industrial, Commercial and
housing project and other related industry.
ANNUAL REPORT 2015
5
CORPORATE STRUCTURE
Cont’d
DHSB
100%
DNSB
60%*
DPSB
100%
MOSB
100%
DCLX
100%
DMTSB
100%
Polymer
DPNG
100%
DOCSB
100%
DUSB
100%
DFMM
100%
DML
100%
DSMG
100%
DLDSB
100%
DCMT
51%
DG1PL
100%
SGSB
51%
ZPSB
100%
USB
100%
THDSB
100%*
DG2PL
100%
Technical Services
DG1L
100%
DG2L
100%
DSSB
55%
SEMSSB
100%
SCCSB
100%
DPV
51%
PTDSI
100%
PTDM
80%
DMSB
62%
Oil & Gas
DPRO
58.5%
DOCI
67%
DOCL
100%
DOCAS
100%
DPROS
100%
DVL
100%
DCSB
60%*
DSFSB
51%*
DSPL
100%*
* Joint Venture Company
6
FINANCIAL INFORMATION
Act
Act
Act
Act
Act
2010
2011
2012
2013
2014
2015
Revenue
174,223
281,746
296,587
523,785
642,160
718,838
EBITDA
29,206
30,853
35,704
22,495
(13,789)
27,419
PBT
22,733
23,760
28,387
11,467
(36,780)
(2,533)
PAT
16,966
17,443
20,116
4,229
(35,782)
(14,192)
Total Equity
177,156
210,628
230,914
241,961
311,045
295,223
Total Assets
292,050
378,115
399,217
525,224
600,531
1,263,604
(2,533)
(36,780)
22,495
23,760
22,733
27,419
35,704
30,853
‘10 ‘11 ‘12 ‘13 ‘14 ‘15
(13,789)
296,587
281,746
174,223
29,206
(RM’000)
718,838
PBT
(RM’000)
642,160
EBITDA
(RM’000)
523,785
REVENUE
11,467
RM’000
28,387
Act
‘10 ‘11 ‘12 ‘13 ‘14 ‘15
‘10 ‘11 ‘12 ‘13 ‘14 ‘15
SHAREHOLDERS’
FUND
1,263,604
600,531
525,224
292,050
‘10 ‘11 ‘12 ‘13 ‘14 ‘15
399,217
295,223
241,961
210,628
230,914
‘10 ‘11 ‘12 ‘13 ‘14 ‘15
177,156
(14,192)
(35,782)
4,229
(RM’000)
‘10 ‘11 ‘12 ‘13 ‘14 ‘15
20,116
17,443
16,966
(RM’000)
TOTAL ASSETS
378,115
(RM’000)
311,045
PAT
ANNUAL REPORT 2015
7
PROFILE OF DIRECTORS
Malaysian, aged 55
Independent Non-Executive Chairman
Malaysian, aged 51
Executive Vice Chairman
Dato’ Dr. Azmil was appointed to the Board on 19
September 2007. Dato’ Dr. Azmil graduated with a Bachelors
Degree in Civil Engineering and subsequently with a
Masters in Business Administration. In 2013, he received
an Honorary Degree of Doctor of Science (Hon DSc) from
University of Hertfordshire. He began his career with a
United Kingdom company, Tarmac National Construction
and upon his return to Malaysia worked for Trust
International Insurance and Citibank NA.
Mr. Nathan Tham was appointed to the Board on 30 May
2005 and assumed the position of Executive Vice Chairman
on 29 March 2015. He graduated from McGill University
in Montreal, Canada in 1988 with a Master of Business
Administration specialising in corporate finance. He is a
qualified Chartered Financial Analyst. Mr. Nathan Tham
joined DPSB in 2003 as a Director. He started his career
as a credit analyst with Chase Manhattan Bank in Kuala
Lumpur in 1989. In 1995, he joined UBS and later became
its Executive Director responsible for Malaysian investment
banking and Asia-Pacific Mergers and Acquisitions
practices. In 2003, Mr Nathan Tham was appointed as
a Director of Tradewinds Corporation Berhad and PIHP
(Selangor) Berhad, both posts he held until 2005.
Dato’ Dr. Azmil is the President & Chief Executive Officer
of AlloyMtd Group where he held the position of General
Manager, Corporate Planning on joining MTD Capital Bhd
in 1993 and assumed the helm as Group Managing Director
in 1996. On 1 June 2009, he was redesignated as President
& Chief Executive Officer. He concurrently holds the same
position in the listed subsidiary of MTD Capital Bhd, namely
MTD ACPI Engineering Berhad and is also the Chairman of
MTD Walkers PLC, a foreign subsidiary of MTD Capital Bhd
listed on the Colombo Stock Exchange in the Republic of
Sri Lanka. Dato’ Dr. Azmil also holds directorships and is
also the President & Chief Executive Officer in other public
companies namely, MTD InfraPerdana Bhd and Metacorp
Berhad, both are subsidiaries of MTD Capital Bhd; and ANIH
Berhad, a toll concession company. Dato’ Dr. Azmil is also
a director of Environment Idaman Sdn. Bhd., a solid waste
concession company; a Trustee of the Perdana Leadership
Foundation; and Chairman of the Malaysian Philippines
Business Council. Dato’ Dr. Azmil also sits on the board of
several other private limited companies.
Dato’ Dr. Azmil is the Chairman of the Nomination
Committee and a member of the Audit and Remuneration
Committees of the Company.
Dato’ Dr. Azmil attended four out of six Board Meetings held
in 2015.
He attended the “Financial Statement Reporting
Requirements and Best Practices in Boardroom
Effectiveness” seminar organised by AlloyMtd Group.
8
Mr. Nathan Tham is the Chairman of the Risk Management
Committee and a member of the Executive Committee
(“EXCO”) of the Company.
Presently, Mr. Nathan Tham is also a director of several
private companies in Malaysia.
Mr. Nathan Tham attended all six Board Meetings held in the
year of 2015.
Mr. Nathan Tham attended the “Updates on Goods and
Services Tax 2015” seminar organised by DMB.
Cont’d
Datuk Lim Thean Shiang (“Datuk TS Lim”)
Fazrin Azwar Bin Md Nor
Malaysian, aged 44
Executive Director/Group Chief Executive Officer
Malaysian, aged 49
Senior Independent Non-Executive Director
Datuk TS Lim was appointed as an Executive Director and
Group Chief Executive Officer of DMB on 24 March 2015.
He graduated from University of London, England with
Bachelor of Law (Hons) and holds Bachelor of Business
Administration (Hons) from Universiti Utara Malaysia.
Encik Fazrin was appointed to the Board on 30 May
2005. He graduated from the University of Malaya with a
Bachelor of Law (LLB) Honors Degree. He is an Advocate
and Solicitor and a member of the Malaysian BAR. He
is currently the Managing Partner of Messrs. Azwar &
Associates.
Datuk TS Lim started his career as a Marketing Executive
with TA Construction & Properties Sdn Bhd in 1994.
Later in 1996, he joined Wayteam Sdn Bhd as a Business
Development Manager. In 1997, he progressed to join Ideal
Palms Sdn Bhd as the Personal Advisor to the Chairman.
He left employment and set up his own businesses in 1999.
During the same period, he was appointed as Director in
several private companies. From 2008 to 2009, he was
appointed as General Manager of Port Klang Authority and
Executive Chairman of Port Klang Free Zone.
Datuk TS Lim has been sitting on the Board of several
companies within the Felda Global Ventures (FGV) Group
of Companies since 2013. He is one of the Advisors to
the Investment Committee of FGV. Datuk TS Lim is also
an Independent Non-Executive Director of MSM Malaysia
Holding Berhad (“MSM”). At MSM Group, he is the
Chairman of both the Investment Committee and the Board
Governance and Risk Management Committee. In 2015, he has also been appointed as Director of the
Maritime Institute of Malaysia (MIMA).
Datuk TS Lim attended four out of six Board Meetings in the
year of 2015 following his appointment on 24 March 2015.
Encik Fazrin is also currently an Independent Non-Executive
Chairman of Mercury Industries Berhad, an Independent
Non-Executive Director and Audit Committee member of
both Poh Kong Holdings Berhad and Tong Herr Resources
Berhad, all listed on the Main Market of Bursa Securities.
Encik Fazrin is also an Independent Non-Executive Director
of Times Offset (M) Sdn. Bhd. and a Non-Independent
Non-Executive Director of the Kuchinta Holdings Group of
Companies.
Encik Fazrin is also a chartered member of The Malaysian
Institute of Directors and The Institute of Internal Auditors
Malaysia.
Encik Fazrin is the Chairman of the Audit Committee and a
member of the Nomination and Remuneration Committees
of the Company.
Encik Fazrin attended all six Board Meetings held in the year
of 2015.
Encik Fazrin attended the “Audit Committee Conference
2015” organised by Malaysian Institute of Accountants
and The Institute of Internal Auditors Malaysia and the
“Nominating Committee Programme Part II” organised by
ICLIF and Bursa Malaysia.
He is a member of EXCO of the Company. He attended
the “Updates on Goods and Services Tax 2015” seminar
organised by DMB.
ANNUAL REPORT 2015
9
Cont’d
Datuk Lim Soon Foo (“Datuk SF Lim”)
Malaysian, aged 67
Malaysian, aged 60
Tan Sri Dato’ Sri Koh was appointed to the Board on 22
December 2008. He graduated from Plymouth Polytechnic,
UK with a Higher National Diploma in Business Studies
and a Council’s Diploma in Management Studies. He
began his career in Standard Chartered Bank, Sandakan in
1977 as a trainee assistant. In 1978, he joined his family
business and was principally involved in administrative and
financial matters. In 1985, he assumed the role as Chief
Executive Officer of the family business. In 1987, he was
pivotal and instrumental in the formation of Rickoh Holdings
Sdn. Bhd., the flagship company of the family business
which was involved in activities ranging from properties
investments, properties letting and property development,
securities investments, oil palm plantations, sea and land
transportation for crude palm oil and palm kernel, IT, hotel
business, car park operator, insurance agency, trading in
golf equipment and accessories, river sand mining, bricks
manufacturing and quarry operations.
Datuk SF Lim was appointed to the Board on 15 August
2011. He was admitted as member of The Chartered
Institute of Shipbrokers, London since 1979 and currently
serving as Chairman and Principal Advisor to Wajah Nichiei
Sdn. Bhd., Optic Marine Services International Limited,
Optic Marine Offshore Limited and Optic Marine Gateway
Limited, providing highly specialised services in the optic
fibre submarine cable industry which extend into many
countries in Asia Pacific region. The Companies also worked
alongside many Global Partners in the optic fibre submarine
industry. Datuk SF Lim also sits in the board of several other
private companies involved in plantation, logging and real
estates.
Presently, Tan Sri Dato’ Sri Koh is also a Director of NPC
Resources Berhad, Cocoaland Holdings Berhad and IOI
Properties Group Berhad.
Tan Sri Dato’ Sri Koh is also in the Management Team of
Red Sena Berhad as a Corporate Development Director
since October 2014.
Tan Sri Dato’ Sri Koh is the Chairman of the Remuneration
Committee and a member of the Audit and Nomination
Committees of the Company.
Tan Sri Dato’ Sri Koh attended all six Board Meetings held in
the year of 2015. He attended the “GST Training for Rickoh
Group of Companies”, “Seminar on Transition from PERS to
Malaysian Private Entities Reporting Standard (“MPERS”)Are You Ready?” and “2016 Budget and Tax Seminar”
organised by Ernst & Young Tax Consultants Sdn Bhd.
10
Datuk SF Lim is a member of the Remuneration Committee
of the Company.
Datuk SF Lim is the father of Mr. Ronnie Lim Hai Liang, who
acts as his Alternate.
Datuk SF Lim attended four out of six Board Meetings
in the year of 2015. He attended the “Update on
Goods and Sales Tax 2015” Seminar organised by DMB.
Cont’d
Malaysian, aged 40
Malaysian, aged 35
Alternate Director to Datuk Lim Soon Foo
Encik Aminuddin was appointed to the Board on 1 October
2014. He graduated from Robinson College, Cambridge,
UK with a Second Class Upper Honors in Economics. A
Yayasan Sime Darby scholar, he started his career as an
Economist with Sime Securities Sdn Bhd in 1997. In 1998,
he joined Sime AXA Assurance where he was involved at
the marketing and planning levels. Subsequently, he moved
to Consolidated Plantations Bhd in 2000, where he gained
exposure at both the corporate and operations areas. In
2001, Encik Aminuddin joined the government when he was
appointed the Special Officer to the Minister of Youth and
Sports, Malaysia. He later joined the Ministry of Education
as the Private Secretary to the Minister of Education
Malaysia in 2004. In 2009, Encik Aminuddin continued his
career in government as Private Secretary to the Minister
of Home Affairs, Malaysia. He later joined the Ministry of
Transport, Malaysia as the Principal Private Secretary to the
Minister of Transport Malaysia in 2013. Mr. Ronnie Lim was appointed to the Board on 15 August
2011 as Alternate Director to Datuk Lim Soon Foo. He
graduated from the Flinders University of South Australia,
Adelaide with a Bachelor of Law and Legal Practice
(LLB-LP). He began his career as Assistant Project Manager
in small scale housing project developments in Adelaide.
He later joined his family business as CEO of Wajah Nichiei
Sdn. Bhd., Optic Marine Services International Limited and
Optic Marine Offshore Limited in the optic fibre submarine
cable industry. Mr. Ronnie Lim also sits in the board of a
number of family owned companies.
Mr. Ronnie Lim is the son of Datuk Lim Soon Foo, an
Independent Non-Executive Director of the Company.
As an alternate director, Mr. Ronnie Lim attended three out
of six Board Meetings in the year of 2015. He attended
the “Updates on Goods and Services Tax 2015” seminar
organised by DMB.
Encik Aminuddin attended all six of the Board Meetings held
in the year of 2015.
He attended the “Updates on Goods and Services Tax
2015” organised by DMB.
Family Relationship and Major Shareholders
Save as disclosed, none of the Directors of the Company
have any family relationship with any director and/or major
shareholders of the Company.
Conflict of Interest
None of the Directors of the Company has entered into
any transaction, whether directly or indirectly, which has a
conflict of interest with the Company.
Conviction of Offences
None of the Directors has convicted any offence within the
past ten (10) years other than traffic offences, if any.
ANNUAL REPORT 2015
11
CHAIRMAN’S
STATEMENT
Dear Shareholders,
As I write this letter, we are in the depth of an unprecedented turmoil in the oil & gas
industry. One and a half years ago, we witnessed the first unexpected decline in oil
price from US$107 to about US$90 per barrel, which was then largely perceived to
be a short-term correction by most. As it turned out, it was the beginning of the one
of the most dramatic and prolonged slumps that the industry has ever encountered.
Oil price broke the US$70 per barrel level with relative ease (when I last reported in
the 2014 Annual Report), and now hovers around US$40 per barrel. It is fair to say
that very few has foreseen the severity of this downturn, and fewer still will be able to
predict whether oil price will go from the present level to US$20 or US$60 per barrel
in the next 12 months. Such is the quandary facing the industry today.
With this lingering uncertainty as a backdrop, industry players have had to make enormous adjustments
in order to avoid the dangers that lurk ahead. Almost without any exception, all major oil companies had
undertaken major spending cuts in phases throughout 2015, only to be faced with more cuts in 2016 as they
come to the belated realization that the cuts taken earlier were insufficient to address the protracted nature
of the downturn. Tellingly, most of these companies have reported disappointing results, with some of them
suffering their worst ever performances in decades.
Given the depressed scenario, it is thus not surprising that service companies have taken the full brunt of this
market chaos. We suffered a small loss in 2015, though this represented a significant improvement over the
much larger loss we suffered in 2014. On a positive note, we achieved several key milestones during 2015
and successfully addressed many of the issues we faced since entering the offshore service sector in 2012.
We renegotiated key contracts, resulting in us being able to reduce our operating costs meaningfully. We
streamlined our workforce sensibly and trimmed operational inefficiencies. We also completed the purchase
of Siem Daya 1 (an offshore subsea construction vessel) in December 2015 for US$120 million, which will
translate into further cost savings going forward.
12
CHAIRMAN’S STATEMENT
Cont’d
However more work is to be done in order for us to weather through this challenging period. Confronting the
industry now are the twin side effects of a low oil price – a significant over-capacity in many asset classes as well
as a pronounced decline in product prices and service rates. These effects are likely to take many months to work
themselves out as oil companies regroup to review their new capital expenditure and development plans in the face
of the new reality: a prolonged low oil price environment.
The Board and I are very pleased to have Datuk TS Lim join us at the Board and as the new Group Chief Executive
Officer in March 2015. He brings with him extensive experience and networking within both the private and public
sectors. I am confident that his exemplary leadership and unyielding commitments are the key ingredients that will
help our Group in not only navigating through the current choppy waters, but also taking advantage of significant
market opportunities that lie ahead.
PERFORMANCE REVIEW
For the year ended 31 December 2015, the Group recorded a pretax loss of RM2.5 million on turnover of RM718.8
million. This represents an improvement of 93.1% over the pretax loss of RM36.8 million and an increase of 11.9%
over the turnover achieved in financial year 2014. The improvement was primarily attributable to the reduced cost
structure in our upstream (offshore) business, the improvement in our downstream businesses and realised and
unrealised foreign exchange gains. The segmental analysis of our businesses are presented below:-
RM’000
Revenue
EBITDA
Profit
Before Tax
Profit
After Tax
2015
Oil and Gas
395,920
4,193
(9,033)
(15,217)
Technical Services
296,046
14,426
11,728
7,135
26,871
755
384
417
718,838
19,374
3,079
(7,664)
Oil and Gas
341,369
(29,675)
(44,504)
(39,587)
Technical Services
280,846
24,218
19,391
16,020
19,945
81
(189)
(100)
642,160
(5,376)
(25,302)
(23,667)
Specialised Polymer
2014
Specialised Polymer
• The above figures do not take into account management fees and interest expenses charged by the holding company to each
of the business segments.
Oil & Gas (“O&G”)
We suffered a loss of RM9.0 million in this Division as a whole due to the losses in the upstream/offshore segment
of the business. The losses were primarily a result of certain legacy long-term contracts signed in 2013 and the
low vessel utilisation in the last quarter of 2015 as offshore sentiments, especially in the North Sea, became
progressively depressed. Despite the significant cost cutting measures we successfully implemented throughout
2015 (saving approximately 25% in vessel operating costs and 35% in administrative and overhead costs), we were
still unable to fully turn the business around.
ANNUAL REPORT 2015
13
Cont’d
On a positive note, we continued to perform well in the downstream segment, registering a segmental pretax profit
of RM22.2 million despite a notable gross margin contraction due to increasing pricing pressure and overall weak
market conditions. It is encouraging to note that new products and services we introduced the past two years
have gained further traction and acceptance in the marketplace, contributing to almost 30% of the revenue of the
downstream segment.
Approximately RM190 million of new orders were secured in 2015.
Technical Services
This Division reported a pretax profit of RM11.7 million on turnover of RM296 million in financial year 2015. While
turnover improved by 5.4% over the previous financial year, profitability was reduced by 22.9% due largely to
completion of a high margin project in 2014 and ongoing execution issues in one of our projects. Overall margin
of the business remained low, which was not unexpected given the intensely competitive nature of the business.
Ultimately what was important to us was that our clients were broadly satisfied with our performance and we
continue to replenish our order book. In 2015, we secured some RM310 million in new orders.
SpecialiSed Polymer
This Division achieved a notable turnaround in 2015. Turnover increased by 34.7% from RM19.9 million in 2014
to RM26.9 million in 2015 while pretax profit grew to RM384,000 from a loss of RM564,000 over the same period.
Lower raw material costs as well as our ongoing efforts to branch into trading sales contributed to this improved
performance. However, the margin and profitability of this business had been and will continue to be relatively low
given the underlying economics of the industry, constrained by slow growth and high degree of foreign competition.
FINANCIAL POSITION & DIVIDENDS
With the purchase of Siem Daya 1 completed on 17 December 2015 for US$120 million (or RM526 million), satisfied
via a combination of RM126 million convertible bonds (CBs), US$84 million vessel financing (VF) and internal
resources, the Group’s financial position had changed considerably. The Group’s asset base increased from RM174
million in financial year 2014 to RM704 million in financial year 2015. Our net gearing increased correspondingly
from 0.2 times to 1.8 times over the same period. It is useful to note that both the CBs and VF are long-term in
nature (4 years and 6.5 years respectively) and were secured at reasonable rates.
Our cash position improved significantly to RM144 million in financial year 2015 from RM76 million in financial
year 2014. This was largely attributable to a combination of cash generated from profitable business units and
better management of trade receivables and payables. However, our future liquidity and financial position will
predominantly be dependent on the performance of the upstream/offshore segment, which in turn is dependent on
the utilisation of Siem Daya 1 and Siem Daya 2.
In view of the continued uncertainties in the O&G sector and the poor operating performance in 2015, the Board is
of the view that it is prudent not to declare any dividends for the financial year.
14
Cont’d
FUTURE OUTLOOK
Short of a major geopolitical upheaval, global oil supply is expected to remain resilient in the near to medium term,
especially with the renewed supply coming from Iran and persistent high rate of supply from major oil producing
countries. At the same time, the demand of oil, driven largely by global economy growth, has been noticeably
affected the slowing growth in some of the largest economies in the world. Clearly, downside risks still remain in
the near term.
Notwithstanding this, it is probably fair to conclude that we are now nearer to the bottom, rather than top, end of
the sustainable oil price range. While weaker players continue to be under considerable duress, stronger players
will rejoice at gradually seeing light at the end of the tunnel. Unique merger and acquisition opportunities and
investment prospects will present themselves in the next twelve months for those players who are in the position
to capitalise on such situations. Needless to say, building a meaningful war chest to exploit this once-in-a-decade
“oilgasm” is the key to future success.
On our part, our management team has demonstrated their capacity to take tough decisions in the last couple of
years. They are prepared to take even tougher and more drastic measures to further fortify our businesses. In
times of adversity like this where clarity is in short supply, we believe in keeping our options open and thinking out
of the box in order to achieve a sustainable long-term competitive position.
Lastly, I would like to take this opportunity to thank our stakeholders for their unwavering support of our businesses.
They have shown incredible understanding of the challenges facing the oil & gas industry and continued to work
patiently and closely with us. There will no doubt be more challenges ahead, but we are confident that our core
values and commitments will prevail.
Chairman
ANNUAL REPORT 2015
15
CORPORATE SOCIAL
RESPONSIBILITY
“Creating a strong business and building a better world are not
conflicting goals – they are both essential ingredients for
long-term success.”
William Clay Ford Jr. Executive Chairman, Ford Motor Company.
“Corporate Social Responsibility is a hard-edged business
decision. Not because it is a nice thing to do or because people
are forcing us to do it because it is good for our business.”
Niall Fitzerald, Former CEO, Unilever
“Businesses need to go beyond the interests of their companies
to the communities they serve.”
Ratan Tata, former chairman of the Tata Group
Corporate Social Responsibility (CSR) is at the very core of everything
we do at Daya Materials Berhad. We believe in giving back to the society
and community. We believe that a responsible approach to developing
relationships between companies and the communities they serve is an
important part of delivering business success. In the year of 2015, DMB
carried out numerous activities for our local community.
July 2015
The volunteering employees of Daya Maxflo paid a visit to Pusat Jagaan
Siti Nor Aini, an old folks home located in Kajang, Selangor to conduct
a breaking fast event on the 13 July 2015, Monday. Our employees
contributed some essential goods in kind to the senior citizens. Apart from
that, they interacted and had their fast breaking dinner with the senior
citizens.
November 2015
Employees of Daya OCI Sdn Bhd organised a “Back to School” programme
at Rumah Bakti Al Kausar at Bangi that housed about 22 orphans. On 19
November 2015, the employees visited and donated two pairs of shoes and
school uniforms, as well as bags and socks to each of them.
16
CORPORATE GOVERNANCE STATEMENTS
The Board of Directors of DMB (“the Board”) is committed towards achieving excellence in corporate governance
and acknowledges that the primary responsibility for good corporate governance lies within the Board. The Board,
in carrying out their roles and responsibilities, is firmly committed to ensuring that the highest standards of corporate
governance and corporate conduct are adhered to, in order that the Group achieves strong financial performance for
each financial year, and more importantly delivers long-term and sustainable value to shareholders.
The Malaysian Code on Corporate Governance 2012 (“the Code”) sets out principles and recommendations on
structures and processes that companies should adopt in making good corporate governance an integral part of
their business dealings and culture. The Board reaffirms its support to the Code and believes that good corporate
governance is fundamental in achieving the Group’s objectives. To ensure that the best interests of shareholders and
other stakeholders are effectively served, the Board continues to play an active role in improving governance practice
and constantly monitors the development in corporate governance including in the Code.
The Board is pleased to report to the shareholders, the manner and the extent in which the Group has applied and
complied with the Principles and Recommendations of the Code for the financial year ended 31 December 2015.
1.DIRECTORS
1.1 Board Composition and Balance
As at the date of this statement, the Board consists of seven (7) principal directors and one (1) alternate
director. Out of the seven (7) principal directors, two (2) are Executive Directors and five (5) are Independent
Non-Executive Directors. With this Board composition, the Company has thus complied with paragraph
15.02(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”)
which requires that at least two (2) Directors or one-third (1/3) of the Board of Directors, whichever is the
higher, to be Independent Directors. The size and composition of the board remain adequate to provide for
a diversity of views, facilitate effective decision making, and appropriate balance of Executive, Independent
and Non-Independent directors.
The Directors come from diverse backgrounds with skills and expertise in different area, such as banking,
finance, engineering, business and legal. Their diverse skills and background collectively bring depth
and diversity in experience to the Group’s operations. The Independent Non-Executive Directors are
independent from the day to day management and have no family or business relationships with the Group
that could interfere with the exercise of their independent judgment. They bring to bear objective and
independent judgment to the decision making of the Board and provide an effective check and balance for
the Executive Directors.
In maintaining the independence of the Independent Directors of the Company, annual assessment
is performed in order to mitigate risks arising from any possible conflict of interest situations or undue
influence affecting their independence. In line with the recommendations of the Code, the tenure of an
Independent Director of the Company should not exceed a cumulative term of nine (9) years. The Board
must justify and seek shareholders’ approval in the event it retains an Independent Director, who has served
in that capacity for more than nine (9) years.
Encik Fazrin Azwar Bin Md Nor, who is the Senior Independent Non-Executive Director of the Company,
has served the Board for more than nine (9) years. Thus, shareholders’ approval will be sought to retain him
as an Independent Director of the Company. The Nomination Committee and the Board have performed
an assessment on the independence of the Independent Directors. Upon the Nomination Committee’s
recommendation, the Board recommended for shareholders’ approval to retain Encik Fazrin Azwar Bin Md
Nor as an Independent Non-Executive Director of the Company based on the following justifications:-
(a)
(b)
(c)
He fulfils the criteria under the definition of Independent Director as stated in the Main Market Listing
Requirements of Bursa Securities and therefore would be able to function as a check and balance
and bring an element of objectivity to the Board of Directors;
He has devoted sufficient time and attention to his professional obligations for informed and balanced
decision making;
He had vast experience in a diverse range of businesses and therefore would be able to provide
constructive opinion;
ANNUAL REPORT 2015
17
Cont’d
1.
DIRECTORS cont’d
1.1 Board Composition and Balance cont’d
(d)
(e)
(f)
The roles of the Chairman, the Executive Vice Chairman and the Group Chief Executive Officer are separate
with clear distinction of responsibilities between them to ensure balance of power and authority. The
Chairman, who is a Non-Executive Director, is primarily responsible for the orderly conduct and working
of the Board whilst the Executive Vice Chairman and Group Chief Executive Officer are responsible for the
running of the business and operations and implementation of the Board’s policies and decisions.
The profiles of each Board member are set out under Profile of Directors on pages 8 to 11 of this Annual
Report.
He exercises independent judgement and has the ability to act in the best interest of the Company;
He had continued to exercise his independence and due care during his tenure as an independent
Non-Executive Director of the Company and carried out his professional duties in the best interest of
the Company and shareholders;
He has actively participated in the Board’s deliberations, provided objective and independent opinion
to the Board.
1.2 Duties and Responsibilities
The Board is overall responsible for the corporate governance structure of the Group. Its primary
responsibilities pursuant to the recommendations of the Code include:
l
l
l
l
l
l
review and adopt a strategic plan for the Group;
oversee the conduct of the Group’s business to evaluate whether the business is being properly
managed;
identify principal risks and ensure the implementation of appropriate systems to manage these risks;
implement succession planning, including appointing, training, fixing the compensation of and where
appropriate, replacing senior management;
develop and implement an investor relations program or shareholders communications policy for the
Group; and
review the adequacy and the integrity of the Group’s internal control systems and management
information systems, including systems for compliance with applicable laws, regulations, rules,
directives and guidelines.
The Board maintains a schedule of matters reserved for its collective decision. The Board reserves full
decision-making powers on the following matters:-
(a) Conflict of interest issues relating to a substantial shareholder or a Director;
(b) Material acquisition and disposition of assets not in the ordinary course of business;
(c) investments in capital projects;
(d)
Authority level;
(e)
Treasury policies;
(f) Risk Management policies; and
(g) Key human resource issues
18
The Board has delegated certain responsibilities to the Board Committees, such as the Audit Committee,
Nomination Committee and Remuneration Committee, which operate within clearly defined terms of
reference. These Board Committees have the authority to examine specific issues and forward their
recommendations to the Board. At each Board meeting, minutes of the Board Committees meetings are
presented to the Board. The respective Chairman of the Board Committees will also report to the Board on
key issues deliberated by the Board Committees. The final decisions on all matters, however, rest with the
Board.
To ensure the effective discharge of its function and responsibilities, the Board also delegates some of the
Board’s authorities to the Executive Committee (“EXCO”), which represents the management. The EXCO is
entrusted with the responsibility of carrying out tasks which are assigned by the Board. The EXCO acts on
behalf of the Board on matters concerning administrations, operations, capital expenditure, debt approvals
and investments. It meets at regular intervals to review and decide on administrative and operational
matters, budgets and investment strategies of the Group.
Cont’d
1.
DIRECTORS cont’d
1.2 Duties and Responsibilities cont’d
The Board recognises the importance to set out the key values, principles and ethos of the Group, as
policies and strategy development are based on these considerations. The Board approved and adopted
a Board Charter which includes the division of responsibilities and powers between the Board and the
management as well as the different committees established by the Board.
The Board Charter sets out the principal role of the Board, the demarcation of the roles, functions,
responsibilities and power of the Board, various Board Committees or EXCO of the Company.
The Board Charter further defines the specific responsibilities of the Board, in order to enhance
coordination and communication between the senior management and Board and more specifically,
to clarify the accountability of both the Board and management for the benefit of the Company and its
shareholders. In addition, it will assist the Board in the assessment of its own performance and of its
individual Directors.
The Board will review and update the Board Charter periodically in accordance with the needs of
the Company and any new regulations that may have an impact on the discharge of the Board’s
responsibilities. The Board Charter is available for reference on the Company’s website. 1.3 Supply of Information
The Board has unrestricted access to timely and accurate information necessary in the furtherance of their
duties. All Directors are furnished with the meeting agenda and other documents on matters requiring their
consideration prior to and in advance of each Board meeting. This is to facilitate meaningful and productive
deliberation and discussion during the Board meeting. The documents are comprehensive and include
qualitative and quantitative information to enable the Board members to make an informed decision. Senior
management may be invited to attend these meetings to explain and clarify to the Board on matters being
tabled.
The Chairman, with the assistance of the management, undertakes primary responsibility for organising
information necessary for the Board to deal with the agenda and in ensuring all Directors have full and
timely access to the information relevant to the matters that will be deliberated at the Board meeting.
Certain reports, such as those relating to the Company’s financial results for statutory announcements, are
submitted to the Audit Committee for their review and recommendation to the Board for approval thereafter.
All proceedings from the Board meetings are recorded by way of minutes. The minutes are then confirmed
by the Board and signed as correct records of the proceedings thereat by the Chairman of the meeting.
The Board has direct access to the Senior Management and has unrestricted and immediate access to any
information relating to the company’s business and affairs in the discharge of their duties. When required,
they may request to be furnished with additional information and clarification. For complex and technical
issues, the Board may seek independent professional advice at the Company’s expense in discharging
their duties. Individual may also obtain independent professional or other advice in fulfilling their duties and
responsibilities, subject to the Chairman’s or Board’s approval, and depending on the quantum of the fees
involved.
ANNUAL REPORT 2015
19
Cont’d
1.
DIRECTORS cont’d
1.3 Supply of Information cont’d
During the financial year ended 31 December 2015, the Board members met six (6) times where
they deliberated on and considered matters relating to the Group’s financial performance, significant
investments, change to management and control structure of the Group, corporate development, strategic
issues and business plan. The attendance of each Director at Board meetings held during the financial year
ended 31 December 2015 is set out below:
Name of Directors
Dato’ Dr. Azmil Khalili bin Dato’ Khalid
Datuk Lim Soon Foo
(appointed w.e.f 24/03/2015)
No. of Board
meetings attended
Percentage of
attendance (%)
4/6
6/6
6/6
6/6
4/6
6/6
4/4
67
100
100
100
67
100
100
None of the Directors was absent for more than 50% of the total Board meetings held under the financial
year under review, hence complying with paragraph 15.05 of the Main Market Listing Requirements of
Bursa Securities.
The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their
roles and responsibilities as Directors of the Company. This is evidenced by the attendance record of
the Directors at the Board of Directors’ and Board Committees meetings for the financial year ended 31
December 2015.
1.4 Board Committees
1.4.1 Audit Committee
The Board established the Audit Committee on 1 June 2005. The Audit Committee comprises of
three (3) members, all of whom are Independent Non-Executive Directors. The composition, terms of
reference and summary of activities of the Audit Committee during the financial year under review are
disclosed in the Audit Committee Report as set out on pages 32 to 35 of this Annual Report.
1.4.2Nomination Committee
The Nomination Committee comprises three (3) members, all of whom are Independent NonExecutive Directors:
Chairman : Dato’ Dr. Azmil Khalili bin Dato’ Khalid (Independent Non-Executive Director)
Member : Fazrin Azwar bin Md. Nor
20
The Board was of the view that the Board Committees should be chaired by different Independent
Non-Executive Directors. Hence, the Board agreed that Dato’ Dr. Azmil Khalili bin Dato’ Khalid to
remain as Chairman of the Nomination Committee, while Encik Fazrin Azwar bin Md. Nor, who is the
Senior Independent Non-Executive Director of the Company to continue to act as Chairman of the
Audit Committee.
Cont’d
1.
DIRECTORS cont’d
1.4 Board Committees cont’d
1.4.2Nomination Committee cont’d
The functions of the Nomination Committee are as follows:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
The Nomination Committee held two (2) meetings during the financial year ended 31 December 2015.
Details of attendance of each member are as follows:
To review regularly the Board structure, size and composition and make recommendations to the
Board with regards to any adjustments that are deemed necessary;
To propose and identify new nominees for appointment to the Board;
To assess Directors on an on-going basis, the effectiveness of the Board as a whole, the Board
Committees and the contribution of each individual Director as well as the Chief Executive
Officer;
To recommend to the Board, Directors to fill the seats on Board Committees;
To review annually the Board’s mix of skills and experience and other qualities including core
competencies which non-executive Directors should bring to the Board;
To develop the criteria to assess independence of the Independent Directors of the Company;
To determine annually whether or not a Director is Executive, Non-Executive or Independent;
To recommend to the Board for continuation (or not) in service of Executive Director(s) and
Directors who are due for retirement by rotation;
To recommend to the Board for continuation in service of Independent Director(s) who have
served the Board for a cumulative term of more than nine (9) years;
To consider, in making its recommendations, candidates for directorships proposed by the Chief
Executive Officer and, within the bounds of practicability, by any other senior executive or any
Director or shareholder; and
To orientate and educate new Directors on the nature of the business, current issues within
the Group and the corporate strategy, the expectations of the Group concerning input from the
Directors and the general responsibilities of Directors.
Nomination Committee
No. of meetings attended
2/2
2/2
2/2
The summary of activities of the Nomination Committee during the financial year ended 31 December
2015 is as follows:-
(a)
(b)
(c)
(d)
Reviewed and recommended to the Board, the appointment of the new Group Chief Executive
Officer and Executive Director of the Company;
Reviewed and recommended to the Board, Director’s retiring by rotation and re-election;
Assessed the independence of an Independent Director, who has served the Board for more
than nine (9) years; and
Assessed the effectiveness of the Board as a whole and contribution of individual Directors.
1.4.3 Remuneration Committee
The Remuneration Committee comprises four (4) members, all of whom are Independent NonExecutive Directors:
Chairman
Member
:
:
:
:
Fazrin Azwar bin Md. Nor Datuk Lim Soon Foo (Independent Non-Executive Director)
ANNUAL REPORT 2015
21
Cont’d
1.
DIRECTORS cont’d
1.4 Board Committees cont’d
1.4.3 Remuneration Committee cont’d
The duties and functions of the Remuneration Committee are as follows:
(i)
To recommend to the Board the framework of Executive Directors’ remuneration and the
remuneration package for each Executive Director, drawing from outside advice as necessary;
(ii) To recommend to the Board, guidelines for determining remuneration/fees of Non-Executive
Directors;
(iii) To recommend to the Board any performance related pay schemes for Executive Directors;
(iv) To review Executive Directors’ scope of service contracts; and
(v) To consider the appointment of the service of such advisers or consultants as it deems
necessary to fulfill its functions.
The Remuneration Committee held two (2) meetings during the financial year ended 31 December
2015. Details of attendance of each member are as follows:Remuneration Committee
2/2
2/2
2/2
Datuk Lim Soon Foo
2/2
The summary of activities of the Remuneration Committee during the financial year ended 31
December 2015, is as follows:-
(a)
Reviewed and recommended to the Board, remuneration package of the new Group Executive
Officer and Executive Director of the Company;
(b) Reviewed and recommended to the Board, proposed payment of Directors’ fees to the NonExecutive Directors for the financial year ended 31 December 2014; and
(c) Reviewed and recommended to the Board, remuneration package of the Executive Directors of
the Company for the financial year ended 31 December 2015.
1.5
Appointments to the Board
22
The Board recognises its responsibility to carefully appraise and consider the appointment of new
and existing Directors so as to continue functioning effectively. Thus, whilst the initial appraisal of new
candidates is delegated to the Nomination Committee, the Board will assess and review the appointment
or re-appointment of each Director to ensure a good balance of skills and experience in the Board
composition. The decision on appointment of new Directors rests with the Board after considering the
recommendations of the Nomination Committee.
During the nomination and selection process, the Nomination Committee first considered and
recommended to the Board, nominee for directorship upon accessing the fitness and proprierty of the
nominee(s). Upon the approval of the Board, the Company Secretary will ensure that the appointment is
made properly, that all necessary information is obtained, as well as legal and regulatory obligations are
made.
Cont’d
1.
DIRECTORS cont’d
1.5 Appointments to the Board cont’d
On 24 March 2015, the Board has approved the appointment of Datuk Lim Thean Shiang as the new Group
Chief Executive Officer and Executive Director of the Company, after extensive review and consideration of
the following criteria:
(i)
(ii)
(iii)
(iv)
(v)
Newly appointed Director is furnished with the necessary information to enable him to carry out his duties,
which includes, inter alia, information on the Group, the Board’s role, powers delegated to various Board
Committees and financial information.
As at the date of this statement, no gender diversity policies, targets and measures have been set by the
Company. The Board, through the Nomination Committee will take the necessary steps to ensure that
women candidates are sought as part of its recruitment exercise.
His
His
His
His
His
leadership qualities;
extensive knowledge of both the public and private sectors;
in-depth experience dealing with government agencies and large corporates;
considerable networking with corporate leaders in Malaysia and abroad; and
ability to assist in securing new business for the Group.
1.6 Re-election of Directors
In accordance with Article 104 of the Company’s Articles of Association, one-third (1/3) or the number
nearest to one-third (1/3) of the Directors shall retire from office and be eligible for re-election at the Annual
General Meeting. Furthermore, each Director shall retire from office at least once in every three (3) years but
shall be eligible for re-election. The Directors to retire each year are the Directors who have been longest in
office since their last election.
The re-election of Directors provide shareholders an opportunity to re-assess the composition of the Board.
The following Directors shall retire pursuant to Article 104 of the Company’s Articles of Association at the
forthcoming Annual General Meeting of the Company:
(i)
(ii)
Pursuant to Section 129(2) of the Companies Act, 1965, Directors who are of or over seventy (70) years of
age are required to seek for re-appointment to the Board annually. None of the Directors of the Company
has attained the age of seventy (70) years for the financial year under review.
Dato’ Dr. Azmil Khalili bin Dato’ Khalid; and
1.7 Annual Assessment
The Nomination Committee carries out an annual assessment on the Board as a whole and its individual
directors.
The performance indicators on which Board effectiveness is evaluated include Board composition and
structure, operations and interactions, Board roles and responsibilities as well as Board activities. The
Nomination Committee met to discuss and assess the Board effectiveness and collectively completed its
evaluation of the Board.
To assess the performance of individual Directors, each Board member is given a self-assessment form
which include the performance indicators such as their meeting attendance, their interactive contributions,
understanding of their role and responsibilities and their quality of input. The completed forms were then
tabled to the Nomination Committee for review and discussion.
For the financial year ended 31 December 2015, the Board had, through the Nomination Committee,
reviewed the mix of skills and experience of the individual Directors and assessed the effectiveness of the
Board as a whole.
The Nomination Committee also assessed the independence of Independent Director who has served the
Company for a cumulative term of more than nine (9) years and made appropriate recommendation to the
Board.
ANNUAL REPORT 2015
23
Cont’d
1.
DIRECTORS cont’d
1.8 Directors’ Trainings
All members of the Board have attended and successfully completed the Mandatory Accreditation
Programme.
The Board will assess the training needs of its Directors annually and the Directors will continue to undergo
further Continuous Education Programmes to keep themselves abreast with the latest developments in the
market place and enhance their professionalism in the discharge of their duties and responsibilities.
During the financial year ended 31 December 2015, the following training courses/seminar were attended
by the respective Directors:
Directors
Trainings/Seminars Attended
•
31 March 2015
Financial Statements Reporting Requirements
and Best Practices in Boardroom Effectiveness
(organised by AlloyMtd Group)
Tham Jooi Loon
•
24 November 2015
Updates on Goods and Services Tax 2015
(organised by DMB)
•
24 November 2015
(organised by DMB)
•
25 March 2015
Audit Committee Conference 2015
(organised by Malaysian Institute of Accountants
and The Institute of Internal Auditors Malaysia)
8 April 2015
Nominating Committee Programme Part
II (organised by the ICLIF Leadership and
Governance Centre (“ICLIF”) and Bursa Malaysia
Berhad)
•
•
•
•
24
27 January 2015
GST Training for Rickoh Group of Companies
(organised by Ernst & Young Tax Consultants Sdn
Bhd)
10-11 September 2015
Seminar on Transition from PERS to Malaysian
Private Entities Reporting Standard (“MPERS“)
– Are you ready? (organised by Ernst & Young)
11 November 2015
–2016 Budget and Tax Seminar (organised by
Ernst & Young Consultants Sdn Bhd)
Datuk Lim Soon Foo
•
24 November 2015
(organised by DMB)
•
24 November 2015
(organised by DMB)
•
24 November 2015
(organised by DMB)
Cont’d
1.
DIRECTORS cont’d
1.9 Number of Directorship
Pursuant to Paragraph 15.06(1) of the Main Market Listing Requirements of Bursa Securities, Directors of
the Company shall not hold more than (5) directorship in public listed companies.
The Directors of the Company are required to first notify the Chairman, prior to acceptance of new
directorship in other public listed companies, including the estimated time commitment required, to ensure
that such appointment would not affect their commitments and focus for an effective input to the Board.
As at the date of this Statement, none of the Directors of the Company hold more than (5) directorship in
public listed companies. The directorships of each Director are set out in the Profile of Directors on pages 8
to 11 of this Annual Report.
1.10
Qualified and Competent Company Secretary
The Board is supported by two (2) qualified Company Secretaries who are Associate members of the
Malaysian Institute of Chartered Secretaries and Administrators (“MAICSA”).
The Board is satisfied with the performances and support rendered by the Company Secretaries to the
Board in the discharge of its functions. The Company Secretaries play an advisory role to the Board in
relation to the Company’s constitution, Board’s policies and procedures and compliance with the relevant
regulatory requirements, codes or guidance and legislations. The Company Secretaries support the Board
in managing the Company’s governance model, ensuring its effectiveness and relevance. The Company
Secretaries also ensure that the deliberations and decisions made at the Board meetings are well captured
and minuted.
1.11 Code of Ethics
The Group is committed in maintaining the highest standards of honesty, integrity and ethical conduct
and has established a Code of Conduct and Business Ethics (“the Code of Ethics”) and includes rules
and guidance on anti-fraud and whistle blower protection to ensure effective investigation, reporting and
disclosure of any occurrences of fraud within the Group.
The Code of Ethics provides general compliance requirements as to employees’ conduct and behaviour in
carrying out their duties and responsibilities in day-to-day business operations. The Code of Ethics outlines
minimum standards expected of employees in dealing with conflicts of interest, supplier relationships,
competitors, external businesses or activities, transactions with the Group, use of the Group’s real
and intellectual, use and disclosure of the Group’s confidential information, compliance of national and
international laws and regulations, compliance of all relevant health & safety requirements, maintenance of
business records and illegal or questionable payments.
The Code of Ethics will be reviewed periodically and it is published on the Company’s website.
1.12 Whistle-Blowing Policy
A Whistle-Blowing Policy was established and approved by the Board in November 2015 to provide a
platform and to act as a mechanism for parties to channel their complaints or to provide information on
fraud, wrongdoings or non-compliance to any rules or procedures by the employees or Management of the
Company. The policy outlines the scope and procedures a concern may be properly raised, distinguishes
a concern from a personal grievance and allows the whistleblower the opportunity to raise a concern
outside their management line and in confidence. The identity of the whistleblower is kept confidential and
protection is accorded to the whistleblower against any form of reprisal or retribution. Any concerns raised
will be investigated and a report and update are provided to the Board of Directors, through the Audit
Committee. The Whistle-Blowing Policy is available for reference on the Company’s website.
ANNUAL REPORT 2015
25
Cont’d
2.
DIRECTORS’ REMUNERATION
The details of remuneration of Directors of the Company during the financial year ended 31 December 2015 are
as below:
(i)
The remuneration of Directors is determined at levels, which will enable the Company to attract and retain
Directors with the relevant experience and expertise to run the Group successfully. The remuneration of
Executive Directors is structured to link rewards to corporate and individual performance. The remuneration
of Non-Executive Directors comprises annual Directors’ fee and meeting allowance for each Board meeting or
Board Committee meeting attended by them. The determination of the remuneration packages of Non-Executive
Directors, including Non-Executive Chairman, is a matter for the Board as a whole.
Aggregate remuneration categorised into components:
Executive
Directors
Non-Executive
Directors
Total
(RM)
(RM)
(RM)
Fees
Salaries & other emoluments
42,000
132,000
174,000
1,008,346
88,000
1,096,346
Total
1,050,346
220,000
1,270,346
(ii) The number of Directors whose total remuneration fall within the following bands:Range
Executive Directors
Non-Executive Directors
-
3
RM50,001 – RM100,000
-
2
RM850,001 – RM900,000
1
-
RM1,150,000 – RM1,200,000
1
-
Below RM50,000
3.
INVESTORS RELATION AND SHAREHOLDERS COMMUNICATION
The Company recognises the value of transparent, consistent and coherent communications with investment
community consistent with commercial confidentiality and regulatory considerations. The Company aims to
build long-term relationships with shareholders and potential investors through appropriate channels for the
management and disclosure of information. These investors are provided with sufficient business, operations and
financial information on the Group to enable them to make informed investment decisions. 3.1 Dialogue with shareholders and investors
26
In maintaining the commitment to effective communication with the shareholders, the Company adopts the
practice of comprehensive, timely and continuing disclosures of information to its shareholders as well as
to the general investing public.
Where possible and applicable, the Company also provides additional disclosure of information on
a voluntary basis. The Company believes that consistently maintaining a high level of disclosure and
extensive communication with its shareholders is vital to shareholders and investors to make informed
investment decisions.
The primary tools of communication with the shareholders of the Company are through the annual report,
quarterly reports, announcements through Bursa Securities and circulars. The Company’s website at
www.dayagroup.com.my contains vital information concerning the Group which is updated on a
regular basis and shareholders are able to pose questions to the Company through the website. All
announcements made by the Company, annual reports as well as the notice of general meetings are also
made available on the Company’s website.
Cont’d
3.
INVESTORS RELATION AND SHAREHOLDERS COMMUNICATION cont’d
3.1 Dialogue with shareholders and investors cont’d
The Board considers it essential for investors to be kept informed of all latest financial results and
developments of the Company and the Group and where appropriate, will provide disclosure that is in the
best interest of the Company and also of the shareholders. All such reporting information can be obtained
from the websites of the Company and Bursa Securities. The Company also disseminates information
through press releases on corporate events and business as well as any significant developments of the
Group.
In addition to the above, the Board has identified En. Fazrin Azwar bin Md. Nor as the Senior Independent
Non-Executive Director to whom all concerns from the shareholders or investors may be conveyed.
3.2 General Meetings
All shareholders are encouraged to attend the Company’s general meetings and to participate in the
proceedings. The Company allows a member to appoint more than one (1) proxy, who may but need not be
a member of the Company. A member may appoint any person to be his/her proxy without limitation and
the proxy shall have the same rights as the member to speak at the general meetings.
At the Annual General Meeting and Extraordinary General Meeting, the Chairman gives shareholders ample
opportunity to participate through questions on the prospects, performance of the Group and other matters
of concern addressed to the Board. Shareholders’ suggestions received during the general meetings are
reviewed and considered for implementation, wherever possible. The Company would conduct poll voting if
demanded by shareholders at the general meetings.
Notice of general meetings and the Group’s annual report are sent out to the shareholders within the period
prescribed by the Company’s Articles of Association. The notice of general meetings will also be advertised
in the newspaper.
4.
ACCOUNTABILITY AND AUDIT
4.1 Financial Reporting
The Board is responsible for presenting a balanced and meaningful assessment of the Group’s financial
performance and prospects primarily through the annual report, financial statements and quarterly
announcements of the Group’s results. The Audit Committee assists the Board in ensuring accuracy,
adequacy and completeness of information for disclosure. The Statement by Directors pursuant to Section
169 of the Companies Act, 1965 is set out on page 41 of this Annual Report and the Statement explaining
the responsibility for preparing the annual audited financial statements is set out on page 42 of this Annual
Report.
4.2 Internal Control and Risk Management
The Board is ultimately responsible for the overall system of internal controls, which includes not only
financial controls but also controls relating to operations, compliance and risk management. The internal
control system which is designed to meet the needs of the Company and to manage risks to which
the Company is exposed can only provide reasonable and not absolute assurance against material
misstatement, loss or fraud.
Further details relating to internal control are set out in the Statement on Risk Management and Internal
Control on pages 29 and 31 and the Audit Committee Report on pages 32 and 35 of this Annual Report.
ANNUAL REPORT 2015
27
Cont’d
4.
ACCOUNTABILITY AND AUDIT cont’d
4.3 Relationship with Auditors
The external auditors, Messrs Deloitte was appointed at the last Annual General Meeting of the Company.
The Board maintains a transparent relationship with the external auditors in seeking professional advice and
ensuring compliance with relevant accounting standards in Malaysia.
The Audit Committee undertakes an annual assessment of the suitability and independence of the external
auditors. Upon satisfactory assessment of their performance, the Audit Committee will recommend their reappointment to the board upon which shareholders’ approval will be sought at the Annual General Meeting
of the Company.
It is a policy of the Audit Committee that it meets with external auditors at least twice a year to discuss
their audit plan, audit findings and the Company’s financial statements as well as any other issues without
the presence of the Executive Directors and Management.
In addition, the external auditors are invited to attend the Annual General Meetings of the Company and are
available to answer shareholders’ questions on the conduct of the statutory audit and the preparation and
content of their audit report.
Key features underlying the relationship of the Audit Committee with the external auditors and internal
auditors are included in the Audit Committee Report on pages 32 and 35 of this Annual Report.
The external auditors have confirmed that they are and have been independent throughout the conduct
of the audit engagement for the financial year under review in accordance with the provisions of the ByLaws on Professional Independence of the Malaysian Institutes of Accountants and other regulatory
requirements.
5.
SUSTAINABILITY POLICY
The Board promotes good Corporate Governance in the application of sustainability practices throughout the
Group, the benefits of which are believed to translate into better corporate performance.
A detailed report on sustainability activities, demonstrating the Company’s commitment to the global
environmental, social, governance and sustainability agenda, appears in the Corporate Responsibility Statement
on page 16 of this Annual Report.
The Board is committed in achieving high standards of corporate governance throughout the Group. The Board
considers that the Group has complied with the Code throughout the financial year ended 31 December 2015.
This statement was approved by the Board of Directors on 7 April 2016.
28
STATEMENT ON RISK MANAGEMENT AND
INTERNAL CONTROL
INTRODUCTION
The Board of Directors of DMB (the “Board”) is pleased to provide the following statement on the state of risk
management and internal control of Daya Materials Berhad and its subsidiaries (“Group”), which have been prepared
in accordance with the “Statement on Risk Management and Internal Control: Guidance for Directors of Public Listed
Companies” as adopted by the Bursa Securities.
The following statement outlines the nature and scope of risk management and internal control of the Group during the
financial year ended 31 December 2015.
Responsibility of the board
In carrying out its oversight roles and responsibilities, the Board is committed to maintain a sound system of risk
management and internal control in the Group and to review the adequacy and integrity of the system to safeguard the
shareholders’ investments and the Group’s assets.
Throughout the financial year, the Board has actively reviewed the risk management framework and internal control
to confirm that there is an ongoing process for identifying, evaluating, monitoring and managing the significant risks
faced by the Group. By doing so, the Board is able to ensure that the system addresses and manages the Group’s key
areas of risk within an acceptable risk profile to increase the likelihood of the Group’s policies being complied with and
business objectives being achieved.
As with the inherent limitations in any system of internal control, the Group’s system is designed to manage, rather
than to eliminate the risk of failure to achieve its business objectives. The system of internal control is designed to
provide reasonable but not absolute assurance against material misstatement or loss.
KEY PROCESSES ON RISK MANAGEMENT AND INTERNAL CONTROL
The key processes that have been established in reviewing the adequacy and effectiveness of the risk management
and internal control system include the following:
Risk Management
The Group has established the Risk Management Policy and Guidelines based on the ISO 31000:2009 International
Standard of Risk Management - Principles and Guidelines, to proactively identify, evaluate and manage key risks to
an optimal level. In line with the Group’s commitment to deliver sustainable value, this framework aims to provide an
integrated and organised approach entity-wide.
During the financial year ended 31 December 2015, the Group had actively executed the Enterprise Risk Management
(“ERM”) initiatives based on the approved ERM Framework; which includes tracking and monitoring of the key
mitigation strategies implementation for the key risk areas identified.
The Management is responsible for identifying, analysing, managing and reporting on significant risks on an ongoing
basis. These functions were carried out continuously during the year and significant risk matters together with the
relevant systems of controls to manage those risks.
The Group’s risk management framework also provides for regular reviews and reporting. These reports include
assessment of risks, evaluation of the effectiveness of the controls in place and the requirements for further controls.
The key elements of these processes are:
a.
b.
c.
d.
Reviewing and discussing of key risks at least on a quarterly basis by the Risk Coordinator with the Risk
Management Unit of each subsidiary;
Reporting of significant risks by the Risk Management Unit to the Group Internal Audit on a quarterly basis;
Presentation of a summary of significant risks to the Board via Group Internal Audit on a quarterly basis; and
Development of the actions plan to improve the system of controls in order to effectively manage the risks.
ANNUAL REPORT 2015
29
INTERNAL CONTROL
Cont’d
KEY PROCESSES ON RISK MANAGEMENT AND INTERNAL CONTROL cont’d
Internal Audit
The Board has established an internal audit function which is carried out in-house via the Group Internal Audit
Department (the “GIA”). The GIA reports functionally to the Audit Committee (“AC”) and administratively to the
Executive Committee (the “EXCO”).
The main roles and responsibilities of the GIA is to provide an independent objective assurance and consulting
services designed to add value and improve the business and work activities of the Group by bringing about a
systematic and disciplined approach to evaluate and improve the effectiveness of the risk management, governance
and internal control processes.
The internal audit function has adopted a risk-based approach in its audit work. The audit focused on areas with high
risk, which were identified in the risk management framework, to ensure that the controls were functioning and where
necessary, action plans were developed to improve on controls to manage significant risks.
The audit assignments were performed for the Group’s corporate support functions, subsidiaries and business entities,
of which the timing and frequency were based on the level of risks assessed and this was incorporated into the
Annual Internal Audit Plan. The Internal Audit Plan was reviewed by the AC and approved by the Board. The GIA
also reviewed controls related to new emerging risks and attended to the Management’s requests in addition to the
approved Internal Audit Plan.
The GIA also followed-up and reported to the AC on a quarterly basis regarding the status of audit issue closure by the
Management based on the recommendations highlighted in the internal audit reports. Further details of the activities of
the GIA are provided in the Audit Committee Report on page 34 of this Annual Report.
CONTROL STRUCTURE AND ENVIRONMENT
The Group has an established internal control structure and is committed to evaluating, enhancing and maintaining the
structure to ensure effective control over the Group’s business operations and to safeguard the value and security of
the Group’s assets.
The key elements that support the control structure and environment are described below:a.
b.
c.
d.
e.
f.
30
Formal organisation structure within the Group with delineated lines of responsibility, delegated authority and
accountability;
Clearly documented internal policies, manuals, procedures and work instructions, which are updated from time to
time;
Regular Board and management meetings are held where information is provided to the Board and management
covering financial performances and operations;
Major investments, acquisitions and disposals are appraised prior to approval by the EXCO or the Board;
Regular training and development programs are being attended by employees with the objective of enhancing
their knowledge and competency; and
Management accounts and reports are prepared monthly for monitoring of actual performance versus budget. In
this instance, material variances are explained and corrective actions, where necessary, are taken.
INTERNAL CONTROL
Cont’d
INTERNAL POLICIES AND PROCEDURES
The Group continues to periodically review and update the internal policies and standard operating procedures for
improvement and to reflect changes in the business structure and processes as and when necessary.
a.
Delegation of Authority (“DoA”) and Limit of Authority (“LoA”)
l
l
b.
Human Resource Policies
l
l
c.
Standard Operating Procedures
l
d.
Whistleblowing Policy and Guidelines
l
There is an organisational structure with formally defined lines of responsibility and delegation of authority
to ensure proper identification of accountabilities and segregation of duties.
There are operational authority limits imposed on the Group Chief Executive Officer and Senior
Management within the Group in respect of day-to-day operations.
There are existing policies which provide clear guidelines for the organisation to implement various aspects
of human resource practices in an objective and consistent manner.
The policies set standards that guide how we conduct ourselves as employees and also play as an integral
part of the Group’s business strategy.
There are documented procedures specific to various operations that describe the activities necessary to
complete tasks in accordance with industry rules and regulations.
There is an internal mechanism that are safe and acceptable for staff or any other stakeholders to raise
concerns so that it can be addressed in an independent and unbiased manner and if further required, take
any action deemed appropriate.
REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS
This Statement has been reviewed by the External Auditors for the inclusion in the annual report of the Group for
the year ended 31 December 2015. The External Auditors have reported to the Board that nothing has come to their
attention that causes them to believe that this Statement is inconsistent with their understanding of the process
adopted by the Board in reviewing the adequacy and integrity of the system of risk management and internal controls.
Conclusion
The Board is of the opinion that based on the current level of activities; the Group’s system of internal control is
adequate and accords with the guidance provided by the Internal Control Guidance adopted by the Bursa Securities.
Date: 18 April 2016
ANNUAL REPORT 2015
31
AUDIT COMMITTEE REPORT
Composition
Members of the Audit Committee, their respective designations and directorate are as follows:Chairman:
FAZRIN AZWAR BIN MD. NOR
Chairman, Senior Independent Non-Executive Director
Members:
TAN SRI DATO’ SRI KOH KIN LIP JP
DATO’ DR. AZMIL KHALILI BIN DATO’ KHALID
MEMBERSHIP
The Audit Committee shall be appointed by the Board from amongst the Directors and shall consist of not less than
three (3) members, where all members must be non-executive directors with a majority of whom shall be Independent
Directors.
The Board shall, within three (3) months of a vacancy occurring in the Audit Committee which results in the number
of members reduced to below three (3), appoint such number of new members as may be required to make up the
minimum number of three (3) members.
The members of the Audit Committee shall elect a Chairman from among their members who shall be an Independent
Director. An alternate Director must not be appointed as a member of the Audit Committee.
The Board shall review the terms of office and performance of the Audit Committee and each of its members at least
once (1) in every three (3) years to determine whether the Audit Committee and the members have carried out their
duties in accordance with their terms of reference.
AUTHORITY
The Committee shall, in accordance with the procedure determined by the Board and at the cost of the Company
have authority to investigate any matter within its terms of reference, full and unrestricted access to any information
pertaining to the Company and all the resources required to perform its duties. The Committee shall have direct
communication channels with the external auditors and person(s) carrying out the internal audit function or activity and
be able to convene meetings or to obtain independent external professional advice or other advice and to secure the
attendance of outsiders with relevant experience and expertise if it considers necessary.
MEETINGS
The Committee shall meet at least four (4) times in a year subject to the quorum of at least two (2) independent
directors or more frequently as circumstances required or upon the request of any member of the Committee with
due notice of issues to be discussed and shall record its deliberations and conclusions. The Committee may invite
any Board member or any senior management of the Company who the Committee thinks fit to attend its meetings to
assist and to provide pertinent information as necessary.
The Committee may regulate its own procedures, in particular:
i.
ii.
iii.
iv.
v.
32
The
The
The
The
The
calling of meetings;
notice to be given of such meetings;
voting and proceedings of such meetings;
keeping of minutes; and
custody, production and inspection of such minutes.
Cont’d
MEETINGS cont’d
The Company Secretary shall act as Secretary of the Audit Committee and shall, with the concurrence of the
Chairman, draw up the agenda of meetings. The notice of meetings and the meeting papers or explanatory
documentation will be circulated to the Audit Committee members prior to each meeting.
The Secretary shall also be responsible for recording the proceedings of the Audit Committee.
DUTIES
The duties of the Audit Committee include the following:
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
ix)
x)
xi)
xii)
xiii)
xiv)
xv)
xvi)
To review the quarterly results and the year-end financial statements, prior approval by the Board, focusing
particularly on:
l
Changes in or implementation of accounting policies and practices;
l
Significant adjustments or unusual events;
l
Going concern assumption; and
l
Compliance with applicable approved financial reporting standards, regulatory and other legal requirements;
To review with the external auditor, the audit scope and plan, including any changes to the planned scope of the
audit plan, and to discuss to ensure co-ordination where more than one audit firm is involved;
To review with the external auditor, the results of the interim and final audits and the Management’s response
thereto, including the status of previous audit recommendations;
To review the assistance given by the Company’s employees to the auditors, and any difficulties encountered in
the course of audit work, including any restrictions on the scope of activities or access to required information (in
the absence of management where necessary);
To review the appointment and performance of external auditor, the audit fee and any question of resignation or
dismissal before making recommendations to the Board;
To review with the external auditor, its evaluations of the system of internal controls;
To assess the suitability and independence of external auditors;
To review the adequacy of the internal audit scope, functions, authority, competency and resources of the
internal audit function and that it has necessary authority to carry out its work;
To review the internal audit programme, processes and reports to evaluate the findings of the internal audit and
to ensure that appropriate and prompt remedial action is taken by Management on the recommendations of the
internal audit function;
To review any appraisal or assessment of the performance of the internal audit function;
To approve any appointment or termination of internal audit function;
Take cognisance of resignations of internal audit function and provide an opportunity to submits its reasons for
resigning;
To consider any related party transaction and conflict of interest situation that may arise within the Group
including any transaction, procedure or course of conduct that raises questions of management integrity;
To verify the allocation of Employees’ Share Option Scheme (“ESOS”) in compliance with the criteria stipulated in
the ESOS By Laws, if any;
To direct and, where appropriate, supervise any special projects or investigation considered necessary, and
review investigation reports on any major defalcations, frauds and thefts; and
Such other responsibilities as may be agreed to by the Audit Committee and the Board.
Summary of Activities
During the financial year ended 31 December 2015, the Audit Committee met five (5) times and the attendance of each
member is as follows:
Audit Committee
5/5
3/5
5/5
ANNUAL REPORT 2015
33
Cont’d
Summary of Activities cont’d
During the financial year ended 31 December 2015, the Audit Committee have considered, reviewed and discussed
the following:
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
ix)
x)
xi)
xii)
xiii)
Reviewed the external auditor’s scope of work and audit plan for the financial year. Prior to the audit fieldwork,
representatives from the external auditor presented their audit strategy and plan to the Audit Committee;
Reviewed with the external auditor the results of the interim and final audits, the management letter, including
management’s response and the evaluation of the system of internal controls;
Reviewed the suitability and independence of external auditors and recommended to the Board the reappointment of the external auditor and approval of audit fees payable to the external auditor;
Met with external auditor twice (2) during the financial year without the presence of any Executive Directors, to
discuss problems and reservations arising from the interim and final audits, if any, or any other matter the auditor
may wish to discuss;
Reviewed the internal audit function’s resource requirements, adequacy of plan, functions and scope for the
financial year under review;
Reviewed the performance and competency of internal audit function;
Reviewed the internal audit plan, processes and reports which highlighted the audit issues, recommendations
and management’s response. Discuss with management and ensure appropriate actions were taken to improve
the system of internal controls based on improvement opportunities identified in the internal audit reports;
Reviewed the adequacy and effectiveness of governance and risk management processes as well as the internal
control system through risk assessment reports from the internal auditor. Significant risk issues were summarised
and communicated to the Board for consideration and resolution;
Reviewed the unaudited quarterly financial results of the Group and making relevant recommendations to the
Board for approval. The review and discussions were conducted with the Group Chief Financial Officer;
Reviewed the audited financial statements of the Group prior to submission to the Board for its consideration
and approval. The review was to ensure that the audited financial statements were drawn up in accordance
with the provisions of the Companies Act, 1965 and the applicable Malaysian Financial Reporting Standards
and International Financial Reporting Standards. Any significant issues resulting from the audit of the financial
statements by the external auditors were deliberated;
Reviewed related party transactions entered into by the Group, conflict of interest situations and report the same
to the Board;
Reviewed the Statement on Risk Management and Internal Control and its recommendation to the Board for
inclusion in the Annual report; and
Pertinent issues of the Group which has significant impact on the results of the Group.
Summary of Activities of the Internal Audit Function
The Board has established an internal audit function which is carried out in-house via the Group Internal Audit
Department. The internal auditor reports directly to the Audit Committee.
During the financial year ended 31 December 2015, the Internal Audit Function had undertaken independent and
objective reviews of the system of internal controls that included governance and risk management of major areas
within the operations of the Group. The Internal Audit reports were deliberated by the Audit Committee and the
recommendations were duly implemented by the Management.
The internal audit activities carried out for the financial year included, inter alia, the following:
Prepared and presented the Board Charter for the Audit Committee’s review and subsequently to the Board for
approval;
ii.
Prepared and presented the Whistleblowing Policy for the Audit Committee’s review and subsequently to the
Board for approval;
34
i.
Cont’d
Summary of Activities of the Internal Audit Function cont’d
The internal audit activities carried out for the financial year included, inter alia, the following: cont’d
iii.
Prepared and presented the Annual Internal Audit Plan for the AC’s review and subsequently to the Board for
approval;
iv.
Prepared audit reports and sought management response on the highlighted issues in the report. Upon
incorporating the response of Management into the final reports, the same were circulated to the Audit
Committee;
v.
Evaluated the efficiency of processes, functions and current practices, and provided suitable recommendations
to the Audit Committee;
vi. Ascertained the extent of compliance with the established Group policies, procedures and statutory
requirements; and
vii. During the year the Group Internal Audit Department has completed 10 audit reviews and follow-up assignments
covering several companies and functions within the Group such as the following:
•
•
•
•
•
•
•
•
•
•
Daya Clarimax Sdn Bhd
Daya NCHO Sdn Bhd
Daya Offshore Constructions Sdn Bhd
Daya Secadyme Sdn Bhd
Daya Maxflo Sdn Bhd (Follow-Up)
Daya Land & Development Sdn Bhd (Follow-Up)
Daya Proffscorp (Sabah) Sdn Bhd (Follow-Up)
Daya Clarimax Sdn Bhd (Follow-Up)
Daya NCHO Sdn Bhd (Follow-Up)
Daya Offshore Constructions Sdn Bhd (Follow-Up)
The cost incurred for the internal audit function of the Group in respect of the financial year ended 31 December 2015
amounted to RM6,175.00.
The results of the review were presented in the form of reports using the Committee of Sponsoring Organisations
of the Treadway Commission (“COSO”) methodology to the Audit Committee during the quarterly Audit Committee
meetings. The reports set out audit findings and recommendations for improvements and status of prior audit findings.
The internal auditor also presented the internal audit plan of the Group for the financial years ending 2016 to 2018
during the fourth quarter Audit Committee Meeting. The internal audit plan was approved by the Audit Committee and
is subject to revision and amendment with approval of the Audit Committee (if required) to accommodate any changes
within the Group.
ANNUAL REPORT 2015
35
F inanci al St at em ent s
Directors' Report
37
Statement by Directors
41
Statutory Declaration
41
Independent Auditors' Report
42
Statements of Profit or Loss and Other Comprehensive Income
44
Statements of Financial Position
45
Statements of Changes in Equity
47
Statements of Cash Flows
50
Notes to the Financial Statements
54
Supplementary Information
142
DIRECTORS’ REPORT
The directors of DAYA MATERIALS BERHAD hereby submit their report and the audited financial statements of the
Group and of the Company for the financial year ended 31 December 2015.
PRINCIPAL ACTIVITIES
The principal activities of the Company are investment holding and provision of management services to its
subsidiaries.
The principal activities of the subsidiaries are set out in Note 17 to the Financial Statements. There have been no significant changes in the nature of the principal activities of the Company and its subsidiaries
during the financial year.
RESULTS OF OPERATIONS
The results of operations of the Group and of the Company for the financial year are as follows:
(Loss)/Profit before tax
The Group
The Company
RM
RM
(2,532,739)
9,534,045
Income tax expense
(11,659,012)
(1,820,308)
(Loss)/Profit for the year
(14,191,751)
7,713,737
(18,502,334)
7,713,737
4,310,583
-
(14,191,751)
7,713,737
(Loss)/Profit attributable to:
Equity holders of the Company
Non-controlling interests
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in
the financial statements.
In the opinion of the directors, the results of operations of the Group and of the Company during the financial year
have not been substantially affected by any item, transaction or event of a material and unusual nature.
DIVIDENDS
No dividend has been paid or declared by the Company since the end of the previous financial year. The directors also
do not recommend any dividend payment in respect of the current financial year.
TREASURY SHARES
During the financial year, the Company repurchased 2,000 of its issued ordinary shares from the open market at an
average price of RM0.12 per share. The total consideration paid for the repurchase including transaction costs was
RM324. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies
Act, 1965.
As at 31 December 2015, the Company held as treasury shares a total of 4,000 of its 1,736,022,854 issued ordinary
shares. Such treasury shares are held at a carrying amount of RM1,021 and further relevant details are disclosed in
Note 30(e) to the Financial Statements.
ANNUAL REPORT 2015
37
DIRECTORS’ REPORT
Cont’d
ISSUE OF SHARES AND DEBENTURES
During the financial year, the Company increased its issued and paid-up share capital from RM165,181,875 to
RM173,602,285 by way of the issuance of 84,204,100 ordinary shares of RM0.10 each at an issue price of RM0.10 per
ordinary share for cash through private placements.
The new ordinary shares issued during the year ranked pari passu in all respects with the then existing ordinary shares
of the Company.
SHARE OPTIONS
No options have been granted by the Company to any parties during the financial year to take up unissued shares of
the Company.
No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares
of the Company. As at the end of the financial year, there were no unissued shares of the Company under options.
OTHER STATUTORY INFORMATION
Before the statements of profit or loss and other comprehensive income and statements of financial position of the
Group and of the Company were made out, the directors took reasonable steps:
(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of
allowance for doubtful debts, and had satisfied themselves that all known bad debts had been written off and
that adequate allowance had been made for doubtful debts; and
(b) to ensure that any current assets which were unlikely to realise their book values in the ordinary course of
business had been written down to their estimated realisable values.
At the date of this report, the directors are not aware of any circumstances:
(a) which would render the amount written off as bad debts or the amount of allowance for doubtful debts in the
financial statements of the Group and of the Company inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements of the Group and of the
Company misleading; or
(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group
and of the Company misleading or inappropriate; or
(d) not otherwise dealt with in this report or financial statements which would render any amount stated in the
financial statements of the Group and of the Company misleading.
At the date of this report, there does not exist:
(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year
which secures the liability of any other person; or
(b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.
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, in the opinion of the directors, will or may substantially affect the
ability of the Group and of the Company to meet their obligations as and when they fall due.
In the opinion of the directors, 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
operations of the Group and of the Company for the succeeding financial year.
38
DIRECTORS’ REPORT
Cont’d
DIRECTORS
The following directors served on the Board of the Company since the date of the last report:
Dato’ Azmil Khalili Bin Dato’ Khalid
Datuk Lim Thean Shiang (Appointed on 24 March 2015)
Tham Jooi Loon
Fazrin Azwar Bin Md. Nor
Tan Sri Dato’ Sri Koh Kin Lip J.P. Datuk Lim Soon Foo Ronnie Lim Hai Liang (Alternate director to Datuk Lim Soon Foo)
DIRECTORS’ INTERESTS
The shareholdings in the Company of those who were directors at the end of the financial year, as recorded in the
Register of Directors’ Shareholdings kept by the Company under Section 134 of the Companies Act, 1965, are as
follows:
Number of ordinary shares of RM0.10 each
Balance
as of
1.1.2015/
date of
appointment
Acquired
Disposal
Balance
as of
31.12.2015
70,708,198
-
-
70,708,198
4,709,998
-
-
4,709,998
9,998
-
-
9,998
78,115,098
-
-
78,115,098
3,000,000
-
-
3,000,000
65,329,098
-
-
65,329,098
279,000
-
-
279,000
279,000
-
-
279,000
65,329,098
-
-
65,329,098
The Company
Tham Jooi Loon
Direct
Indirect
1
Direct
Tan Sri Dato’ Sri Koh Kin Lip J.P.
Direct
Indirect
2
Datuk Lim Soon Foo
Direct
Indirect2
Direct
Indirect
3
Direct
1
2
3
100,000,000
-
-
100,000,000
Indirect
1
5,389,100
-
-
5,389,100
Indirect
3
255,000
-
-
255,000
Indirect interest through his spouse
Indirect interest through his son
Indirect interest through his parent
ANNUAL REPORT 2015
39
DIRECTORS’ REPORT
Cont’d
DIRECTORS’ INTERESTS cont’d
By virtue of their interest in the shares of the Company, these directors are deemed to have interests in the
subsidiaries of the Company to the extent that the Company has an interest.
The other directors in office at the end of the financial year did not have any interest in shares of the Company or its
related corporations during and at the end of the financial year. DIRECTORS’ BENEFITS
Since the end of the previous financial year, none of the directors of the Company has received or become entitled
to receive any benefit (other than the 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 disclosed in Note 9 to the
Financial Statements) by reason of a contract made by the Company or a related corporation with the director or with
a firm of which the director is a member, or with a company in which the director has a substantial financial interest
except for any benefit which may be deemed to have arisen by virtue of the transactions between the Company and
certain companies in which certain directors of the Company are also directors and/or shareholders as disclosed in
Note 24 to the Financial Statements.
During and at the end of the financial year, no arrangement subsisted to which the Company was a party whereby
directors of the Company might acquire benefits by means of the acquisition of shares in, or debentures of, the
Company or any other body corporate. SIGNIFICANT AND SUBSEQUENT EVENTS
Details of significant and subsequent events are disclosed in Note 39 and Note 40 to the Financial Statements,
respectively.
AUDITORS
The auditors, Messrs. Deloitte, have indicated their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the Directors,
THAM JOOI LOON
Kuala Lumpur,
18 April 2016
40
FARZIN AZWAR BIN MD. NOR
STATEMENT BY DIRECTORS
PURSUANT TO SECTION 169(15) OF COMPANISE ACT, 1965
The directors of DAYA MATERIALS BERHAD state that, in their opinion, the accompanying financial statements are
drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards
and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of
the Group and of the Company as of 31 December 2015 and of the financial performance and cash flows of the Group
and of the Company for the year ended on that date.
The supplementary information set out in Note 41 on page 142, which is not part of the financial statements, is
prepared in all material respects, 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 and the directive of Bursa Malaysia Securities
Berhad.
Signed in accordance with a resolution of the Directors,
Fazrin Azwar Bin Md. Nor Tham Jooi Loon
Kuala Lumpur,
18 April 2016
STATUTORY DECLARATION
PURSUANT TO SECTION 169(16) OF COMPANISE ACT, 1965
DECLARATION BY THE DIRECTOR PRIMARILY RESPONSIBLE FOR THE FINANCIAL MANAGEMENT OF THE
COMPANY
I, THAM JOOI LOON, the director primarily responsible for the financial management of DAYA MATERIALS BERHAD,
do solemnly and sincerely declare that the accompanying financial statements 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 THAM JOOI LOON
at KUALA LUMPUR this 18th day of April 2016.
Tham Jooi Loon
Before me,
COMMISSIONER FOR OATHS
ANNUAL REPORT 2015
41
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBER OF DAYA MATERIALS BERHAD
(INCORPORATED IN MALAYSIA)
Report on the Financial Statements
We have audited the financial statements of DAYA MATERIALS BERHAD, which comprise the statements of financial
position of the Group and of the Company as of 31 December 2015, and the statements of profit or loss and other
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 44 to 141.
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 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 the auditors’ judgement, including the assessment of risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, auditors
consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by directors, as well as evaluating the
overall presentation of the financial statements.
We believe 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 of 31 December 2015 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 that:
(a)
in our opinion, the accounting and other records and the registers required by the Act to be kept by the
Company and by the subsidiaries of which we have acted as auditors, have been properly kept in accordance
with the provisions of the Act;
(b) we have considered the accounts and auditors’ reports of the subsidiaries, of which we have not acted as
auditors, as mentioned in Note 17 to the Financial Statements, being accounts that have been included in the
consolidated financial statements of the Group;
(c) we are satisfied that the accounts of the subsidiaries that have been consolidated with the financial statements
of the Company are in form and content appropriate and proper for the purposes of the preparation of the
financial statements of the Group and we have received satisfactory information and explanations as required by
us for these purposes; and
42
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBER OF DAYA MATERIALS BERHAD
(INCORPORATED IN MALAYSIA)
Cont’d
Report on Other Legal and Regulatory Requirements cont’d
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that: cont’d
(d) the auditors’ reports on the accounts of the subsidiaries did not contain any qualification or any adverse
comment made under Section 174(3) of the Act.
Other reporting responsibilities The supplementary information set out in Note 41 on page 142 is disclosed to meet the requirement of Bursa Malaysia
Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of
the supplementary information in accordance with Guidance on Special Matter No. 1 “Determination of Realised
and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing
Requirements” as issued by the Malaysian Institute of Accountants “MIA Guidance” and the directive of Bursa
Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in
accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
Other Matters
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the
Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility towards any other
person for the contents of this report.
The financial statements of the Group and of the Company for the preceding financial year ended 31 December 2014
were audited by another firm of auditors whose report dated 29 April 2015 expressed an unmodified opinion on those
financial statements.
Deloitte
AF 0080
Chartered Accountants
Huang Khean Yeong
Partner - 2993/05/16 (J)
Chartered Accountant
Kuala Lumpur, Malaysia
18 April 2016
ANNUAL REPORT 2015
43
STATEMENTS OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
Note
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
Revenue
5
718,837,675
642,159,755
6,284,977
10,764,015
Cost of sales
6
(701,484,192)
(598,197,034)
-
-
17,353,483
43,962,721
6,284,977
10,764,015
45,202,366
4,672,878
16,761,328
13,158,019
(54,920,791)
(75,673,769)
(8,028,933)
(8,773,360)
7,635,058
(27,038,170)
15,017,372
15,148,674
(11,868,575)
(10,374,443)
(5,483,327)
(3,956,653)
1,700,778
632,939
-
-
Gross profit
Other operating income
7
Administrative expenses
Profit/(Loss) from operations
Finance costs
8
Share of results of joint ventures
9
(2,532,739)
(36,779,674)
9,534,045
11,192,021
Income tax (expense)/credit
10
(11,659,012)
997,629
(1,820,308)
(643,624)
(14,191,751)
(35,782,045)
7,713,737
10,548,397
(18,502,334)
(35,162,017)
7,713,737
10,548,397
4,310,583
(620,028)
-
-
(14,191,751)
(35,782,045)
7,713,737
10,548,397
(1,333,334)
5,333,334
(1,333,334)
5,333,334
Foreign currency translation difference for
foreign subsidiaries
(22,415,004)
(4,206,746)
-
-
Total other comprehensive (loss)/income
for the year, net of tax
(23,748,338)
1,126,588
(1,333,334)
5,333,334
Total comprehensive (loss)/income for the
year
(37,940,089)
(34,655,457)
6,380,403
15,881,731
Owners of the Company
(42,250,672)
(34,035,429)
6,380,403
15,881,731
4,310,583
(620,028)
-
-
(37,940,089)
(34,655,457)
6,380,403
15,881,731
(1.12)
(2.52)
(Loss)/Profit for the year
(Loss)/Profit attributable to:
Equity holders of the Company
Other comprehensive (loss)/income
Items that may be reclassified subsequently
to profit or loss:
Changes in fair value on investment in
available-for-sale (“AFS”) assets
Total comprehensive (loss)/profit
attributable to:
Loss per share (sen) attributable to
owners of the Company
Basic and diluted (sen)
12
The accompanying Notes form an integral part of the Financial Statements.
44
STATEMENTS OF FINANCIAL POSITION
AS OF ENDED 31 DECEMBER 2015
Note
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
ASSETS
Non-current Assets
Property, plant and equipment
13
704,694,332
174,370,404
565,232
532,547
Investment properties
14
5,215,381
281,283
-
-
Inventories-non-current
15
8,288,331
7,931,815
-
-
Intangible assets
16
84,901,314
85,136,109
69,031
73,582
Investment in subsidiaries
17
-
-
170,232,685
172,979,377
Investment in joint ventures
18
4,234,526
2,540,438
-
-
Available-for-sale financial assets
19
15,333,335
15,333,335
15,333,335
15,333,335
Deferred tax assets
20
11,797,210
14,403,369
-
35,137
Long-term receivables
21
28,000,000
-
-
-
862,464,429
299,996,753
186,200,283
188,953,978
Total Non-current Assets
Current Assets
Inventories
15
24,165,702
20,660,161
-
-
Trade receivables
22
172,130,916
127,510,031
-
-
Other receivables, deposits and prepaid
expenses
23
58,229,188
37,515,069
889,893
2,326,337
Amount due from subsidiaries
24
-
-
311,157,698
150,762,595
Amount due from contract customers
25
Tax recoverable
-
28,291,883
-
-
2,854,669
1,855,846
196,850
628,218
Non-current assets held for sale
26
-
8,632,382
-
-
Marketable securities
27
100,975
98,090
-
-
Cash and bank balances
28
143,658,420
75,970,566
25,162,596
20,508,858
401,139,870
300,534,028
337,407,037
174,226,008
1,263,604,299
600,530,781
523,607,320
363,179,986
Total Current Assets
Total Assets
ANNUAL REPORT 2015
45
STATEMENTS OF FINANCIAL POSITION
AS OF ENDED 31 DECEMBER 2015
Cont’d
Note
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
EQUITY AND LIABILITIES
Capital and Reserves
Share capital
29
173,602,285
165,181,875
173,602,285
165,181,875
Reserves
30
58,031,924
73,687,520
97,408,006
94,028,969
28,052,874
51,925,203
34,799,664
27,085,927
259,687,083
290,794,598
305,809,955
286,296,771
35,535,636
20,250,646
-
-
295,222,719
311,045,244
305,809,955
286,296,771
Retained earnings
Total Equity
Non-current Liabilities
Loan and borrowings
31
544,205,353
80,269,812
165,489,612
41,280,796
Deferred tax liabilities
20
4,414,100
-
4,442,795
-
548,619,453
80,269,812
169,932,407
41,280,796
12,458,853
9,103,291
Total Non-current Liabilities
Current Liabilities
Loans and borrowings
31
150,461,730
57,749,045
Trade payables
32
129,872,820
71,914,095
-
-
Other payables and accrued expenses
33
110,112,443
74,670,917
2,127,266
3,344,395
Amount due to contract customers
25
26,255,764
-
-
-
Amount due to subsidiaries
24
-
-
33,278,839
23,154,733
3,059,370
4,881,668
-
-
Total Current Liabilities
419,762,127
209,215,725
47,864,958
35,602,419
Total Liabilities
968,381,580
289,485,537
217,797,365
76,883,215
1,263,604,299
600,530,781
523,607,320
363,179,986
Tax liabilities
Total Equity and Liabilities
46
-
-
-
Acquisition of minority
interests
Realisation of foreign
translation reserve
Total comprehensive loss for
the year
173,602,285
-
Disposal of minority interests
As at 31 December 2015
-
71,440,135
-
-
-
-
-
-
-
Purchase of treasury shares
Value of conversion rights
on redeemable convertible
secured bonds, net of tax
71,440,135
RM
-
165,181,875
RM
Share
premium
8,420,410
Shares issued
As at 1 January 2015
The Group
Share
capital
(22,119,885)
(22,415,004)
3,380,371
-
-
-
-
-
(3,085,252)
RM
Foreign
translation
reserve
(1,021)
-
-
-
-
-
(324)
-
(697)
RM
Treasury
shares
Non-distributable
-
-
-
RM
Bond
reserve
-
-
-
-
4,000,000 4,712,695
(1,333,334)
-
-
-
- 4,712,695
-
-
5,333,334
RM
AFS
reserve
Attributable to equity holders of the Company
28,052,874
(18,502,334)
(3,380,371)
(545,560)
(1,444,064)
-
-
-
51,925,203
RM
Retained
earnings
Distributable
259,687,083
(42,250,672)
-
(545,560)
(1,444,064)
4,712,695
(324)
8,420,410
290,794,598
RM
Total
35,535,636
4,310,583
-
11,954,625
(980,218)
-
-
-
20,250,646
RM
Noncontrolling
interests
295,222,719
(37,940,089)
-
11,409,065
(2,424,282)
4,712,695
(324)
8,420,410
311,045,244
RM
Total
equity
STATEMENTS OF CHANGES IN EQUITY
ANNUAL REPORT 2015
47
48
-
-
-
-
165,181,875
Incorporation of subsidiary
Disposal of subsidiaries
Total comprehensive loss
for the year
-
-
71,440,135
-
1,148,488
-
44,533,032
25,758,615
RM
Disposal of treasury shares
38,878,100
126,303,775
RM
Purchase of treasury
shares
Shares issued
The Group
Share
capital
(3,085,252)
(4,206,746)
-
-
-
-
-
1,121,494
RM
Foreign
Share translation
premium
reserve
Non-distributable
-
-
-
-
-
-
RM
AFS
reserve
(697) 5,333,334
- 5,333,334
-
-
1,016,235
(697)
-
(1,016,235)
RM
Treasury
shares
51,925,203
(35,162,017)
(1,428,447)
-
-
-
-
88,515,667
RM
Retained
earnings
Distributable
Attributable to equity holders of the Company
290,794,598
(34,035,429)
(1,428,447)
-
2,164,723
(697)
83,411,132
240,683,316
RM
Total
20,250,646
(620,028)
19,428,447
164,677
-
-
-
1,277,550
RM
Noncontrolling
interests
311,045,244
(34,655,457)
18,000,000
164,677
2,164,723
(697)
83,411,132
241,960,866
RM
Total
equity
STATEMENTS OF CHANGES IN EQUITY
Cont’d
-
Total comprehensive income for
the year
ANNUAL REPORT 2015
71,440,135
-
-
-
-
71,440,135
71,440,135
-
-
1,148,488
-
44,533,032
(1,021)
-
(324)
-
-
(697)
(697)
-
-
1,016,235
(697)
-
25,758,615 (1,016,235)
RM
RM
Capital
reserve
-
-
-
-
-
-
-
-
-
4,712,695 17,256,197
-
-
4,712,695
-
- 17,256,197
- 17,256,197
-
-
-
-
-
- 17,256,197
RM
Bond
Reserve
Non-distributable
Treasury
shares
-
-
-
-
-
RM
AFS
reserve
4,000,000
(1,333,334)
-
-
-
5,333,334
5,333,334
5,333,334
173,602,285
-
-
8,420,410
Value of conversion rights
on redeemable convertible
secured bonds, net of tax
Issue of ordinary shares
165,181,875
-
Total comprehensive income for
the year
165,181,875
-
Changes in the fair value of AFS
financial assets, net of tax
-
38,878,100
126,303,775
RM
RM
The Company
Notes
Share
premium
Share
capital
34,799,664
7,713,737
-
-
-
27,085,927
27,085,927
10,548,397
-
-
-
-
16,537,530
RM
Retained
earnings
Distributable
305,809,955
6,380,403
(324)
4,712,695
8,420,410
286,296,771
286,296,771
15,881,731
-
2,164,723
(697)
83,411,132
184,839,882
RM
Total
STATEMENT OF CHANGES IN EQUITY
Cont’d
49
STATEMENTS OF CASH FLOWS
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
(2,532,739)
(36,779,672)
9,534,040
11,192,021
CASH FLOWS FROM/(USED IN) OPERATING
ACTIVITIES
Adjustments for:
Depreciation of property, plant and equipment
18,691,581
13,263,366
307,686
265,577
Finance costs
11,868,575
10,374,443
5,483,328
3,956,653
Loss on disposal of property, plant and equipment
Amortisation of intangible assets
Amortisation of redeemable convertible secured
bond
Net unrealised foreign exchange gain
Property, plant and equipment written off
1,010,232
8,581
-
-
441,083
394,899
28,644
25,243
373,266
-
373,266
-
(13,752,283)
(206,929)
(5,607,784)
(64,323)
51,191
7,053
-
-
Depreciation of investment properties
4,601
7,215
-
-
Fair value (gain)/loss on marketable securities
(2,885)
31,735
-
-
(1,700,778)
(632,939)
-
-
Interest income
(1,053,886)
(1,049,400)
(4,622,681)
(2,941,880)
(1,284,317)
-
-
-
Gain on disposal of:
Non-current assets held for sale
Shares in a joint venture
-
(1,609,628)
-
(59,169)
Investment property
-
(188,089)
-
-
A subsidiary
-
-
-
(10,092,647)
Partial interest in a subsidiary that does not involve
loss of control
-
-
(6,392,010)
-
Dividends income
-
-
-
(2,150,000)
Reversal of allowance for impairment loss
-
(201,500)
-
-
Bad debts recovered
-
(60,000)
-
-
147,585
18,370,448
-
-
5,992
577,882
-
-
(658)
-
-
-
Allowance for impairment of receivables
Bad debts written off
Strike-off of a joint venture
Loss on disposal of a subsidiary
-
-
-
962,011
Development costs written off
-
249,671
-
-
12,194,587
2,557,136
(895,511)
1,093,486
Operating Profit/(Loss) Before Working Capital
Changes
50
(71,973)
Cont’d
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
28,291,883
13,669,667
-
-
CASH FLOWS FROM/(USED IN) OPERATING
ACTIVITIES cont’d
(Increase)/Decrease in:
Amount due from contract customers
Inventories – non-current
Inventories – current
(356,516)
-
-
-
(6,951,712)
238,305
-
-
Other receivables, deposits and prepaid expenses
(20,969,452)
(8,639,723)
1,436,444
(1,980,730)
Trade receivables
(44,960,991)
(38,788,323)
-
-
-
-
(155,259,733)
(94,389,238)
Amount due from subsidiary
Increase/(Decrease) in:
Trade payables
47,985,595
(6,469,227)
-
-
35,275,960
14,349,037
(2,066,273)
1,979,211
Amount due to contact customers
26,255,764
-
-
-
Amount due to subsidiary
-
-
14,540,746
(8,443,400)
Amount due to directors
-
-
-
(75,282)
76,765,118
(23,083,128)
(142,244,327)
(101,815,953)
Cash Flows Generated From/(Used In) Operations
Interest received
1,053,886
(10,374,443)
-
(2,700,664)
Income tax (paid)/refunded
(10,400,776)
(7,828,181)
148,090
(327,360)
Interest paid
(11,868,575)
-
(4,634,178)
-
Net Cash Flows From/(Used In) Operating Activities
55,549,653
(41,285,752)
(146,730,415)
(104,843,977)
Disposal of partial interest in subsidiary that does
not involve loss of control
11,409,000
-
-
-
Proceeds from disposal of non-current assets held
for sale
4,978,000
-
-
-
230,520
1,774,125
-
65,964
83,711
-
-
-
CASH FLOWS FROM/(USED IN) INVESTING
ACTIVITIES
Proceeds from disposal of property, plant and
equipment
Proceeds from disposal of share in joint venture
Purchase of intangible assets
Purchase of partial interest in subsidiary from NCI
Increase in long-term receivables
Purchase of property, plant and equipment
Interest received
(102,707)
(87,784)
-
-
(2,424,217)
-
-
-
(28,000,000)
-
-
-
(536,907,824)
(35,358,608)
(340,372)
(60,226)
-
-
206,042
165,718
Addition in investment in subsidiaries
-
-
(141,900)
-
Acquisition of subsidiaries
-
-
(2,119,399)
-
Dividend received
-
-
-
2,150,000
Revocation compensation received
-
675,000
-
-
Incorporation of subsidiaries
-
-
-
(75)
ANNUAL REPORT 2015
51
Cont’d
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
Proceeds from disposal of subsidiaries
-
18,000,000
11,400,000
18,260,054
Additional investment in a joint venture company
-
(125,000)
-
-
Purchase of available-for-sale financial assets
-
(7,599,998)
-
(7,599,998)
Increase in pledged deposits placed with licensed
banks
-
(347,491)
-
(683,731)
Proceeds from disposal of investment properties
-
1,080,000
-
-
Acquisition of land held for property development
-
(992,261)
-
-
CASH FLOWS FROM/(USED IN) INVESTING
ACTIVITIES cont’d
Addition of land held for property development
-
(4,000)
-
-
Interest received
-
1,049,400
-
-
(550,733,517)
(21,936,617)
9,004,371
12,297,706
Net drawdown of loans and borrowings
373,293,965
(8,761,778)
9,779,290
15,852,139
Net proceeds from issuance of redeemable
convertible secured bonds
123,579,340
-
123,579,340
-
Proceeds from issuance of ordinary shares
8,420,410
83,411,132
8,420,410
83,411,132
(324)
(697)
-
(697)
Net Cash (Used In)/From Investing Activities
CASH FLOWS FROM/(USED IN) FINANCING
ACTIVITIES
Reduction of share premium
(110,007)
-
(110,332)
-
Repayment of bank overdraft
-
(1,289,727)
-
-
Proceeds from disposal of treasury shares
-
2,164,723
-
2,164,723
505,183,384
75,523,653
141,668,708
101,427,297
9,999,520
12,301,284
3,942,664
8,881,026
Effect of exchanges rate fluctuation on cash and
cash equivalents
18,463,557
(6,655,564)
337,525
-
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR
42,752,084
37,106,364
12,176,040
3,295,014
CASH AND CASH EQUIVALENTS AT END OF
YEAR
71,215,161
42,752,084
16,456,229
12,176,040
Net Cash From Investing Activities
NET CHANGES CASH AND CASH EQUIVALENTS
52
Cont’d
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
20,721
11,952,996
20,721
11,952,996
51,580,803
32,516,984
3,495,531
3,384,731
The cash and cash equivalents comprise:
Short term investments
Fixed deposits with licensed banks
92,056,896
31,500,586
21,646,344
5,171,131
Bank overdraft
(25,750,666)
(14,840,533)
(5,210,836)
(4,948,087)
117,907,754
61,130,033
19,951,760
15,560,771
(42,465,818)
(16,132,354)
(3,495,531)
(3,384,731)
(4,226,775)
(2,245,595)
-
-
71,215,161
42,752,084
16,456,229
12,176,040
Less: Fixed deposits with licensed banks pledged
Fixed deposits with maturity more than
3 months
During the year, the Group and the Company acquired property, plant and equipment which were financed as follows:
Cash
Hire purchase
Loan
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
806,177
35,358,608
-
60,226
672,530
6,959,255
-
-
534,961,481
-
-
-
536,440,188
42,317,863
-
60,226
ANNUAL REPORT 2015
53
NOTES TO THE FINANCIAL STATEMENTS
1.
GENERAL INFORMATION
The principal activities of the Company are investment holding and provision of management services to its
subsidiaries.
The Company is a public limited liability company, incorporated and domiciled in Malaysia.
The principal activities of the subsidiaries are set out in Note 17.
There have been no significant changes in the nature of the principal activities of the Company and its
subsidiaries during the financial year.
The registered office of the Company is located at Level 8, Symphony House, Pusat Perdagangan Dana 1, Jalan
PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan.
The principal place of business of the Company is located at D5-1-10, Solaris Dutamas, No. 1, Jalan Dutamas 1,
50480 Kuala Lumpur.
The financial statements of the Group and of the Company have been authorised by the Board of Directors for
issuance on 7 April 2016.
2.
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
Adoption of New and Revised Malaysian Financial Reporting Standards
In the current financial year, the Group and the Company have adopted the following amendments to MFRSs
issued by Malaysian Accounting Standards Board that are relevant to their operations and mandatory for
financial periods beginning on or after 1 January 2015:
The financial statements of the Company have been prepared in accordance with the Malaysian Financial
Reporting Standards (“MFRS”), International Financial Reporting Standards and the provisions of the Companies
Act, 1965 in Malaysia.
Amendments to MFRS 119 Employee Benefits (Amendments relating to Defined Benefit Plans: Employee
Contributions)
Amendments to MFRSs contained in the document entitled Annual Improvements to MFRSs 2010 - 2012 Cycle
Amendments to MFRSs contained in the document entitled Annual Improvements to MFRSs 2011 - 2013 Cycle
54
The adoption of these revised Amendments has not affected the amounts reported on the financial statements of
the Group and of the Company in the current and previous financial years.
Cont’d
2.
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS cont’d
Standards and Amendments in issue but not yet effective
At the date of authorisation for issue these financial statements, the new and revised Standards and
Amendments which were in issue but not yet effective and not early adopted by the Group and the Company are
as listed below:
MFRS 9
Financial Instruments2
MFRS 14
Regulatory Deferral Accounts1
MFRS 15
Revenue from Contracts with Customers2
Amendments to MFRS 10, MFRS 12 and
MFRS 128
Investment Entities: Applying the Consolidation Exception1
Amendments to MFRS 10 and MFRS 128
Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture3
Amendments to MFRS 11
Accounting for Acquisitions of Interests in Joint Operations1
Disclosure Initiative1
Clarification of Acceptable Methods of Depreciation and
Amortisation1
Agriculture: Bearer Plants1
Equity Method in Separate Financial Statements1
Amendments to MFRSs contained in the document entitled Annual Improvements to MFRSs 2012 - 2014 Cycle1
1
2 3
Effective for annual periods beginning on or after 1 January 2016
Effective for annual periods beginning on or after 1 January 2018
Effective date deferred to a date to be determined and announced, with earlier application still permitted
The directors anticipate that the abovementioned Standards and Amendments will be adopted in the annual
financial statements of the Group and of the Company when they become effective and that the adoption of
these Standards and Amendments will have no material impact on the financial statements of the Group and of
the Company in the period of initial application.
3.
SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Group and of the Company have been prepared under the historical cost
convention unless otherwise stated in the accounting policies mentioned below. Historical cost is generally based
on the fair value of the consideration given in exchange for assets.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes
into account the characteristics of the asset or liability if market participants would take those characteristics
into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or
disclosure purposes in these financial statements is determined on such a basis, except for any share-based
payment transactions that are within the scope of MFRS 2, leasing transactions that are within the scope
of MFRS 117, and measurements that have some similarities to fair value but are not fair value, such as net
realisable value in MFRS 102 or value-in-use in MFRS 136.
Basis of Accounting
ANNUAL REPORT 2015
55
Cont’d
56
3.
SIGNIFICANT ACCOUNTING POLICIES cont’d
Basis of Consolidation and Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and entities (including
special purpose entities) controlled by the Company (its subsidiaries). Control is achieved when the Company:
•
•
•
The Company reassesses whether or not it controls and investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee
when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee
unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the
Company’s voting rights in an investee are sufficient to give it power, including:
•
•
•
•
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when
the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or
disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive
income from the date the Company gains control until the date when the Company ceases to control the
subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company
and to the non-controlling interest. Total comprehensive income of subsidiary is attributed to the owners of the
Company and to the non-controlling interests even if this results in the non-controlling interest having a deficit
balance.
When necessary, adjustments are made to the financial statements of subsidiary to bring their accounting
policies into line with the Group’s accounting policies.
All intra-group assets and liabilities, equity income, expenses and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.
Changes in Group’s ownership interest in existing subsidiaries
Changes in the Group’s ownership interests in subsidiaries that do not result in a loss of control are accounted
for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are
adjusted to reflect the changes in their relative interest in the subsidiaries. Any difference between the amount by
which the non-controlling interests are adjusted and the fair value of consideration paid or received is recognised
directly in equity and attributed to owners of the Company.
has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns.
the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other
vote holders;
potential voting rights held by the Company, other vote holders or other parties;
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the Company has, or does not have, the current
ability to direct the relevant activities at the time that decisions need to be made, including voting patterns
at previous shareholders’ meetings.
Cont’d
3.
Basis of Consolidation and Subsidiaries cont’d
Changes in Group’s ownership interest in existing subsidiaries cont’d
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as
the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any
retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the
subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revalued amounts or
fair values and the related cumulative gain or loss has been recognised in other comprehensive income and
accumulated in equity, the amounts previously recognised in other comprehensive income are accounted for as
if the Group had directly disposed of the relevant assets (i.e. reclassified to profit or loss or transferred directly
to retained earnings as specified by applicable MFRSs). The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent
accounting under MFRS 139 Financial Instruments: Recognition and Measurement or, when applicable, the cost
on initial recognition of an investment in an associate or jointly controlled entity.
Subsidiaries
Investment in associates and joint ventures
An associate is an entity in which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but is not control or joint control over
those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights
to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the
parties sharing control.
On acquisition of an investment in associate or joint venture, any excess of the cost of investment over the
Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as
goodwill and included in the carrying amount of the investment. Any excess of the Group’s share of the net fair
value of the identifiable assets and liabilities of the investee over the cost of investment is excluded from the
carrying amount of the investment and is instead included as income in the determination of the Group’s share of
the associate’s or joint venture’s profit or loss for the period in which the investment is acquired.
An associate or a joint venture is equity accounted for from the date on which the investee becomes an
associate or a joint venture.
Under the equity method, on initial recognition the investment in an associate or a joint venture is recognised at
cost, and the carrying amount is increased or decreased to recognise the Group’s share of the profit or loss and
other comprehensive income of the associate or joint venture after the date of acquisition. When the Group’s
share of losses in an associate or a joint venture equal or exceeds its interest in the associate or joint venture,
the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made
payments on behalf of the associate or joint venture.
Profits and losses resulting from upstream and downstream transactions between the Group and its associate or
joint venture are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests
in the associate or joint venture. Unrealised losses are eliminated unless the transaction provides evidence of an
impairment of the asset transferred.
The financial statements of the associates and joint ventures are prepared as of the same reporting date as the
Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the
Group.
Investment in subsidiaries, which are eliminated on consolidation, are stated at cost less any accumulated
impairment losses, if any, in the Company’s financial statements.
ANNUAL REPORT 2015
57
Cont’d
58
3.
Basis of Consolidation and Subsidiaries cont’d
Investment in associates and joint ventures cont’d
After application of the equity method, the Group applies MFRS 139 Financial Instruments: Recognition and
Measurement to determine whether it is necessary to recognise any additional impairment loss with respect to
its net investment in the associate or joint venture. When necessary, the entire carrying amount of the investment
is tested for impairment in accordance with MFRS 136 Impairment of Assets as a single asset, by comparing
its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any
impairment loss is recognised in profit or loss. Reversal of an impairment loss is recognised to the extent that the
recoverable amount of the investment subsequently increases.
In the Company’s separate financial statements, investments in associates and joint ventures are accounted for
at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds
and their carrying amounts is included in profit or loss.
Business Combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration
transferred in a business combination is measured at fair value which is calculated as the sum of the acquisitiondate fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the
acquiree and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related
costs are recognised in profit or loss as incurred.
At acquisition date, the identifiable assets acquired and liabilities assumed are recognised at the fair value,
except that:
•
•
•
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the
acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities
assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and
liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests
in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the
excess is recognised immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share
of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the noncontrolling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets.
The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling
interests are measured at fair value or, when applicable, on the basis specified in another MFRSs.
Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting
from a contingent consideration arrangement, the contingent consideration is measured at its acquisitiondate fair value. Changes in the fair value of the contingent consideration that qualify as measurement period
adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period
adjustments are adjustments that arise from additional information obtained during the measurement period
(which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the
acquisition date.
deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are
recognised and measured in accordance with MFRS 112 Income Taxes and MFRS 119 Employee Benefits
respectively.
liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based
payment awards are measured in accordance with MFRS 2 Share-based Payment; and
assets (or disposal groups) that are classified as held for sale in accordance with MFRS 5 Non-current
Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.
Cont’d
3.
Business Combinations cont’d
The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as
measurement period adjustments depends on how the contingent consideration is classified. Contingent
consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is
remeasured at subsequent reporting dates in accordance with MFRS 137 Provisions, Contingent Liabilities and
Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss.
Where a business combination is achieved in stages, the Group’s previously held equity interests in the acquiree
are remeasured to fair value at the acquisition date (i.e. the date when the Group attains control) and the resulting
gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the
acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or
loss, where such treatment would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see above), or additional assets or
liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the
acquisition date that, if known, would have affected the amounts recognised at that date.
Revenue Recognition
Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to
the Group and the Company and the amount of revenue can be measured reliably. Revenue is measured at the
fair value of consideration received and receivable in the normal course of business.
The following specific recognition criteria must also be met before revenue is recognised:
(i)
Sale of goods
Revenue from sale of goods is recognised upon the transfer of significant risks and rewards of ownership
of the goods to the customer. Revenue is not recognised to the extent where there are significant
uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.
Rendering of services
(ii)
Revenue from services rendered is recognised net of service taxes and discounts as and when the services
are performed.
Sale of completed properties
(iii)
Revenue from sale of completed properties is recognised upon the finalisation of sale and purchase
agreements by the end of the reporting period and when the risks and rewards of ownership have passed
to the customers.
(iv) Construction contracts
(v)
Revenue from construction contracts is accounted for by the stage of completion method.
For all financial instruments measured at amortised cost and interest-bearing financial assets classified
as AFS, interest income is recorded using the effective interest rate (“EIR”). EIR is the rate that exactly
discounts estimated future cash receipts through the expected life of the financial asset, or (where
appropriate) a shorter period, to the net carrying amount on initial recognition.
Interest income
ANNUAL REPORT 2015
59
Cont’d
3.
Revenue Recognition cont’d
The following specific recognition criteria must also be met before revenue is recognised: cont’d
(vi) Management fees
Management fees are recognised when services are rendered.
(vii) Dividend income
Dividend income from investments is recognised when the right to receive payment has been established.
(viii) 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.
Foreign Currency Conversion
60
The individual financial statements of each group entity are presented in the currency of the primary economic
environment in which the entity operates (its functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each group entity are expressed in Ringgit Malaysia (“RM”),
which is the functional currency of the Company and the presentation currency for the consolidated financial
statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the functional
currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At
the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing at the date when the fair values were determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise except for:
•
•
•
•
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign
operations are translated into RM using exchange rates prevailing at the end of the reporting period. Income and
expenses items are translated at the average exchange rates for the period, unless exchange rates fluctuated
significantly during that period, in which case the exchange rates at the dates of transactions are used. Exchange
differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributable
to non-controlling interests as appropriate).
Exchange differences arising on the retranslation of non-monetary items carried at fair value in respect of
which gain and losses are recognised in other comprehensive income. For such non-monetary items, the
exchange component of that gain or loss is also recognised in other comprehensive income;
Exchange differences on foreign currency borrowings relating to assets under construction for future
productive use, which are included in the cost of those assets when they are regarded as an adjustment to
interest costs on those foreign currency borrowings;
Exchange differences on transactions entered into in order to hedge certain foreign currency risks; and
Exchange differences on monetary items receivable from or payable to a foreign operation for which
settlement is neither planned nor likely to occur (therefore, forming part of the net investment in the foreign
operation), which are recognised initially in other comprehensive income and reclassified from equity to
profit or loss on repayment of the monetary items.
Cont’d
3.
Foreign Currency Conversion cont’d
On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a
disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a
jointly controlled entity that includes a foreign operation, or loss of significant influence over an associate that
includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable
to the Group are reclassified to profit or loss. Any exchange differences that have previously been attributed to
non-controlling interests are derecognised, but they are not reclassified to profit or loss.
In addition, in relation to a partial disposal of a subsidiary that does not result in the Group losing control over
the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non-controlling
interests and are not recognised in profit or loss. For all other partial disposals (i.e. of associates or jointly
controlled entities that do not result in the Group losing significant influence or joint control), the proportionate
share of the accumulated exchange differences is reclassified to profit or loss.
Goodwill and fair value adjustments on identifiable assets and liabilities arising on the acquisition of
a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of
exchange prevailing at the end of each reporting period. Exchange differences arising are recognised in other
comprehensive income and accumulated in equity. Employee Benefits
Short-term benefits
Wages, salaries, bonuses and non-monetary benefits are accrued in the period in which the associated
services are rendered by employees of the Group and the Company. Short-term accumulating compensated
absences such as paid annual leave are recognised when services are rendered by employees that increase their
entitlement to future compensated absences. Short-term non-accumulating compensated absences such as sick
leave are recognised when the absences occur.
Defined contribution plans
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 Employees Provident Fund (“EPF”)
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.
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and
rewards of ownership to the lessee. All other leases are classified as operating leases.
The Group as lessee
Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception
of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the
lessor is included in the statement of financial position as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised
immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are
capitalised in accordance with the Group’s general policy on borrowing costs (see below). Contingent rentals are
recognised as expenses in the periods in which they are incurred.
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except
where another systematic basis is more representative of the time pattern in which economic benefits from the
leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in
the period in which they are incurred.
ANNUAL REPORT 2015
61
Cont’d
62
3.
Leases cont’d
The Group as lessee cont’d
In the event that lease incentives are received to enter into operating leases, such incentives are recognised
as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straightline basis, except where another systematic basis is more representative of the time pattern in which economic
benefits from the leased asset are consumed.
The Group 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 above.
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added
to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for recognised.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Borrowing costs
consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of
funds.
Income Tax
Income tax expense for the year comprises currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in
the statements of comprehensive income because of items of income or expense that are taxable or deductible
in other years and items that are never taxable or deductible. The Group’s liability for current tax is calculated
using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred
tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally
recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it
is probable that taxable profits will be available against which those deductible temporary differences, unused tax
losses and unused tax credits can be utilised. Such deferred tax assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of
other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in
subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal
of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable
future. Deferred tax assets arising from deductible temporary differences associated with such investments and
interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against
which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable
future.
Cont’d
3.
Income Tax cont’d
Deferred tax cont’d
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the manner in which the Group and the Company expect,
at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Group and the Company intend to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to
items that are recognised outside profit or loss (whether in other comprehensive income or directly in equity), in
which case the current and deferred tax is also recognised in other comprehensive income or directly in equity
respectively. Where current or deferred tax arises from the initial accounting for a business combination, the tax
effect is included in the accounting for the business combination.
Impairment of Non-Financial Assets Other Than Goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its non-financial assets other
than goodwill to determine whether there is any indication that these assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of
the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset,
the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual
cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a
reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs to sell and value-in-use. In assessing value-in-use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset (or cash-generating
unit) for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount,
the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the
asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit
or loss.
ANNUAL REPORT 2015
63
Cont’d
3.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses.
Gain or loss arising from the disposal of an asset is determined as the difference between the estimated net
disposal proceeds and the carrying amount of the asset, and is recognised in profit or loss.
Freehold land and capital in progress is not depreciated.
Depreciation of other property, plant and equipment is computed using the straight-line method to write off the
cost of the various assets over their estimated useful lives at the following annual rates:
Short-term leasehold land
Over lease period
Long-term leasehold land
Over lease period
Building, renovation and electrical installation
Cranes, parts and forklifts
Plant and machinery
3.33% - 20%
4% - 10%
Factory equipment
10% - 30%
Furniture, fittings, computer and office equipment
10% - 30%
Motor vehicles
Vessel
64
2% - 20%
20%
4%
At the end of each reporting period, the residual values, useful lives and depreciation methods of property, plant
and equipment are reviewed, and the effects of any change in estimates are recognised prospectively.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned
assets.
Intangible Assets
Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the
business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or
groups of cash-generating units) that is expected to benefit from the synergies of the combination.
The cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more
frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cashgenerating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the
carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss.
An impairment loss recognised for goodwill is 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 of, the goodwill associated with the operation disposed of is included in the carrying amount of
the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this
circumstance is measured based on the relative fair values of the operations disposed of and the portion of the
cash-generating unit retained.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
Cont’d
3.
Intangible Assets cont’d
Other intangible assets
Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired their
fair value as at the date of acquisition. Following initial acquisition, intangible assets are measured at cost less
any accumulated amortisation and accumulated impairment losses.
The useful lives of intangible assets are assessed to be either finite or infinite.
Intangible assets with finite useful lives are amortised on a straight-line basis over the estimated useful lives
and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The
amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the
expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset
is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in
accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or
loss.
Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or
more frequently if the events and circumstances indicate that the carrying value may be impaired either
individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an
intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment
continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective
basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is
derecognised.
Investment Properties
Investment properties are properties which are held either to earn rental income or for capital appreciation or
for both. Such properties are measured initially at cost, including transaction costs. Following initial recognition,
investment properties are carried at cost less any accumulated depreciation and accumulated impairment losses.
Freehold land is not subject to depreciation while the building on the freehold land is depreciated at 2% per
annum on a straight-line method.
A property interest under an operating lease is classified and accounted for as an investment property on a
property-by-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any
such property interest under an operating lease classified as an investment property is carried at cost less
accumulated depreciation and any accumulated impairment losses.
Investment properties are derecognised when either they have been disposed of or when the investment
property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any
gain or loss on the retirement or disposal of an investment property is recognised in profit or loss in the year of
retirement or disposal.
Transfers are made to or from investment property only when there is a change in use. For a transfer from
investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value
at the date of change in use. For a transfer from owner-occupied property to investment property, the property
is accounted for in accordance with the accounting policy for property, plant and equipment up to the date of
change in use.
ANNUAL REPORT 2015
65
Cont’d
3.
Inventories
66
Inventories are stated at lower of cost and net realisable value.
Raw materials, work-in-progress, finished goods and merchandise
Cost is determined using the first-in, first-out method. The cost of raw materials comprises costs of purchase
and the costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to
completion and the estimated costs necessary to make the sale.
Land held for property development
Land held for property development consists of land on which no significant development work has been
undertaken or where development activities are not expected to be completed within the normal operating cycle.
Such land is classified as non-current asset and is stated at cost less any impairment losses.
Costs associated with the acquisition of land include the purchase price of the land, professional fees, stamp
duties, commissions, conversion fees and other relevant levies. Where an indication of impairment exists, the
carrying amount of the asset is assessed and written down immediately to its recoverable amount.
Land held for property development is transferred to property development costs (under current assets) when
development activities have commenced and where the development activities can be completed within the
Group’s normal operating cycle.
Properties under development
Property development costs comprise costs associated with the acquisition of land and all costs directly
attributable to development activities or that can be allocated on a reasonable basis to these activities.
When the outcome of the development activity can be estimated reliably, property development revenue and
expenses are recognised by using the stage of completion method. The stage of completion is measured by
reference to the proportion of property development costs incurred in relation to the estimated total costs for the
property development.
When the outcome of a development activity cannot be reliably estimated, property development revenue is
recognised only to the extent of property development costs incurred that are probable of recovery.
Irrespective of whether the outcome of a property development activity can be estimated reliably, when it is
probable that total property development costs (including expected defect liability expenditure) will exceed total
property development revenue, the expected loss is recognised as an expense immediately.
Property development costs not recognised as an expense are recognised as an asset and are stated at the
lower of cost and net realisable value.
Where revenue recognised in profit or loss exceeds billings to purchasers, the balance is shown as accrued
billings within current assets. Where billings to purchasers exceed revenue recognised in profit or loss, the
balance is shown as progress billings within current liabilities.
Developed properties held for sale
Cost of developed properties held for sale consists of costs associated with the acquisition of land, direct costs
and appropriate proportions of common costs attributable to developing the properties to completion.
Cont’d
3.
Construction Contracts
When the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by
reference to the stage of completion of the contract activity at the end of the reporting period, as measured
by the proportion of the contract costs incurred for work performed to-date in relation to the estimated total
contract costs. Variations in contract work, claims and incentive payments are included to the extent that they
have been agreed with the customers.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the
extent of contract costs incurred that are probable of recovery. Contract costs are recognised as expenses in the
period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised
as an expense immediately as an allowance for foreseeable loss.
Amount due from contract customers represents the excess of cost incurred to-date and portion of profit or loss
attributable to work performed to-date over progress billings while amount due to contract customers represents
the excess of progress billings over cost incurred to-date and portion of profit or loss attributable to work
performed to-date.
Provisions
Provisions are recognised when the Group and the Company have a present obligation (legal or constructive)
as a result of a past event, 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.
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the
obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a
third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably.
Financial Instruments
Financial assets and financial liabilities are recognised when, and only when, the Group and the Company
become a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of the financial assets and financial liabilities (other than financial assets
and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs that are directly
attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.
Financial Assets
Financial assets are classified into the following specified categories: financial assets “at fair value through profit
or loss” (FVTPL), “held-to-maturity” investments, “available-for-sale” (AFS) financial assets and, “loans and
receivables”. The classification depends on the nature and purpose of the financial assets and is determined
at the time of initial recognition. All regular way purchases or sales of financial assets are recognised and
derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets
that require delivery of assets within the time frame established by regulation or convention in the marketplace.
ANNUAL REPORT 2015
67
Cont’d
68
3.
Financial Assets cont’d
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset, or (where appropriate) a shorter period, to
the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets
classified as at FVTPL.
Financial assets at FVTPL
Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as
at FVTPL.
A financial asset is classified as held for trading if:
•
•
•
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised
in profit or loss.
AFS financial assets
AFS financial assets are non-derivatives that are either designated as available-for-sale or are not classified as
loans and receivables, held-to-maturity investments or financial assets at FVTPL.
All AFS assets are measured at fair value at the end of the reporting period. Gains and losses arising from
changes in fair value are recognised in other comprehensive income and accumulated in the investments
revaluation reserve, with the exception of impairment losses, interest calculated using the effective interest
method, and foreign exchange gains and losses on monetary assets, which are recognised in profit or loss.
Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously
accumulated in the investments revaluation reserve is reclassified to profit or loss.
AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot
be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity
investments are measured at cost less any identified impairment losses at the end of the reporting period.
Dividends on AFS equity instruments are recognised in profit or loss when the Group’s right to receive the
dividends is established.
The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency
and translated at the spot rate at the end of the reporting period. The foreign exchange gains and losses that
are recognised in profit or loss are determined based on the amortised cost of the monetary asset. Other foreign
exchange gains and losses are recognised in other comprehensive income.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Loans and receivables are measured at amortised cost using the effective interest
method, less any impairment. Interest income is recognised by applying the effective interest rate, except for
short-term receivables when the recognition of interest would be immaterial.
it has been acquired principally for the purpose of selling it in the near term; or
on initial recognition it is part of a portfolio of identified financial instruments that the Group manages
together and has a recent actual pattern of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.
Cont’d
3.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets
are considered to be impaired when there is objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have
been affected.
Objective evidence of impairment could include:
•
•
•
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a collective basis. 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, as well as observable
changes in national or local economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment loss recognised is 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 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 is considered uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in
the carrying amount of the allowance account are recognised in profit or loss.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in
other comprehensive income are reclassified to profit or loss in the period.
For financial assets measured at amortised cost, 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 through profit or loss to the extent that the
carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised
cost would have been had the impairment not been recognised.
In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed
through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other
comprehensive income and accumulated under the heading of investments revaluation reserve. In respect of AFS
debt securities, impairment losses are subsequently reversed through 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.
Derecognition of financial assets
The Group and the Company derecognise a financial asset only when the contractual rights to the cash flows
from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of
ownership of the asset to another entity. If the Group and the Company neither transfer nor retain substantially
all the risks and rewards of ownership and continue to control the transferred asset, the Group and the Company
recognise their retained interest in the asset and an associated liability for amounts it may have to pay. If the
Group and the Company retain substantially all the risks and rewards of ownership of a transferred financial
asset, the Group and the Company continue to recognise the financial asset and also recognise a collateralised
borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the
sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in
other comprehensive income and accumulated in equity is recognised in profit or loss.
Financial Assets cont’d
significant financial difficulty of the issuer or counterparty; or
default or delinquency in interest or principal payments; or
it becoming probable that the borrower will enter bankruptcy or financial reorganisation.
ANNUAL REPORT 2015
69
Cont’d
3.
Financial Liabilities and Equity Instruments issued by the Group and the Company
Classification as debt or equity
Debt and equity instruments are classified as either financial liability or as equity in accordance with the
substance of the contractual arrangement.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments issued by the Group and the Company are recognised at the proceeds
received, net of direct issue costs. Ordinary shares are equity instruments.
Financial liabilities
Financial liabilities are classified as either financial liabilities “at FVTPL” or “other financial liabilities”.
Other financial liabilities
Other financial liabilities are initially measured at fair value, net of transaction costs and are subsequently
measured at amortised cost using the effective interest method, with interest expense recognised on an effective
yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to
the net carrying amount on initial recognition.
Derecognition of financial liabilities
The Group and the Company derecognise financial liabilities when, and only when, the Group’s and the
Company’s obligations are discharged, cancelled or they expire.
Statements of Cash Flows
The Group and the Company adopt the indirect method in the preparation of the statements of cash flows.
Cash and cash equivalents are short-term, highly liquid investments with maturities of three months or less from
the date of acquisition that are readily convertible to a known amount of cash with insignificant risk of changes in
value, against which bank overdrafts, if any, are deducted.
4.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
(i)
70
Critical judgements in applying the Group’s and the Company’s accounting policies
There are no critical judgements made by management in the process of applying the Group’s and the
Company’s accounting policies that has significant effect on the amounts recognised in the financial
statements.
Cont’d
4.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY cont’d
(ii)
Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation
uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial year.
(i) Useful lives of property, plant and equipment
The estimates for the residual values, useful lives and related depreciation charges for the property,
plant and equipment are based on commercial factors which could change significantly as a result
of technical innovations and competitors’ actions in response to the market conditions. The Group
anticipates that the residual values of its property, plant and equipment will be insignificant. As a
result, residual values are not being taken into consideration for the computation of the depreciable
amount. Changes in the expected level of usage and technological development could impact the
economic useful lives and the residual values of these assets, therefore future depreciation charges
could be revised.
Management estimates the useful lives of these property, plant and equipment to be 3 to 50 years. A
10% difference in the average useful lives of these assets from management’s estimates would result
in approximately 3% (2014: 3%) variance in the loss for the year.
(ii)
Income taxes
Significant estimation is involved in determining the provision for income taxes. There are certain
transactions and computations for which the ultimate tax determination is uncertain during the
ordinary course of business. The Group recognises liabilities for expected tax issues based on
estimates of whether additional taxes will be due. Where the final tax outcome of these matters is
different from the amounts that were initially recognised, such differences will impact the income tax
and deferred tax provisions in the period in which such determination is made.
(iii) Impairment of loans and receivables
The Group and the Company assess 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 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.
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 amounts of the Group’s and of the Company’s trade receivables at the reporting date are
disclosed in Note 22.
(iv)
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an
estimation of the value-in-use of the cash-generating units (“CGUs”) to which goodwill is allocated.
Estimating a value-in-use amount requires management to make an estimate of the expected future
cash flows from the CGUs and also to choose a suitable discount rate in order to calculate the
present value of those cash flows. The carrying amounts of goodwill as at 31 December 2015 and 31
December 2014 were RM 84,320,909 and RM 84,320,909 respectively. Further details are disclosed in
Note 16.
ANNUAL REPORT 2015
71
Cont’d
4.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY cont’d
(ii)
Key sources of estimation uncertainty cont’d
(v) Deferred tax assets
Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and
unused tax credits to the extent that it is probable that taxable profits will be available against which
the deductible temporary differences, unused tax losses and unused tax credits can be utilised.
Significant management judgement is required to determine the amount of deferred tax assets that
can be recognised, based upon the likely timing and level of future taxable profits together with future
tax planning strategies. The total carrying value of deferred tax assets recognised is disclosed in Note
20.
(vi) Revenue from construction contracts
The Group recognises revenue and costs in the profit or loss using the stage of completion method.
The stage of completion is determined by the completion of a physical proportion of the contract
work. Judgements are required in determining the stage of completion, the estimated total contract
revenue and costs, as well as the recoverability of the contracts. (vii)
Provision for defect liability cost
The Group recognises provision for defect liability for future work expected to be carried out
subsequent to the project’s completion as part of their defect liability obligations. In making the
judgement, the Group evaluates based on past experience and by relying on the work of specialists.
The carrying amount of the Group’s provision for defect liability cost at the reporting date and further
details are included in accruals and disclosed in Note 33.
5.REVENUE
Sale of goods
The Company
2014
2015
2014
RM
RM
RM
RM
96,669,116
88,175,406
-
-
Management fees charged to subsidiaries
-
-
6,284,977
8,614,015
Dividends income
-
-
-
2,150,000
Contract revenue
324,027,191
270,858,497
-
-
Service revenue
297,915,404
281,804,570
-
-
225,964
1,321,282
-
-
718,837,675
642,159,755
6,284,977
10,764,015
Project management fees
72
The Group
2015
Cont’d
6.
COST OF SALES
2014
RM
RM
80,218,521
59,044,556
Contract costs
331,574,444
257,034,993
Cost of services rendered
289,691,227
282,117,485
701,484,192
598,197,034
Cost of inventories sold
7.
The Group
2015
OTHER INCOME
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
- Realised
22,483,349
-
138,853
-
- Unrealised
Foreign exchange gain:
13,752,283
829,052
5,607,784
64,323
Insurance compensation
2,525,771
-
-
-
Gain on disposal of non-current assets held
for sale
1,284,317
-
-
-
Gain on disposal of property, plant and
equipment
106,256
-
-
-
1,053,886
1,049,400
4,622,681
2,941,880
Rental income
463,338
648,894
-
-
Commission income
966,776
-
-
-
2,885
-
-
-
-
201,500
-
-
Gain on disposal of a subsidiary
6,392,010
10,092,647
Interest income
Fair value gain on marketable securities
-
-
Gain on disposal of property, plant and
equipment
-
1,609,628
-
59,169
Gain on disposal of investment property
-
188,088
-
-
Bad debts recovered
-
60,000
-
-
2,563,505
86,316
-
-
45,202,366
4,672,878
16,761,328
13,158,019
Others
ANNUAL REPORT 2015
73
Cont’d
8.
FINANCE COSTS
The Group
Interest expense on loans and borrowings
Coupon interest expense on redeemable
convertible secured bonds (“RCSB”)
2015
2014
RM
RM
RM
RM
-
-
888,101
1,115,283
10,362,312
9,650,893
4,221,960
2,841,370
1,132,997
723,550
-
-
373,266
-
373,266
-
11,868,575
10,374,443
5,483,327
3,956,653
9.
(LOSS)/PROFIT BEFORE TAX
(Loss)/Profit before tax is arrived after the following charges:
The Company
2014
Interest expense on advances from subsidiaries
Commitment fees
2015
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
33,937,183
41,723,097
3,487,466
4,376,898
18,691,581
13,263,366
307,686
265,577
4,601
7,215
-
-
Amortisation of intangible assets (Note 16)
441,083
394,899
28,644
25,243
Allowance for impairment loss of receivables
(Note 22)
147,585
18,370,448
-
-
5,992
577,882
-
-
1,409,208
7,816,358
490,123
492,171
Employees benefit expense
Depreciation:
- Property, plant and equipment (Note 13)
- Investment properties (Note 14)
Rental expense
-
-
-
962,011
Loss on disposal of property, plant and
equipment
Loss on disposal of a subsidiary
1,010,232
8,581
-
-
Directors’ remuneration
1,966,048
4,773,716
1,096,346
890,532
325,000
358,129
174,000
272,000
Directors’ fees
Directors’ benefits in kind
-
21,250
-
21,250
51,191
7,053
-
-
-
31,735
-
-
- Statutory audit
266,000
519,750
31,000
48,000
- Other services
-
20,000
-
20,000
- Realised
-
1,643,149
-
74
- Unrealised
-
622,123
-
-
Property, plant and equipment written off
Fair value loss on marketable securities (Note 27)
Auditors’ remuneration:
Foreign exchange loss:
74
Cont’d
10. INCOME TAX EXPENSE/(CREDIT)
(i)
Income tax recognised in profit or loss
Estimated tax payable:
Current year
(Over)/Underprovision in prior years
Real property gain tax
Deferred tax:
Relating to origination and reversal of
temporary differences
Effect of reduction in Malaysian income tax
rate
Benefits from previously unrecognised tax
losses
Underprovision in prior years
Income tax expense/(credit) recognised in
profit or loss
The Group
2015
2014
RM
RM
The Company
2015
2014
RM
RM
7,551,757
(291,299)
319,197
9,615,642
(70,672)
-
388,326
(105,048)
-
529,630
122,395
-
7,579,655
9,544,970
283,278
652,025
2,035,944
(12,240,625)
1,376,250
(13,299)
(247,564)
710,234
-
-
2,290,977
8,501
979,291
160,780
4,898
4,079,357
(10,542,599)
1,537,030
(8,401)
11,659,012
(997,629)
1,820,308
643,624
A numerical reconciliation of income tax expense/(credit) applicable to (loss)/profit before tax at the
applicable statutory income tax rate to income tax expense/(credit) at the effective income tax rate is as
follows:
Tax at the applicable tax rate of 25%
Different tax rates in other countries
Effect of reduction in Malaysian income tax
rate
Deferred tax recognised at different tax
rates
Income not subject to tax
Expenses not deductible for tax purposes
Deferred tax assets not recognised during
the year
Effect of gains taxed at real property gain
tax (“RPGT”) rate
Benefits from previously unrecognised tax
losses
The Group
2015
2014
RM
RM
The Company
2015
2014
RM
RM
(2,532,739)
(36,779,674)
9,534,045
11,192,021
(633,185)
-
(9,194,919)
249,166
2,383,511
-
2,798,005
-
(247,564)
710,234
-
-
(4,187,520)
13,608,007
893
(65,112)
2,848,968
(3,453,882)
2,834,947
(2,834,951)
553,277
800,399
3,711,258
-
-
319,197
-
(158,235)
-
-
-
(8,501)
-
-
ANNUAL REPORT 2015
75
Cont’d
10. INCOME TAX EXPENSE/(CREDIT) cont’d
(i)
Income tax recognised in profit or loss cont’d
A numerical reconciliation of income tax expense/(credit) applicable to (loss)/profit before tax at the
applicable statutory income tax rate to income tax expense/(credit) at the effective income tax rate is as
follows: cont’d
(Over)/Underprovision of income tax in
prior years
Underprovision of deferred tax in prior years
Income tax expense/(credit) recognised in
profit or loss
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
(291,299)
(70,672)
(105,048)
122,395
2,290,977
979,291
160,780
4,898
11,659,012
(997,629)
1,820,308
643,624
The Finance (No.2) Act 2015 gazetted on 30 December 2015 enacts the reduction of corporate income tax
rate from 25% to 24% with effect from year of assessment 2016. Accordingly, the applicable tax rates to be
used for the measurement of any applicable deferred tax will be the expected rates.
(ii)
Income tax recognised in other comprehensive income
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
1,333,334
-
1,333,334
-
Deferred tax
Arising on income and expenses
recognised in other comprehensive
income:
Changes in fair value of investment in
AFS assets:
- Underprovision in prior year
11. EMPLOYEE BENEFIT EXPENSE
Wages and salaries
Social security costs
The Company
2014
2015
2014
RM
RM
RM
RM
26,065,828
37,665,232
2,901,463
3,699,744
207,319
566,427
12,188
13,956
Pension costs - defined contribution plans
3,001,474
2,218,168
353,277
414,470
Overtime and allowances
4,662,562
1,273,270
179,319
248,728
33,937,183
41,723,097
3,446,247
4,376,898
76
The Group
2015
Cont’d
12. BASIC LOSS PER SHARE
Basic loss per share is calculated by dividing loss for the year attributable to ordinary equity holders of the
Company by the weighted average number of ordinary shares in issue during the financial year.
Diluted loss per share amounts are calculated by dividing loss for the year, net of tax, attributable to owners of
the parent by the weighted average number of ordinary shares outstanding during the financial year plus the
weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential
ordinary shares into ordinary shares. The following tables reflect the loss and share date used in the computation of basic earnings per shares for the
years ended 31 December 2015 and 2014:
Loss attributable to ordinary equity holders of the Company (RM)
Weighted average number of ordinary shares in issue
Basic loss per share (sen)
The Group
2015
RM
2014
RM
(18,502,334)
(35,162,017)
1,657,052,457
1,396,276,670
(1.12)
(2.52)
No item, transaction or event has arisen in the interval between the end of the financial year and the date of this
report which has dilutive effect on the ordinary shares. Hence, diluted loss per share is not presented.
13. PROPERTY, PLANT AND EQUIPMENT
At
1 January
2015
RM
Disposals
RM
Written
off
RM
Exchange
differences
RM
As at
31 December
2015
RM
Additions
RM
1,600,974
-
-
-
-
1,600,974
Short-term
leasehold land
Long-term
leasehold land
777,714
-
-
-
-
777,714
Building
renovation
and electrical
installation
7,568,119
-
-
-
-
7,568,119
Cranes, parts and
forklifts
41,909,762
159,802
-
(32,690)
117,781
42,154,655
Plant and
machinery
62,756,373
16,779,550
(4,619,200)
-
-
74,916,723
20,251,605
360,591
-
-
-
20,612,196
Factory equipment
4,122,175
76,838
(1,367,969)
(345)
-
2,830,699
Furniture, fittings,
computer and
office equipment
74,388,300
281,446
(188,238)
(141,563)
16,506,489
90,846,434
6,658,224
931,949
(278,800)
-
2,607
7,313,980
-
518,317,648
-
-
-
518,317,648
220,033,246
536,907,824
(6,454,207)
(174,598)
16,626,877
766,939,142
The Group
Cost
Freehold land
Motor vehicles
Vessel
Total
(Forward)
ANNUAL REPORT 2015
77
Cont’d
13. PROPERTY, PLANT AND EQUIPMENT cont’d
Disposals
Written
off
Exchange
differences
As at
31 December
2015
RM
RM
RM
RM
RM
-
-
-
-
-
-
Short-term
leasehold land
231,887
16,768
-
-
-
248,655
Long-term
leasehold land
761,997
100,915
-
-
-
862,912
6,619,597
1,123,279
(24,178)
(1,552)
59,300
7,776,446
14,240,486
1,660,355
(4,453,737)
-
-
11,447,104
Plant and
machinery
6,674,427
1,131,737
-
-
-
7,806,164
Factory equipment
2,001,127
314,578
(315,246)
(175)
-
2,000,284
computer and
office equipment
10,947,533
11,824,854
(156,640)
(121,680)
3,167,949
25,662,016
4,185,788
1,081,349
(263,654)
-
-
5,003,483
-
1,437,746
-
-
-
1,437,746
45,662,842
18,691,581
(5,213,455)
(123,407)
3,227,249
62,244,810
The Group
At
1 January
2015
Charge for
the year
RM
Accumulated
depreciation
Freehold land
Building
renovation
and electrical
installation
Cranes, parts and
forklifts
Motor vehicles
Vessel
Total
78
41,755,161
57,678,841
18,663,639
3,983,735
4,391,207
7,106,684
Building
renovation
and electrical
installation
Cranes, parts and
forklifts
Plant and
equipment
Factory
equipment
computer
and office
equipment
Motor vehicles
Total
178,311,571
34,785,497
7,568,119
Long-term
leasehold land
Capital in
progress
777,714
42,317,863
-
793,940
33,117,048
184,273
1,587,966
6,407,968
226,668
-
-
-
RM
1,600,974
Additions
RM
Short-term
leasehold land
Freehold land
Cost
The Group
Balance
as of
1 January
2014
(2,667,054)
-
(1,264,010)
(13,546)
(10,168)
-
(1,310,936)
(68,394)
-
-
-
RM
-
(34,785,497)
19,500
34,785,497
-
-
(19,500)
-
-
-
-
RM
Disposals Reclassification
(12,222)
-
-
(10,845)
-
-
-
(1,377)
-
-
-
RM
Adjustment
-
-
(3,533)
(35,665)
-
-
(35,508)
-
-
-
RM
2,224,519
-
2,110
2,189,197
-
-
-
33,212
-
-
-
RM
Written
Exchange
off differences
(66,725) (74,706)
-
-
(66,725)
-
-
-
-
-
-
-
RM
Transfer to
intangible
assets
220,033,246
-
6,658,224
74,388,300
4,122,175
20,251,605
62,756,373
41,909,762
7,568,119
777,714
1,600,974
RM
Balance as of
31 December
2014
Cont’d
ANNUAL REPORT 2015
79
80
5,507,970
Building renovation and
electrical installation
2,209,483
4,298,708
Furniture, fittings, computer and
office equipment
Motor vehicles
Total
34,466,358
-
1,700,212
Factory equipment
Capital in progress
5,815,399
Plant and machinery
14,058,390
661,084
215,112
-
13,263,366
-
1,040,270
8,270,396
336,416
859,028
1,493,028
1,146,540
100,913
16,775
-
RM
RM
Freehold land
Accumulated depreciation
The Group
Charge for
the year
Balance
as of
1 January
2014
(2,493,975)
-
(1,154,353)
(8,581)
(1,592)
-
(1,310,932)
(18,517)
-
-
-
RM
(360)
-
-
(360)
-
-
-
-
-
-
-
RM
Disposals Adjustments
(66,722)
-
-
(66,722)
-
-
-
-
-
-
-
RM
Transfer
to
intangible
assets
(67,653)
-
-
(3,214)
(33,909)
-
-
(30,530)
-
-
-
RM
Written
off
561,828
-
1,163
546,531
-
-
-
14,134
-
-
-
RM
Exchange
differences
45,662,842
-
4,185,788
10,947,533
2,001,127
6,674,427
14,240,486
6,619,597
761,997
231,887
-
RM
Balance as of
31 December
2014
Cont’d
Cont’d
31 December 31 December
2015
2014
The Group
RM
RM
1,600,974
1,600,974
Net book value
Freehold land
529,059
545,827
6,705,207
6,806,122
Building renovation and electrical installation
34,378,209
35,290,165
63,469,619
48,515,887
Plant and equipment
12,806,032
13,577,178
Factory equipment
Furniture, fittings, computer and office equipment
Motor vehicles
830,415
2,121,048
65,184,418
63,440,767
2,310,497
2,472,436
Capital in progress
516,879,902
-
Total
704,694,332
174,370,404
Furniture,
fittings,
computer
and office
equipment
RM
Motor
vehicles
RM
Renovation
RM
Total
RM
Cost
Balance as of 1 January
Additions
181,529
-
1,259,360
340,371
60,226
-
1,501,115
340,371
Balance as of 31 December
181,529
1,599,731
60,226
1,841,486
Accumulated Depreciation
Charge for the year
96,063
18,361
868,992
283,302
3,513
6,023
968,568
307,686
114,424
1,152,294
9,536
1,276,254
2014
Cost
Additions
Disposals
188,375
(6,846)
1,369,192
(109,832)
60,226
-
1,557,567
60,226
(116,678)
181,529
1,259,360
60,226
1,501,115
Charge for the year
Disposals
73,801
24,144
(1,882)
739,073
237,920
(108,001)
3,513
-
812,874
265,577
(109,883)
96,063
868,992
3,513
968,568
The Company
2015
ANNUAL REPORT 2015
81
Cont’d
Furniture,
fittings,
computer
and office
equipment
Motor
vehicles
Renovation
Total
RM
RM
RM
RM
Balance as of 31 December 2015
67,105
447,437
50,690
565,232
85,466
390,368
56,713
532,547
Net book value
(a)
Capitalisation of borrowing costs
Included in the Group’s property, plant and equipment is interest capitalised amounting to RM806,697
(2014: RM703,108).
(b)
Capitalisation of charter costs
Included in the Group’s property, plant and equipment is charter costs capitalised amounting to
RM73,260,035 (2014: RM67,027,454).
(c) Assets pledged as security
The net book value of the Group’s and of the Company’s property, plant and equipment pledged to
financial institutions as securities for bank facilities as disclosed in Note 31 is as follows:
Freehold land
The Company
2015
2014
2015
2014
RM
RM
RM
RM
1,549,010
1,549,010
-
-
529,059
545,827
-
-
5,642,183
5,728,050
-
-
Building renovation and electrical
installation
20,912,641
30,146,842
-
-
48,265,635
20,459,746
-
-
Plant and machinery
10,730,824
11,590,588
-
-
102,296
124,497
-
-
65,069,616
34,450
-
-
1,751,278
2,115,731
447,437
390,368
517,493,366
-
-
-
672,045,908
72,294,741
447,437
390,368
Factory equipment
Furniture, fittings, computer and office
equipment
Motor vehicles
Vessel
82
The Group
Cont’d
(d)
Assets held under finance lease
The net book value of the Group’s and of the Company’s assets held under finance lease as at the
reporting date is as follows:
Plant and machinery
Motor vehicles
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
15,881,264
10,137,410
-
-
-
314,442
-
-
980,236
2,113,766
447,437
390,368
16,861,500
12,565,618
447,437
390,368
(e) Depreciation of plant and equipment
The depreciation of plant and equipment amounting to RM2,869,530 (2014: RM471,596) and RM15,822,051
(2014: RM12,791,770) are included in the “cost of sales” and “administrative expenses” line items
respectively in the income statements.
14. INVESTMENT PROPERTIES
The Group
2015
Freehold
land
Building
Total
RM
RM
RM
Cost
113,446
226,892
340,338
-
4,938,699
4,938,699
113,446
5,165,591
5,279,037
-
59,055
59,055
Charge for the year (Note 9)
-
4,601
4,601
-
63,656
63,656
Reclassification from non-current assets held for sale
ANNUAL REPORT 2015
83
Cont’d
14. INVESTMENT PROPERTIES cont’d
2014
Freehold
land
RM
Building
Building
under
construction
Total
RM
RM
RM
Cost
113,446
1,246,750
8,632,382
9,992,578
Disposals
-
(1,019,858)
-
(1,019,858)
Reclassification to non-current assets held for
sale
-
-
(8,632,382)
(8,632,382)
113,446
226,892
-
340,338
-
179,786
-
179,786
Charge for the year
-
7,215
-
7,215
Disposals
-
(127,946)
-
(127,946)
-
59,055
-
59,055
113,446
5,101,935
-
5,215,381
113,446
167,837
-
281,283
280,000
8,540,000
-
8,820,000
280,000
540,000
-
820,000
Accumulated Depreciation
Net Book Value
Investment properties, at fair value
15.INVENTORIES
The Group
2015
2014
RM
RM
8,288,331
7,931,815
Property development costs
3,575,330
3,433,868
Raw materials
7,565,877
5,549,631
57,424
80,548
2,903,267
7,279,690
-
428,548
10,063,804
3,887,876
24,165,702
20,660,161
32,454,033
28,591,976
Inventories - non - current:
Inventories - current:
Work-in-progress
Finished goods
Goods in-transit
Consumables
84
Cont’d
15. INVENTORIES cont’d
(a)
Additions
Transfer to property development cost
(i)
The Group
2015
2014
RM
RM
7,931,815
10,373,422
356,516
992,261
-
(3,433,868)
8,288,331
7,931,815
Assets pledged as security
The net carrying amount of the Group’s land held for property development of RM8,288,331
(2014: RM7,067,588) are pledged to financial institution as securities for bank facilities as disclosed in
Note 31.
Assets held in trust
(ii)
Included in land held for property development is an amount of RM7,272,500 (2014: RM7,272,500)
which are registered under a third party’s name held in trust on behalf of the Group.
(iii) Revocation compensation received
On 18 May 2012, the Group, via its sub-subsidiary, Terra Hill Development Sdn. Bhd. entered into
a joint agreement with Kee Lin Trading Sdn. Bhd. (“KLTSB”) whereby KLTSB, (“the Landowner”)
provides the land for development and the Company (“the Developer”), at its own costs and
expenses, develops the land into a housing and/or commercial development by erecting thereon retail
units and /or service apartments or any types of buildings and other infrastructure and ancillary work
on the land in accordance with the approved plans by the appropriate authorities (“the said project”).
In consideration of the Landowner providing the Land and the Developer developing the said project,
the Developer paid cash consideration of RM750,000 to the Landowner upon execution of the
agreement.
On 19 September 2014, the Developer is no longer desirous to proceed with the joint agreement and
in consequence thereof, the Landowner and the Developer agreed to terminate and rescind the joint
agreement. Upon the termination of the joint agreement, the Landowner shall be entitled to forfeit a
sum of RM75,000 from the cash consideration and the balance of RM675,000 is compensated to the
Developer.
ANNUAL REPORT 2015
85
Cont’d
15. INVENTORIES cont’d
(b)
Property development
Additions
Transfer from land held for property development
The Group
2015
2014
RM
RM
3,433,868
-
141,462
-
-
3,433,868
3,575,330
3,433,868
Assets pledged as security
The Group’s inventories amounting to RM3,575,329 (2014: RM6,079,840) have been pledged to a licensed
bank as securities for the bank facilities as disclosed in Note 31.
16. INTANGIBLE ASSETS
The Group
Patents
and Development
trademarks
costs
Goodwill
Software
Total
RM
RM
RM
RM
RM
Cost
84,320,909
1,597,043
152,085
360,022
86,430,059
Additions
Balance as of 1 January 2015
-
102,707
-
-
102,707
Adjustment
-
24,093
-
-
24,093
Exchange differences
-
147,567
-
-
147,567
84,320,909
1,871,410
152,085
360,022
86,704,426
Accumulated amortisation
86
-
840,987
92,941
360,022
1,293,950
Amortisation for the year
-
390,388
50,695
-
441,083
-
68,079
-
-
68,079
-
1,299,454
143,636
360,022
1,803,112
Cont’d
16. INTANGIBLE ASSETS cont’d
The Group
Goodwill
Software
Patents
and
trademarks
RM
RM
RM
RM
RM
Development
costs
Total
Cost
84,320,909
1,695,450
152,085
360,022
86,528,466
Additions
-
87,784
-
-
87,784
Adjustment
-
(303,237)
-
-
(303,237)
Transfers from property, plant
and equipment
-
66,725
-
-
66,725
-
50,321
-
-
50,321
84,320,909
1,597,043
152,085
360,022
86,430,059
2014
Accumulated amortisation
-
427,444
42,246
360,022
829,712
Amortisation for the year
-
344,204
50,695
-
394,899
Adjustment
-
(15,032)
-
-
(15,032)
Transfers from property, plant
and equipment
-
66,722
-
-
66,722
-
17,649
-
-
17,649
2014
-
840,987
92,941
360,022
1,293,950
2015
84,320,909
571,956
8,449
-
84,901,314
2014
84,320,909
756,056
59,144
-
85,136,109
Net book value
ANNUAL REPORT 2015
87
Cont’d
The Company
2015
Software
RM
Cost
Additions
As of 31 December 2015
126,218
24,093
150,311
52,636
Amortisation during the year
28,644
81,280
2014
Cost
Additions
126,218
126,218
27,393
Amortisation during the year
25,243
52,636
Net book value
69,031
73,582
(a)
88
Impairment loss recognised
The Group has not recognised any impairment loss on goodwill during the year.
Cont’d
(b) Impairment tests for goodwill
Allocation of goodwill
Goodwill has been allocated to the Group’s cash generating units (“CGUs”) identified according to the
business segments as follows:
The Group
2015
2014
RM
RM
Oil and gas
73,681,265
73,681,265
Technical services
10,639,644
10,639,644
84,320,909
84,320,909
The recoverable amount of the CGU is determined based on value-in-use calculations using cash flows
projections approved by management covering a five-year period. Cash flows are extrapolated using an
average growth rate of 1.00% (2014: 3.20%) per annum.
The following describes each key assumption on which management has based its cash flow projections to
undertake impairment testing of goodwill:
i. Budgeted gross margins
The basis used to determine the value assigned to the budgeted gross margin is the average gross
margin achieved in the year immediately before the budgeted year increased for expected efficiency
improvements.
ii. Selling price
The selling price used to calculate the cash inflows from operations was determined after taking
into consideration of price trends in the industries which the CGU is exposed. Values assigned are
consistent with the external sources of information.
iii. Discount rate and growth rate The discount rate applied to the cash flows projections is based on the weighted average cost of
capital of the respective CGU throughout the calculation period. The growth rate used is consistent
with the projected growth rate of the CGU’s industry and economy. Following are the rates for the
calculations of the value-in-use for each of the business segments for the next five years. Discount rate Growth rate
Business segments
Oil and gas
Technical service
9.00% -13.00%
8.00%-13.00%
5.00%
5.00% -10.00%
Sensitivity to changes in assumptions
Barring any unforeseen circumstances, the management believes that no reasonable change in
the above assumptions would cause the net carrying amount of goodwill to materially exceed its
recoverable amount.
ANNUAL REPORT 2015
89
Cont’d
17.
INVESTMENT IN SUBSIDIARIES
The Company
2015
2014
RM
RM
172,979,377
182,108,719
2,119,399
-
141,900
-
Unquoted shares at cost
Acquisition of subsidiary
Increase in investment in subsidiary
Incorporation of subsidiaries
Partial disposal of shares in subsidiaries
-
75
(5,007,991)
(9,129,417)
170,232,685
172,979,377
Non-controlling interests in subsidiaries
The Group’s subsidiaries that have material non-controlling interests (“NCI”) are as follows:
Daya CMT
Sdn. Bhd.
and its Daya Maxflo
subsidiaries
Sdn. Bhd.
Other
individually
immaterial
subsidiaries
Total
RM
RM
RM
RM
49%
49.3%(1)
32,140,551
4,310,906
(915,821)
35,535,636
Profit/(Loss) attributable to NCI
2,834,081
2,203,417
(726,915)
4,310,583
Total comprehensive income/(expense)
attributable to NCI
2,834,081
2,203,417
(726,915)
4,310,583
30%
59.4%(1)
Carrying amount of NCI
17,492,776
2,823,305
(65,435)
20,250,646
(Loss)/Profit attributable to NCI
(2,169,509)
1,435,786
113,695
(620,028)
Total comprehensive (expense)/income
attributable to NCI
(2,169,509)
1,435,786
113,695
(620,028)
2015
NCI percentage of ownership interest and voting
interest
Carrying amount of NCI
2014
NCI percentage of ownership interest and voting
interest
90
(1)
Certain non-controlling interests of the immediate holding company, Daya Petroleum Ventures Sdn. Bhd.
(“DPV”) by way of the Sales & Purchases Agreement dated 8 March 2013 has agreed to forgo their claim
on the assets and profits of DPV. Accordingly, the Group has not recognised any share of non-controlling
interests in the statements of profit or loss and other comprehensive income and statements of financial
position for DPV, its subsidiary and its joint venture company for the said non-controlling interests.
Cont’d
17. INVESTMENT IN SUBSIDIARIES cont’d The details of the subsidiaries are as follows:
Country of
Incorporation
Proportion of ownership
interest and voting power
held
2015
2014
%
%
Held by the Company
Daya Polymer Sdn. Bhd.
Malaysia
100
100
Manufacture of semi-conductor
and XLPE compounds for cables
and wire and trading of specialty
chemicals, related polymer
compounds and hardware
DMB Marketing & Trading
Sdn. Bhd.
Malaysia
100
100
General trading, marketing and
investment holding
Meridian Orbit Sdn. Bhd.
Malaysia
100
100
Investment holding
Daya Secadyme Sdn.
Bhd.(5)
Malaysia
55
67
Supplying industrial chemicals
and catalysts for the oil and
gas industry, blending, mixing
and supplying of oilfield
chemicals,environmental chemicals
and other related products for
the oil and gas industry and to
do all such acts, deeds or things
as would be required for effective
fulfilment of the said objective
Daya CMT Sdn. Bhd.
Malaysia
51
70
Providing industrial facilities
management including builder
works, facility operation and
maintenance services, upgrades,
retrofits, design and build plant
facilities
Daya Proffscorp Sdn.
Bhd.(3)
Malaysia
58.5
58.5
Engaged in hiring of lorries,
forklifts, cranes and heavy
machineries for loading and
unloading, tally services and
general trading
Hong Kong
100
100
Center of regional procurement
and trading as well as international
investments
Malaysia
100
100
Property investment holding
Daya Offshore
Construction Limited(2)
Daya Urusharta Sdn. Bhd.
ANNUAL REPORT 2015
91
Cont’d
17. INVESTMENT IN SUBSIDIARIES cont’d The details of the subsidiaries are as follows: cont’d
Country of
Incorporation
held
2015
2014
%
%
Held by the Company
92
Daya OCI Sdn. Bhd.
Malaysia
67
67
Supply agent of equipment and
specialty chemicals for oil and
gas process plants, a provider
of installation and maintenance
services for air-conditioning and
ventilation system, a provider for
automatic welding services for
offshore pipeline installation, a
provider for maintenance services
for both onshore plants and
offshore facilities and a provider
for warehousing and forwarding
agency
Daya Petroleum Ventures
Sdn. Bhd. (4)
Malaysia
51
51
Provision of drilling services,
geological, petroleum engineering,
subsea and deep-water support
services, and operations and
maintenance services
Daya Offshore
Construction Sdn. Bhd.
Malaysia
100
100
Dealing in project management,
installation and design engineering,
fabrication, procurement and
logistics, vessel operations, survey
and diving operations
Seca Chemicals and
Catalysts Sdn. Bhd.
Malaysia
100
100
Dealing in petroleum, oil and gas
products, and consulting services
Daya Maritime
Limited
Malaysia
100
100
Shipping leasing business and
other related services to the oil and
gas industry
Daya Global 1
Limited
Malaysia
100
100
gas industry
Daya Global 2
Limited
Malaysia
100
100
gas industry
Daya Global 1
Pte. Ltd. (1)
Singapore
100
100
Vessel ownership, shipping leasing
business and other related services
to the oil and gas industry
Cont’d
Country of
Incorporation
held
2015
2014
%
%
Held by the Company
Daya Global 2
Pte. Ltd. (1)
Singapore
100
100
Vessel ownership, shipping leasing
business and other related services
to the oil and gas industry
Daya Clarimax
Sdn. Bhd.
Malaysia
100
-
Recycling of waste solvent
and manufacturing high purity
electronics and technical solvent
Daya Hightech
Sdn. Bhd.
Malaysia
100
100
Manufacturing of polymer
compounds for cables and wires
Seca Engineering
and Manpower Services
Sdn. Bhd. Malaysia
55
67
Providing engineering and
manpower services
Daya FMM
Sdn. Bhd.
Malaysia
51
70
General contractors and related
services
PT Daya Secadyme
Indonesia(2)
Indonesia
55
67
Trading in petrochemicals products
Daya Proffscorp (Sabah)
Sdn. Bhd.(3)
Malaysia
58.5
58.5
Daya Land &
Development Sdn. Bhd.
Malaysia
51
70
Property development and project
management agent
Ultrafest Sdn. Bhd.
Malaysia
51
70
Zen Projects Sdn. Bhd.
Malaysia
51
70
Investment holding
Terra Hill
Development Sdn. Bhd.
Malaysia
51
70
Daya SMG
Engineering Sdn. Bhd.
Malaysia
51
70
To provide project engineering
services to the oil and gas industry
in particular and other industries in
general Daya Vessels
Limited
Malaysia
67
67
gas industry
Hiring of lorries, trucks, forklifts,
cranes and heavy machines
for loading and unloading, tally
services and general trading
ANNUAL REPORT 2015
93
Cont’d
Country of
Incorporation
held
2015
2014
%
%
Daya Maxflo
Sdn. Bhd.(4)
Malaysia
31.6
25.9
Providing products and services
for exploration, drilling and
well intervention, EOR/IOR and
production technologies specifically
for offshore and onshore oil and
gas, refining, chemical and petrochemical
P.T. Daya
Maxflo(2)(4)
Indonesia
25.28
20.7
Provision, trade, import and
distribute oil and gas products and
services to the oil and gas industry
Norway
100
100
Onshore and offshore operations
including contracting, purchasing
possession and activities
associated
Daya Offshore
Construction
AS(2)
(1)
The financial statements of these subsidiaries are audited by member firm of Deloitte
(2)
The financial statements of these subsidiaries are audited by auditors other than the auditors of the
Company
(3)
The non-controlling interests in Daya Proffscorp Sdn. Bhd. (“DPRO”) by way of the Share Sale Agreement
(“SSA”) dated 16 June 2014 have agreed to forgo their claim on the assets and profits of DPRO.
Accordingly, the Group has not recognised any share of non-controlling interests in the statements of profit
or loss and other comprehensive income and statements of financial position for DPRO and its subsidiaries
(4)
Certain non-controlling interests in Daya Petroleum Ventures Sdn. Bhd. (“DPV”) by way of the Sales &
Purchases Agreement dated 8 March 2013 has agreed to forgo their claim on the assets and profits of DPV.
or loss and other comprehensive income and statements of financial position for DPV, its subsidiary and its
joint venture company for the said non-controlling interests
(5)
Certain non-controlling interests in Daya Secadyme Sdn. Bhd. (“DSSB”) by way of the Shares Sale
Agreement (“SSA”) dated 21 May 2015 has agreed to forgo their claim on the assets and profits of DSSB.
or loss and other comprehensive income and statements of financial position for DSSB, its subsidiary and
its joint venture company for the said non-controlling interests
94
Cont’d
17. INVESTMENT IN SUBSIDIARIES cont’d (a)
Acquisition of subsidiaries
(i) On 30 March 2015, through the Internal Group Re-organisation Plan, the Company acquired
2,000,000 ordinary shares of RM1.00 each in Daya Clarimax Sdn. Bhd. (“DCLX”), a then subsidiary of
Meridian Orbit Sdn. Bhd. (“MOSB”) which is a wholly-owned subsidiary of the Company, representing
100% of the issued and paid-up share capital of DCLX for a cash consideration of RM2,119,399 from
MOSB. The acquisition was completed on 29 June 2015. The Company’s ultimate equity ownership in
DCLX remain unchanged but DCLX became a direct subsidiary of the Company.
(ii)
On 18 March 2013, the Group, via its subsidiary, Daya Petroleum Ventures Sdn. Bhd. (“DPV”)
entered into a Subscription Agreement with Daya Maxflo Sdn. Bhd. (“DMSB”), a Sale and Purchase
Agreement with Jay Dorfman, and a Shareholders Agreement and Call and Put Option Agreement
with Jay Dorfman and Visual Well Solutions Sdn. Bhd. for the proposed acquisition of 50.70% of the
issued and paid-up share capital of DMSB for a cash consideration of RM1,900,000. The acquisition
was completed on 5 April 2013.
Pursuant to the Call and Put Option Agreement, Jay Dorfman and Visual Well Solutions Sdn. Bhd.
(collectively known as “the Grantors”) irrevocably grant to DPV, and DPV agrees to pay to the
Grantors (the receipt whereof the Grantors acknowledge), an option to require the Grantors to sell
all of the aggregate of up to 280,000 ordinary shares of RM1.00 each in the share capital of DMSB
(“Option Shares”) held by the Grantors representing approximately 19.70% of the share capital of
DMSB to DPV or its nominee(s), in the following three (3) tranches in consideration of the below
stipulated sums. At the same time, DPV also irrevocably grants to the Grantors the option to require
DPV to buy the Option Shares from the Grantors and/or its nominee(s) in the same stipulated sums.
-
Year 1 (Financial Year Ended 31 Dec 2013) - 70,000 shares at RM15.00 each for a total cash
consideration of RM1,050,000;
-
consideration of RM1,800,000; and
-
consideration of RM3,000,000.
The put option is fully exercisable by the Grantors only upon DMSB achieving the following net profit
after tax (“Profit Guarantee”) in each respective year:
-
Year 1 (Financial Year Ending 31 Dec 2013) - RM1,750,000 profit guarantee;
-
Year 2 (Financial Year Ending 31 Dec 2014) - RM2,500,000 profit guarantee; and
-
Year 3 (Financial Year Ending 31 Dec 2015) - RM3,250,000 profit guarantee.
DMSB had not achieved the Profit Guarantee for the year ended 31 December 2014 and as such no
call or put option had been exercised pursuant to the Call and Put Option Agreement for the first year.
On 16 November 2015, DPV received a letter from Visual Well Solutions Sdn. Bhd. (“Put Option
Notice”), which states, amongst others, to dispose of 160,000 ordinary shares of RM1.00 each in
DMSB (“the Sale Shares”) representing 11.27% of the issued and paid-up share capital of DMSB for
a total cash consideration of RM2,964,000, inclusive of 6 months interest of RM114,000 calculated at
8% per annum.
On the same date, DPV and Visual Well Solutions Sdn. Bhd. (“the Vendor”) had entered into a Sale
and Purchase Agreement, to acquire the Sale Shares from the Vendor. The acquisition was completed
on 30 November 2015 and DMSB became a 61.97% owned subsidiary of DPV.
ANNUAL REPORT 2015
95
Cont’d
17. INVESTMENT IN SUBSIDIARIES cont’d (b)
Partial disposal of shares in subsidiaries
(i) On 28 April 2014, the Company entered into a Share Sale Agreement (“SSA”) with Perfect Propel
Sdn. Bhd. to dispose 2,400,000 ordinary shares of RM1.00 each in Daya CMT Sdn. Bhd. (“DCMT”)
representing 30% of the issued and paid-up share capital of DCMT at a total cash consideration
of RM18,000,000.00 (“Disposal”). In the SSA, DCMT includes DCMT and its existing subsidiaries,
together with Daya Land & Development Sdn. Bhd. (“DLD”) and its subsidiaries and joint venture
company.
96
In consideration of the Purchaser agreeing to purchase the Sale Shares, the Company agreed to grant
the put option to the Purchaser in respect of all the ordinary shares in DCMT and not just part thereof
then held by Purchaser upon the occurrence of several conditions.
In addition and in consideration of the Purchaser agreeing to purchase the Sale Shares, the Company
also agreed to grant the call option (“Call Option”) to the Purchaser subject to the Company’s
shareholders’ approval in a general meeting to be convened, if required by law. The Purchaser is
entitled to exercise the Call Option in respect of up to 45% of the issued and paid up share capital of
DCMT held by the Company other than the Sale Shares at any time and from time to time within 24
months from the completion date.
The Purchaser, Perfect Propel Sdn. Bhd. was incorporated on 7 April 2014 under the Companies
Act, 1965 as a private limited company with an authorised share capital of RM400,000 divided into
400,000 ordinary shares of RM1.00 each, of which 2 ordinary shares of RM1.00 each have been
issued and fully paid-up. The Purchaser is principally engaged in the general trading, investment
holding and property development. The shareholders of the Purchaser has substantial experience
in corporate matters and property sector. The participation of the Purchaser in DCMT will enable
the Company to benefit directly from the existing business ventures of the Purchaser. Moreover, the
Disposal is in line with the Group’s overall objective of focusing its resources in its core Oil & Gas
business.
The Disposal was completed on 17 July 2014, and DCMT became a 70% owned subsidiary of the
Company.
The Company had on 31 December 2014 received a letter from PPSB requesting the Company to
agree and accept, amongst others, for a reduction in the Call Option price from RM8.80 per DCMT
Share to RM7.50 per DCMT Share (“Revised Call Option Price”).
On 28 April 2015, the Company has agreed and accepted, a letter from PPSB, amongst others, to
increase the Call Option for up to 4,000,000 ordinary shares of RM1.00 each in DCMT (“Revised Call
Option Shares”), representing 50.0% of the issued and paid-up share capital of DCMT at the Revised
Call Option Price (“Revised Call Option”).
On the same day, the Company also received a call option notice in relation to the disposal of
Revised Call Option Shares.
On 13 May 2015, the Company received a supplemental letter from PPSB stating amongst others,
that the call option notice dated 28 April 2015 (“Old Call Option Notice”), is with immediate effect
cancelled, nullified and voided and is deemed not having been served (“Revised Letter from PPSB”).
On the same day, the Company agreed and accepted the Revised Letter from PPSB. Pursuant to
the Revised Letter from PPSB, the Company also received a call option notice from PPSB stating its
intention to exercise the Revised Call Option requiring the Company to sell and transfer 1,520,000
ordinary shares of RM1.00 each in DCMT, representing 19% of the issued and paid-up share capital
of DCMT, to PPSB for a disposal consideration of RM11,400,000 based on the Revised Call Option
Price (“Proposed Initial Disposal”). The Proposed Initial Disposal was completed on 6 August 2015,
and DCMT became a 51% owned subsidiary of the Company.
Cont’d
17. INVESTMENT IN SUBSIDIARIES cont’d (b)
Partial disposal of shares in subsidiaries cont’d
Subsequent to the completion of the Proposed Initial Disposal, PPSB is still entitled to require the
Company to sell and transfer the remaining Revised Call Option Shares of 2,480,000 ordinary shares
of RM1.00 each in DCMT, representing 31% of the issued and paid-up share capital of DCMT, to
PPSB at the Revised Call Option Price (“Proposed Further Disposal”).
(ii)
On 21 May 2015, the Company entered into a Share Sale Agreement (“SSA”) with Rancak Nikmat
Sdn. Bhd. to dispose 120,960 ordinary shares of RM1.00 each in Daya Secadyme Sdn. Bhd.
(“DSSB”) representing 12% of the issued and paid-up share capital of DSSB for a total cash disposal
consideration of RM10,800,000. The disposal was completed on 23 October 2015, and DSSB
became a 55% owned subsidiary of the Company.
(iii) The Company on 15 May 2014 through its Internal Group Re-Organisation, disposed of 500,000
ordinary shares of RM1.00 each in DLD representing 100% of the issued and paid-up share capital
of DLD for a cash consideration of RM260,054 to Daya CMT Sdn. Bhd. (“DCMT”). The Internal Group
Re-organisation is to fulfil the condition precedent set in the Share Sale Agreement (“SSA”) with
Perfect Propel Sdn. Bhd. (“Perfect Propel’) between the Company and Perfect Propel pursuant to the
disposal of 30% of the entire issued and paid up share capital of DCMT, as set out in (i) above.
(iv) On 16 June 2014, the Company entered into a Share Sale Agreement (“SSA”) with Wiramas Baiduri
Sdn. Bhd. to dispose 140,250 ordinary shares of RM1.00 each in Daya Proffscorp Sdn. Bhd. (“DPRO”)
representing 8.5% of the issued and paid-up share capital of DPRO for a total cash disposal
consideration of RM2,000,000. The disposal was completed on 1 October 2014.
(c)
Incorporation of subsidiaries in 2014
(i) On 15 October 2014, the Company incorporated two limited liability companies known as Daya
Global 1 Pte. Ltd. (“DG1PL”) and Daya Global 2 Pte. Ltd. (“DG2PL”) with paid-up share capital of
SGD2.00 divided by 2 ordinary shares of SGD1.00 each. The incorporation of DG1PL and DG2PL is
to enable the Group to take advantage of the Maritime Sector Incentive in Singapore for its Oil & Gas
segment business. The incorporation of DG1PL and DG2PL is also in line with the Group’s policy for
major assets, in this case, vessels, to be held by a separate legal entity for the purposes of clarity on
the structure, financing and potential future sale.
(ii)
Issued and paid-up capital pledged as security
(d)
On 3 October 2014, the Company incorporated two limited liability companies known as Daya Global
1 Limited (“DG1L”) and Daya Global 2 Limited (“DG2L”) with paid-up share capital of USD10.00
divided by 10 ordinary shares of USD1.00 each. The incorporation of DG1L and DG2L is to enable
the Group to take advantage of the current favorable tax regime in Labuan for its Oil & Gas segment
business. The incorporation of DG1L and DG2L is also in line with the Group’s policy for major
contracts in relation to the vessel leased to be housed under a separate legal entity for the purposes
of clarity on the structure, financing and potential future sale.
The entire issued and paid-up capital of Daya Secadyme Sdn. Bhd., Daya OCI Sdn. Bhd. and Daya CMT
Sdn. Bhd. is pledged to financial institutions as security as disclosed in Note 31.
ANNUAL REPORT 2015
97
Cont’d
18. INVESTMENT IN JOINT VENTURES
Unquoted shares, at cost
At beginning of year
Disposal of investment in a joint venture company
Strike off of a joint venture company
Incorporation of a joint venture company
At end of year
The Group
2015
2014
RM
RM
952,509
(175,000)
(22,899)
4,390
834,485
125,000
2
2
(6,978)
759,000
952,509
The Group
2015
2014
RM
RM
Shares of post acquisition reserve
Disposal of investment in a joint venture company
1,587,929
1,700,778
167,652
19,167
954,990
632,939
-
At end of year
3,475,526
1,587,929
Share of net assets
4,234,526
2,540,438
Details of the joint ventures are as follows:
Country of
Incorporation
held
2015
2014
%
%
Held through Subsidiaries
Daya Sheffield
Sdn. Bhd.
Malaysia
34.2
34.2
Hong Kong
-
60
Provision of management services
in tanks and investment holding
Daya NCHO
Sdn. Bhd. (1)
Malaysia
60
60
Provision of ISO tank cleaning,
repair and maintenance services
Daya Campo
(Sabah) Sdn. Bhd.
Malaysia
40.2
40.2
Investment holding
Semangat Global
Sdn. Bhd.
Malaysia
35.7
35.7
Construction and development of
industrial, commercial and housing
project and other related industry
Daya NCHO
International Limited
98
(1)
Recruiting and providing
specialised, qualified and
professional personnel for the
onshore and offshore oil and gas
industries
Cont’d
18. INVESTMENT IN JOINT VENTURES cont’d
Details of the joint ventures are as follows: cont’d
Country of
Incorporation
held
2015
2014
%
%
Malaysia
-
25.5
Provision of inspection services,
non-destructive testing (“NDT”)
and advanced NDT services,
cathodic protection, piping and
fabrication projects, underwater
and subsea services, technical
training and certification services,
technical manpower outsourcing,
engineering, procurement and
construction, electrical and
mechanical projects in Malaysia
Singapore
34.2
34.2
Provision for technical and
engineering services in global
oil and gas industries as well as
overseas consultancy services to
oil and gas or any other industries
Held through Subsidiaries
Daya Cutech
Inspection
Services Sdn. Bhd.
Daya Sheffield
Pte. Ltd. (1)
(1)
The financial statements of these subsidiaries are audited by auditors other than the auditors of the
Company
(1)
ANNUAL REPORT 2015
99
Cont’d
Summarised financial information of material joint venture is set out below. The summarised financial information
represents the amounts in the financial statements of joint ventures and not the Group’s share of those amounts.
Daya NCHO
Sdn. Bhd.
Daya Sheffield
Sdn. Bhd.
2015
2014
2015
2014
RM
RM
RM
RM
Summarised statements of financial position
Non-current assets
2,875,255
3,086,346
7,938
9,042
Current assets
1,761,772
810,214
4,706,551
3,810,774
Total assets
4,637,027
3,896,560
4,714,489
3,819,816
479,308
819,668
-
30,552
Current liabilities
Non-current liabilities
1,326,059
831,768
552,966
1,734,023
Total liabilities
1,805,367
1,651,436
552,966
1,764,575
Net assets
2,831,660
2,245,124
4,161,523
2,055,241
3,527,279
2,700,409
20,299,331
5,216,394
586,536
630,491
1,949,295
805,741
1,698,996
1,347,074
1,423,241
702,892
351,922
378,295
666,658
275,563
2015
2014
RM
RM
Group’s share of profit/(loss) after tax from continuing operations
682,198
(20,919)
Group’s share of other comprehensive income/(expense)
682,198
(20,919)
Group’s share of total comprehensive income/(expense)
682,198
(20,919)
1,112,289
490,472
Summarised statements of comprehensive
income
Revenue
Profit for the year
Group’s share of net assets, representing
carrying amount of the Group’s interest in joint
venture
Group’s share of results of joint venture
Aggregate information of joint ventures that is not material:
Group’s share of net assets, representing carrying amount of the Group’s
interest in joint venture
100
Cont’d
(a) Disposal of joint venture companies
(i)
On 22 April 2015, the Group, via its subsidiary, Daya Petroleum Ventures Sdn. Bhd. (“DPV”) entered
into a Sale and Purchase Agreement (“SPA”) with Encik Abu Bakar Bin Hussein (“the Purchaser”)
to dispose 175,000 ordinary shares of RM1.00 each in Daya Cutech Inspection Services Sdn.
Bhd. (“DCIS”) representing 50% of the issued and paid-up share capital of DCIS for a total sale
consideration of RM83,711. Upon the completion of disposal, DCIS will cease to be a joint venture
company of DPV. The disposal was completed on 26 May 2015.
(ii)
On 6 July 2015, the Group, via its subsidiary, Daya Land & Development Sdn. Bhd. (“DLD”), had
received an Offer Letter (“Offer Letter”) from Highstar Realty Sdn. Bhd. (“Highstar”), to purchase
102,000 ordinary shares of RM1.00 each in Semangat Global Sdn. Bhd. (“SGSB”) representing 100%
of the issued and paid-up share capital of SGSB for a total sale consideration of RM3,835,000. Upon
the completion of this proposed disposal, SGSB will cease to be a joint venture company of DLD.
On 21 July 2015, the Board further announced that DLD and Highstar had entered into a Sale and
Purchase Agreement (“SPA”) in respect of the proposed disposal.
The disposal was completed subsequent to the end of the financial year as disclosed in Note 40(b).
(b)
On 18 December 2015, Daya NCHO International Limited (“DNIL”) has been struck off.
(c)
On 28 February 2014, the Group, via its 51% owned subsidiary, Daya Petroleum Ventures Sdn. Bhd.
(“DPV”) increased its investment in its joint venture company, Daya Cutech Inspection Services Sdn. Bhd.
(“DCIS”) via the subscription of an additional 125,000 ordinary shares of RM1.00 each at par for working
capital purposes. The new ordinary shares subscribed in DCIS ranked pari passu in all respects with the
existing ordinary shares of DCIS.
Incorporation of a joint venture company
(d)
On 29 May 2014, Daya Sheffield Sdn. Bhd., a joint venture company of Daya OCI Sdn. Bhd., which is
a subsidiary of the Company had incorporated a wholly-owned limited liability company known as Daya
Sheffield Pte. Ltd. (“DSPL”) with an authorised and fully paid-up share capital of SGD1.00 divided into 1
ordinary share of SGD1.00 each. The principal activities of DSPL are provision for technical & engineering
services in global oil & gas industries as well as overseas consultancy services to oil & gas or any other
industries.
19. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Group and Company
Available-for-sale financial assets (AFS)
2015
2014
RM
RM
15,333,335
15,333,335
The AFS represents redeemable convertible secured bonds (“RCSB”) subscribed which will be convertible into
10 Shares together with 10 free detachable warrants of Reach Energy Berhad upon receipt of approval from
the Securities Commission for the Proposed IPO (as defined below). The Company has fully paid for the RCPS
Subscription on the even date.
Reach Energy proposes to undertake an initial public offering and listing on the Main Market of Bursa Malaysia
Securities Berhad as a Special Purpose Acquisition Company (“SPAC”) (“Proposed IPO”) focused on the oil and
gas industry.
ANNUAL REPORT 2015
101
Cont’d
19. AVAILABLE-FOR-SALE FINANCIAL ASSETS cont’d
The Subscription will enable the Company to invest in Reach Energy, a company which will be an oil and gas
exploration and production company, once it completes its qualifying acquisition.
On 29 July 2013, pursuant to the Subscription Agreement, the Company had subscribed for 533,334 RCPS at an
issue price of RM4.50 each in Reach Energy for a consideration of RM2,400,003.
Subsequently on 2 July 2014, the Company had entered into the following:
(a)
(b) Novation Agreement between Reach Energy, the Vendor and the Company for the Vendor to novate its
rights, title, interests, duties and obligations under the Subscription Agreement dated 26 July 2013 entered
into between Reach Energy and the Vendor (“Vendor Subscription Agreement”) for the subscription of (a)
the Sale RCPS and (b) 3,111,111 Reach Energy Shares together with 3,111,111 free detachable Warrants
at an issue price of RM0.45 per Reach Energy Share for a consideration of RM1,400,000 (“Reach Energy
Share Subscription”) (“Novation Agreement”);
(c)
(d) Supplemental Agreement (to the Subscription Agreement dated 26 July 2013 between Reach Energy
and the Company) between Reach Energy and the Company (“Supplemental Agreement to the Company
Subscription Agreement”).
The Acquisition of RCPS and the Reach Energy Share Subscription will enable the Company to increase its
equity holdings in Reach Energy. The Company will hold 1.74% in Reach Energy upon the IPO of Reach Energy.
The Supplemental Agreement to the Vendor Subscription Agreement and the Supplemental Agreement to the
Company Subscription Agreement are to reflect the changes in the terms of all the Warrants of Reach Energy to
be issued to the Company in conjunction with the IPO of Reach Energy. The IPO of Reach Energy was approved
by the SC on 20 June 2014.
Pursuant to the Subscription Agreement, SPA and Novation Agreement, the Company had completed the
subscription in Reach Energy for a total consideration of RM10,000,001 on 2 July 2014.
The Reach Energy shares were listed on Bursa Malaysia on 15 August 2014.
Sale and Purchase Agreement between Midvest Asia Sdn. Bhd. (“Vendor”) and the Company for the
acquisition of 133,333 RCPS (“Sale RCPS”) by the Company from the Vendor for a consideration of
RM599,998.50 (“Acquisition of RCSB”) (“SPA”);
Supplemental Agreement (to the Vendor Subscription Agreement) between Reach Energy and the Company
(“Supplemental Agreement to the Vendor Subscription Agreement”); and
20. DEFERRED TAX ASSETS/(LIABILITIES)
The Group
102
2015
2014
RM’000
RM’000
Deferred tax assets
16,867,774
32,873,443
(9,484,664)
(18,470,074)
At end of year
7,383,110
14,403,369
Cont’d
20. DEFERRED TAX ASSETS/(LIABILITIES) cont’d
The Company
Deferred tax assets
2015
2014
RM’000
RM’000
35,137
91,575
(4,477,932)
(56,438)
At end of year
(4,442,795)
35,137
2015
2014
RM’000
RM’000
14,403,369
2,800,267
15,510,194
(16,951,551)
Unabsorbed capital allowances
3,808,200
1,962,741
The movements during the financial year relating to deferred tax are as follows:
The Group
Transfer to/(from) income statement (Note 10):
Receivables
(4,263,147)
-
Payables
12,108,623
612,000
(1,333,334)
-
Conversion rights on RCSB
Unabsorbed tax losses
Others
At end of year
The Company
(1,881,801)
-
(29,351,759)
25,764,100
(1,617,235)
215,812
(7,020,259)
11,603,102
7,383,110
14,403,369
2015
2014
RM’000
RM’000
35,137
26,736
Payables
(1,607,568)
-
Receivables
(1,401,946)
-
(1,333,334)
-
(175,075)
-
39,991
8,401
(4,477,932)
8,401
(4,442,795)
35,137
(Charge)/Credit to profit or loss (Note 10):
At end of year
ANNUAL REPORT 2015
103
Cont’d
The deferred tax in the financial statements are in respect of the tax effects on the following:
The Group
2015
2014
RM’000
RM’000
6,171,360
2,363,160
13,054,063
945,440
Unabsorbed tax losses
-
29,351,759
Others
-
214,549
19,225,423
32,874,908
(11,842,313)
(18,471,539)
7,383,110
14,403,369
(1,333,334)
-
Conversion rights on RCSB
(1,881,801)
-
Deferred tax assets (before offsetting):
Temporary differences arising from:
Unabsorbed capital allowance
Payables
Offsetting
Deferred tax assets (after offsetting)
Deferred tax liabilities (before offsetting):
(2,961,345)
(18,471,539)
Receivables
(4,263,147)
-
Others
(1,402,686)
-
11,842,313
(18,471,539)
( 11,842,313)
18,471,539
-
-
Offsetting
Deferred tax liabilities (after offsetting)
The Company
2015
2014
RM’000
RM’000
-
91,575
Deferred tax assets (before offsetting):
104
-
91,575
Offsetting
-
(56,438)
Deferred tax assets (after offsetting)
-
35,137
Cont’d
The deferred tax in the financial statements are in respect of the tax effects on the following: cont’d
The Company
2015
2014
RM’000
RM’000
(1,333,334)
-
(16,447)
(56,438)
Receivables
(1,401,946)
-
Payables
(1,607,568)
-
(83,500)
-
(4,442,795)
(56,438)
-
56,438
(4,442,795)
-
Deferred tax liabilities (before offsetting):
Offsetting
Deferred tax liabilities (after offsetting)
21. LONG-TERM RECEIVABLE
The Group
2015
2014
RM
RM
28,000,000
-
Long-term receivable represents amount receivable from a sub-contractor from its share of losses arising from
a property construction project, jointly undertaken by a Group’s subsidiary and the sub-contractor. The said
amount bears interest at 7.50% per annum and is repayable as follows:
The Group
2015
2014
RM
RM
More than 1 year and less than 2 years
16,000,000
-
More than 2 years and less than 5 years
12,000,000
-
28,000,000
-
ANNUAL REPORT 2015
105
Cont’d
22. TRADE RECEIVABLES
The Group
2015
2014
RM
RM
Trade receivables
193,608,742
148,846,264
Less: Allowance for doubtful debts
(21,477,826)
(21,336,233)
Trade
172,130,916 127,510,031
Trade receivables are non-interest bearing and are generally on 30 to 90 days (2014: 30 to 90 days) terms. They
are recognised at their original invoice amounts which represent their fair values on initial recognition. At the reporting date, 61% (2014: 70%) of the Group’s trade receivables were due from five debtors. This has
exposed the Group to significant concentration of credit risk.
Ageing analysis of trade receivables
The ageing analysis of the Group’s trade receivables are as follows:
The Group
2015
2014
RM
RM
96,714,125
88,344,364
1 - 30 days
63,338,177
22,371,972
31 - 60 days
2,648,571
7,607,820
61 - 90 days
5,453,715
4,138,874
91 to 120 days
1,496,509
1,317,385
More than 121 days
2,479,819
3,729,616
75,416,791
39,165,667
21,477,826
21,336,233
193,608,742
148,846,264
Neither past due nor impaired
Past due nor impaired:
Impaired
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.
None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the
financial year.
Receivables that are past due but not impaired
106
The Group has trade receivables amounting to RM75,416,791 (2014: RM39,165,667) respectively that are past
due at the reporting date but not impaired. No allowance for impairment is made as in the opinion of the management, significant portions of the
outstanding debts is in line with the norm in the construction industry and would be collected in full within the
next twelve months.
Cont’d
22. TRADE RECEIVABLES cont’d
Movement in allowance accounts:
Allowance for impairment loss
At end of year
2015
2014
RM
RM
21,336,233
5,307,417
147,585
16,808,198
-
(201,500)
(5,992)
(577,882)
21,477,826
21,336,233
There is no allowance for impairment made for the Company during the year and prior year.
Trade receivables that are impaired relate to individually determined debtors that are in significant financial
difficulties and have defaulted on payment. These receivables are not secured by any collateral or credit
enhancements.
Included in trade receivables are the following trade receivables amounts denominated in a currency other than
the functional currency of the entity to which they relate:
The Group
2015
2014
RM
RM
Hong Kong Dollars
2,007,466
-
Indonesian Rupiah
-
1,052,678
European Dollars
-
120,885
38,358,736
20,288,007
-
3,131
40,366,202
Retentions are unsecured, interest-free and are expected to be collected as follows:
21,464,701
United States Dollars
Singapore Dollars
The Group
The Group
2015
2014
RM
RM
Within 1 year
4,790,425
10,618,569
1 – 2 years
7,964,463
5,195,627
2 – 3 years
-
189,750
3 – 4 years
6,759,438
5,195,627
4 – 5 years
6,074,130
11,961,916
25,588,456
33,161,489
ANNUAL REPORT 2015
107
Cont’d
23. OTHER RECEIVABLES, DEPOSITS AND PREPAID EXPENSES
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
2,369,687
8,728,371
69,570
698,608
Other receivables
51,059,202
24,615,387
750,165
436,475
Prepaid expenses
6,720,552
6,091,564
70,158
1,191,254
60,149,441
39,435,322
889,893
2,326,337
(1,920,253)
(1,920,253)
-
-
58,229,188
37,515,069
889,893
2,326,337
Deposits
Less: Allowance for doubtful debt
Movement in allowance accounts:
Allowance for impairment loss
At end of year
The Group
2015
2014
RM
RM
1,920,253
358,003
-
1,562,250
1,920,253
1,920,253
24. RELATED PARTY TRANSACTIONS
The amount due to subsidiaries are non-trade in nature, unsecured, non-interest bearing and is repayable on
demand. Advances from subsidiaries amounting to RM10,648,805 (2014: RM13,766,803) are unsecured, bear
interest at 5% to 10% (2014: 5.00% to 10.10%) per annum and are repayable on demand.
108
The amount due from subsidiaries are non-trade in nature, unsecured, non-interest bearing and is repayable
on demand except for advances to subsidiaries amounting to RM411,097,197 (2014: RM134,021,626) are
unsecured, bear interest equal at 8% to 15% (2014: 15.00%) per annum and are repayable on demand.
Cont’d
24. RELATED PARTY TRANSACTIONS cont’d
In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company have
the following transactions with related parties during the financial year:
2015
2014
RM
RM
The Group
Joint venture companies
Interest paid
-
4,190
(2,427)
-
(261,336)
(252,003)
-
2,150,000
Management fees received/receivable
6,284,977
8,614,015
Interest received/receivable
Interest income
Rental income
The Company
Subsidiaries
Dividend received
4,416,639
2,776,162
Interest paid/payable
888,102
1,115,283
Rental paid/payable
490,123
482,262
Related party transactions described above were carried out based on negotiated terms and conditions and
mutually agreed with the respective related parties.
Compensation of key management personnel
The remuneration of directors and other members of key management personnel during the year is as follow:
Short-term employee benefits
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
30,935,709
9,010,277
3,374,047
1,688,624
3,001,474
1,004,316
363,400
164,964
33,937,183
10,014,593
3,737,447
1,853,588
Pension costs
- Defined contribution plan
ANNUAL REPORT 2015
109
Cont’d
24. RELATED PARTY TRANSACTIONS cont’d
Compensation of key management personnel cont’d
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
1,008,346
1,169,347
1,008,346
826,532
88,000
60,500
88,000
60,500
- Remuneration for the subsidiaries’directors
869,702
3,543,869
-
3,500
- Directors’ fees for the Company’s executive
directors
42,000
172,000
42,000
156,000
156,000
116,000
156,000
116,000
Included in the total compensation of key
management personnel are:
- Remuneration for the Company’s executive
Directors
- Remuneration for the Company’s nonexecutive directors
- Directors’ fees for the Company’s nonexecutive directors
-Directors’ fees for the subsidiaries’ directors
151,000
70,129
The number of directors of the Company whose total remuneration during the year fell within the following bands
is analysed below:
Number of directors
2015
2014
RM600,001-RM650,000
-
1
RM700,001-RM750,000
-
1
RM850,001-RM900,000
1
-
RM1,150,001-RM1,200,000
1
-
3
4
Executive directors
Non-executive directors
Below RM50,000
110
RM50,001-RM100,000
2
1
Key management personnel are defined as persons having authority and responsibility for planning, directing and
controlling the activities of the Group and of the Company, either directly or indirectly, including any director of
the Group and of the Company.
Cont’d
25.
AMOUNT DUE (TO)/FROM CONTRACT CUSTOMERS
Amount due (to)/from customer on contracts
(a)
2014
RM
RM
(26,255,764)
28,291,883
Contract customers
Aggregate costs incurred to date
The Group
2015
2014
RM
RM
701,507,342
775,131,818
85,358,793
97,007,593
786,866,135
872,139,411
-
(17,742,663)
786,866,135
854,396,748
(813,121,899)
(839,454,192)
(26,255,764)
14,942,556
-
13,349,327
(26,255,764)
28,291,883
Add: Attributable profits
Less: Loss from a project
Less: Progress billings
Customer advances for construction work in progress
The Group
2015
Included in the construction contract costs during the year is the hire of plant and machinery amounting to
RM6,120,180 (2014: RM6,777,344).
26. NON-CURRENT ASSETS HELD FOR SALE
2015
2014
RM
RM
As of 1 January 2015
8,632,382
-
Reclassification (to)/from investment properties
(4,938,698)
8,632,382
Disposal
(3,693,684)
-
-
8,632,382
The Group
Properties amounting to RMNil (2014: RM8,632,382) were pledged to financial institutions to secure credit
facilities granted to the Group as disclosed in Note 32.
ANNUAL REPORT 2015
111
Cont’d
27. MARKETABLE SECURITIES
The Group
2015
2014
RM
RM
98,090
129,825
2,885
(31,735)
100,975
98,090
Financial assets at fair value through profit or loss
Quoted shares in Malaysia
At beginning of the year
Fair value gain/(loss) during the year
At end of the year
28. CASH AND BANK BALANCES
Short-term investments
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
20,721
11,952,996
20,721
11,952,996
Fixed deposits with licensed financial institutions
51,580,803
32,516,984
3,495,531
3,384,731
92,056,896
31,500,586
21,646,344
5,171,131
143,658,420
75,970,566
25,162,596
20,508,858
For the purposes of the statements of cash flows, cash and cash equivalents comprise the following as at the
reporting date:
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
Cash and cash equivalents
143,658,420
75,970,566
25,162,596
20,508,858
Less: Pledged deposits with licensed financial
institutions
(42,465,818)
(16,132,354)
(3,495,531)
(3,384,731)
(4,226,775)
(2,245,595)
-
-
(25,750,666)
(14,840,533)
(5,210,836)
(4,948,087)
71,215,161
42,752,084
16,456,229
12,176,040
Fixed deposits with maturity more than 3 months
Bank overdrafts
(a)
The information on financial risks of short-term investments are disclosed in Note 33.
Fixed deposits with licensed financial institutions
The Group’s and the Company’s fixed deposits amounting to RM48,260,986 (2014: RM18,257,708) and
RM3,495,531 (2014: RM3,384,731) respectively have been pledged to licensed banks for banking facilities
granted to the Company and its subsidiaries.
(b)
112
Cont’d
28. CASH AND BANK BALANCES cont’d
(b)
Fixed deposits with licensed financial institutions cont’d
The maturities of fixed deposits for the Group and the Company were as follow:
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
Less than three months
25,788,532
14,312,826
-
-
More than three months
25,792,271
18,204,158
3,495,531
3,384,731
51,580,803
32,516,984
3,495,531
3,384,731
Fixed deposits with licensed financial
institutions
(c)
The interest rates of the fixed deposits are fixed rates ranging 1.2% to 3.1% (2014: 1.2% to 3.3%) per
annum and the maturities of deposits as at the end of the financial year range from 30 to 365 days (2014:
30 to 365 days).
Cash and cash equivalents denominated in foreign currencies
Included in cash and cash equivalents are the following cash and cash equivalents amounts denominated
in a currency other than the functional currency of the entity to which they relate:
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
Hong Kong Dollars
216,116
39,597
-
-
Indonesian Rupiah
28,040
42,597
-
-
-
45,219
-
-
13,526,521
3,841,728
-
5,178
13,770,677
3,969,141
-
5,178
European Dollars
ANNUAL REPORT 2015
113
Cont’d
29. SHARE CAPITAL
The Group and The Company
Number of
ordinary shares
2015
2014
Amount
2015
2014
RM
RM
Authorised:
10,000,000,000
2,000,000,000
1,000,000,000
200,000,000
Created during the year
-
8,000,000,000
-
800,000,000
10,000,000,000 10,000,000,000
1,000,000,000
1,000,000,000
At the end of the year
Issued and fully paid:
1,651,818,754
1,263,037,750
165,181,875
126,303,775
84,204,100
388,781,004
8,420,410
38,878,100
1,736,022,854
1,651,818,754
173,602,285
165,181,875
The holder of ordinary shares is entitled to receive dividends as declared from time to time and is entitled to
one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s
residual assets.
In 2014, the Company increased its authorised share capital from RM200,000,000 to RM1,000,000,000 through
the creation of 8,000,000,000 new ordinary shares of RM0.10.
Also in 2014, on 3 January 2014, the Company issued 125,781,000 new ordinary shares of RM0.10 each
in the Company through a private placement at an issue price of RM0.345 for a total cash consideration of
RM43,394,445. Subsequently, on 19 December 2014 and 31 December 2014, the Company further issued
233,000,000 and 30,000,000 new ordinary shares of RM0.10 each in the Company through private placements at
an issue price of RM0.165 respectively for a total cash consideration of RM43,395,000.
In 2015, on 7 December 2015 and 15 December 2015, the Company issued 60,000,000 and 24,204,100 new
ordinary shares of RM0.10 each in the Company through private placements at an issue price of RM0.10
respectively for a total cash consideration of RM8,420,410.
114
Cont’d
30. RESERVES
Distributable reserve:
Retained earnings
The Group
2015
2014
RM
RM
The Company
2015
2014
RM
RM
28,052,874
51,925,203
34,799,664
27,085,927
-
-
17,256,197
17,256,197
Non-distributable reserves:
Capital reserve
(22,119,885)
(3,085,252)
-
-
AFS reserve
Foreign translation reserve
4,000,000
5,333,334
4,000,000
5,333,334
Bond reserve
4,712,695
-
4,712,695
-
Treasury shares
(1,021)
(697)
(1,021)
(697)
Share premium
71,440,135
71,440,135
71,440,135
71,440,135
86,084,798
125,612,723
132,207,670
121,114,896
(a)
Retained earnings
The Company may distribute dividends out of its entire retained profits as at 31 December 2015 and 31
December 2014 under the single tier system.
(b)
Capital reserve
The capital reserve represents the fair value adjustments on previously held interest in subsidiaries.
(c)
Foreign translation reserve
The foreign currency translation reserve represents exchange differences arising from the translation of the
financial statements of foreign operations whose functional currencies are different from that of the Group’s
presentation currency. (d)
AFS reserve
The AFS reserve comprises the cumulative net change in the fair value, net of tax, of available-for-sale
financial assets until the investments are derecognised or impaired.
(e)
Treasury shares
Number of The Group and
The Company shares
Amount
2015
2014
2015
2014
RM
RM
At 1 January
2,000
5,220,700
697
1,016,235
2,000
2,000
324
697
-
(5,220,700)
-
(1,016,235)
At 31 December
4,000
2,000
1,021
697
The shareholders of the Company, by a special resolution passed in a general meeting held on 20 June
2011, approved the Company’s plan to repurchase its own shares. The directors of the Company are
committed to enhance the value of the Company to its shareholders and believe that the repurchase plan
can be applied in the best interests of the Company and its shareholders. ANNUAL REPORT 2015
115
Cont’d
30. RESERVES cont’d
(e) Treasury shares cont’d
For the year ended 31 December 2015, the Company repurchased 2,000 (2014: 2,000) of its issued share
capital from the open market. The average price paid for the shares repurchased was RM0.12 (2014:
RM0.31) per share including the transaction costs. The repurchase transactions were financed by internally
generated funds. The shares repurchased are held as treasury shares.
Average
resale price
Highest
resale price
Lowest
resale price
Number of
treasury
shares
resold
RM
RM
RM
RM
Total
consideration
received
RM
2014
February
0.416
0.420
0.415
5,220,700
2,164,723
As at 31 December 2015, the issued and paid up capital of the Company comprising 1,736,022,854 (2014:
1,651,818,754) ordinary shares of RM0.10 each of which 4,000 (2014: 2,000) ordinary shares of RM0.10
each are held as treasury shares.
(f)
Share premium
This amount arose from premium on the issue of ordinary shares above par value. The movement in share premium account is as follows:
The Group and the Company
2015
2014
RM
RM
71,440,135
25,758,615
Issued for cash
-
44,533,032
Gain on disposal of treasury shares
-
1,148,488
71,440,135
71,440,135
Ordinary shares issued during the year:
(g)
Bond reserve
The Group and the Company
2015
2014
RM
RM
-
-
4,712,695
-
Value of conversion rights on RCSB, net of tax
116
4,712,695
This reserve represents the fair value of the equity component of the RCSB, net of tax, as determined on
the date of issue.
The salient features of the conversion rights on RCSB is disclosed in Note 31(c).
Cont’d
31. LOANS AND BORROWINGS
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
387,000,660
32,939,754
18,600,000
1,000,000
Secured
Non-current
Term loans
Revolving credits
29,000,000
40,000,000
29,000,000
40,000,000
117,522,336
-
117,522,336
-
10,682,357
7,330,058
367,276
280,796
544,205,353
80,269,812
165,489,612
41,280,796
Term loans
23,848,511
9,925,353
1,010,202
4,000,000
Trade facilities
89,583,390
-
-
-
6,000,000
-
6,000,000
-
RCSB
Hire purchase payables
Current
Revolving credits
Hire purchase payables
2,715,485
1,657,404
237,815
155,204
Bankers’ acceptance
2,250,000
31,325,755
-
-
26,064,344
14,840,533
5,210,836
4,948,087
150,461,730
57,749,045
12,458,853
9,103,291
694,667,083
138,018,857
177,948,465
50,384,087
Bank overdrafts
Total loans and borrowings
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
150,461,730
57,749,045
12,458,853
9,103,291
Remaining maturities of borrowings:
On demand or within one year
More than 1 year and less than 2 years
36,118,751
59,488,682
29,188,949
41,158,020
More than 2 years and less than 5 years
363,214,723
10,860,429
117,600,546
122,776
More than 5 years
144,871,879
9,920,701
18,700,117
-
694,667,083
138,018,857
177,948,465
50,384,087
(a) Term loans
The Group has a total 9 (2014: 8) term loans amounting to RM410,849,271 (2014: RM42,865,107) obtained
from local licensed financial institutions. The said term loans bear interest rates ranging from 4.40% to
8.10% (2014: 4.40% to 8.10%) per annum.
The repayment terms are disclosed in Note 35.
The securities given for the term loans are disclosed in Note 31(e).
ANNUAL REPORT 2015
117
Cont’d
31. LOANS AND BORROWINGS cont’d
(b)
Revolving credits The revolving credit facilities bear interest at a range of 2.25% to 2.50% (2014: 2.25%) per annum above
the bank’s effective cost of funds and is renewable on a quarterly basis.
118
The fair value of the revolving credits approximates its carrying amount due to it being a floating rate
instrument.
(c) Redeemable convertible secured bonds (“RCSB”)
Pursuant to the Memorandum of Agreement in respect of the proposed acquisition of a Dynamic
Positioning Class 2 (“DP2”) offshore subsea construction vessel known as “Siem Daya 1” (“SD1”), the
consideration of USD120 million is to be satisfied via the issuance of an RM denominated four (4)-year
redeemable convertible secured bonds equivalent to USD30 million nominal value at a coupon rate of 5%
per annum.
As disclosed in Note 39, the Company issued the RCSB to Siem Offshore Rederi AS (“SORA”) on the 14
December 2015. The terms and conditions of the RCSB are as follows:
Tenure/Maturity Date
Four (4) years from the date of issuance
Name of trustee
TMF Trustees Malaysia Berhad
Redemption at Maturity
All Bonds which are not redeemed, converted, repurchased or cancelled
shall be redeemed by the Issuer at its nominal value on the maturity date.
Redemption of the Bonds by the Issuer shall be made to paying agent
through Real-time Electronic Transfer of Funds and Securities System
(RENTAS) in accordance with the Central Securities Depository and Paying
Agency Rules.
Coupon Rate
The coupon rate for the Bonds shall be 5% per annum. The coupon shall
be payable in arrears annually during the tenure of the Bonds prior to the
conversion of the same.
Conversion Price
RM0.15 per DMB Share
The Conversion Price is subject to adjustments pursuant to certain events
as set out in the trust deed to be entered into (including but not limited to
subdivision, or consolidation of shares, capitalisation issues, rights issues
and other dilutive events).
Conversion Rights
The Bondholder shall have the right to convert at the Conversion Price all or
any part of the Bonds into fully paid new DMB Shares at any time during the
Conversion Period, subject to the Bondholder giving seven (7) market days
prior irrevocable written notice to the Issuer.
If any Bondholder exercises its rights to convert all or any amount of the
Bonds held by it into new DMB Shares at any time after the Issue Date
but before the coupon payment date, no coupon shall be payable on such
Bonds after the aforesaid period.
Conversion Period
Any time from the Issue Date and in any case shall not be later than eight (8)
market days prior to the Maturity Date.
Security
The Bonds will be secured by third party second legal charge over SD1.
Cont’d
(d)
Hire purchase payables The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
Not later than 1 year
3,607,034
2,207,624
237,815
171,636
Later than 1 year and not later than 2 years
3,427,841
3,665,237
188,949
167,123
Later than 2 years and not later than 5 years
6,106,818
4,829,487
78,210
125,775
More than 5 years
2,408,800
46,643
100,117
-
Minimum lease payment
15,550,493
10,748,991
605,091
464,534
Future finance charges
(2,152,651)
(1,761,529)
-
(28,534)
Present value of hire purchase payables
13,397,842
8,987,462
605,091
436,000
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
2,715,485
1,657,404
237,815
155,204
Later than 1 year and not later than 2 years
2,823,675
2,918,405
188,949
158,020
Later than 2 years and not later than 5
years
5,577,103
4,375,926
78,210
122,776
More than 5 years
2,281,579
35,727
100,117
-
13,397,842
8,987,462
605,091
436,000
10,682,357
7,330,058
367,276
280,796
2,715,485
1,657,404
237,815
155,204
Present value of hire purchase payables
Analysed as
Due after 12 months
Due within 12 months
13,397,842
8,987,462
605,091
436,000
(e)
Security The Group
The bank borrowings and other facilities are secured by way of:
(i) legal charges over subsidiaries’ freehold land and buildings;
(ii) corporate guarantee by the Company; (iii) a debenture over all assets of certain subsidiaries;
(iv) a pledge on the Company and subsidiaries’ fixed deposits;
(v) a pledge of 100% unquoted shares over the entire issued and paid-up share capital of certain
subsidiaries with a carrying amount of RM99,393,602 (2014: RM104,401,593); and
(vi) a pledge on an assignment or assignments of all charter proceeds or its equivalent in respect of the
purchased vessel. ANNUAL REPORT 2015
119
Cont’d
(e)
Security The Company
The bank borrowings are secured by way of:
(i) a facility agreement to be executed between the Company and the bank;
(ii) a pledge of 100% unquoted shares over the entire issued and paid-up capital of certain subsidiaries
with a carrying amount of RM99,393,602 (2014: RM104,401,593).
(iii) third party secured legal charge over a subsidiary’s freehold land and building;
(iv) a pledge on the Company’s fixed deposits; and
(vi) a pledge on an assignment or assignments of all charter proceeds or its equivalent in respect of the
purchased vessel.
Other information on financial risks of loans and borrowings are disclosed in Note 35.
32. TRADE PAYABLES
The normal credit period granted to the Group for trade purchases ranges from 14 to 90 days (2014:14 to 90
days). The amounts are non-interest bearing.
The currency profile of trade payables is as follows:
Hong Kong Dollars
Indonesian Rupiah
European Dollars
British Pound Sterling
The Group
2015
2014
RM
RM
1,463,600
303,883
-
1,924,919
270,275
989,687
104,788,073
36,205,818
-
3,616,819
Norwegian Krone
203,987
906,156
Singapore Dollars
13,946
1,222,168
106,739,881
45,169,450
33. OTHER PAYABLES AND ACCRUED EXPENSES
Accruals
Amount due to directors
Other payables
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
14,329,343
13,877,338
1,191,416
2,528,125
-
51,736
-
51,736
95,783,100
60,741,843
935,850
764,534
110,112,443
74,670,917
2,127,266
3,344,395
Included in other payables are advance payments received from customers amounting to RMNil (2014:
RM13,349,327) and retention sum retained from subcontractors amounting to RM24,526,723 (2014:
RM16,813,577).
120
Cont’d
34.COMMITMENTS
(a)
Capital commitments
Capital expenditure as at the reporting date is as follows:
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
2,167,900
997,822,500
-
213,000
260,920
11,301,856
-
-
Approved and contracted for:
Approved but not contracted for:
(b)
Operating lease commitments - as lessee As of the end of the reporting period, the Group and the Company have future minimum lease payments
payable under non-cancellable operating leases in respect of its buildings and vessels which fall due as
follows:
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
169,376,575
169,167,085
120,000
480,000
Later than 1 year but not later
than 5 years
728,626,232
728,111,044
-
120,000
27,449,751
196,270,370
-
-
More than 5 years
925,452,558 1,093,548,499
120,000
600,000
(c) Operating lease commitments - as lessor The Group has entered into commercial leases on its investment properties and chartered vessels. These non-cancellable leases have remaining lease terms of between 1 to 7 years. All leases include
a clause to enable upward revision of the rental charge on an annual basis based on prevailing market
conditions.
The Company via its related company, Daya Vessels Limited (“DVL”) entered into a charter agreement with
Technip Norge AS for the charter of the chartered Offshore Subsea Construction Vessels, Siem Daya 1 and
Siem Daya 2 for seven (7) years with the minimum annual charter of 100 days continuously. The remaining
days of uncommitted charter by Technip Norge AS is to strategically position for the spot charter which
tend to have more competitive charter rates.
ANNUAL REPORT 2015
121
Cont’d
34. COMMITMENTS cont’d
(c)
Operating lease commitments - as lessor Future minimum rentals receivable under non-cancellable operating leases at the reporting date are as
follows:
The Group
2015
2014
RM
RM
160,921,026
39,951,677
Later than 1 year but not later than 5 years
643,470,936
171,960,692
More than 5 years
321,179,040
45,991,812
1,125,571,002
257,904,181
(d)
Finance lease commitments
The Group and the Company have finance lease for certain of its property, plant and equipment. The future
minimum lease payments under finance leases together with the present value of the net minimum lease
payments are disclose in Note 30.
(e)
Corporate guarantee
The Company has provided corporate guarantee of RM314,581,950 (2014: RM353,238,896) for banking
facilities and third party for supply of goods and services granted to the subsidiaries.
As at 31 December 2015, the utilisation of the banking facilities by the subsidiaries are RM602,171,813
(2014: RM138,925,621).
The corporate guarantee has not been recognised in the financial statements of the Company as the
directors have assessed that the requirement to reimburse is remote and the Company does not expect to
incur material losses under the corporate guarantee.
35. FINANCIAL INSTRUMENTS
122
The Group’s and the Company’s overall financial risk management objective is to ensure that the Group and the
Company create value for its shareholders whilst managing its credit risk, liquidity risk and foreign currency risk.
The Group and the Company do not trade in financial instruments.
The following sections provide details regarding the Group’s and the Company’s exposure to the abovementioned financial risk and objectives, policies and processes for the management of these risks. Significant accounting policies
Details of the significant accounting policies and methods adopted (including the criteria for recognition, the
bases of measurement, and the bases for recognition of income and expenses), for each class of financial
assets, financial liabilities and equity instruments are disclosed in Note 3.
Cont’d
35. FINANCIAL INSTRUMENTS cont’d
Categories of financial instruments
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
172,130,916
127,510,031
-
-
51,508,636
33,343,758
819,735
1,135,083
-
-
311,157,698
150,762,595
143,658,420
75,970,566
25,162,596
20,508,858
100,975
98,090
-
-
15,333,335
15,333,335
15,333,335
15,333,335
Loans and borrowings (Note 31)
694,667,083
138,018,857
177,948,465
50,384,087
Trade payables (Note 32)
129,872,820
71,914,095
-
-
Other payables and accrued expenses (Note 33)
110,112,443
74,670,917
2,127,266
3,344,395
-
-
33,278,839
23,154,733
Financial assets
Loans and receivables:
Trade receivables (Note 22)
Other receivables and deposits (Note 23)
Amount due from subsidiaries (Note 24)
Cash and bank balances (Note 28)
Fair value through profit and loss:
Marketable securities (Note 27)
Available-for-sale:
Available-for-sale financial assets (Note 19)
Other financial liabilities:
Amount due to subsidiaries (Note 24)
(i)
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 primary from its borrowings.
The Group manage its interest rate exposure by maintaining a prudent mix of fix and floating rate
borrowings. The Group reviews its debt portfolio, taking into account the investment holding period
and nature of its assets. This strategy allows it to capitalise on cheaper funding in a low interest rate
environment and achieve a certain level of protection against rate hikes.
Sensitivity analysis for interest rate risk
At the reporting date, if interest rates had been 100 basis points lower/higher, with all other variables held
constant, the Group’s and the Company’s (loss)/profit after tax would have been RM3,516,990 (2014:
RM868,069) and RM1,674,670 (2014: RM616,948) higher/lower, arising mainly as a result of lower/higher
interest expense on floating rate loan and borrowings and higher/lower interest income from floating rate
loans to related parties. The assumed movement in basis points for interest rate sensitivity analysis is
based on the currently observable market environment in Malaysia.
ANNUAL REPORT 2015
123
Cont’d
(i)
Interest rate risk cont’d
Sensitivity analysis for interest rate risk cont’d
The following tables set out the carrying amounts, the range of interest rates as at the reporting date
and the remaining maturities of the Group’s and the Company’s financial instruments that are exposed to
interest rate risk:
Interest
rate
On demand
or within
1 year
More than 1
year
Total
%
RM
RM
RM
-
20,721
-
20,721
Term loans
4.40-8.10
23,848,511
387,000,660
410,849,171
Revolving credits
6.54-6.59
6,000,000
29,000,000
35,000,000
3.50-7.85
2,250,000
-
2,250,000
7.60-10.10
26,064,344
-
26,064,344
Interest
rate
On demand
or within
1 year
More than 1
year
Total
%
RM
RM
RM
2.01-3.22
11,952,996
-
11,952,996
Term loans
4.40-8.10
9,925,353
32,939,754
42,865,107
Revolving credits
5.86-6.48
-
40,000,000
40,000,000
3.60-7.85
31,325,755
-
31,325,755
7.60-10.10
14,840,533
-
14,840,533
The Group
Note
At 31 December 2015
Floating rate
Financial assets
Financial Liabilities
Bank overdrafts
The Group
Note
At 31 December 2014
Floating rate
Financial assets
Financial Liabilities
Bank overdrafts
124
Cont’d
(i)
Interest rate risk cont’d
Sensitivity analysis for interest rate risk cont’d
The following tables set out the carrying amounts, the range of interest rates as at the reporting date
and the remaining maturities of the Group’s and the Company’s financial instruments that are exposed to
interest rate risk: cont’d
The Company
Interest
rate
On demand
or within
1 year
More than 1
year
Total
%
RM
RM
RM
8.60 -15.00
311,157,698
-
311,157,698
20,721
-
20,721
At 31 December 2015
Floating rate
Financial assets
5.00 - 10.00
33,278,839
-
33,278,839
Term loans
ECOF - 2.25
1,010,202
18,600,000
19,610,202
Revolving credits
6.54 – 6.59
6,000,000
29,000,000
35,000,000
Bank overdrafts
8.10 – 8.35
5,210,836
-
5,210,836
Interest
rate
On demand
or within
1 year
More than 1
year
Total
%
RM
RM
RM
8.60 -15.00
134,021,626
-
134,021,626
2.88-3.22
11,952,996
-
11,952,996
5.00 - 10.0
13,766,803
-
13,766,803
Term loans
6.03 - 6.30
4,000,000
1,000,000
5,000,000
Revolving credits
5.86 - 6.48
-
40,000,000
40,000,000
Bank overdrafts
8.10 - 8.35
4,948,087
-
4,948,087
The Company
At 31 December 2014
Floating rate
Financial assets
ANNUAL REPORT 2015
125
Cont’d
(ii) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates.
The Group has transactional currency exposures arising from sales and purchases that are denominated
in a currency other than the respective functional currencies of Group entities, primarily RM, Hong Kong
Dollars (“HKD”) and Indonesian Rupiah (“IDR”). The foreign currencies in which these transactions are
denominated are mainly European Dollars (“EURO”), United States Dollars (“USD”), Singapore Dollar
(“SGD”), British Pound Sterling (“GBP”), Australian Dollars (“AUD”) and Norwegian Krone (“NOK”). The Group is also exposed to currency translation risk arising from its net investments in foreign operations,
including Hong Kong and Indonesia. The Group’s net investment in Hong Kong and Indonesia are not
hedged as currency position in HKD and IDR are considered to be long-term in nature.
At the reporting date, the Group and the Company do not have significant foreign currency risk exposure
except as disclosed below. Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity of the Group’s and of the Company’s (loss)/profit before tax
to a reasonably possible change in the HKD, IDR, EURO, USD, SGD, GBP, AUD and NOK exchange rates
against the respective functional currencies of the Group entities, with all other variables held constant.
SGD/RM
USD/RM
HKD/RM
EURO/RM
126
The Group
2015
2014
Loss after
tax
Loss after
tax
RM
RM
- strengthen 10%
(1,046)
(4,419)
- weaken 10%
1,046
4,419
- strengthen 10%
(3,967,711)
(168,924)
- weaken 10%
3,967,711
169,924
- strengthen 10%
56,999
(8,381)
- weaken 10%
(56,999)
8,381
- strengthen 10%
(20,270)
(567)
- weaken 10%
20,270
567
Cont’d
(ii)
Foreign currency risk cont’d
Sensitivity analysis for foreign currency risk cont’d
GBP/RM
AUD/RM
NOK/RM
IDR/RM
2014
Effect on
loss after
tax
Effect on
loss after
tax
RM
RM
- strengthen 10%
-
(155,248)
- weaken 10%
-
155,248
- strengthen 10%
-
(214)
- weaken 10%
-
214
- strengthen 10%
-
(21,089)
- weaken 10%
-
21,089
- strengthen 10%
2,103
-
- weaken 10%
(2,103)
-
USD/RM
The Group
2015
- strengthen 10%
The Company
2015
2014
Effect on
profit after
tax
Effect on
profit after
tax
RM
RM
-
4,824
- weaken 10%
(4,824)
(iii) Liquidity risk Liquidity risk is the risk that the Group and 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 objective is to
maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the Group’s financial liabilities at the reporting date
based on contractual repayment obligations.
ANNUAL REPORT 2015
127
Cont’d
(iii) Liquidity risk cont’d
Analysis of financial instruments by remaining contractual maturities cont’d
Carrying
amount
On demand
or within
one year
RM
More than 1
year
RM
Total
RM
129,872,820
129,872,820
-
129,872,820
110,112,443
110,112,443
-
110,112,443
694,667,083
150,461,730
544,205,353
694,667,083
934,652,346
390,446,993
544,205,353
934,652,346
Trade payables
71,914,095
71,914,095
-
71,914,095
74,670,917
74,670,917
-
74,670,917
138,018,857
57,749,045
80,269,812
138,018,857
284,603,869
204,334,057
80,269,812
284,603,869
Carrying
amount
On demand
or within
one year
RM
More than 1
year
RM
Total
RM
2,127,266
2,127,266
-
2,127,266
The Group
2015
Trade payables
2014
The Company
2015
33,278,839
33,278,839
-
33,278,839
177,948,465
12,458,853
165,489,612
177,948,465
213,354,570
47,864,958
165,489,612
213,354,570
Carrying
amount
On demand
or within
one year
RM
One to
5 years
RM
Total
RM
3,344,395
3,344,395
-
3,344,395
23,154,733
23,154,733
-
23,154,733
50,384,087
9,103,291
41,280,796
50,384,087
76,883,215
35,602,419
41,280,796
76,883,215
2014
128
Cont’d
(iv) 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 short-term investments and cash and cash
equivalents), 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. It
is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification
procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the
Group’s exposure to bad debts is not significant. Exposure to credit
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.
Credit risk concentration profile
The Group determines concentrations of credit risk by monitoring the country of its trade receivables on an
ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date
are as follows:
The Group
2015
2014
RM
RM
170,123,450
104,606,344
2,007,466
22,903,687
172,130,916
127,510,031
By country:
Malaysia
Other countries
Financial assets that are neither past due nor impaired
Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 18.
Deposits with banks and short term investments that are neither past due nor impaired are placed with
or entered into with reputable financial institutions or companies with high credit ratings and no history of
default.
Information regarding financial assets that are either past due or impaired is disclosed in Note 18.
ANNUAL REPORT 2015
129
Cont’d
(b)
Fair values of financial instruments (i)
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:
Note
Trade receivables
22
Other receivables and deposits
23
Cash and cash equivalents
28
Trade payables
32
33
24
31
The carrying amounts of current financial assets and liabilities are reasonable approximation of fair
values, either due to their short-term nature or that they are floating rate instruments that are re-priced
to market interest rates on or near the reporting date.
The carrying amounts of the current portion of borrowings are reasonable approximations of fair
values due to the insignificant impact of discounting.
The fair values of non-current 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.
Fair value hierarchy
All assets for which fair value is disclosed in the financial statements are categorised within the fair
value hierarchy, described as follows, based on the lowest level input that is significant to the fair
value measurement as a whole:
Level 1: Quoted (unadjusted) prices in an active market for identical assets or liabilities
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
130
Cont’d
(b)
Fair values of financial instruments cont’d
(i) Determination of fair value cont’d
Fair value hierarchy cont’d
As at the reporting date, the Group has the following financial assets that are measured at fair value
by level of fair value hierarchy:
Level 1
Level 2
Level 3
Total
2015
Financial assets
Financial assets at fair value through
profit or loss
- Marketable securities (quoted
shares)
100,975
-
-
100,975
15,333,335
-
-
15,333,335
Level 1
Level 2
Level 3
Total
98,090
-
-
98,090
15,333,335
-
-
15,333,335
2014
Financial assets
Financial assets at fair value through
profit or loss
- Marketable securities (quoted
shares)
ANNUAL REPORT 2015
131
Cont’d
36. SEGMENTAL REPORTING
(a)
Reporting format
The Group is organised into business based on its products and services. Information reported to the Chief
Operating Decision Maker, who is the Group’s Chief Executive Officer focuses on the following reportable
segments:
(i)
(ii)
(iii)
The polymer segment is involved in manufacturing of advanced materials for the power cables and wires
industry and the trading of various other related polymer compounds and specialty chemical products.
The oil & gas segment is involved in trading and distribution of specialty chemicals and catalysts, provision
of heavy machineries and related manpower services, maintenance services for air-conditioning and
ventilation system, automatic welding services for offshore pipeline installation to the oil and gas industry.
The technical services segment is involved in services in the construction, office maintenance and recycling
services. This reporting segment has aggregated the construction and maintenance services segment and
recycling services segment, which are regarded by management to exhibit similar economic and business
characteristics.
(iv) The others segment is involved in general trading and marketing, property investment holding, investment
holding and regional procurement centre.
Except as indicated above, no operating segments have been aggregated to form the above
reportable operating segments.
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.
The following table provides an analysis of the Group’s revenue, results, assets and liabilities and other
information by business segments:
The Group
2015
Polymer
Oil and Gas
Technical
Services
Others
Total
RM
RM
RM
RM
RM
26,871,306
395,920,101
296,046,268
-
718,837,675
(430,015)
(10,043,208)
12,422,794
1,475,420
3,424,991
Revenue
Revenue from external
customers
Results
Segment results
Unallocated results
4,210,067
Profit from operations
7,635,058
Finance costs
Share of results of joint
ventures
1,700,778
Loss before tax
(2,532,739)
Income tax expense
(11,659,012)
Loss for the year
(14,191,751)
132
(11,868,575)
Cont’d
36. SEGMENTAL REPORTING cont’d
(a)
Reporting format cont’d
The Group
2015
Polymer
Oil and Gas
Technical
Services
Others
Total
RM
RM
RM
RM
RM
22,074,775
876,369,187
292,087,274
12,679,464
1,203,210,700
Assets and liabilities
Segment assets
4,234,526
Tax recoverable
2,657,819
Deferred tax assets
11,797,210
Unallocated assets
41,704,044
Total assets
Segment liabilities
1,263,604,299
2,603,276
119,161,523
141,123,528
1,196,734
264,085,061
516,718,618
Tax payable
3,059,370
Unallocated liabilities
184,518,531
Total liabilities
968,381,580
Other information
Capital expenditure
Property, plant and
equipment
Inventories
Intangible assets
55,879
535,972,753
538,821
340,371
536,907,824
-
-
356,516
-
356,516
27,857
-
74,850
-
102,707
83,736
535,972,753
970,187
340,371
537,367,047
343,082
16,631,201
1,270,406
446,892
18,691,581
21,548
293,601
97,290
28,644
441,083
364,630
16,924,802
1,367,696
475,536
19,132,664
Depreciation and
amortisation
Property, plant and
equipment
Intangible assets
ANNUAL REPORT 2015
133
Cont’d
(a)
The Group
2014
Polymer
Oil and Gas
Technical
Services
Others
Total
RM
RM
RM
RM
RM
19,944,738
341,368,739
280,846,278
-
642,159,755
(482,320)
(44,606,286)
17,627,005
293,567
(27,168,034)
Revenue
Revenue from external
customers
Results
Segment results
Unallocated results
129,864
Loss from operations
(27,038,170)
Finance costs
(10,374,443)
Share of results of joint
ventures
632,939
Loss before tax
(36,779,674)
Income tax credit
997,629
Loss for the year
(35,782,045)
Assets and liabilities
Segment assets
231,483,836
193,487,770
16,309,993
459,130,081
2,540,438
Tax recoverable
1,855,846
Deferred tax assets
14,403,369
Unallocated assets
122,601,047
Total assets
600,530,781
Segment liabilities
Corporate liabilities
Tax payable
Total liabilities
134
17,848,482
463,872
59,800,351
81,852,221
1,124,173
143,240,617
3,344,395
138,018,857
4,881,668
289,485,537
Cont’d
(a)
The Group
2014
Polymer
Oil and Gas
Technical
Services
Others
Total
RM
RM
RM
RM
RM
29,247
42,168,302
38,099
82,215
42,317,863
Other information
Capital expenditure
Property, plant and
equipment
Inventories
-
-
996,261
-
996,261
Intangible assets
-
85,667
2,117
-
87,784
29,247
42,253,969
1,036,477
82,215
43,401,908
367,006
11,208,841
1,270,590
416,929
13,263,366
-
2,614
4,601
-
7,215
17,367
264,505
87,784
25,243
394,899
384,373
11,475,960
1,362,975
442,172
13,665,480
Depreciation and
amortisation
Property, plant and
equipment
Investment properties
Intangible assets
(b)
Geographical segments:
Revenue, segment assets and capital expenditures based on geographical location of customers and
assets are as follows:
Malaysia
Other
countries
Consolidated
Total revenue from
external customers Segment assets
Capital expenditure
2015
2014
2015
2014
2015
2014
RM
RM
RM
RM
RM
RM
718,837,675
639,071,610
669,392,864
436,186,758
9,988,586
43,364,864
-
3,088,145
533,817,836
22,943,323
527,378,461
37,044
642,159,755 1,203,210,700
459,130,081
537,367,047
43,401,908
718,837,675
The Group’s operations are mainly located in Malaysia.
ANNUAL REPORT 2015
135
Cont’d
37. 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 shareholders value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions.
To maintain or adjust the capital structure, the Group may adjust the dividends payment to shareholders, return
capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes
during the years ended 31 December 2015 and 31 December 2014.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The
Group includes within net debt, loans and borrowings less cash and cash equivalents. Capital includes equity
attributable to the owners of the parent.
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
694,667,083
138,018,857
177,948,465
50,384,087
Trade payables
129,872,820
71,914,095
-
-
Other payables and other accruals
110,112,443
74,670,917
2,127,266
3,344,395
Less: Cash and cash equivalents
(143,658,420)
(75,970,566)
(25,162,596)
(20,508,858)
Net debt
790,993,926
208,633,303
154,913,135
33,219,624
Equity attributable to the owners of the
parents
259,687,083
290,794,598
305,809,955
286,296,771
1,050,681,009
499,427,901
460,723,090
319,516,395
75.28%
41.77%
33.62%
10.39%
Capital and net debt
Gearing ratio
38. MATERIAL LITIGATIONS
(a) Kuala Lumpur High Court Suit No. D3-22-360-2008
136
On 25 March 2008, Daya Secadyme Sdn. Bhd. (DSSB) filed a civil suit against (i) Mohd Akbar B Hj. Johari,
(ii) AJ Premier Holdings Sdn Bhd, (iii) Aims Mission Sdn Bhd, (iv) Global Max Trading Sdn. Bhd. and (v)
Azrul Bin Mohd Nasir trading as Rasa Indah Trading (Defendants) vide KL High Court Civil Suit No. D3-22380-2008. The claim against the 1st, 2nd and 3rd Defendants was based on fraudulent misrepresentation
and/or fraud perpetrated in conspiracy with the other Defendants, and alternatively for monies had and
received, and against the 4th and 5th Defendants on fraud perpetrated in conspiracy with the other
Defendants. The amount claimed was RM1,942,250 with interest at 8.00% p.a. thereupon from judgment to
settlement, and the legal costs of the proceedings.
On the 11 August 2011, the 1st and 2nd Defendants consented to Judgment for a sum of RM1,200,000
payable by way of four (4) instalments, RM100,000 on or before 31 December 2011, RM370,000 on or
before 31 December 2012, RM365,000 on or before 31 December 2013 and RM365,000 on or before 31
December 2014. In default of any one of these instalments, the 1st and 2nd Defendants became liable
for the payment of the entire sum claimed of RM1,942,250 less any instalments paid. The 1st and 2nd
Defendants also agreed to provide security for the instalments payments in the form of titles to properties
up to the value of RM300,000 on or before 31 December 2011 and RM900,000 on or before 30 June 2012
in default of which the entire sum due on the instalments shall fall due as at the date of default. On 16
August 2011, the Court granted Judgment against the 3rd, 4th and 5th defendants for the sum claimed of
RM1,942,250 with costs and interest.
Cont’d
38. MATERIAL LITIGATIONS cont’d
(a)
Kuala Lumpur High Court Suit No. D3-22-360-2008 cont’d
On 16 February 2015, DSSB filed cause papers for bankruptcy proceedings against the 5th Defendant
under Shah Alam High Court Bankruptcy No. 29NCC-1578-02/2015 and is currently pending extraction
of the sealed Adjudication Order and Receiving Order in order to lodge a proof of debt form with the
Insolvency Department of Malaysia against the 5th Defendant.
On 17 February 2015, DSSB served on the 3rd and 4th Defendants a Notice pursuant to section 218 (2)
(a) of the Companies Act 1965. The 3rd and 4th Defendants who have had 21 days from the date of the
said Notice to respond did not respond to the same. As such, DSSB filed winding up petition against the
3rd and 4th Defendants on 15 May 2015 at Shah Alam High Court under Shah Alam High Court Winding
Up 28NCC-231-05/2015 and Shah Alam High Court Winding Up 28NCC-232-05/2015 respectively. Both
petitions were fixed for hearing on 10 August 2015. On 10 August 2015, the Court granted Order in Terms
for both Winding Up Petitions with costs to be paid by the 3rd and 4th Defendants to the DSSB for each
proceeding. DSSB duly advertised the Notice of Winding Up Order And Particulars of Liquidator in respect
of the 3rd and 4th Defendants.
On 19 March 2015, DSSB successfully lodged a proof of debt form with the Insolvency Department of
Malaysia against the 1st Defendant for the sum of RM1,912,250.00. The matter is currently kept in
abeyance pending notification of creditors’ meeting by the Insolvency Department of Malaysia.
On 28 March 2015, DSSB served on the 2nd Defendant a Notice pursuant to section 218(2)(a) of the
Companies Act 1965. The 2nd Defendant who have had 21 days from the date of the said Notice to
respond did not respond to the same. As such, DSSB, through its solicitors, filed winding up petition
against the 2nd Defendant on 19 May 2015 at Seremban High Court under Seremban High Court Winding
Up 28NCC-13-05/2015. The petition was fixed for hearing on 3 August 2015 where the Court granted Order
in Terms in relation to the petition and DSSB filed into Court the draft Winding Up Order and have duly
advertised the Notice of Winding Up Order And Particulars of Liquidator.
(b)
Kuala Lumpur High Court Suit No. 22NCC-90-03/2014
On 18 March 2014, the Company and its wholly-owned subsidiary, Daya Offshore Construction Sdn. Bhd.
(formerly known as SD Equipment Sdn. Bhd.) (“DOCSB”), had been notified by their lawyers, Messrs. Zain
Megat & Murad of a letter dated 17 March 2014 from Messrs. Trevor George Partnership (“the Plaintiff’s
Solicitors”), the lawyers acting for and on behalf of Mark Leonard Midgley (“Plaintiff”), the former Chief
Executive Officer and Director of DOCSB, together with a copy of the sealed Writ of Summons and
Statement of Claim (“Writ of Summons and Statement of Claim”) also dated 17 March 2014, where both
the Company and DOCSB had been named as defendants in a civil suit filed by the Plaintiff in the High
Court of Malaya at Kuala Lumpur (“the Suit”).
The Plaintiff claims that the Company had allegedly breached a shareholders agreement dated 30
April 2013 (“Shareholders Agreement”) in relation to DOCSB and the Plaintiff is claiming for inter alia a
declaration to that effect, valuation of the shares in DOCSB, damages and an injunction to restrain breach
or further breach of the Shareholders Agreement.
On 17 April 2014, the Company and DOCSB vide their lawyers, filed in and served on the Plaintiff’s
Solicitors the following:
(i)
(ii)
On 15 December 2014, the Plaintiff had served his application for the appointment of receivers and
managers for DOCSB (“Application”), pending determination of the trial of this litigation suit, which was
fixed from 9 March 2015 to 12 March 2015 and 30 March 2015 to 31 March 2015. The Application was
fixed for Case Management on 6 January 2015 and then fixed for a hearing on 12 February 2015, where the
Application was struck out with costs awarded to the Defendants.
Defence and Counterclaim against the Plaintiff; and
An Affidavit in Reply to resist the Plaintiff’s Injunction Application.
ANNUAL REPORT 2015
137
Cont’d
138
(b)
Kuala Lumpur High Court Suit No. 22NCC-90-03/2014 cont’d
The trial of this litigation suit was completed on 19 March 2015 and fixed for decision on 29 September
2015 wherein the Court allowed part of the Plaintiff’s claim and dismissed the Plaintiff’s claim for damages.
The Court also dismissed the Defendants’ counterclaim.
The Court granted the following orders as per the Plaintiff’s Writ and Statement of Claim:
(i)
(ii) Consequent to the above, an order that the Company do, pursuant to Clause 23.7 of the
Shareholders Agreement, cease to have:
A declaration, under s. 41 of the Specific Relief Act 1950 that the Company had breached its
obligations under the Shareholders Agreement;
(a)
(b) any entitlement for any of its Directors to attend and vote at any meetings of the Board of
DOCSB and a quorum for meetings of the Board shall be one (1) Director appointed by the other
Party;
(iii)
That pursuant to the Shareholders Agreement, that the Company do, within Ninety (90) Days from the
date of order, conduct a valuation of its 80% (4 million shares) in DOCSB and that the Plaintiff be at
liberty to verify / counter such valuation by appointing his own valuers for the same;
(iv) An injunction against the Company and/or DOCSB, their officers, agents, servants or whosoever, from
acting in breach (further breach) of the provisions of the Shareholders Agreement; and
(v)
The hearing of the formal stay application was held on 14 December 2015 wherein the Court granted an
order for the stay of execution and any proceedings (if any) for the execution of the Judgment pending the
decision/disposal of the appeal pending the appeal to the Court of Appeal, and made no order as to costs.
The Court of Appeal has not made its decision as of the date of approval of this financial statements.
Shah Alam High Court Suit No. 22NCVC-480-10/2014
(c)
any voting rights in respect of any shares it may have in DOCSB; and
Costs of RM50,000
On 20 October 2014, DOCI had received service of notice of an action being brought against it by Tideway
Alliance Sdn Bhd (Company No. 607144-M) (“Plaintiff”) together with a copy of the sealed copy of the Writ
and Statement of Claim (“Suit”).
The Plaintiff is claiming the sum of RM6,937,500 allegedly owing for services allegedly rendered at the
request and instructions of DOCI. The Plaintiff’s claim in the abovementioned civil suit was in relation to
certain rock-dumping works and services allegedly provided to DOCI.
On 21 November 2014, in view of the abovementioned directions, DOCI filed its defence and
counterclaimed RM132,539 general damages, costs, interest on all sums awarded until full and final
settlement and such further and/or other relief as deemed fit and just by the Court and Tideway filed its
reply to defence and defence to counterclaim on 3 December 2014.
The litigation suit was completed on 27 August 2015 and fixed for decision on 25 November 2015 wherein
the Court granted part of Tideway’s claim and awarded a total sum of RM4,935,546 (the “Decision”).
On 16 December 2015, DOCI vide its solicitors filed a notice of appeal against the Decision.
On 10 February 2016, DOCI vide its solicitors filed its record of appeal against the Decision.
DOCI was notified by its solicitors on 14 March 2016 that further to the case management of the Appeal,
the matter is now fixed for hearing on 12 May 2016.
Cont’d
(c)
Shah Alam High Court Suit No. 22NCVC-480-10/2014 cont’d
The solicitors of DOCI are of the opinion that DOCI has a fair and reasonable prospect of success in its
appeal against the Decision. Based on this, the directors are of the opinion that no provision for loss is
required to be made in the financial statements of the Company for the financial year ended 31 December
2015.
39. SIGNIFICANT EVENTS
(a)
Private Placement
On 7 December 2015 and 15 December 2015, the Company issued 60,000,000 and 24,204,100 new
ordinary shares of RM0.10 each in the Company through private placements at an issue price of RM0.10
respectively for a total cash consideration of RM8,420,410 as disclosed in Note 29.
(b) Acquisition of a vessel known as “Siem Daya 1” for a purchase consideration of USD120 million
On 24 April 2015, on behalf of the Board, Hong Leong Investment Bank Berhad (“HLIB”) announced that
the Company had on 24 April 2015 entered into the following with Siem Offshore Rederi AS (“SORA”):
(i)
(ii)
A (“Third Addendum”) to amend certain terms and conditions as set out in the Memorandum of
Agreement in respect of the proposed acquisition of a Dynamic Positioning Class 2 (“DP2”) offshore
subsea construction vessel known as “Siem Daya 1” (“SD1”) (“Proposed SD1 Acquisition”) dated 22
August 2014 (as amended by the addendum dated 19 January 2015 (“First Addendum”) and second
addendum dated 19 April 2015) (“Second Addendum”).
The Memorandum of Agreement as supplemented by the First Addendum, Second Addendum and
Third Addendum is collectively referred to as the “SD1 MOA”; and
A third addendum to terminate the Memorandum of Agreement in respect of the proposed acquisition
of a second DP2 offshore subsea constructions vessel known as “Siem Daya 2” (“SD2”) (“Proposed
SD2 Acquisition”) dated 22 August 2014 (as amended by the addendum dated 19 January 2015 and
second addendum dated 19 April 2015) (“SD2 MOA”) with effect from 24 April 2015 with no liabilities
or costs to either party. The Company did not proceed with the Proposed SD2 Acquisition.
Pursuant to the Third Addendum, amongst others, the consideration for the Proposed SD1 Acquisition was
revised from USD140 million (equivalent to approximately RM488 million) to USD120 million (equivalent to
approximately RM435 million) (“SD1 Consideration”) and is to be satisfied in the following manner:
(i)
cash consideration of USD90 million (equivalent to approximately RM326 million) (“SD1 Cash
Consideration”);
(ii)
issuance of such amount of RM denominated four (4)-year redeemable convertible secured bonds
equivalent to USD30 million nominal value (“Bonds”) (based on the closing middle exchange rate
as quoted by Bank Negara Malaysia on the business day prior to the issuance of the issue request
(“Amount-Fixing Date”) as consideration for the remaining SD1 Consideration, whereby in any event,
the nominal value of the Bonds issued shall not exceed RM126 million. In the event such exchange
rate results in an amount higher than RM126 million, the difference between the issue amount and
USD30 million shall be paid by the Company in cash.
ANNUAL REPORT 2015
139
Cont’d
39. SIGNIFICANT EVENTS cont’d
cont’d
(ii)
140
The Bonds shall be issued to Siem Offshore Invest AS and/or such other nominees(s) as may be
nominated by SORA as consideration for the remaining SD1 Consideration amounting to RM
denominated Bonds equivalent to USD30 million, whereby in any event, the nominal value of the
Bonds issued shall not exceed RM126 million. Hence, no proceeds will be raised from the issuance
of the Bonds. The amount of Bonds to be issued shall be determined at the Amount-Fixing Date.
It is the intention of the Company and SORA to determine the amount based on the prevailing
exchange rate between USD and RM at the Amount-Fixing Date. No proceeds will be raised from the
conversion of the Bonds into new DMB Shares as the conversion will be wholly satisfied through the
surrender of Bonds.
The Bonds shall also be secured by a second priority charge/mortgage in respect of SD1 (“2nd Legal
Charge over SD1”). The 2nd Legal Charge over SD1 shall rank after a first priority charge/mortgage
in respect of SD1 (“1st Legal Charge over SD1”) to be created as security for a term loan of USD80
million (equivalent to approximately RM293 million) to be granted by a lender to the Company. The 1st
Legal Charge over SD1 and 2nd Legal Charge over SD1 will not be discharged prior to the completion
of the Proposed SD1 Acquisition.
The Company shall pay a deposit of USD10 million (equivalent to approximately RM36.7 million) (“SD1
Deposit”). The partial deposits previously paid in respect of SD1 and SD2 of USD1.4 million (equivalent to
approximately RM5.1 million), was utilised for the purpose of payment of the SD1 Deposit.
SD1 shall be delivered together with a 50 metric tonnes AHC 3,000 metres crane (“the Crane”) and its
pedestal, which are stored ashore and shall be delivered at the present location, unless otherwise agreed.
Unless and until the cash consideration of USD2.3 million (equivalent to approximately RM8.4 million) for
the Crane has been paid to SORA, SORA shall retain title and possession of the Crane and daily hire will be
charged at USD1,500 (equivalent to approximately RM5,501) per day until the purchase of the Crane has
been completed.
On 9 July 2015, the Company has entered into a Novation Agreement (“Novation Agreement”) dated 9
July 2015 with SORA and Daya Global 1 Pte Ltd (“DG1PL”), a wholly-owned subsidiary of the Company.
Pursuant to the Novation Agreement:
(i)
DG1PL assumes all obligations and liabilities of the Company under the SD1 MOA and agrees to be
bound by the terms of the SD1 MOA in every way as if DG1PL were a party to the SD1 MOA in place
of the Company;
(ii)
SORA releases and discharges the Company from all obligations, liabilities, claims and demands
under the SD1 MOA and accepts the liabilities of DG1PL under the SD1 MOA in place of the liability
of the Company;
(iii)
DG1PL has the benefit of all rights and claims of the Company under the SD1 MOA and SORA agrees
to be bound by the terms of the SD1 MOA in every way as if DG1PL were a party to the SD1 MOA in
place of the Company; and
(iv) The Company releases and discharges SORA from all obligations, liabilities, claims and demands
under the SD1 MOA.
In consideration of SORA entering into the Novation Agreement with DG1PL and the Company in respect
of novating the SD1 MOA to now be between SORA and DG1PL, the Company in its capacity as ultimate
parent company of DG1PL, issued a parent company guarantee (“Parent Company Guarantee”) to SORA,
guaranteeing the full, faithful and punctual performance by DG1PL of all obligations, responsibilities, and
undertakings to be carried out by DG1PL under the Novation Agreement and SD1 MOA, including but not
limited to DG1PL’s discharge of any and all liabilities under or pursuant to the Novation Agreement and SD1
MOA, and shall indemnify and hold harmless SORA from and against any and all losses, damages, claims,
costs (including legal costs), charges and expenses arising out of or in connection with DG1PL’s breach of
or non-compliance with any terms and conditions of the Novation Agreement and SD1 MOA, but always
subject to the limitations set forth in the Novation Agreement and SD1 MOA.
Cont’d
39. SIGNIFICANT EVENTS cont’d
cont’d
The balance of the SD1 Deposit amounting to USD8.6 million (equivalent to approximately RM31.5 million)
(“Balance SD1 Deposit”) was paid by the Company to SORA on 15 July 2015, on behalf of DG1PL.
On 14 December 2015, the Company has issued the Bonds to SORA.
On 17 December 2015, the SD1 Acquisition together with the delivery of the Crane and its pedestal, was
completed.
Changes in group structure
(c)
During the current financial year, changes in group structure due to the incorporation, acquisition and/or
disposal of subsidiaries and joint ventures, are disclosed in Notes 17 and 18, respectively.
40. EVENTS AFTER THE END OF THE REPORTING PERIOD
(a)
Incorporation of a subsidiary company in Papua New Guinea
On 19 January 2016, the Company incorporated a limited liability company known as Daya PNG Limited
(“DPNGL”) with a paid-up share capital denominated in Papua New Guinean Kina (“PGK”) of 1.00
divided by 1 ordinary share of PGK1.00 only. DPNGL is principally engaged in investment holding and/or
undertaking business activities in Papua New Guinea.
(b) Proposed disposal of 102,000 ordinary shares of RM1.00 each in Semangat Global Sdn. Bhd.
(“SGSB”) by Daya Land & Development Sdn. Bhd. (“DLD” or “Vendor”) which is 70% owned
subsidiary of DMB, to Highstar Realty Sdn. Bhd. (“Highstar” or “Purchaser”)
On 6 July 2015, the Group, via its subsidiary, Daya Land & Development Sdn. Bhd. (“DLD”), had received
an Offer Letter (“Offer Letter”) from Highstar Realty Sdn. Bhd. (“Highstar”), to purchase 102,000 ordinary
shares of RM1.00 each in Semangat Global Sdn. Bhd. (“SGSB”) representing 100% of the issued and
paid-up share capital of SGSB to a total sale consideration of RM3,835,000. Upon the completion of this
proposed disposal, SGSB will cease to be a joint venture company of DLD.
On 21 July 2015, the Board further announced that DLD and Highstar had entered into a Sale and Purchase
Agreement (“SPA”) in respect of the proposed disposal. The proposed disposal was completed on 28
March 2016.
ANNUAL REPORT 2015
141
Cont’d
41. SUPPLEMENTARY INFORMATION – BREAKDOWN OF RETAINED PROFITS INTO REALISED AND
UNREALISED
The breakdown of the retained profits of the Group and of the Company as at 31 December 2015 into realised
and unrealised is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated
25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised
and Unrealised Profits and Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad
Listing Requirements, as issued by the Malaysian Institute of Accountants.
Realised and unrealised profits/(losses)
The Group
The Company
2015
2014
2015
2014
RM
RM
RM
RM
- Realised
43,834,194
74,640,748
29,092,420
26,986,467
- Unrealised
29,134,497
15,379,330
5,707,244
99,460
72,968,691
90,020,078
34,799,664
27,085,927
Less: Consolidation adjustments
(44,915,817)
(38,094,875)
-
-
Total retained earnings
28,052,874
51,925,203
34,799,664
27,085,927
Note
Total retained earnings:
142
DIRECTORS’ RESPONSIBILITIES STATEMENT
ON FINANCIAL STATEMENTS
In accordance with the Companies Act, 1965, the Directors of the Company are required to prepare financial
statements for each financial year which shall give a true and fair view of the financial position of the Company and of
the Group as at the end of the financial year and of their results and their cash flows of the Company and of the Group
for the financial year. The directors should also ensure that all the financial statements are made out in accordance
with applicable Malaysian Financial Reporting Standards (MFRSs), International Financial Reporting Standards (IFRSs),
the requirements of the Companies Act in Malaysia and the Main Market Listing Requirements.
The Directors are responsible to ensure that the Company and the Group keep proper accounting records to enable
the Company to disclose, with reasonable accuracy and without any material misstatement in the financial statements,
the financial position, the results and the cash flows of the Company and of the Group. The Directors are also
responsible to ensure that the financial statements comply with the Companies Act, 1965 and the relevant accounting
standards.
In preparing the financial statements for the financial year ended 31 December 2015, the Directors have:l
l
l
l
adopted the appropriate accounting policies, which are consistently applied;
made judgements and estimates that are reasonable and prudent;
ensured applicable accounting standards have been followed, subject to any material departures which will be
disclosed and explained in the financial statements; and
prepared the financial statements on the assumption that the Company and the Group will operate as a going
concern.
The Directors have provided the auditors with every opportunity to take all steps, undertake all inspections and seek
all explanations they considered to be appropriate for the purpose of enabling them to give their audit report on the
financial statements.
ANNUAL REPORT 2015
143
ANALYSIS OF SHAREHOLDINGS
AS AT 31 MARCH 2016
Authorised share capital
:
10,000,000,000 ordinary shares of RM0.10 each
Issued and fully paid-up share capital
:
1,736,022,854 ordinary shares of RM0.10 each (include 5,000 ordinary
shares of RM0.10 each retained as Treasury Shares)
Class of Shares
:
Ordinary shares of RM0.10 each
Voting Rights
:
One vote per ordinary share held
DISTRIBUTION OF SHAREHOLDINGS
No. of
Shareholders
% of
Shareholders
No. of
Shares
% of
Issuedcapital
1-99
175
1.35
9,523
0.00
100-1,000
353
2.73
227,609
0.01
Size of Shareholdings
1,001-10,000
3,242
25.06
24,425,637
1.41
10,001-100,000
7,329
56.65
312,660,394
18.01
100,001-86,800,891*
1,838
14.21
1,298,694,691
74.81
1
0.01
100,000,000
5.76
12,938
100.00
1,736,017,854
100.00
86,800,892 and above**
TOTAL
Notes:
*
**
- Less than 5% of issued shares
- 5% and above of issued shares
SUBSTANTIAL SHAREHOLDERS AS AT 31 MARCH 2016
According to the Register of Substantial Shareholders required to be kept under Section 69L of the Companies Act,
1965, the following are the substantial shareholders of the Company:
Number of Shares Held
Name of Substantial Shareholder
Datin Wai Sit Wan
Datuk Lim Soon Foo
##
*
**
#
144
Indirect
Indirect
Indirect
Indirect
Direct
%
Indirect
%
100,000,000
5.76
6,494,100
0.37
6,239,100
0.36
100,000,000#
5.76
115,329,098
6.64
279,000*
0.02
279,000
0.02
115,329,098**
6.64
Interest via the shareholdings of his mother and spouse pursuant to Section 134 (12)(c) of the Companies Act, 1965
Interest via the shareholdings of his son pursuant to Section 134 (12)(c) of the Companies Act, 1965
Interest via the shareholdings of his father.
interest via the shareholdings of his spouse pursuant to Section 134 (12)(c) of the Companies Act, 1965
AS AT 31 MARCH 2016
Cont’d
DIRECTORS’ INTEREST AS AT 31 MARCH 2016
According to the Register of Directors’ Shareholding required to be kept under Section 134 of the Companies Act,
1965, the Directors’ interest in the ordinary share capital of the Company are as follows:
Name of Directors
Direct
Interest
%
Indirect
Interest
%
-
-
-
-
Tham Jooi Loon
4.07
4,709,998
5.76
6,494,100
9,998
0.00
-
-
78,115,098 4.50
3,000,000*
0.17
Datuk Lim Soon Foo
#
##
*
**
Indirect
Indirect
Indirect
Indirect
Interest
Interest
Interest
Interest
via
via
via
via
the
the
the
the
shareholdings
shareholdings
shareholdings
shareholdings
of
of
of
of
his
his
his
his
0.37
115,329,098
6.64
279,000*
0.02
-
-
-
-
279,000
0.02
115,329,098**
6.64
(Alternate Director to Datuk Lim Soon Foo)
0.27
70,708,198
100,000,000
#
spouse pursuant to Section 134 (12)(c) of the Companies Act, 1965
mother and spouse pursuant to Section 134 (12)(c) of the Companies Act, 1965
son pursuant to Section 134 (12)(c) of the Companies Act, 1965
father.
THIRTY LARGEST SHAREHOLDERS AS AT 31 MARCH 2016
Name of Shareholders
No. of
Shares
% of
Issued capital
100,000,000
5.76
1
Maybank Nominees (Tempatan) Sdn Bhd
- Pledged Securities Account for Datuk Lim Thean Shiang
2
DB (Malaysia) Nominee (Asing) Sdn Bhd
- Deutsche Bank AG Singapore for Capital Asia Pte Ltd (MaybankSG)
72,316,400
4.17
3
HSBC Nominees (Asing) Sdn Bhd
- Exempt An for Credit Suisse (SG BR-TST-Asing)
52,676,098
3.03
4
RHB Capital Nominees (Tempatan) Sdn Bhd
- Datuk Lim Soon Foo
50,000,000
2.88
5
Cimsec Nominees (Tempatan) Sdn Bhd
- CIMB Bank for Tham Jooi Loon (MM1102)
47,547,998
2.74
6
RHB Capital Nominees (Asing) Sdn Bhd
- Robert Yee Seng Lee
32,133,100
1.85
7
Amsec Nominees (Tempatan) Sdn Bhd
- Pledged Securities Account for Tan Sri Dato’ Sri Koh Kin Lip JP
31,461,438
1.81
8
- Pledged Securities Account for Tham Jooi Loon
21,252,200
1.22
9
EB Nominees (Tempatan) Sendirian Berhad
- Pledged Securities Account for Tan Sri Dato’ Sri Koh Kin Lip JP (SFC 2)
21,000,000
1.21
10
Kenanga Nominees (Tempatan) Sdn Bhd
- Pledged Securities Account for Agrobulk Holdings Sdn Bhd
20,000,000
1.15
11
CIMSEC Nominees (Tempatan) Sdn Bhd
- CIMB Bank for Tan Sri Dato’ Sri Koh Kin Lip JP (MY0502)
17,640,000
1.02
12
Citigroup Nominees (Asing) Sdn Bhd
-CBNY for DFA Emerging Market Small Cap Series
15,160,200
0.87
ANNUAL REPORT 2015
145
AS AT 31 MARCH 2016
Cont’d
THIRTY LARGEST SHAREHOLDERS AS AT 31 MARCH 2016 cont’d
Name of Shareholders
% of
Issued capital
13
- CBNY for Emerging Market Core Equity Portfolio DFA Investment
Dimensions Group Inc
14,892,600
0.86
14
- CBNY for Dimensional Emerging Markets Value Fund
14,638,800
0.84
15
- Pledged Securities Account for Koh Siew Kong
13,080,000
0.75
16
Alliancegroup Nominees (Tempatan) Sdn Bhd
- Pledged Securities Account for Mohd Fairus Bin Shafie
12,750,000
0.73
17
- Pledged Securities Account for Tang Quee Huang (001)
11,050,000
0.64
18
Er Soon Puay
11,000,000
0.63
19
RHB Nominees (Tempatan) Sdn Bhd
- Pledged Securities Account for Datuk Lim Soon Foo
10,951,500
0.63
20
- Pledged Securities Account for Phua Sin Mo
10,160,200
0.59
21
- Pledged Securities Account for Ritz Crest Sdn Bhd
10,000,000
0.58
22
- Pledged Securities Account for Tan Aik Pen
10,000,000
0.58
23
- Pledged Securities Account for Low Keng Siong
10,000,000
0.58
24
Alliancegroup Nominees (Tempatan) Sdn Bhd
- Pledged Securities Account for Ng Chin San (6000030)
9,118,300
0.53
25
Datuk Lim Soon Foo
8,610,000
0.50
26
Lai Ming Chun@Lai Poh Lin
8,199,998
0.47
27
Maybank Nominees (Tempatan) Sdn Bhd
- Pledged Securities Account for Tan Sri Dato’ Sri Koh Kin Lip JP
7,890,000
0.45
28
Khoo Nang Seng @ Khoo Nam Seng
7,400,000
0.43
29
Seow Hee Yoong
7,100,000
0.41
30
Cimsec Nominess (Tempatan) Sdn Bhd
- CIMB Bank for Tan Aik Pen (PBCL-0G0021)
7,000,000
0.40
665,028,832
38.31
TOTAL
146
No. of
Shares
ADDITIONAL COMPLIANCE INFORMATION
SHARE BUY-BACK
The details of shares bought back/cancelled for the financial year ended 31 December 2015 are as follows:
Monthly
Breakdown
Bought Back
Number
of Shares
Purchased
(units)
Price Per Share (RM)
Lowest
Highest
Average
Cost/ Selling
Price Per
Share
Total
Consideration
Number of
Treasury
Shares
Cancelled
March 2015
1,000
0.140
0.140
0.140
181.50
-
August 2015
1,000
0.100
0.100
0.100
143.43
-
Total
2,000
0.120
324.93
-
During the financial year under review, the Company purchased in the open market a total of 2,000 of its own issued
shares. None of the treasury shares has been cancelled. As at 31 December 2015, the Company held a total of 4,000
ordinary shares as treasury shares.
OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES
The Company did not issue any options, warrant or convertible securities during the financial year ended 31 December
2015.
AMERICAN DEPOSITORY RECEIPT (ADR)/GLOBAL DEPOSITORY RECEIPT (GDR) PROGRAMME
The Company did not sponsor any ADR/GDR Programme during the financial year under review.
IMPOSITION OF SANCTIONS AND/OR PENALTIES
There were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by
any relevant regulatory bodies during the financial year under review.
NON-AUDIT FEES
During the year ended 31 December 2015, non-audit fees of RM5,000 was incurred by the Group to engage the
external auditors, Messrs Deloitte, to review the internal control.
PROFIT ESTIMATES, FORECAST OR PROJECTION
The Company did not issue any profit estimate, forecast or projection for the financial year ended 31 December 2015.
VARIATION IN RESULTS
There was no material variation between the audited results for the financial year ended 31 December 2015 and the
unaudited results of the Group as previously announced.
PROFIT GUARANTEE
The Company did not issue any profit guarantee during the financial year under review.
ANNUAL REPORT 2015
147
Cont’d
MATERIAL CONTRACT INVOLVING DIRECTORS AND MAJOR SHAREHOLDERS
There were no material contracts entered into by the Company and its subsidiaries which involved the interests of the
Directors and major shareholders, either still subsisting at the end of the financial year ended 31 December 2015, or
which were entered into since the end of the previous financial year.
RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE
Details of the recurrent related party transactions of a revenue or trading nature entered into by the Group is disclosed
in Note 24 to the financial statements on page 109 and 110.
MATERIAL CONTRACT RELATING TO LOANS
There were no material contracts relating to loan involving the interests of the Directors and major shareholders during
the financial year under review.
UTILISATION OF PROCEEDS
Private Placement Exercise Proposed in Year 2014
As at 31 December 2014, the Company had raised gross proceeds of approximately RM43.395 million (“Gross
Placement Proceeds”) via the placement of 263,000,000 Placement Shares under the Proposed Placement exercises
comprising:
(i)
233,000,000 Placement Shares at an issue price of RM0.165 per share on 19 December 2014 (“Tranche 1
Placement”); and
(ii)
Placement”).
On 10 February 2015, the Company announced that the Board of Directors of the Company had resolved to revise
part of the utilisation of proceeds from the Tranche 1 Placement and Tranche 2 Placement amounting to RM28.395
million or 65.43% of the Gross Placement Proceeds.
As at 31 March 2015, the status of the utilisation of proceeds was as follows:
Original
utilisation
amount
Revised
utilisation
amount
(Note 1)
Actual
utilisation
Balance
RM’000
RM’000
RM’000
RM’000
A
B
C
D=B-C
Estimated timreframe
for the utilisation of
proceeds from the
date of listing of the
Placement Shares
43,395
15,000
-
15,000
Within six (6) months
-
28,395
28,395
-
Within three (3) months
43,395
43,395
28,395
15,000
-
Description
Purchase of vessels
Working capital (including the
estimated expenses for the
Proposals)
Total proceeds
On 24 April 2015, Bursa Securities approved the extension of time of six months to 25 October 2015 for the
implementation of the Proposed Placement. Bursa Securities has subsequently, via its letter dated 20 October 2015
granted the Company a further extension of time of six months to 25 April 2016 to complete the implementation of the
Proposed Placement.
148
Cont’d
UTILISATION OF PROCEEDS cont’d
As at 31 December 2015, the Company had raised gross proceeds of approximately RM8.42 million (“Gross
Placement Proceeds”) via the placement of 84,204,100 Placement Shares under the Proposed Placement exercises
comprising:
(i)
Placement”); and
(ii)
Placement”).
On 15 December 2015, the Company announced that the Proposed Placement was completed and the Board of
Directors of the Company has resolved to change the utilisation of proceeds for the Tranche 3 Placement and Tranche
4 Placement. As at 31 March 2016, the status of the utilisation of proceeds was as follows:
Original
utilisation
for
Tranche 1
Placement
and
Tranche 2
Placement
amount
Original
utilisation
for
Tranche 3
Placement
and
Tranche 4
Placement
amount
Revised
utilisation
for
Tranche 1
Placement
and
Tranche 2
Placement
(on 10
February
2015)
amount
(RM’000)
(RM’000)
(RM’000)
(RM’000)
(RM’000)
(RM’000)
(RM’000)
Description
A
B
C (Note 1)
D
E=C+D
F
G=E-F
Purchase of
vessels
43,395
8,420
15,000
-
15,000
15,000
-
-
-
28,395
8,420
36,815
36,815
-
43,395
8,420
43,395
8,420
51,815
51,815
-
Working capital
(including the
estimated
expenses for
the proposals)
(Note 2)
TOTAL
Revised
utilisation
for
Tranche 3
Placement
and
Tranche 4
Placement
amount
Total
Revised
utilisation
amount
Actual
utilisation
amount
Balance
Note 1: The Company intends to use part of the proceeds raised from the Proposed Placement for general
working capital purposes of the Group, including but not limited to payment of trade and other payables,
management, employees and marketing expenses and other day-to-day expenses. The breakdown of
proceeds to be utilised for each component of working capital has not been determined at this juncture.
Moreover, the actual amount to be utilised by each component of working capital may differ subject to the
operating requirements at the time of utilisation.
The Company intends to finance the shortfall in the Proposed Acquisitions either via bank borrowings and/or
internally-generated funds of the Group and/or other forms of financing.
Note 2: The Company intends to use part of the proceeds raised from the Placement for general working capital
purposes of the Group, including but not limited to payment of trade and other payables, management,
employees and marketing expenses and other day-to-day expenses. The breakdown of the proceeds to
be utilised for each component of working capital has not been determined at this juncture. Moreover,
the actual amount to be utilised by each component of working capital may differ subject to the operating
requirements at the time of utilisation
ANNUAL REPORT 2015
149
LIST OF PROPERTIES
Tenure
Approximate
Age of
Building
Net Book
Value as at
31.12.2015
(RM)
Date of Last
Revaluation
136,389/
81,628
Freehold
18 years
7,995,540.91
13 October 2008
Industrial
land with
warehouse
and office
215,280/
1,680
Leasehold
60 years
expiring
7 September
2064
8 years
77,22,040 NIL
Business/
Office
N/A/
3,229
Freehold
9 years
503,748
4 October 2004
Industrial land
20,000/
N/A
Leasehold
60 years
expiring
5 November
2069
6 years
1,088,105
NIL
Daya CMT Sdn Bhd
Plot 81 Lebuhraya Kampung Jawa,
Bayan Lepas,
11900 Pulau Pinang, Malaysia.
Industrial
land with
warehouse
and office
46,478/
20,748
Leasehold
60 years
expiring
2 November
2048
16 years
1,935,523
7 July 2008
Daya CMT Sdn Bhd
72 Jalan Badlishah, 09100 Baling,
Kedah Darul Aman, Malaysia.
3 Storey
shophouse
N/A/
2,314
Freehold
18 years
276,682
7 July 2008
Vacant Land
23,573/
N/A
Freehold
20 years
51,964
7 July 2008
Industrial
land with
warehouse
and office
113,053/
28,364
Leasehold
99 years
expiring on
14 February
2104
10 years
8,634,463
2 June 2008
Registered Owner/Location
Description
And Existing
Use
Land/Built
Up Area
(sq ft)
Daya Polymer Sdn Bhd
1744, Jalan Industri Dua,
Taman Industri Bukit Panchor,
14300 Nibong Tebal,
Penang, Malaysia.
Industrial
land with
factory,
warehouse
and office
Lot No. 5410,
Kawasan Perindustrian,
Teluk Kalong,
24007 Kemaman,
Terengganu Darul Iman,
Malaysia.
Suite B-5-2,
Setiawangsa Business Suites,
Jalan Setiawangsa 11,
Taman Setiawangsa,
54200 Kuala Lumpur,
Malaysia.
Lot PT 8052,
Teluk Kalong,
24007 Kemaman,
Terengganu Darul Iman, Malaysia.
Daya CMT Sdn Bhd
Lot No. 736 Mukim 1,
Jalan Pulau Betong,
Balik Pulau, Daerah Barat Daya
Pulau Pinang, Malaysia.
Daya Clarimax Sdn Bhd
Lot No. 38,
Jalan Sungai Pinang 5/1,
Seksyen 5, Phase 2A,
Taman Perindustrian Pulau Indah,
42920 Port Klang,
Selangor Darul Ehsan, Malaysia.
150
LIST OF PROPERTIES
Cont’d
Approximate
Age of
Building
Net Book
Value as at
31.12.2015
(RM)
Date of Last
Revaluation
Leasehold
60 years
expiring
26 March
2059
8 years
1,580,257
NIL
53,908/
3,720
Leasehold
60 years
expiring
10 September
2060
14 years
271,105
NIL
Industrial
land
53,822/
1,600
Leasehold
60 years
expiring
28 January
2063
7 years
283,518
NIL
Industrial
land with
warehouse
and office
21,312/
13,701
99 years
lease
expiring on
29 Sept 2086
29 years
2,159,937
10 Aug 2010
Daya Urusharta Sdn Bhd
D5-1-6, D5-1-7, D5-1-8,
D5-1-9, D5-1-10
Solaris Dutamas,
No.1, Jalan Dutamas 1,
50480 Kuala Lumpur
Business/
Office
N/A/
5,178
Freehold
9 years
3,293,340
NIL
D5-1-1,D5-1-2,D5-1-3,
D5-1-3A,D5-1-5
Solaris Dutamas,
No.1, Jalan Dutamas 1,
50480 Kuala Lumpur
Business/
Office
N/A
4,268
Freehold
9 years
3,729,924 NIL
Description
And Existing
Use
Land/Built
Up Area
(sq ft)
Daya Proffscorp Sdn Bhd
Lot 3997,
Teluk Kalong,
24007 Kemaman,
Malaysia.
Industrial
land with
warehouse
and office
107,600/
18,725
Lot 4597,
Teluk Kalong,
24007 Kemaman,
Malaysia.
Industrial
land with
workshop
Lot 4835,
Teluk Kalong,
24007 Kemaman,
Malaysia.
Daya OCI Sdn Bhd
No 9 & 11, Jalan P/8,
Kawasan Perindustrian Bangi,
Seksyen 13,
43650 Bandar Baru Bangi,
Selangor, Malaysia.
Tenure
ANNUAL REPORT 2015
151
LIST OF PROPERTIES
Cont’d
Net Book
Value as at
31.12.2015
(RM)
Date of Last
Revaluation
99 years
lease
expiring on
23 Oct 2104
3 years
4,938,698 NIL
385,506/
NA
Leasehold
NA
3,931,846
NIL
1,267,160/
NA
Freehold
NA
7,931,815
NIL
Land/Built
Up Area
(sq ft)
52,52-1,52A,52A-1,56,56-1,58,58-1
Jalan Damai Raya 1, Alam Damai,
56000 Cheras, Kuala Lumpur
Vacant Office
N/A
15,678
Ultrafest Sdn Bhd
CL 025134883,
Kampong Gadong Kimanis
Off Jalan Kimanis-Keningau
District of Papar, Sabah
Proposed
development
of industrial/
factory
units
Ultrafest Sdn Bhd
(Benificially owner)
NT 023097841
NT 023097850
NT 023097863
NT 023097878
Kampong Gadong Kimanis
Off Jalan Kimanis-Keningau
District of Papar, Sabah
Proposed
development
of industrial/
factory
units
152
Approximate
Age of
Building
Description
And Existing
Use
Tenure
NOTICE OF THIRTEENTH ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the Thirteenth Annual General Meeting of the Company will be held at MTD Group
Building, Ground Floor, No. 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan on Wednesday, 15 June
2016 at 10.30 a.m. for the following purposes:
AGENDA
As Ordinary Business
1.
To receive the Audited Financial Statements for the financial year ended 31
December 2015 together with the Directors’ and Auditor’s Reports thereon.
(Please refer to Explanatory
Notes to the Agenda )
2.
To approve the payment of Directors’ fees of RM174,000.00 for the financial
year ended 31 December 2015.
Ordinary Resolution 1
3.
To re-elect the following Directors who retire by rotation in accordance with
Article 104 of the Company’s Articles of Association:
(a)
(b)
4.
To re-appoint Messrs Deloitte as the Company’s auditors for the ensuing year
and to authorise the Board of Directors to fix their remuneration.
As Special Business
To consider and, if thought fit, pass the following ordinary resolutions:
5.
Authority for Directors to issue and allot shares in the Company pursuant
to Section 132D of the Companies Act, 1965
“THAT pursuant to Section 132D of the Companies Act, 1965, and subject
always to the approval of the relevant authorities, the Directors be and are
hereby empowered to issue and allot shares in the Company, from time to time
to such persons and upon such terms and conditions and for such purposes
as the Directors may, in their absolute discretion, deem fit, provided that the
aggregate number of shares to be issued pursuant to this resolution does not
exceed 10% of the issued share capital of the Company for the time being.
AND THAT the Directors be and are also empowered to obtain the approval
for the listing of and quotation for the additional shares on Bursa Malaysia
Securities Berhad (“Bursa Securities”) and that such authority shall continue in
force until the conclusion of the next Annual General Meeting (“AGM”) of the
Company.”
ANNUAL REPORT 2015
153
Cont’d
6.
Proposed Renewal of Authority for the Purchase by the Company of its
own ordinary shares of up to 10% of the issued and paid up share capital
(“Share Buy-Back”)
“THAT, subject to the Companies Act, 1965 (“the Act”), provisions of
the Company’s Memorandum and Articles of Association and the Listing
Requirements of Bursa Securities, the Company be and is hereby authorised
to purchase such number of ordinary shares of RM0.10 each in the Company
subject to the following:(a)
the aggregate number of the Company’s shares which may be purchased
or held by the Company shall not exceed ten per centum (10%) of the
issued and paid-up ordinary share capital of the Company, subject to the
restriction that the Company continues to maintain a shareholding spread
that is on compliance with the Listing Requirements of Bursa Securities;
(b) the maximum funds to be allocated by the Company for the purpose of
purchasing the Company’s shares under the Share Buy-Back shall not
exceed the latest available audited retained profits and share premium of
the Company;
(c)
the authority conferred by this resolution to facilitate the Share Buy-Back
will commence immediately upon the passing of this ordinary resolution
and will continue to be in force until:
(i)
the conclusion of the next AGM of the Company at which time the
authority would lapse unless renewed by ordinary resolution, either
unconditionally or conditionally; or
(ii)
the expiration of the period within which the next AGM of the
Company after that date is required by law to be held; or
(iii) the authority is revoked or varied by ordinary resolution passed by
the shareholders of the Company in a general meeting,
whichever occurs first; and
(d) upon completion of the purchase(s) of the Company’s shares by the
Company, the Directors of the Company be and are empowered to
cancel or retain as treasury shares, any or all of the Company’s shares
so purchased, resell on Bursa Securities or distribute as dividends to the
Company’s shareholders and/or in any manner as prescribed by the Act,
rules, regulations and orders made pursuant to the Act and the Listing
Requirements of Bursa Securities and any other relevant authorities for the
time being in force,
AND THAT the Directors of the Company be and are hereby authorised to take
all such steps as are necessary or expedient to implement, finalise, complete
or to effect the Share Buy-Back with full powers to assent to any conditions,
modifications, resolutions, variations and/or amendments (if any) as may be
imposed by the relevant authorities and/or to do all such acts and things as the
Directors may deem fit and expedient in the best interest of the Company to
give effect to and to complete the purchase of the Company’s shares.”
154
Cont’d
7.
Continuing in Office as Independent Non-Executive Director
“THAT approval be and is hereby given to Encik Fazrin Azwar Bin Md. Nor who
has served as an Independent Non-Executive Director of the Company for a
cumulative term of more than nine years, to continue to act as an Independent
Non-Executive Director of the Company.”
8.
To transact any other business of which due notice shall have been given in
accordance with the Company’s Articles of Association and the Companies Act,
1965.
By Order of the Board
CHEN BEE LING (MAICSA 7046517)
TAN LAI HONG (MAICSA 7057707)
Secretaries
29 April 2016
Notes:
i)
In respect of deposited securities, only members/shareholders whose names appear in the Record of Depositors as at 9 June
2016 (“General Meeting Record of Depositors”) shall be eligible to attend, speak and vote at the Meeting.
ii)
A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote at the Meeting on his/
her behalf. In the case of a corporation, a duly authorised representative to attend and vote in its stead. The proxy may but
need not be a member of the Company and a member may appoint any person to be his/her proxy without limitation. A proxy/
representative appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.
iii)
Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he/she specifies the proportions of
his/her holdings to be represented by each proxy.
iv)
The instrument appointing a proxy shall be in writing under the hand of the appointer or if such appointer is a corporation, either
under its Common Seal or under the hand of an officer or attorney duly authorised.
v)
The instrument appointing a proxy must be deposited at the Registered Office of the Company at Level 8, Symphony House,
Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours
before the time set for holding the Meeting or adjourned meeting.
vi)
Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners
in one securities account (“Omnibus Account”), there is no limit to the number of proxies which the exempt authorised nominee
may appoint in respect of each Omnibus Account it holds.
Explanatory Notes to the Agenda:
Item 1 of the Agenda
This item of the Agenda is meant for discussion only, as the provision of Section 169(1) of the Companies Act, 1965 does not require
a formal approval of the shareholders for the Audited Financial Statements. Hence, this item of the Agenda is not put forward for
voting.
ANNUAL REPORT 2015
155
Cont’d
Item 5 of the Agenda - Ordinary Resolution 5
Authority for Directors to issue and allot shares in the Company pursuant to Section 132D of the Companies Act, 1965
Ordinary Resolution 5 is a renewal of the previous year mandate and if passed, will empower the Directors of the Company to issue
and allot shares up to an aggregate amount not exceeding 10% of the issued share capital of the Company for the time being for
such purposes as the Directors consider would be in the best interest of the Company. This authority unless revoked or varied by the
Company at a general meeting will expire at the next Annual General Meeting.
Proposed Renewal of Authority for Share Buy Back
Ordinary Resolution 6 if passed, will empower the Directors of the Company to buy-back and/or hold shares of the Company not
exceeding ten percent (10%) of the issued and paid-up share capital of the Company from time to time being quoted on the Bursa
Securities as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and
conditions as the Directors may deem fit and expedient in the interest of the Company.
Shareholders are advised to refer to the Statement to Shareholders dated 29 April 2016, which is circulated together with the 2015
Annual Report when considering Ordinary Resolution 6 on the Share Buy Back.
Continuing in Office as Independent Non-Executive Director
The Nomination Committee has assessed the independence of Encik Fazrin Azwar Bin Md. Nor, who served as an Independent
Non-Executive Director of the Company for a cumulative term of more than nine years and arising therefrom, the Board discussed and
agreed with the recommendation of the Nomination Committee that in his long service to the Company, he has performed very well
as an Independent Director. There is no reason to believe that he would not continue to act independently and to contribute to the
Company as follows:
a)
b)
c)
d)
e)
f)
156
He fulfils the criteria under the definition of Independent Director as stated in the Main Market Listing Requirements of Bursa
Securities and therefore would be able to function as a check and balance and bring an element of objectivity to the Board of
Directors;
He has devoted sufficient time and attention to his professional obligations for informed and balanced decision making;
He had vast experience in a diverse range of businesses and therefore would be able to provide constructive opinion;
He exercises independent judgement and has the ability to act in the best interest of the Company;
He had continued to exercise his independence and due care during his tenure as an independent Non-Executive Director of
the Company and carried out his professional duties in the best interest of the Company and shareholders;
He has actively participated in the Board’s deliberations, provided objective and independent opinion to the Board.
STATEMENT ACCOMPANYING
NOTICE OF ANNUAL GENERAL MEETING
Authority for Directors to issue and allot shares in the Company pursuant to Section 132D of the Companies
Act, 1965
This is a renewal of the mandate obtained from the shareholders of the Company at the Annual General Meeting of
25 June 2015 and if passed, will empower the Directors of the Company to issue and allot shares up to an aggregate
amount not exceeding 10% of the issued share capital of the Company for the time being for such purposes as the
Directors consider would be in the best interest of the Company.
This authority unless revoked or varied by the Company at a general meeting will expire at the next Annual General
Meeting.
The renewal of this mandate would provide flexibility to the Company for any possible fund raising exercise, including
but not limited for further placing of shares, for purpose of funding future investment projects, working capital and/or
acquisitions. This authority is to avoid any delay and cost involved in convening a general meeting to approve such
issuance if shares.
The Company did not utilise the mandate obtained at the last Annual General Meeting and thus no proceeds were
raised from the previous mandate.
ANNUAL REPORT 2015
157
This page has been intentionally left blank.
158
THIRTEENTH ANNUAL GENERAL MEETING
FORM OF PROXY
(Company No. 636357-W)
(Incorporated in Malaysia under the Companies Act,1965)
CDS Account No.
No. of shares held
I/We
of
being a member/members of the Daya Materials Berhad hereby appoint Mr./Mrs./Ms
NRIC No.
of
or failing him/her Mr./Mrs./Ms
NRIC No.
of
or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us and on my/our behalf at the Thirteenth
Annual General Meeting of the Company to be held at MTD Group Building, Ground Floor, No. 1, Jalan Batu Caves, 68100
Batu Caves, Selangor Darul Ehsan on Wednesday, 15 June 2016 at 10.30 a.m. and at any adjournment.
In case of vote taken by a show of hands, my/our proxy shall vote on my/our behalf as indicated below:
Resolution No.
Ordinary Business
Payment of Directors’ Fees
Re-election of Dato’ Dr. Azmil Khalili bin Dato’ Khalid as Director
Re-election of Tan Sri Dato’ Sri Koh Kin Lip JP as Director
Re-appointment of Messrs Deloitte as the Company’s Auditors
Special Business
Authority for Directors to issue and allot shares in the Company
pursuant to Section 132D of the Companies Act, 1965.
Proposed Renewal of Authority for Share Buy-Back.
Retention of Encik Fazrin Azwar Bin Md. Nor as Independent
Non-Executive Director
For
Against
For
Against
Please indicate with an (X) in the spaces provided above how you wish your vote to be cast. If no specific direction as
to voting is given, the proxy will vote or abstain at his/her discretion.
Dated this
day of
, 2016
Signature/Common Seal of Shareholder
NOTES:
i)
In respect of deposited securities, only members/shareholders whose names appear in the Record of Depositors as at 9 June
2016 (“General Meeting Record of Depositors”) shall be eligible to attend, speak and vote at the Meeting.
ii)
A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote at the Meeting on his/
her behalf. In the case of a corporation, a duly authorised representative to attend and vote in its stead. The proxy may but
need not be a member of the Company and a member may appoint any person to be his/her proxy without limitation. A proxy/
representative appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.
iii)
Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he/she specifies the proportions of
his/her holdings to be represented by each proxy.
iv)
The instrument appointing a proxy shall be in writing under the hand of the appointer or if such appointer is a corporation, either
under its Common Seal or under the hand of an officer or attorney duly authorised.
v)
The instrument appointing a proxy must be deposited at the Registered Office of the Company at Level 8, Symphony House,
Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours
before the time set for holding the Meeting or adjourned meeting.
vi)
Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners
in one securities account (“Omnibus Account”), there is no limit to the number of proxies which the exempt authorised nominee
may appoint in respect of each Omnibus Account it holds.
Fold This Flap For Sealing
Then Fold Here
AFFIX
STAMP
The Secretary
Jalan PJU 1A/46
47301 Petaling Jaya
1st Fold Here
636357-W

we deliver we care - Daya Materials Berhad

Transcription

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