SCOMI GROUP BHD Annual Report 2013

Transcription

CONTENTS
Key Financial Indicators P 0 2
Key Financial Highlights P 0 3
Scomi Group Corporate Structure P 04
Corporate Statement P 0 8
Corporate Information P 0 9
Profile of Directors P 1 0
Management Team P 1 6
Chairman’s Statement P 1 8
Management Review of Operations P 26
Corporate Social Responsibility P 36
Human Capital Development P 39
Statement on Corporate Governance P 43
Statement on Risk Management and Internal Control P 54
Audit and Risk Management Committee Report P 60
Additional Information P 6 4
Statement of Directors’ Responsibility P 67
Financial Statements P 7 0
Analysis of Shareholdings P 2 0 7
List of Properties P 2 1 1
Corporate Directory P 2 1 4
Notice of Annual General Meeting P 217
Notice of Nomination P 2 2 1
Form of Proxy P 2 2 3
Scomi is all about realising potential. In this annual report, we
seek to bring Scomi’s promise to life by using paper art, where
a simple sheet of paper is re-imagined into complex three
dimensional forms. Much like how Scomi leverages upon the
simplest opportunity to create value, this demonstrates how
creativity and vision can transform something as basic as paper
into an object of beauty.
P
/0 2
KEY FINANCIAL INDICATORS
SCOMI GROUP BHD ANNUAL REPORT 2013
Key Financial
Indicators
15 months 12 months 12 months 12 months 12 months
NOTES
20132011201020092008** RM’000RM’000RM’000RM’000RM’000
Based on (loss)/profit attributed
to owner of the Company and
the weighted average number of
Continuing operations
shares assumed to be in issue in the
Turnover 1,922,368 1,402,566 1,931,036
2,419,781
2,573,198
respective period/year.
EBITDA
255,118
305
(148,563)
(192,953) 409,148 Depreciation 104,343 119,156 138,420 139,247 125,943 @
Finance costs
129,678 48,856 98,857
106,719 113,058 Based on (loss)/profit attributed
Share of profit in
to owner of the Company and
the weighted average number of
associated companies 133 (2,978)
6,157
43,577
49,543 shares assumed to be in issue in the
Share of profit from
respective period/year after taking
joint-ventures
6,568 3,754 415
3,596 –
into consideration the dilutive effect
of unexercised ESOS. Profit/(loss) before tax
21,097 (167,707)
(276,980)
(951) 190,191
2008 – 2011
Taxation
(27,557)
(19,298)
(27,081)
(31,092)
(13,221)
The financial highlights on pages
2 and 3 reflect the audited results
Profit/(loss) from
of Scomi Group Bhd, with certain
continuing operations (6,460)
(187,005)
(304,061)
(32,043) 176,970
numbers restated to reflect
Loss from discontinued
retrospective effects as a result
operations
(62,989)
(170,156)
(3,269)
–
–
of adoption of new or revised
Financial Reporting Standards in the
respective years. Profit/(loss) for the year (69,449)
(357,161)
(307,330)
(32,043) 176,970
Non-controlling interest 2,616 133,456 134,424
21,179 (60,417)
(Loss)/profit attributed to
owners of the Company (66,833)
(223,705)
(172,906)
9,875 116,553
Numbers of shares
in issue (‘000)
1,564,540 1,187,688 1,182,658 1,086,801 1,021,839 Weighted average number
of shares assumed in issue
(‘000) 1,634,422 1,391,731
1,371,255 1,025,795 1,006,342 Weighted average number
of shares used to compute
diluted earnings per share
(‘000) 1,638,693 1,394,528 1,387,259 1,053,648 1,016,009 Basic - Net EPS (sen)**
(4.09)
(16.07)
(12.61)
0.96 11.58 Fully diluted - Net EPS (sen)@ (4.08)
(16.04)
(12.46)
0.94 11.47
P
KEY FINANCIAL HIGHLIGHTS
Key Financial
Highlights
Turnover (RM Million)
Total Assets
(RM Million) As at 31 March 2013
RM1,647
As at 31 Dec 2011 : RM1,532
As at 31 Dec 2010 : RM2,466
As at 31 Dec 2009 : RM3,039
15 months 12 months 12 months 12 months 12 months
^
2011
2010
2009
2008
2013
1,402
1,931
2,419
2,573
1,922
Earning Per
Share (Basic)
15 months/2013
(4.09)sen
2011 : (16.07) sen
2010 : (12.61) sen
2009 : 0.96 sen
Profit/(Loss) Before Tax
(RM Million)
15 months
^
2013
21
12 months
2008
190
Net Tangible Assets
(RM Million)
As at 31 March 2013
RM441
As at 31 Dec 2011 : RM188
As at 31 Dec 2010 : RM346
As at 31 Dec 2009 : RM360
12 months 12 months 12 months
2010
2011
2009
(277)
(168)
(951)
Shareholders’ Fund
(RM Million)
As at 31 March 2013
RM599
As at 31 Dec 2011 : RM509
(Loss)/Profit Attributed to Owners
of the Company (RM Million)
As at 31 Dec 2010 : RM726
As at 31 Dec 2009 : RM920
12 months 12 months
2009
2008
10
117
15 months
^
2013
(66)
12 months 12 months
2010
2011
(173)
(224)
NOTE
^
The 2013 financials are in respect of continuing operations only.
Net Assests Per Share
(Attributable to owners
of the Company)
As at 31 March 2013
38sen
As at 31 Dec 2011 : 37 sen
As at 31 Dec 2010 : 61 sen
As at 31 Dec 2009 : 85 sen
/0 3
P
/0 4
SCOMI GROUP CORPORATE STRUCTURE AS AT 31 JULY 2013
Scomi Group Bhd1
SIN GAP ORE
Scomi
International
Private Limited
Scomi
Solutions
Sdn Bhd
I SL A N D S
Scomi
Ecosolve
Limited
Scomi Oiltools
Bermuda Limited
SCOTL AN D
Scomi Barite
Sdn Bhd
MAURITIUS
Scomi Oiltools
(Kemaman)
Sdn Bhd
TEXAS, USA
51%
Scomi Oiltools
(Shetland)
Limited
KMC All Star
Chemical
Sdn Bhd
MEXICO
A LG E R I A
MEXICO
Emerald 49%
Logistics
Sdn Bhd
Trans Advantage
Sdn Bhd
L A BUA N
E GYPT
SCOTL AN D
Scomi Oiltools
Egypt SAE3,4
Scomi Oiltools
(Europe) Ltd
19%
I S L A NDS
Scomi Oiltools
South America Ltd
SCOTL AN D
Augean North Sea
Services Limited
48%
21.08%
V I E TN A M
Southern Petroleum
Transportation Joint
Stock Company
L A BUA N
Goldship Pte Ltd
80.54%
I N D ON ESI A
PT Rig Tenders
Indonesia Tbk6
49%
BR I TI SH V I RG I N
B R I T I S H VI RGI N
Scomi Oiltools
Sdn Bhd
Scomi Marine
Services Pte Ltd
SI N G A P OR E
KMC Oiltools
Algerie EURL
51%
Marineco
Limited
SIN G A P OR E
Scomi Oiltools
de Mexico S de
RL de CV5
Oilfield Services
de Mexico S de
RL de CV 5
I SL A N D S
King Bridge
Enterprises
Limited
Scomi KMC
Sdn Bhd
4%
TEXA S , U S A
Scomi
Equipment Inc.
50%
Transenergy Shipping
Pte. Ltd.
SI N G AP O R E
Scomi Oiltools
(S) Pte Ltd
Scomi Sosma
Sdn Bhd
50%
FRANCE
BRU N EI
Scomi Anticor
S.A.S7
Scomi (B)
Sdn Bhd
I N D ON ESI A
95%
PT Scomi Oiltools
I N D ON ESI A
VE NE ZUE L A
VENEZ UEL A
Scomi Oiltools de
Venezuela S.A.
Premium Industrial
Machining S.A.
Scomi
Capital
Limited
65.65%2
Gemini 51%
Sprint
Sdn Bhd
Scomi Oiltools Overseas
(M) Limited
Scomi Oiltools Inc
L AB UAN
Scomi Energy
Services Bhd1*
B E R MUDA
Scomi OBM
Terminal
Sdn Bhd
Scomi
Chemicals
Sdn Bhd
95%
PT Inti Jatam Pura
RU SSI A
Scomi Oiltools
(RUS) LLC
INDIA
KMC Oiltools
India Pte Ltd9
I N D O N E S IA
95%
PT Multi Jaya Persada
P
SCOMI GROUP CORPORATE STRUCTURE AS AT 31 JULY 2013
KEY
Global
Learning and
Development
Sdn Bhd
Energy Services Division
Oilfield Services
( Western) Division
Scomi
Energy
Sdn Bhd
Transport Solutions Division
Scomi
Enviro
Sdn Bhd
Scomi 72.33%
Engineering
Bhd1
B E R M UDA
Scomi Oilfield
Limited
AUS T R A LI A
Scomi Oiltools
Pty Ltd
KMCOB Capital
Berhad
51%
T HA I L A ND
OMAN
Scomi Oiltools
(Thailand) Ltd8
Scomi Oiltools
Oman LLC
C AYMAN ISL AN D S
I SL A N D S
Scomi Oiltools Ltd
Scomi OMS
Oilfield
Services Ltd
NE T HE R L A NDS
EN GL AN D & WAL ES
KMC Oiltools BV
Scomi Oiltools
(Africa) Limited
Vibratherm Limited
60%
Wasco Oil Service
Company Nigeria
Limited
Scomi Transit
Projects Brazil
(Sao Paulo)
Sdn Bhd
BR A Z I L
INDIA
Urban Transit
Servicos Do
Brasil LTDA10
Urban Transit
Private Limited11
Scomi
Transportation
Systems
Sdn Bhd
Scomi Special
Vehicles Sdn Bhd
Scomi Oiltools
(Cayman) Ltd
50%
NI GERIA
Scomi Transit
Projects Brazil
Sdn Bhd
C AYMAN ISL AN D S
C AYMAN ISL AN D S
GABON
Scomi Transit
Projects Sdn Bhd
96%
Scomi Trading
Sdn Bhd
Oiltools
Gabon SA
Scomi
Rail Bhd
Scomi
Coach
Sdn Bhd
Scomi
Coach
Marketing
Sdn Bhd
*
1
2
Formerly known as Scomi Marine Bhd.
Listed on the Bursa Malaysia Securities Berhad (Kuala Lumpur Stock Exchange).
Includes 0.01% held by
Scomi Energy Sdn Bhd.
3
4
Scomi Oiltools Bermuda Limited holds on trust for
Scomi Oilfield Limited persuant to a trust deed dated 8 March 2013.
Includes 1 share each held
by Scomi Oitools Ltd and Scomi Oiltools (Cayman) Ltd.
5 Includes 1 share held by an individual.
6 Listed on the Jakarta Stock Exchange.
7 Includes 1 preferential share
each held by 2 different individuals.
8 Includes 1 Class A share
each held by Scomi Oiltools Ltd and Scomi Oiltools (Cayman) Ltd.
9
10
11
Includes 1 share held by Scomi Oiltools Ltd.
I ncludes 1 share held by Scomi Rail Bhd.
I ncludes 0.0004% held by Scomi Rail Bhd.
NOTES
•
•
•
This corporate structure does not include the subsidiaries/
associated companies of PT Rig
Tenders Indonesia Tbk.
Except as otherwise expressly
stated, all companies in this
corporate structure are incorporated in Malaysia.
Except as otherwise expressly
stated, all companies in this
corporate structure are wholly
owned by their respective holding companies.
/0 5
Transforming a
simple commodity
into something
of global value.
A GLOBE
Using imagination, even a simple piece of paper has the
potential to become an object of greater value. In paper art,
Scomi sees its own credo to realise potential.
P
/0 8
CORPORATE STATEMENT
With a presence in 53 locations
across 26 countries, the Scomi
group of companies is a global
technology enterprise in the
energy and logistics industries.
We are a global technology enterprise.
Our global reach, capabilities and talent
provide us with the necessary resources
to develop and own new technology in all
areas of our business.
We focus on Energy & Logistics.
All our businesses are focused on the Energy
and/or Logistics sectors with the ability to
compete globally. All of us in the Scomi family
should remember that any new initiatives we
undertake will focus on these areas of business.
We provide innovative solutions.
We innovate to respond to an evolving
environment. Our products and operations
meet today’s needs while anticipating
tomorrow’s. We are committed to developing
competitive and innovative solutions to
create efficiency, add value and grow with
our customers to shape our future.
We aim to realise
potential for our
stakeholders.
Our customers:
We will develop and offer
customers innovative and
competitive products and
services that help them
grow their business.
Our shareholders:
We are committed to
providing long-term
superior returns to our
shareholders.
Our people:
We aim to provide our
employees with developmental
opportunities so they can
succeed on personal and
professional levels.
Our suppliers:
We will treat our suppliers as
our partners in the mutual
interest of business growth.
Our society/
environment:
As a good corporate citizen,
we will give back to the
communities we operate
in worldwide.
P
CORPORATE INFORMATION
Corporate
Information
Board of Directors
Tan Sri Asmat bin Kamaludin
(Chairman)
Tan Sri Nik Mohamed bin Nik Yaacob
Tan Sri Mohamed Azman bin Yahya
Datuk Haron bin Siraj
Dato’ Mohammed Azlan bin Hashim
Dato’ Sreesanthan a/l Eliathamby
Dato’ Abdul Rahim bin Abu Bakar
Dato’ Teh Kean Ming
(Appointed on 22 October 2012)
Foong Choong Hong
Shah Hakim @ Shahzanim bin Zain
Lee Chun Fai
(Alternate Director to
Dato’ Teh Kean Ming)
(Appointed on 22 May 2013)
Audit and Risk
Management Committee
(Chairman)
Nomination and
Remuneration Committee
(Chairman)
Options Committee
(Chairman)
Registered Office
Level 17, 1 First Avenue
Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan
Malaysia
Tel : 03-7717 3000
Fax: 03-7728 5853
Administrative and
Correspondence Address
Bandar Utama
47800 Petaling Jaya
Malaysia
Tel : 03-7717 3000
Fax: 03-7728 5258
Website : www.scomigroup.com.my
Email : info@scomigroup.com.my
Registrar
Symphony Share Registrars Sdn Bhd
Level 6, Symphony House
Pusat Dagangan Dana 1
Jalan PJU 1A/46 47301 Petaling Jaya
Selangor Darul Ehsan Malaysia
Tel: 03-7841 8000
Fax: 03-7841 8151/8152
Helpdesk: 03-7849 0777
Advocates & Solicitors
Albar & Partners
Advocates & Solicitors
6th Floor, Faber Imperial Court
Jalan Sultan Ismail
50250 Kuala Lumpur
Malaysia
Kadir Andri & Partners
8th Floor, Menara Safuan
80 Jalan Ampang
50450 Kuala Lumpur
Malaysia
Company Secretaries
Ong Wei Leng
(MAICSA 7053539)
Chong Mei Yan
(MAICSA 7047707)
Auditors
PricewaterhouseCoopers
(AF 1146)
Chartered Accountants
Level 10, 1 Sentral
Jalan Travers
Kuala Lumpur Sentral
PO Box 10192
50706 Kuala Lumpur
Malaysia
Principal Bankers
CIMB Bank Berhad
10th Floor, Bangunan CIMB
Jalan Semantan, Damansara Heights
50490 Kuala Lumpur
Malaysia
OCBC Bank (Malaysia) Bhd
18th Floor, Menara OCBC
18 Jalan Tun Perak
50050 Kuala Lumpur
Malaysia
Stock Exchange Listing
Main Market of Bursa Malaysia
Securities Berhad
Stock Name: Scomi
Stock Code: 7158
Currency
Ringgit Malaysia (RM)
/0 9
From left
Tan Sri Asmat Bin Kamaludin
Tan Sri Mohamed Azman Bin Yahya
Chairman,
Independent Non-Executive Director
Non-Independent Non-Executive Director
Dato’ Mohammed Azlan Bin Hashim
Tan Sri Nik Mohamed Bin Nik Yaacob
Datuk Haron Bin Siraj
From left
Foong Choong Hong
Shah Hakim Bin Zain
Group Chief Executive Officer,
Non-Independent Executive Director
Dato’ Abdul Rahim Bin Abu Bakar
Dato’ Sreesanthan A/L Eliathamby
P
/1 2
PROFILE OF DIRECTORS
Chairman, Independent Non-Executive Director
Tan Sri Asmat, 69, a Malaysian, is an Independent NonExecutive Director and the Chairman of the Company.
He was appointed to the Board on 3 March 2003.
Tan Sri Nik Mohamed, 64, a Malaysian, is an Independent
Non-Executive Director of the Company and was
appointed to the Board on 13 July 2004.
Tan Sri Asmat holds a Bachelor of Arts (Honours) degree in
Economics from the University of Malaya, and he also holds a
Diploma in European Economic Integration from the University
of Amsterdam.
Tan Sri Nik Mohamed holds a Diploma in Mechanical
Engineering, a Bachelor of Engineering (Hons) from Monash
University, Australia and a Masters in Business Management
from the Asian Institute of Management, Philippines. He also
completed the Advanced Management Programme at Harvard
University in the United States.
Tan Sri Asmat has vast experience in various capacities in
the public service and his last position was as the SecretaryGeneral of the Ministry of International Trade and Industry,
Malaysia (MITI), a position he held from 1992 to 2001.
Between1973 and 1976, he has served as Senior Economic
Counsellor for Malaysia in Brussels and has worked with several
international bodies such as Association of South-East Asian
Nations (ASEAN), World Trade Organisation (WTO) and the
Asia-Pacific Economic Cooperation, representing Malaysia in
relevant negotiations and agreements. Tan Sri Asmat has also
been actively involved in several national organisations such
as Johor Corporation, the Small and Medium Scale Industries
Corporation (SMIDEC) and the Malaysia External Trade
Development Corporation (MATRADE) while in the Malaysian
Government service. In 2008, Tan Sri Asmat was appointed
by MITI to represent Malaysia as Governor on the Governing
Board of the Economic Research Institute for Asean and East
Asia (ERIA). Other Malaysian public companies in which he is a
Director are Permodalan Nasional Bhd, UMW Holdings Berhad,
YTL Cement Berhad, Panasonic Manufacturing Malaysia Berhad,
Compugates Holdings Berhad, The Royal Bank of Scotland
Berhad, UMW Oil & Gas Corporation Berhad and AirAsia X Berhad.
He also serves on the Board of JACTIM Foundation.
Tan Sri Asmat is a member of, and chairs the Nomination and
Remuneration Committee and the Options Committee of the
Board. Tan Sri Asmat attended 10 out of the 11 Board Meetings
held during the financial period ended 31 March 2013.
He served as the Group Chief Executive of Sime Darby Berhad
from 1993 until his retirement in June 2004 and during this
period, he also served on the Boards of many of the Sime
Darby group companies. He was Sime Darby Berhad’s Director
of Operations in Malaysia prior to his appointment as the
Group Chief Executive in 1993. He was also the Chairman of
the Advisory Council of National Science Centre and Chairman
of the Board of Universiti Teknologi MARA (UITM) and served as
a member of the INSEAD East Asian Council, National Council
for Scientific Research and Development, Co-ordinating
Council for the Public-Private Sectors in the Agricultural Sector,
National Coordinating Committee on emerging Multilateral
Trade Issues and the Industrial Coordinating Council. He was
a representative for Malaysia in the APEC Business Advisory
Council and the Asia-Europe Business Forum. Other Malaysian
public companies in which he is a Director are GuocoLand
(Malaysia) Berhad, Symphony Life Berhad (formerly known as
Bolton Berhad), SapuraKencana Petroleum Berhad and Scomi
Energy Services Bhd (formerly known as Scomi Marine Bhd).
Tan Sri Nik Mohamed is also the Executive Director of Yayasan
Kepimpinan Perdana (Perdana Leadership Foundation).
Tan Sri Nik Mohamed is a member of the Audit and Risk
Management Committee of the Board. Tan Sri Nik Mohamed
attended 9 out of the 11 Board Meetings held during the
financial period ended 31 March 2013.
P
YBhg Tan Sri Mohamed Azman bin Yahya, a Malaysian,
aged 49, is a Non-Independent Non-Executive Director
of the Company and was appointed to the Board on 17
March 2003.
Datuk Haron, 68, a Malaysian, is an Independent NonExecutive Director of the Company and was appointed to
the Board on 17 March 2003.
Tan Sri Azman is the Group Chief Executive and Executive
Director of Symphony House Berhad, a listed business
process outsourcing group and the Executive Chairman of
Symphony Life Berhad (formerly known as Bolton Berhad), a
listed property group. He holds a first class honours degree
in Economics from the London School of Economics and
Political Science and is a member of the Institute of Chartered
Accountants in England and Wales and the Malaysian Institute
of Accountants and a fellow member of the Malaysian Institute
of Banks.
During the Asian Financial Crisis in 1998, Tan Sri Azman was
appointed by the Malaysian Government to set-up and head
Danaharta, the national asset management company and
subsequently became its chairman until 2003. His previous
career appointments include auditing with KPMG in London,
finance with the Island & Peninsular Group and investment
banking with Bumiputra Merchant Bankers and Amanah
Merchant Bank, the latter as Chief Executive.
Outside his professional engagements, Tan Sri Azman is active
in public service and sits on the boards of Khazanah Nasional
Berhad and Ekuiti Nasional Berhad (EKUINAS), the investment
arm and the private equity arm of the Malaysian Government
respectively. He also serves as a Director of PLUS Expressways
International Berhad (formerly known as PLUS Expressways
Berhad). Tan Sri Azman is a member of the Financial Reporting
Foundation and is a Director of Sepang International Circuit
and the Chairman of Motorsports Association of Malaysia.
Tan Sri Azman is a member of the Nomination and Remuneration
Committee of the Board. He attended all of the 11 Board
Meetings held during the financial period ended 31 March 2013.
Datuk Haron graduated from the University of Manchester,
United Kingdom, with a Bachelor of Arts with Honours in
Economics, and also holds a Masters Degree in Development
Economics from Williams College, United States of America.
Datuk Haron started his career as an Assistant Controller with
the Ministry of Commerce and Industry. He subsequently
served as the Principal Assistant Secretary, and later as the
Under Secretary, in the Ministry of Primary Industries until
1980. From August 1980, he served as the Minister Counsellor
(Economic Affairs) of the Permanent Mission of Malaysia in
Geneva, Switzerland, and returned to Malaysia in 1985 to
join the Ministry of International Trade and Industry, holding
various directorship positions, and was later appointed as
Deputy Secretary-General (Trade) in 1990. Datuk Haron
was appointed as Ambassador, Permanent Representative
of Malaysia to the United Nations and other International
Organisations (including the GATT and the WTO) and
Specialised Agencies in Geneva, Switzerland from September
1992 to December 1996. On his return, he became the
Secretary-General of the Ministry of Primary Industries where
he served until end of 2000. He was appointed Chief Executive
Officer of the Malaysian Palm Oil Promotion Council from
January 2001 until his retirement in January 2006. Other
Malaysian public company in which he is a Director is Kulim
(Malaysia) Berhad.
Datuk Haron is a member of the Audit and Risk Management
Committee and the Options Committee of the Board. He
attended 10 out of the 11 Board Meetings held during the
/1 3
P
/1 4
Dato’ Azlan, aged 56, Malaysian, is an Independent NonExecutive Director of the Company and was appointed to
the Board on 13 July 2004.
Dato’ Rahim, aged 67, a Malaysian, is an Independent
Non-Executive Director of the Company and was
appointed to the Board on 7 October 2010.
Dato’ Azlan graduated with a Bachelor of Economics from
Monash University and qualified as a Chartered Accountant in
Australia. He is a fellow member of the Institute of Chartered
Accountants, Australia, a member of the Malaysian Institute
of Accountants, a fellow member of Malaysian Institute of
Directors, a fellow member of Malaysia Institute of Chartered
Secretaries and Administrators and a honorary member of the
Institute of Internal Auditors, Malaysia.
Dato’ Rahim graduated from the Brighton College of Technology,
United Kingdom with a Bachelor of Science (Hons) in Electrical
Engineering in 1969. He is a member of the Institute of Engineers
Malaysia (MIEM) and is a Professional Engineer, Malaysia (P.Eng). He
also holds the Electrical Engineer Certificate of Competency Grade 1.
He has extensive experience in the corporate sector. Dato’ Azlan
is the Chairman of D&O Green Technologies Berhad and SILK
Holdings Berhad. He also serves as a Non-Executive Director
of Khazanah Nasional Berhad, IHH Healthcare Berhad (formerly
known as Integrated Healthcare Holdings Berhad), Labuan
Financial Services Authority and is a member of the Investment
Panel of the Employees’ Provident Fund and Retirement Fund
Incorporated. During his career, he served in various capacities in
the financial services industry and investment holding companies,
including as Chief Executive of Bumiputra Merchant Bankers
Berhad, Group Managing Director of Amanah Capital Malaysia
Berhad and Executive Chairman of Bursa Malaysia Berhad Group.
Dato’ Azlan is a member of the Audit and Risk Management
Committee and the Nomination and Remuneration Committee
of the Board. He attended 10 out of the 11 Board Meetings held
during the financial period ended 31 March 2013.
Dato’ Rahim began his career in 1969 with the then National
Electricity Board. He was attached to the organisation for 10
years in various technical and engineering positions before he
moved on to the private sector. From 1979 to 1983, he served
with Pernas Charter Management Sdn Bhd, a management
company for the tin mining industry. Then, from late 1983
to 1991, he was attached to Malaysia Mining Corporation
Berhad (MMC) in various senior positions. Later from 1991
to 1995, he moved on to MMC Engineering Services Sdn Bhd
and subsequently to MMC Engineering Group Berhad as the
Managing Director. In May 1995, he joined Petroliam Nasional
Berhad (Petronas) to assume the position of Managing Director
of Petronas Gas Berhad (PGB) and subsequently moved on to
Petronas as its Vice President, in charge of the Petrochemical
Business in 1999. He retired from Petronas on 31 August 2002.
Dato’ Rahim’s other directorships in public companies are
Scomi Engineering Bhd, Telekom Malaysia Berhad, Global
Maritime Ventures Berhad and Westports Holdings Berhad
(formerly known as Westports Holdings Sdn Bhd).
Dato’ Rahim is the Chairman of the Audit and Risk Management
Committee of the Board. He attended all of the 11 Board Meetings
Dato’ Sreesanthan, aged 52, a Malaysian, is an
Independent Non-Executive Director of the Company
and was appointed to the Board on 18 April 2006. Dato’
Sreesanthan, is an Advocate & Solicitor and a Partner
with the legal firm of Messrs Kadir Andri & Partners.
Dato’ Sreesanthan obtained his undergraduate law degree
from the University of Malaya and his post graduate degree in
law from the University of Oxford, United Kingdom.
He was formerly a Legal Assistant and later a Partner with the
legal firm of Messrs Zain & Co and Messrs Zul Rafique & Partners.
Dato’ Sreesanthan is a member of the Disciplinary Committee
Panel of the Advocates and Solicitors’ Disciplinary Board.
Dato’ Sreesanthan attended 8 out of the 11 Board Meetings
Dato’ Teh, aged 58, a Malaysian, is a Non-Independent
Non-Executive Director of the Company. He was appointed
to the Board on 22 October 2012.
He graduated with a Bachelor of Engineering degree from
University of New South Wales, Australia in 1981.
He was a Resident Civil & Structural Engineer of Dayabumi
Phase 3 Project (1981-1983) and Menara Maybank (1983-1987)
and Area Engineer of Antah Biwater J.V. Sdn Bhd (1987-1989)
prior to joining IJM Construction Sdn Bhd as Project Manager
(1989-1993), Senior Manager (Project) (1994-1997) and Project
Director (1998-2001). He was the Group General Manager
of IJM Corporation Berhad (“IJM”) from 1 April 2001 to 31
P
December 2004. He was also the Head of the Property Division
of IJM from 2001 to 2008 and the Managing Director of IJM
Properties Sdn Bhd from 1 January 2005 to 10 June 2009. He
was the Deputy Chief Executive Officer & Deputy Managing
Director of IJM from 1 July 2008 to 31 December 2010 prior
to his present appointment as the Chief Executive Officer &
Managing Director on 1 January 2011.
His directorships in other public companies include IJM, IJM
Land Berhad, IJM Plantations Berhad, ERMS Berhad and Road
Builder (M) Holdings Bhd.
He attended 4 Board Meetings held during the financial period
ended 31 March 2013 since his appointment
East Asian markets and as an adviser for European and British
pension funds and insurance companies on investments in
South-East Asia and the Far East. Mr Foong returned to Malaysia
to develop a joint venture company with Powers Supermarkets
(UK), a then wholly-owned unit of Associated British Foods public
listed company, to develop a Far Eastern sourcing and trading
house based in Malaysia. Mr Foong is a Certified Financial
Planner and also a Fellow of the Chartered Management Institute
(UK). He also plays an advisory role in the Investment Committee
of several multi-national companies for the identification of
investments and development of business opportunities. He is
currently the Managing Director of Asian Asset Group Sdn Bhd
and a Director of Asian Asset Management Sdn Bhd.
He attended all of the 11 Board Meetings held during the
Lee Chun Fai
Alternate Director to Dato’ Teh Kean Ming
Mr Lee Chun Fai, a Malaysian, aged 42, was appointed as an
Alternate Director to Dato’ Teh Kean Ming on 22 May 2013.
He graduated with a Bachelor of Accountancy (Honours) degree
from University Utara Malaysia in 1995. He obtained a Master of
Business Administration from Northwestern University and The
Hong Kong University of Science & Technology in 2012.
Shah Hakim @ Shahzanim Bin Zain
Chief Executive Officer/
Encik Shah Hakim, 48, a Malaysian, is the Chief Executive
Officer/ Non-Independent Executive Director of the Company
and was appointed to the Board on 3 March 2003.
He started his career with a public accounting firm. In October
1995, he joined Road Builder (M) Holdings Bhd (“RBH Group”)
and was the Head of Corporate Services Division of RBH Group
prior to the acquisition of RBH Group by IJM Corporation Berhad
(“IJM”) in 2007. He was the Deputy Chief Financial Officer for
the IJM Group before being appointed as the Head of Corporate
Strategy & Investment on 1 July 2012.
Encik Shah Hakim started his career as an auditor with Ernst
& Young and was subsequently promoted as Consulting
Manager, responsible for servicing large corporations. He
went on to be appointed as Executive Director of a regional
packaging manufacturer in 1992, with direct operational
responsibility. He currently sits on the Board of Scomi Energy
Services Bhd (formerly known as Scomi Marine Bhd), Scomi
Engineering Bhd and KMCOB Capital Berhad.
His directorships in other public companies include Road Builder
(M) Holdings Bhd (Alternate Director), Scomi Engineering Bhd
and Scomi Energy Services Bhd (formerly known as Scomi
Marine Bhd).
Encik Shah Hakim is a member of the Options Committee of
the Board. He attended 10 out of the 11 Board Meetings held
during the financial period ended 31 March 2013.
Foong Choong Hong
Mr Foong, 52, a Malaysian, is a Non-Independent NonExecutive Director of the Company and was appointed to
the Board on 17 March 2003.
Mr Foong holds a post-graduate degree in Management Studies
majoring in Finance, from Middlesex University, United Kingdom.
Mr Foong started his career with Robert Fleming Merchant Bank
in the United Kingdom as an Economist responsible for South-
NOTES
None of the Directors have any family relationship with any other Director and/
or major shareholder of Scomi Group Bhd.
With the exception of the disclosure on page 66, none of the Directors are
involved in any conflict of interest, or any personal interest in any business
arrangement, involving Scomi Group Bhd.
None of the Directors have been convicted for offences within the past ten years
(other than traffic offences, if any).
/1 5
Loong Chun Nee
Chief Investment &
Performance Officer
Shah Hakim B in Zain
Group Chief Executive Officer
Rohaida Ali Badaruddin
Chief of Staff
Dinesh Chelvathurai
Chief Learning Officer
Sharifah Norizan Shahabudin
Chief Legal & Governance Officer
Abu Zaharoff Abu Bakar
Group Financial Controller
P
/1 8
CHAIRMAN’S STATEMENT
Dear Stakeholders,
Your company celebrates ten years of
realising potential for all its stakeholders.
In the ten years since Scomi Group Bhd (“Scomi” or “SGB”) and
its group of companies (the “Group”) was listed on Bursa
Malaysia, we have weathered demanding times, and in the
most recent past an extremely challenging global economy.
However, in doing so, we have strengthened our business
tenacity and honed our operational flexibility. Thus we enter
our second decade with greater energy and zest to explore and
optimise business opportunities that are coming our way.
Having recovered from the stressful business environment
of the past years, it is with great pleasure that I present our
performance for the financial period from 1 January 2012
to 31 March 2013 (the “financial period”). This is a 15-month
reporting period following a change in financial year end
from 31 December to 31 March. The change was made to
facilitate recent major corporate developments that included
fundamental changes to our corporate structure, which is
starting to show positive results for us.
Overview
The global economy remained pallid in 2012, although there
were hints of recovery in various regions and sectors. Currency
instability, regulatory disruption and civil unrest touched Scomi’s
businesses around the world. The relative weakness of the
Indian Rupee and the Brazilian Real had the most impact on
our business, especially Scomi Engineering Bhd that suffered
unrealised foreign exchange losses through most of the
financial period. Environmental constraints, security challenges
and legislative requirements for land acquisitions also caused
unforeseen delays to the progress of our Mumbai monorail
project. Unsurprisingly, continuing civil unrest in the Middle
East and North Africa affected our Oilfield Services (“OFS”),
especially our operations in Egypt.
Despite all these challenges, we achieved commendable results.
Not only did we make remarkable advances in product
development for the oil & gas industry, but both our Energy
Services and Transport Solutions business segments won major
contracts. Thus, with current order books of over RM5.1 billion
and RM715 million respectively, the Group ended the financial
period in firm footing.
During the period under review, we did not lose sight of the
people who are responsible for the sustained health of our
business. Over the last 15 months, we have continued to sharpen
the technical and service skills of our employees and deepen
personal connections with our clients. Through the delivery of
quality service and nurtured relationships of mutual trust and
respect, we believe we have been able to create value in the
future of our people and our clients for mutual benefit.
Financial Performance
For the 15 months ended 31 March 2013, the Group’s consolidated
revenue from continuing operations reached RM1.92 billion
as compared to RM1.40 billion for the 12 months ended
31 December 2011. On an annualised basis, this equates to a
revenue growth of approximately 10 percent.
The increased revenue was mainly due to higher contributions
from OFS and Transport Solutions businesses. However, this was
offset by lower Marine Services contribution due to the expiry of
a major coal contract in Indonesia in June 2012, which was then
replaced with a time charter contract at lower rates.
On the back of this revenue growth, the Group posted a Profit
Before Tax (“PBT”) from continuing operations of RM21.1 million
for the 15-month period as against a loss of RM167.7 million
Tan Sri Asmat Kamaludin
Chairman
P
/2 0
for the 12-months ended 31 December 2011. This turnaround
result was achieved following the non-recurrence of vessel
impairment charges and cost adjustments on our Mumbai
monorail project, which were made in the financial year ended
31 December 2011.
This encouraging financial performance was achieved despite
the Group having to absorb a one-off charge of RM61.1 million
to our accounts in line with our current accounting policies and
in compliance with the Malaysian Financial Reporting Standards
(MFRS), in particular MFRS 132 and MFRS 39. This one-off charge
was due to the completion of the corporate exercise during
the financial period that saw all the Eastern Hemisphere OFS
and Marine Services businesses consolidated under Scomi Energy
Services Bhd (formerly known as Scomi Marine Bhd) (“SESB”).
Notwithstanding this adverse impact, several factors contributed
toward the enhanced operating results including new contracts
at better margins, a continuous cost reduction drive that lowered
operating expenses and our optimal capital and corporate
structure post completion of the corporate exercise.
More importantly, a positive financial outcome for SGB from the
corporate exercise is the substantial strengthening of its balance
sheet by paring down debt. Total borrowings have dropped
below RM1.0 billion as at 31 March 2013, most of which is made
up of short term and operational funding for various subsidiaries.
Dividend
During the financial period, the Group was still in its transformation
phase to consolidate its businesses in the energy and logistics
industry segments. Through this period, the corporate exercise
was also being driven through to completion. In view of this,
the Board of Directors has decided not to declare a dividend for
the financial period. Instead, the capital of the Group will be
employed towards further strengthening its financial position
as well as propelling its business growth so as to create greater
future value for all its stakeholders, including you, our steadfast
shareholder.
Corporate Structure
•entire issued and paid-up share capital of Scomi Oilfield
Limited and Scomi Sosma Sdn Bhd and;
•48% of the issued and paid-up share capital of Scomi KMC
Sdn Bhd.
This corporate exercise has streamlined and consolidated the
Group’s Eastern Hemisphere operations into an integrated
upstream drilling and marine services business. This consolidation
puts SESB on a stronger financial footing and thus provides
for greater flexibility for future growth. This financial capability
accords the entity greater operational strength to capitalise on
business expansion opportunities both locally and abroad. With
continuing and intensified upstream activities in the oil and gas
industry for the next several years, vast business potential lies
ahead which will benefit both SGB and SESB shareholders.
As part of and to enhance the Group’s Indonesian coal logistics
business, PT Rig Tenders Tbk (“PTRT”), an 80%-owned subsidiary
of SESB, acquired the entire equity interest in three firms owned
by its parent company Scomi Marine Services Pte. Ltd. (“SMS”),
in a deal worth USD57 million. The three companies were CH
Logistics Private Limited, CH Ship Management Private Limited
and Grundtvig Marine Private Limited. The consolidation of the
three companies is expected to improve the management,
operation and cost efficiency of the logistics business and,
ultimately, PTRT’s financial performance. The transaction was
completed on 12 April 2012.
SESB currently has an order book of over RM5.1 billion
after winning major contracts in Qatar, Thailand, Indonesia,
Turkmenistan and Malaysia. With a healthy pipeline of tenders
submitted and upcoming tenders in the industry, SESB is geared
for continued growth.
Divestment of Machine Shop Business
Previously Scomi, through its subsidiaries, had a strong presence
in the machine shop business with a network of machine shops in
Asia, Aberdeen and Nigeria. However, in line with its business
strategy to be a global technology enterprise focused in
the energy and logistics industries, Scomi embarked on a
divestment strategy to dispose of its machine shop business
and the gains from the sale will be used for investment in its
core businesses.
Oil and Gas
In the final step of its divestment strategy, Scomi entered into a
Conditional Share Sale Agreement with AOS Orwell Limited on
16 May 2012 for the disposal of its 100% equity interest in Scomi
Nigeria Pte Ltd (“SNPL”), and a 2% equity interest in Oiltools
Africa Limited (“OAL”) for a total cash consideration of USD39.77
million (approximately RM123.90 million). Both SNPL and OAL
are involved in the machine shop business in Nigeria.
On 12 March 2013, SGB completed a corporate exercise which
saw nearly all of its operations in the oil and gas industry
consolidated under one entity, Scomi Energy Services Bhd. The
corporate exercise, which began in February 2012, involved the
acquisition by SESB of the:
The exercise was completed in October 2012 and the proceeds
from the disposal have been used to strengthen Scomi’s
financial structure. Meanwhile, we have also intensified our
focus on higher margin, high value added activities in high
growth markets where the Group holds leading market positions.
In line with our global strategy of focusing in the energy
and transportation industries, during the financial period we
continued to concentrate on two high growth areas, namely
energy services in the oil and gas industry and transport
solutions for urban cities.
P
Transport Solutions
Scomi Engineering Bhd (“SEB”), a listed subsidiary of SGB, is
a leading provider of transport solutions that designs and
manufactures monorail systems, coaches, buses, rail wagons
and special purpose vehicles. The financial period, though
challenging, saw the continued progress of its monorail projects
in India and Brazil while its coach, bus and special purpose
vehicles continued to pick up pace.
For SEB, countries with fast developing economies and
exponential urbanisation resulting in exigent needs for urban
transit solutions are vital markets. Two such markets are Brazil
and India, which are currently offering SEB plentiful business
opportunities.
The financial period saw major progress for its projects, with
Phase 1 of the Mumbai Monorail on track for completion and
the Brazil projects awarded in the latter half of the previous
financial year 2011, seeing rapid project implementation in 2012.
Manaus Metropolitan Region Monorail
In January 2012, SEB, together with three consortium partners,
entered into a contract with the Infrastructure Secretariat of the
State of Amazonas in Brazil for the development of the detailed
engineering design, construction, supply, and installation of a
monorail system for the Manaus metropolitan region.
The contract signing followed the successful award of the
project to the consortium in August 2011. The consortium
comprises SEB, CR Almeida S/A Engenharia De Obras, Mendes
Junior Trading E Engenharia S/A, and Serveng-Civilsan S/A
Empresas Associadas De Engenharia.
Launch of a Brazilian Monorail Manufacturing Facility
Subsequently, in August 2012, SEB’s Brazilian partner Montagens
e Projetos Especiais SA (“MPE”) also opened a manufacturing
facility in Rio de Janeiro to manufacture the trains for the Line
17 Monorail in Sao Paulo. This new manufacturing facility is the
first facility outside of Malaysia to manufacture the Scomi SUTRA
(Scomi Urban Transit Rail Application) monorail and is part of
the project development plans for local manufacture. Covering
41,100 sqm, the facility is fully equipped to assemble and test
the monorails as well as store up to 15 completed monorail cars.
This is a landmark initiative undertaken by the Group as a part
of our growth and expansion strategy in the Latin American
market. With this facility, we are reiterating our strategic
commitment to providing innovative urban transport solutions
for the Brazilian market.
Scomi’s largest shareholder once the bonds are fully converted
into ordinary shares in SGB by IJM. In this mutually beneficial
arrangement, IJM brings its vast experience in the construction
industry which will complement Scomi’s Transport Solutions
division, whilst IJM gains the opportunity for entry into the
lucrative oil and gas industry.
Corporate Citizenship
One of the important channels in ensuring sustainable growth
of the Scomi group is by continually building both our internal
and external communities. This translates to creating an
environment that nurtures our employees to excel and to push
their boundaries to fulfil their potential. Our employee value
proposition quite simply states “You provide the talent, we
provide the career development.” Hence each and every one
of our employees is groomed towards evolving into confident,
effective and efficient leaders who can grow our business as
well as grow professionally themselves.
The Group’s footprint now spans 26 countries, and every
region where we operate has unique needs. We therefore
empower each and every Scomi business unit to play a part in
its community through locally-driven activities. Yayasan Scomi
is a foundation established by SGB. The Group’s employees are
encouraged to contribute towards Yayasan Scomi’s activities.
The foundation has steadily increased its efforts to provide both
financial and practical assistance to the less fortunate and the
underprivileged.
We are also keenly aware of our duty to act as stewards of
our planet by protecting the environment. Our research and
development efforts are therefore focused on developing
eco-friendly, energy efficient products that reduce environmental
impact, especially noise pollution and waste generation.
We strive to maintain excellent corporate governance throughout
the Group. We exercise stringent risk management not solely
at the enterprise level but also at the project level to ensure
the most effective execution of our contracts. Our Delegated
Authority Limits are subject to regular review. While we are
mindful that our governance measures must ensure a sound,
internal system of checks and balances, we recognise that, as
a lean and agile organisation, we must also remain nimble in
adapting to the ever-changing business terrain.
Further information on our corporate citizenship is provided in
the Corporate Social Responsibility section of this report (page
36 to page 38).
Strategic Partnership
Board Of Directors
At SGB’s recent EGM on 31 January 2013, the shareholders voted
in favour of the issuance of RM110 million worth of bonds to IJM
Corporation Bhd (“IJM”), which will make the construction giant
During the financial period SGB has welcomed 2 new
members to the Board of Directors, who represent IJM as our
substantial shareholder. Dato’ Teh Kean Ming joins us as a
/2 1
Anchor Handling
Tug and Supply
Vessel
P
Non-Independent Non-Executive Director whilst Mr Lee Chun
Fai is an Alternate Director to Dato’ Teh. Both bring with them
a wealth of experience and we look forward to their valuable
contribution on all company matters.
Prospects
The ensuing financial year is expected to be a less volatile period
for the global economy, and the newly reorganised Scomi is
primed to advance across all our chosen sectors and markets.
Although oil prices have softened, the demand for oil and gas,
particularly in the developing nations, continues to increase,
driving new exploration and drilling activity. The Energy Services
order book is robust, and OFS has successfully clinched several
sizable contracts recently in Malaysia, Indonesia and Turkmenistan.
We anticipate several more jobs in the aforementioned
countries and focus on contract execution and service quality.
We remain optimistic of the offshore support segment as we
evaluate strategic investment opportunities in specialised offshore
vessels. Increasing offshore exploration and production in Southeast
Asia also means a heightened demand for support vessels, and
we expect resulting growth in our Marine Services business.
In its newly consolidated form, the Energy Services division can
better meet the specific needs of our target markets, and we
are confident that our participation in the Eastern Hemisphere’s
thriving energy sector will continue its upward trend.
Prospects are also bright for our Transport Solutions division,
as an increasing number of urban areas consider eco-friendly
monorails to alleviate traffic woes. In India alone, over 20 cities are
now contemplating monorail systems. With the anticipated
delivery of Phase 1 of the Mumbai project in the current
calendar year and the improvements in the KL and Brazil
projects, performance for 2013-14 is expected to be satisfactory.
Whilst the division is currently focused on executing contracts
in Malaysia, India and Brazil, it also has new proposals pending
in India and Sri Lanka. Although the challenging foreign
exchange climate is unlikely to abate in the coming year, the
growth in monorail installations and manufacturing facilities is
most encouraging, and our visibility is definitely on the rise.
Acknowledgements
On the heels of several challenging years, we at SGB are
enormously gratified to have seen our efforts paying off
handsomely during the financial period. The transitions of the
past year could not have taken place without the steadfast
support of all of our stakeholders, and on behalf of the Board of
Directors, I would like to express our sincere gratitude.
Our customers across the globe continually inspire us to
develop new products and skills. Our shareholders have held
firm throughout the restructuring exercise, and our business
partners, suppliers, advisors and bankers have all contributed
invaluably to this year’s remarkable results. As ever, we also wish
to thank the governments in the many countries in which we
operate; their assistance and guidance remains indispensable.
Over 3,000 individuals make up the Scomi team worldwide,
and I thank each of you profoundly for your dedication and
unique contributions to the Group’s success. Finally, I would like
to express my appreciation of my fellow Directors, whose vision
and diligence continue to pilot the Scomi Group in its pursuit of
excellence.
Chairman
/2 3
Transforming an
everyday substance into
continuous value.
A CHAIN
P
/2 6
MANAGEMENT REVIEW OF OPERATIONS
Dear Stakeholders,
The past fifteen months have been a
period of dramatic transformation for
Scomi Group Bhd (“Scomi” or “SGB”) and
its group of companies (the “Group”). Our
restructuring, completed in March 2013,
is already delivering measurable benefits,
with the Group emerging more efficient,
more resilient, and well able to meet the
challenges and grasp the opportunities in
the still turbulent global marketplace.
Overview
Widespread financial recession, civil disturbance, political
upheaval and volatile currency exchange have created treacherous
ground for every highly internationalised business, and these
factors have certainly menaced Scomi’s operations. But by
keeping our eyes steadily on our products and services, the best
markets for us to be in, and how we can operate most costeffectively, we have been able to end the financial period on a
buoyant note.
Our research and development teams are continuously enhancing
and developing new products and solutions to meet market
needs. We have designed lightweight, efficient and durable
drilling waste management equipment for all phases of oil and
gas exploration and development, as well as drilling fluids for
the most challenging environments. Scomi’s specialised vessels
offer various support services to offshore drilling installations,
and for dense urban areas battling increasing traffic congestion,
our monorails are providing a highly effective solution. And last
but far from least, our human component, Scomi’s technical and
support staff have once again proved themselves to be key to
our thriving relationships with our clients, and their continuous
development remains one of our highest priorities.
The new Energy Services division is focused on the Eastern
Hemisphere and is most active in Malaysia, Thailand, Indonesia
and the Gulf. Meanwhile, the large cities of Brazil and India are the
primary customers for the Transport Solutions group. Although
we have pegged these as our key regions, we regularly review
the potential in other markets and we have the ability to change
course promptly in response to shifts in market conditions.
Group-wide cost reduction drives have also paid off, with
operating expense margins being reduced during the financial
period. Indeed, part of the rationale behind consolidating the
Oilfield Services and Marine Services divisions was greater cost
control and operating efficiency for the merged entity. Meanwhile,
the Transport Solutions division is also maintaining a disciplined
approach to cost management to ensure its projects are within
budget.
Shah Hakim Zain
Group Chief
Executive Officer
Liquid Mud Plant
at Kemaman
Supply Base,
Malaysia
P
Financial Performance
Energy Services
After a one-off fair value charge on a Put Option of RM61.06
million, Scomi Group Bhd recorded a revenue of RM1.92 billion
and a Profit Before Tax (“PBT”) of RM21.1 million for the financial
period ended 31 March 2013. Without the one-off charge, the
Group would have achieved a PBT of RM82.2 million on the back
of the same RM1.92 billion revenue.
The Energy Services division currently has an order book of over
RM5.1 billion with significant bids still in the pipeline, and we
foresee a continuing positive trend in the coming year.
The Oilfield Services (“OFS”) division continued its positive
momentum, posting a PBT of RM96.0 million. This sterling
performance was spurred by a revenue of RM1.15 billion for
the 15-month period, with Malaysia, Thailand, Russia and
Indonesia being the biggest contributors.
Meanwhile, the Marine Services Division reported a revenue of
RM318.3 million and a PBT of RM38.7 million. The coal segment
revenue was lower than the 2011 financial year however, reflecting
a drop in tonnage carried, while the docking of two vessels
and the refurbishment of an accommodation barge resulted in
a lower offshore contribution. The bottom line was also hit by
vessel impairments.
The Transport Solutions Division generated a revenue of
RM450.3 million for the 15-month period, driven by the delivery
of rolling stocks to Mumbai and our ability to complete the electrical
and mechanical milestones in the Kuala Lumpur Monorail Fleet
Expansion Project. Although there was a pre-tax loss of RM21.1
million for the 15-month period, this was substantially lower
than the pre-tax loss of RM60.6 million posted for the 12-month
period ended 31 December 2011.
The New Scomi
With the completion of the corporate exercise involving the
acquisition by Scomi Energy Services Bhd (“SESB”) of the Oilfield
Services Eastern Hemisphere entities, the Group will deliver a
host of benefits including streamlined marketing efforts, lower
debt, enhanced cost management and greater growth potential.
SESB comprises two divisions, OFS, providing integrated drilling
fluids, drilling waste management solutions, production
enhancement technologies and multiple drilling services; and
Marine Services, offering marine transportation for the coal
industry and provision of offshore support vessels to the oil and
gas industry.
The Group will continue to focus its attention to grow businesses
in Africa, Russia, the Middle East, and Asia. Although the Group
has reduced its market presence from 36 countries to 26, we
are agile enough to penetrate other regions when the
circumstances are right.
Meanwhile, our other listed subsidiary, Scomi Engineering Bhd
(“SEB”) continued to make strides in the provision of innovative
public transport solutions.
The Energy Services operating results improved throughout the
financial period, underpinned by new contracts at better margins,
a successful drive to reduce costs, and the optimisation of our
capital and corporate structure following the merger exercise.
Though oil prices dipped below USD100 per barrel in 2012, demand
in developing nations, particularly India and China, has increased.
A Spears & Associates Inc report is predicting international drilling
activity in 2013 to grow by 12% in Mid East and 6% in Far East.
In the latter half of the financial period, we were seeing a rise in
exploration and rig counts in Malaysia, Indonesia and Thailand and
as a consequence this translated to an increase in operational
activity. We are also seeing steady growth in the Gulf and
Turkmenistan while our West African operations have generated
positive results with increasing rig activity. Australia and Russia,
which are predominantly drilling waste management markets
have fared better during the financial period due to increased
usage of our proprietary drilling waste management products.
We are capitalising on the activity sparked by the Malaysian
government’s Economic Transformation Programme (“ETP”), in
which oil and gas has been defined as a National Key Economic
Area. In 2012, the Malaysian Oilfield Services operations inked a
five-year, RM2.1 billion contract with PETRONAS Carigali to provide
drilling products and services. We are further encouraged by
PETRONAS’ plan to develop marginal fields in Malaysia, which
presents vast business potential and a new area of expertise for
us to explore.
The Indonesia Operations has also secured a contract for a
three-year mega-project in Indonesia, having received a Letter of
Award from Total E&P Indonesie. Work has commenced on this
estimated RM380 million contract for the provision of drilling
fluids and services. This is the largest single contract that Scomi
has ever signed in Indonesia. During the course of the financial
period, we also won a breakthrough contract with Qatar Petroleum
in Qatar to provide drilling fluid services and along with another
significant project in Turkmenistan.
The hike in offshore exploration and production has benefitted the
marine division as well, driving the demand for vessels. During the
financial period, the division signed a two-year contract with
PT Pertamina Hulu Energi Offshore North West Java in Indonesia,
estimated at RM120 million, to provide three vessels for offshore
support services. However, our coal transport segment saw a
revenue drop, reflecting a general slowdown in the coal industry
in Indonesia. This was further compounded by the expiry of a
major coal logistics contract which was replaced with a time-charter
contract at lower fixed rates.
Our Production Enhancement Technologies (“PET”) business unit,
albeit a smaller unit within the OFS division has consistently
/2 9
P
/3 0
delivered on its product and services. Servicing clients in Asia
from its Malaysia operations and the rest of the world from its
France operations, PET continues to maintain its market share and is
a consistent contributor to the financial performance of the division.
While nurturing our relationships with current clients, we have
continued to network and build our brand recognition by
showcasing our products and services at numerous international
energy sector conferences and exhibitions throughout the year.
We were prominently seen at the prestigious 25th World Gas
Conference in Malaysia where our brand presence was significantly
enhanced as the single sponsor for the Interactive Expert Showcase.
Meanwhile our products attracted scores of attention at the Neftegaz
oil and gas exhibition in Russia, the 12th China International Petroleum
& Petrochemical Technology & Equipment Exhibition and the Abu
Dhabi International Petroleum Exhibition and Conference.
Transport Solutions
The Transport Solutions division has an order book which stands at
over RM715 million with three major monorail bids in the pipeline
in India, which if successful will add an anticipated RM1 billion to
the order book value.
As the world’s cities grow in population density, they are
simultaneously expanding in land area. Governments are
increasingly exploring public transit systems that will reduce
traffic and pollution while providing their citizens with a safe and
efficient means of transport. This trend, especially in the large cities
of the BRIC nations (Brazil, Russia, India and China), is providing SEB
with a wealth of opportunities, primarily in the monorail market.
We are also extremely excited about the growing interest and
demand for monorail systems in India. India with its escalating
population is fertile ground to expand our Transport Solutions
business. Tier I and Tier II cities are seen as key contributors to the
country’s economy and hence the anticipated exponential growth
in the requirement to move people between cities. We continue
to keep our eye on the infrastructure developments in Chennai,
Kerala, Delhi, Bangalore and Hyderabad. Having built the first
monorail in India we are well positioned to take advantage of any
opportunity that materialises.
In Brazil, we are bidding against two competitors for several new
monorail projects, including a second line in São Paulo. Phase 1 of
the 18-kilometre Line 17 monorail project in São Paulo kicked off in
September 2012. Piling work is progressing well, and the ‘Integration
Design for All Systems’ milestone was approved by the client in
December 2012. When completed in early 2015, this line is expected
to carry 252,000 passengers per day between 18 stations.
During the financial period the Manaus monorail project, which
we are undertaking with three consortium partners, made good
progress. For our portion of the contract, we are responsible for
the design and supply of rolling stock and depot equipment, track
switches, maintenance vehicles, system integration and project
management. The project is slated for completion in 2016.
We have now established a joint venture company, Quark
Fabricacao de Equipamentos Ferroviarios e Servicos de Engenharia
Ltda with two Brazilian firms, Montagens e Projetos Especiais
SA (“MPE”) and Brasell Gestao Empresarial, LTDA, to handle the
manufacturing, assembly and marketing of monorail rolling stock
and to provide rail-related engineering services. Guided by our
technological expertise, our partner MPE, opened a manufacturing
facility in March 2013 in Rio de Janeiro, that has 10,000 sqm
dedicated for the production and testing of the monorails, with
a balance 31,100 sqm for storage of up to 15 completed monorail
cars, warehousing and office facilities. This facility has the capacity to
produce up to six cars per month for our Brazil monorail projects.
In India, work on the Mumbai monorail has faced several schedule
delays due to factors beyond our control. Phase 1 covers 8.6km
between Chembur and Wadala, and Phase 2 connects Jacob
Circle and Wadala, a distance of 10.5km. Trial tests on Phase 1
have been ongoing since the early part of the year and we are
gearing up to revenue operations by end 2013. Meanwhile, the client
has resolved several challenges along the alignment for Phase 2
involving security issues, land acquisitions and resettlements and
this phase is now proceeding as per expectations in tandem with
the testing of Phase 1.
Our monorail business continues to make inroads in India. We are
currently one of two companies short-listed in the bidding for the
Chennai monorail project, which, at RM4.65 billion, would be the
biggest ever for Scomi. In total we have currently expressed
interest for 3 monorail projects in India for which we anticipate
decisions to be announced by the end of the calendar year.
Prior to the financial period, we had signed a contract to expand
the severely oversubscribed Kuala Lumpur monorail. The RM494
million project includes the delivery of 12 sets of new four-car
trains, a new depot, and upgrades to stations. The civil works have
been ongoing and we delivered the first set of trains in March 2013.
These new trains, which have the capacity to increase passenger
traffic to 64,000 passengers per hour per direction, are anticipated
to be completed and delivered over the next financial period.
The Coach and Special Purpose Vehicle units continued their
stable performance. Although a relatively small contributor to
the financial performance of the division, we continue to see
opportunities to grow this business. Hence, we have enhanced
our design and assembly capabilities as well as expanded into the
maintenance, repair and overhaul segment and equipment leasing.
Further expansion possibilities include the local manufacture of
reputed international brands to make these products accessible
and affordable for regional markets as well as the trading of parts
and spares for specific industry equipment.
Key Initiatives
Research and Product Development
To capitalise on the global trend toward zero-discharge policies
for drilling operations, SESB is developing environmentally conscious
and efficient technologies for the Drilling Waste Management
Global Research
& Technology
Centre, Malaysia
P
/3 2
market. One of our newest innovations is the use of microwave
technology for drilling waste treatment. In the final stages of
prototype testing, this new technology is generating great interest
amongst both production companies and investment analysts in
the oil and gas industry. Our system has numerous advantages
over both existing microwave and thermomechanical cuttings
cleaning methods, addressing a wider range of waste products,
reducing power consumption, operating more reliably, and
complying with EU standards. Its reduced footprint and weight
will also make it an extremely suitable option for offshore rigs. We
are confident of the marketability of this product and anticipate
commercialisation during the current financial period.
Pushing the boundaries of our current waste management
solutions, we have developed a range of shale shakers with the
5 Panel Prima-G shaker the latest to join the portfolio. Operating
more quietly and at high G-forces, this family of shakers have
impressed everyone who worked with them at the early
installations and have also drawn a great deal of attention at
energy conferences. We had also introduced the Clean-in-Place
automated tank cleaning system to this region in 2011 and it has
proved its worth with active use in Malaysia and Thailand operations.
This solution totally eliminates the need for human entry into any
tank for cleaning purposes and has the ability to consistently clean
tanks in less than half the time taken by conventional systems,
with only 10% of the normal waste generated. Moreover, no human
entry means greatly reduced health and safety risks.
Our Drilling Fluid technologies and systems are constantly being
enhanced and improved to cater for new challenges that surface
during drilling operations. With the industry moving towards
deepwater and ultra deepwater drilling, our systems have also
been enhanced to support the requirement. Further the global
focus is now on protecting the environment and the industry
is shifting towards solutions that fulfil both the technical and
environmental performance criteria. Hence our Oilfield Services
research and development team has also worked with strategic
partners to developed eco-friendly green fluids with the capability
to deliver superior performance with environmental benefits
through lower toxicity and biodegradability features. To ensure
the performance of our drilling fluids is always at optimum
level, we have also developed several proprietary engineering
software programmes. These programmes equip our engineers
with the capability to deliver technical assistance whether it is for
comprehensive data management and accurate reporting by our
onsite engineers or for drilling hydraulics simulations to ensure
the formulations of our fluids.
The Marine Services group is tailoring its fleet to focus less on
the waning coal transport business and more on the offshore
support services sector. In revitalising our fleet we have recently
divested our older pairs of tugs and barges and are reviewing
newer options for the offshore support services. As part of this
process we have also refurbished our accommodation work
barges. We are also well positioned to combine our expertise in
oilfield services with our experience in offshore vessels to provide
innovative solutions including floating warehousing facilities for
offshore works. We had initially provided a similar concept for a
floating liquid mud plant which was well received by our client.
Hence we are confident of expanding our portfolio to include this
innovative service.
The Transport Solutions has quite literally continued to trim the
shape and reduced the weight of its monorails through its
P
continuous research and development efforts. This has translated to
production optimisation, greater energy efficiencies and increased
passenger capacity. Learning from its practical experiences in
Mumbai, Brazil and Kuala Lumpur, the research and development
team are in a continuous cycle to improve our monorails.
development in Southeast Asia and the Middle East, and at the
same time global gas demand continues to sprint ahead, growing
at five times the rate of global oil demand. As a result, analysts
predict increasing activity in all aspects of energy exploration and
production.
Research and development to enhance our products is integral
to the Group’s strategy. Our centres in Malaysia at our Global
Research and Technology Centre for drilling fluids and the
Engineering, Technology and Innovation Centre north of Kuala
Lumpur for rail solutions; and in Houston for our waste
management continue to be the driving force in translating
operations feedback to substantive results.
In the Eastern Hemisphere, we certainly see encouraging signs for
the coming year. Indonesia has promised to improve investment
opportunities and cut bureaucracy in order to increase exploration
and production. The EU recently lifted almost all sanctions against
Myanmar, paving the way for significant new investment in all
sectors of the economy. The Chinese government will subsidise
the development of shale gas and allow tax-free imports of
equipment for shale-gas exploration. Here in Malaysia, operators
have discovered an estimated 1.4 billion BBOE (“barrels of oil
equivalent”), representing about 72% of total discoveries in the
region. All of this indicates a productive and successful year to
come for SESB.
People Power
We know that our success depends on the skills, dedication and
integrity of the more than 3,000 individuals who make up the Scomi
Group. We are committed to attracting and retaining top-tier talent
both by offering excellent career development and by helping
each individual to realise his or her full potential.
Our in-house training department, Group Learning and Development,
organises trainings on diverse subjects in a range of languages and
cultures, reflecting the regions in which we do business. To gain
expertise in relevant technologies, Scomi professionals also attend
courses offered by external companies. All our training initiatives,
especially those targeted at the management level and above,
ensure we have a competent and skilled workforce.
Competency Mapping is our tool to guide every individual’s
development path. Initially focusing on the technical streams
within the organisation, we are developing Competency Frameworks
which clearly outline the experience, skills and training required
from both a management and a technical perspective for an
individual to progress. This mapping also gives the scope for an
individual to decide whether to follow a technical progression
path or to move into a management progression path. This gives
employees greater clarity on their career pathways and empowers
them to map out concrete steps to achieve their goals. Thus we
are able to retain a secure and reliable talent pool.
Our programme for Succession Planning identifies potential
successors for various positions within the organisation and we
work with these employees to develop their abilities so that they
can step up to fulfill the organisational needs within the group.
This process has considerably strengthened the leadership talent
pipeline and in many of our global locations we are seeing young
managers capably stepping up to leadership roles.
Looking Ahead
According to the World Bank and other global financial analysts,
the next twelve months should be less turbulent for the world
economy. Brent crude oil prices are expected to hover around
the USD100 per barrel mark, a drop of about 10% from 2012, due
to increasing crude oil production from non-OPEC countries.
Japan’s decision to shut down its nuclear power plants in the
wake of the Fukushima earthquake is spurring liquid natural gas
For our Marine Services division, the coal market remains volatile.
We will of course continue to serve our customers in this industry.
However, as the oil and gas exploration and production numbers
are all set to rise, the strategy is for us to shift the composition
of the fleet to serve the offshore support services sector. The
increasing level of activity is expected to absorb the flow of new
vessels, which should result in steady to higher daily charter rates
and high utilisation. We remain optimistic about this sector as
we continue to evaluate strategic investment opportunities in
specialised offshore vessels.
Our Transport Solutions monorail teams will have a busy year as
they fulfill our current contracts in Brazil, India and Malaysia. These
projects have raised Scomi’s visibility tremendously, and we are
expecting to land more projects in both India and Brazil, as both
countries’ governments are seeking better public transportation
solutions for their congested urban areas. With our partner’s new
manufacturing plant in Rio de Janeiro, we are in a prime position
to support the Brazilian requirements, whilst the strategies are in
place to explore indigenous assembly should more projects in
India materialise. This expansion strategy for the manufacture of
our transport solutions will bring us closer to the relevant markets
and hence make us more agile to answer the city’s transport needs.
As we have consolidated and streamlined our operations, our
shareholders are now able to see a leaner and compact organisation
emerging. This has also created greater operational nimbleness to
respond to market needs while giving greater financial strength
to raise capital for growth. In line with our corporate statement,
we are clearly focused on energy and logistics with an expansive
technology driven product portfolio and a global reach that
allows us to provide innovative solutions and thus, quite simply,
to realise potential for all our stakeholders and that includes our
valuable employees and our steadfast shareholders.
Shah Hakim Zain
/3 3
Transforming basic
material into
enduring worth.
A DIAMOND
P
/3 6
CORPORATE SOCIAL RESPONSIBILITY
Aristotle believed that the whole is greater
than the sum of the parts. At Scomi Group
Bhd (“Scomi” or “SGB”) and its group of
companies (the “Group”), we too believe in
combining our processes, our people and our
brand, to reach out to all our stakeholders and
those that we come in contact with. “
Scomi is committed to making a positive and meaningful
impact in the communities where we are present. We believe
that the Group does not operate in isolation and as such, we are
proactive and resolute in our stand that our business objectives
and decisions take into account sustainability for continued
growth in the environments that we are in.
disseminated through our newsletter, FOCUS, which is shared
with customers, partners, suppliers, employees and other
stakeholders. Meanwhile, comprehensive information on the
Group is easily accessible via our website and this includes our
Annual Reports, Circulars to Shareholders, media releases and
media coverage.
We continue to focus on our social, environmental and economic
impacts in creating value for our business, our shareholders as
well as our other stakeholders. On this premise, we have made
corporate social responsibility (“CSR”) a cornerstone for our efforts.
Our CSR activities have progressed more holistically, evolving
from individual acts of philanthropy to becoming a mindset that
influences decision-making and business strategy.
In creating value for our customers, we ensured that all our
products adhere to regulatory requirements and quality
standards. Further, to add value for our customers, we have also
extended to our customers several technical training modules
on Drilling Fluids Technologies, Drilling Waste Management and
Drilling Operations. The modules cater not only for technical
personnel but also non-technical personnel who come in
contact with the services that we provide. Through this training
we are able to enhance their knowledge of our products and
services as well as building cognizance of the latest technology,
products and services that we provide.
The Marketplace
We remain committed to operating responsibly and upholding
best business practices while adhering to the highest ethical
standards in our business approach and dealings with all our
customers, vendors, the Government and other stakeholders in
general.
Communication is an integral element in ensuring timely
information of the company reaches its key stakeholders. Hence
throughout the financial period, Scomi played host to numerous
media communicators, investment analysts and fund managers to
provide them with the latest information of the Group. We also
ensured timely announcements to Bursa Malaysia on material
activities and events, distribution of quarterly “Letter to Shareholders”
to the investment communities on the Group financial performance,
and also media releases on key developments of our business.
News on Scomi’s business as well as our operations globally is
To further enhance our presence and to create awareness of
our brand and products, the Group as a whole participated in
numerous energy and transportation exhibitions, conferences
and forums worldwide. Throughout the financial period, our
Transport Solutions team participated in conferences and summits
in Brazil and India to showcase our expertise. The division also
hosted several government and trade visits at our manufacturing
facility in Malaysia as well as our ongoing project in India. Our
Energy Services division participated in a number of global oil &
gas exhibitions in Malaysia, China, the Gulf and Russia.
Our senior management have been recognised as thought leaders
and industry experts and were called upon as speakers at
conferences and forums. Scomi’s Group Chief Operating Officer
P
was an invited speaker and panelist at the Perdana Leadership
Forum in Malaysia and the FICCI India Urban Transport Summit in New Delhi, India; while our Chief of Staff, Chief Learning
Officer as well as members of the Group Learning and Development department, were invited to speak at several HR and talent
management conferences, in Malaysia and other countries.
The Workplace
We credit the success of our business to the contribution and
steadfast commitment of our people, being our most valuable
asset. As Scomi Group expanded, it has always nurtured a working
environment which attracts, develops, motivates and retains the
best talents. Employees were consistently being challenged to
push their performance levels, be driven to deliver results and
continue to outdo themselves.
We are committed to creating a working culture that values and
rewards performance while cultivating and reinforcing a sense
of belonging to the Group. Based on performance delivery,
employees were rewarded with bonus increments. To bring out
the best in our employees, we introduced various initiatives such
as projects involvement and stretch assignments of increasing
responsibility and complexity. At the same time, we provide
our employees with training and professional development
opportunities to ensure they are equipped with the relevant
knowledge and skills for career progression. We have made it a
requirement for all executives to attend a minimum of 40 hours
of training a year, while non-executives need to fulfill at least 20
training hours annually.
To foster and enhance unity, the Group has also put in place a
number of programmes that stamp Scomi’s unique identity and
draw participation of our employees. We seek to create a sense
of belonging and ownership by interacting with our employees
and maintaining effective and clear communication with them.
Details of our Group Learning and Development and human
capital development activities are set out in pages 39 to 41.
The Environment
In the current global economy, there is increased pressure for
companies to operate in a manner which is sustainable while
promoting environmental conservation. As an environmentally
concerned global technology enterprise, we are committed to
providing innovative solutions whether in the energy services
or transport solutions industries, with the lowest environmental
footprint.
Scomi employees across the globe are committed to “greening
the earth” and have organised a number of programmes and
initiatives to minimise wastage of resources and mitigate
negative environmental effects. We have also endeavoured to
leverage on technology and intellectual capital to create clean
and green solutions aimed at environmental sustainability while
obtaining optimum customer satisfaction.
Scomi’s commitment towards the environment is reflected
in its Oilfield Services product portfolio. Its Drilling Fluids are
constantly engineered to provide optimised performance and
enhanced recyclability properties. The systems are engineered
to prevent loss of fluids and damage to the surfaces during
drilling. They also ensure efficient waste carrying properties as
well as adsorbtion properties that allow the drilling waste to
be easily cleaned for disposal. The Drilling Waste Management
solutions that handle drilling waste solids control, containment
and handling, treatment and disposal ensure that all waste
generated are effectively separated, contained and treated prior
to disposal, for minimal impact to the environment. These are
achieved through research and development for innovative
products and also the creation of efficient solutions to meet
individual waste management challenges.
For our Transport Solutions business, we have improved on our
world-class Scomi Urban Transit Rail Applications (SUTRA) to offer
amongst others an improved direct-drive propulsion system and
lower vehicle weight translating into an energy-efficient monorail
system. Our monorail being a public transportation system, directly
contributes towards the reduced usage of private vehicles.
Taking these vehicles off the road translates into minimising
carbon emission to the environment. The system itself is an
environmentally friendly solution as it runs on electric motors
that has no emissions as well as moves on rubber wheels on a
concrete surface and hence vastly reducing noise pollution.
Certification
Scomi ensures where possible all its business units, subsidiaries
and joint venture partners are certified to either ISO 9001-2000,
ISO 14001 or 18001 depending on process requirements and or
risk identification reviews.
The Community
As a caring corporate organisation, Scomi believes that it has a
responsibility to give back and support communities across the
26 countries in which we operate. With the understanding that
corporate responsibility is integral for success and essential for
holistic growth, we strive to ensure our CSR programmes make a
positive difference to the community. This has been our guiding
principle since our establishment and signifies efforts to raise
standards of living and enriching communities over the years.
In Malaysia, Yayasan Scomi, a non-profit foundation dedicated
to developing communities through education and living
assistance has been established since 2005. Yayasan Scomi
organises CSR activities with participation of Scomi employees,
to support the underserved public irrespective of race, religion
or creed. Over the years, it has provided educational assistance
and scholarships for needy students along with rural school and
motivational programmes as well as helped the less fortunate in
terms of the provision of food and other basic living necessities.
Yayasan Scomi organised several key community engagement
/3 7
P
/3 8
and relief programmes including its annual blood donation
drive which was co-organised with University Malaya Medical
Centre at Scomi’s global headquarters. It also continued its support
for 10 under-priviledged families it has adopted in Malaysia,
extending financial support to them to uplift their living conditions.
Todate Yayasan Scomi has provided scholarships to over thirty
students, special education needs continuous training and
equipment to three schools and helped more than six hundred
individuals through their underprivileged assistance initiatives.
Yayasan Scomi also initiated a partnership with Mercy Malaysia,
an internationally renowned Malaysian NGO for the deployment
of Scomi’s staff as Mercy Malaysia’s volunteers in its community
programmes. This partnership will enable Scomi staff to pledge
their support and sign up as volunteers to participate in the
various community programmes driven by Mercy Malaysia.
Above and beyond the corporate driven activities, each business
unit is empowered to organise its own CSR activities. This can
be as simple as creating a moment of joy for the underprivileged
by interacting with them or as altruistic as home or education
improvement for a deserving family or community. We believe
the quantum is not of import rather the quality of the helping
hand is. Hence with all our global hands reaching out together
the sum of the parts becomes greater once again.
P
HUMAN CAPITAL DEVELOPMENT
People at the Heart
At the core of any organisation is its
people. They are the heart, the source of
energy that energises the organisation’s
processes to fruition; and they are the soul,
the values that exemplify the culture of an
organisation.
Thus at Scomi Group Bhd (“Scomi” or “SGB”) and its group of
companies (the “Group”) there is a concerted focus on the
development of our people as they are the key engine in
driving innovation and creating value for all our stakeholders.
Scomi provides a platform for the growth of talent. We are
a global multicultural organisation that provides different
exposures to our people. Priding ourselves on being part of
a lean organisation, our people can easily make a difference
by creating a legacy and leaving a footprint. Further with
every member in the team being encouraged to contribute
and to have their voice heard through informal and open
communication, it naturally extrapolates into building bonds
with colleagues and cultivating relationships. Hence we have
heard the rallying call of being Team Scomi.
For this team, Scomi’s value proposition is “You provide the
Talent, we provide Career Development”. To set them on that
path various, seemingly divergent, development channels have
been specifically created to nurture the talents. However, all
these individualistic channels have one common underlying
theme. They are all built upon the Scomi Brand Values of
New Ideas, Working Together, Goal Oriented and Customer
Responsible. The values in turn support our Brand Vision of
Realising Potential.
Learning & Development
To bring all of these intentions together to form a cohesive
and coherent learning and development path, we have a
dedicated Group Learning and Development (“GLaD”) team that
conducts training programmes for staff across our international
operations. GLaD is responsible for addressing the identified
skills and knowledge gaps, and for managing the Group’s
comprehensive talent development programmes. During
the financial period, GLaD carried out its strategic objectives
comprising the following initiatives:
Work @ Scomi & Induction Programme
This two-day training is mandatory for all new employees,
introducing them to the Scomi business, culture and brand. It
offers the recruits an insight into what Scomi stands for, what
it expects from its employees and, conversely, what employees
can expect from the company.
Core Values, Functional Skills and Managerial
Skills Programmes
These programmes which encompass Scomi’s core values as
well as functional and managerial skills were held in several of
our global locations including Kuala Lumpur, Labuan, Kemaman,
Jakarta, Bangkok, Dubai, Perth, Turkmenbashy and Ashgabat.
/3 9
P
/4 0
The intention was to reach out to employees and to make it
easier for global employees to attend our in-house training. Over
12,000 hours of training were conducted during the year and the
programmes were attended by over 1,000 employees.
The Executive Management Programme
This programme brings together mid-level management from
our global operations, and is geared towards enhancing their
leadership skills while allowing them to meet and network with
their global counterparts. In 2012, the Executive Management
Programme was held in Kuala Lumpur and Dubai drawing the
participation of 41 managers worldwide.
The Management Leadership Development Programme
This aims to develop future leaders for the Group, hence the
high-level training focuses on effective management and
leadership skills. In 2012, the programme was held in Kuala
Lumpur, attended by 16 senior managers from our global
operations.
The Management Trainee Programme
Aimed at fresh graduates who are recruited into Scomi, this
18-month programme exposes the new recruits to all facets
of the Group’s operations be it technical or management
skills. During this time, the trainees are attached to different
departments to enable them to pick up relevant skills that will
set them on the right track for further development in Scomi.
Mentoring & Coaching Programme
One-to-one mentoring and coaching is offered to managers
who have demonstrated leadership potential, to help them
deal with challenges and issues as they move up the leadership
ladder. It is geared towards ensuring a secure leadership
pipeline and forms part of Scomi’s succession plan.
Global Executive Learning (GEL)
This is a two-day learning programme for senior management
and is normally held in conjunction with our annual Global
Executive Meeting, a conference for senior management from
Scomi’s global operations. These sessions use out-of-the box
learning methods to reiterate key leadership messages to the
senior management. For the programme in 2012 “Stallions
Strengths”, the senior management group had to work with
horses, which are known as highly sensitive sentient beings that
cannot be forced into action. Thus the team through this exercise
and using the Values in Action methodology were able to
identify strengths and areas for improvement in nurturing teams.
Aside from its training programmes, GLaD also helms various
strategic employee development initiatives within the
organisation. Building the methodologies and the frameworks,
GLaD works hand-in-hand with the business division’s Human
Resource and Technical Training departments to implement
the plans.
Technical Training
While the managerial and soft skills training and development
moves in one stream, there is the other stream of technical
training that is also focused upon. For Drilling Fluids, our
trainings are mainly conducted at our Global Research and
Technology Centre (“GRTC”), where we have an extensive
training calendar that includes a compulsory Drilling Fluids
School for drilling fluids engineers, technical and non-technical
drilling fluids operations, drilling operations, wellbore control,
drilling engineering software, managing drilling operations
and others. On several occasions our trainers have travelled
to a client’s location on special request to conduct these
similar trainings. Our Drilling Waste Management trainings are
conducted at our research and engineering centre in Houston,
while on-the-job trainings are conducted at the individual
business units. Our Transport Solutions trainings are conducted
at our Engineering, Technology and Innovation Centre at the
North Kuala Lumpur Facility (“NKLF”) in Malaysia.
As part of our technical expertise development, we ensure
that in every location that we operate in, the local employees
are given equal opportunity to grow and develop their
technical skills. Hence intensive on-the-job trainings are
conducted to allow them to upskill themselves. While the
trainings at the GRTC were given focus during the financial
period for the Energy Services business division, the Transport
Solutions business division focused on technology transfer to
its operating locations. At our Mumbai Monorail operations
in Mumbai, India, the pace picked up exponentially with the
requirements for operations and maintenance to start in
2013. Hence a large team of local talent have been mobilised
and the Malaysian technical experts have been transferring
production, operational and maintenance skills to the team.
The same applies in Brazil where we are collaborating with our
partners who have set up a manufacturing facility. This facility
was designed with the technical expertise from Malaysia, but
the actual operations will be carried out by the Brazilians. The
facility is expected to create over 500 jobs with technology
being transferred by our Malaysian team of experts.
P
Our training and development programmes have created
global diversity within our organisation with different
nationalities working across the globe united under the one
brand of Scomi and as part of Team Scomi.
Performance Management
To inculcate a high performance culture, Scomi uses
Performance Assessment & Capability Enhancement (“PACE”),
a performance management tool, to assess its employees
on three leadership capabilities, namely People Leadership,
Personal Leadership and Business Leadership. PACE was
conceptualised to evaluate an individual’s performance
and also to highlight areas of improvement for personal
development.
Through PACE, employees are engaged in a discussion to
explore their strengths and agree on improvement areas while
also mapping out a career plan that will allow them to realise
their potential. Using PACE, the management is also able to
identify employees with high potential and these individuals
are presented with opportunities to advance and fast-track
their careers.
Competency Mapping
Having a talented and resourceful team is critical for our
business continuity and hence we have placed great
focus on talent management. To ensure our talents have a
progressive growth path, an extensive competency mapping
programme for the technical line has been completed.
This allows each individual to clearly map their experiences
against requirements and hence, clearly chart a career path
for themselves. Through this we believe we will develop an
engaged team that will translate into continued growth results
for us.
Succession Planning
Scomi’s succession plan involves nurturing and developing
employees from within the organisation. Our efforts are always
forward-looking, taking into account the future needs based on
strategic plans, goals, objectives, priority programmes and projects.
We have in place, a succession plan to manage gaps that may
arise when individuals in key positions leave or are promoted to
ensure smooth transition and continuity at the workplace. Our
plans mostly involve a combination of training and development
programmes organised for existing staff as well as new recruits.
Career Planning Discussions
The Group Chief Executive Officer together with the Chief of
Staff and Chief Learning Officer conduct sessions with selected
employees to discuss their individual development plans and
their career goals. Developmental interventions in terms of
experience, exposure and training needs are then planned
so that the company can provide the employee with every
opportunity to ensure that those career goals are met.
Safety at Work
Scomi continues to place great emphasis on the importance
of maintaining best practices in Quality, Health, Safety and
Environment (“QHSE”) at all levels in our workplaces. All our
business units throughout the Group have QHSE teams
whose main focus is to communicate our QHSE policies and
safeguard our stakeholders including personnel, contractors
and suppliers.
To cultivate the right attitude towards QHSE, the QHSE teams
across all our locations globally organise a number of QHSErelated programmes including safety briefings, toolbox talks
specific to operations, fire safety briefings and demonstrations
and various campaigns communicated internally. Above all,
Management has also taken a step to further ensure employees
practise good QHSE standards by including QHSE requirements
into performance appraisals.
Our drive to maintain best practices in QHSE has earned us
commendations from many clients in various parts of the
world including Australia, Indonesia, Malaysia and the United
Arab Emirates. They have acknowledged our employees
with certificates and awards for exemplary portrayal of QHSE
standards.
Team Scomi
With all these initiatives slowly but surely being built brick by
brick into the structure of Scomi, we wish to evolve Team Scomi
into being a diverse group of individuals who are qualified
yet street-smart, disciplined yet flexible and adaptable, goal
oriented yet unconventional and team players yet self-starters.
/4 1
Monorail in Mumbai
P
STATEMENT ON CORPORATE GOVERNANCE
Corporate governance is the process
and structure used to direct and manage
the business and affairs of the company
towards enhancing business prosperity
and corporate accountability with the
ultimate objective of realising long-term
shareholder value, whilst taking into
account the interests of other stakeholders.
Good governance provides a solid foundation for a company to
achieve sustainable growth as well as engenders trust and infuses
confidence among its shareholders and other stakeholders.
Strong business ethics, sound policies and procedures and
effective internal control systems with proper checks and balances
are the ingredients of good corporate governance.
As such, the Board of Directors of Scomi Group Bhd (“the
Company”) (“the Board”) remains committed towards governing,
guiding and monitoring the direction of the Company with the
objective of enhancing long term sustainable value creation
aligned to the interests of shareholders and other stakeholders.
Towards this end, the Board strives to ensure that the highest
standards of corporate governance are practiced by the Company
and its group of companies (“the Group”) and views this as a
fundamental part of discharging its roles and responsibilities.
Observance of good corporate governance is also critical to
safeguard against unethical conduct, mismanagement and
fraudulent activities. Hence, the Board continues to implement
the eight (8) principles set out in the Malaysian Code on Corporate
Governance 2012 (“the Code”) to its particular circumstances,
having regard to the recommendations stated under each principle.
This statement sets out the extent of how the Group has applied
and complied with the principles and recommendations of the
Code and the Main Market Listing Requirement of Bursa Malaysia
Securities Berhad (“Bursa Malaysia”) (“MMLR”) for the financial
period ended 31 March 2013.
Principle 1 – Establish Clear Roles and Responsibilities
The Board’s role is to govern and set the strategic direction of
the Company, whilst the Management manages the Company
and the Group in accordance with the strategic direction and
delegations of the Board. The responsibility of the Board is to
oversee the activities of the Management in carrying out these
delegated duties.
The Group is led and controlled by an effective Board where it
assumes, amongst others, the following principal responsibilities
in discharging its stewardship role and fiduciary and leadership
functions:
•reviewing and adopting a strategic plan for the Company and
the Group, and subsequently monitoring the implementation
of the strategic plan by the Management to ensure sustainable
growth of the Company and the Group;
• overseeing the conduct of the Company and the Group’s business;
•evaluating principal risks of the Company and the Group and
ensuring the implementation of appropriate risk management
and internal control systems to manage these risks;
• reviewing the adequacy and the integrity of the Company and the Group’s risk management and internal control systems;
• succession planning of the Company;
•providing input and overseeing the development and
implementation of the investor relations and shareholder
communications policy for the Company and the Group; and
•reviewing the adequacy and the integrity of the management
information of the Company and the Group.
/4 3
P
/4 4
The Board has established and delegated specific responsibilities
to three (3) committees of the Board, which operate within
clearly defined written terms of reference. The Board reviews
the Board Committees’ authority and terms of reference from
time to time to ensure their relevance. The Board Committees
deliberate the issues on a broad and in-depth basis before putting
up any recommendation to the Board for approval. The ultimate
responsibility for decision making lies with the Board.
The Board Committees are:
• the Audit and Risk Management Committee (“ARMC”);
• the Nomination and Remuneration Committee (“NRC”); and
•
the Options Committee (“OC”).
With the exception of the OC, none of these Board Committees
have the power to act on behalf of the Board and are required
to review and evaluate particular issues which are to be tabled
to the Board with their recommendations.
The minutes of the Board Committees’ meetings and circular
resolutions passed are presented to the Board for information.
The Chairman of the relevant Board Committees will also
report to the Board on the key issues deliberated by the Board
Committees at its meetings.
Composition of the Board and its Committees are as follow:
Board Committees
ARMC
NRC
OC
Chairman/Independent Non-Executive Director
–
C
C
Independent Non-Executive Directors
M
–
–
M
–
M
M
M
–
–
–
–
C
–
–
Non-Independent Non-Executive Directors
–
M
–
Mr Foong Choong Hong
–
–
–
Dato’ Teh Kean Ming@
–
–
–
Group Chief Executive Officer (“GCEO”)/
Encik Shah Hakim @ Shahzanim bin Zain
–
–
M
Alternate Director
Mr Lee Chun Fai#
–
–
–
NOTES
C – Chairman
M – Member
@ Appointed as a Non-Independent Non-Executive Director on 22 October 2012.
# Appointed as an Alternate Director to Dato’ Teh Kean Ming on 22 May 2013.
The OC of the Board is entrusted with the responsibility of
overseeing the administration of the Company’s Employees’
Share Option Scheme (“ESOS”) in accordance with the ESOS
By-Laws (“By-Laws”). The OC comprises two (2) Independent
Non-Executive Directors and the GCEO/Non-Independent
Executive Director. The Options Committee meets as and when
required, and at least once during the financial year.
The salient Terms of Reference of the OC are as follows:
•to determine participation eligibility and to decide on the
number of options to be offered to eligible employees and/
or Persons as stipulated in the By-Laws, throughout the
duration of the scheme;
•to ensure that the maximum number of new options that
may be offered to eligible employees and/or persons shall
not exceed the limits set against their respective categories
and comply with the criteria for allocation as set out in the
By-Laws;
•to evaluate and decide on the eligible employees’ and/
or eligible persons’ periodic entitlement to exercise their
options as stipulated in the By-Laws;
•to make offers to eligible employees and/or persons who
are entitled to participate in the scheme, after taking into
consideration the performance, seniority, number of years in
service, employee grading and/or the potential contribution
P
of the eligible employees and/or persons; and
•to recommend to the Board, when necessary, any
amendments to be made to all or any of the provisions of the
scheme, subject to the approvals of the relevant authorities
and the Company’s shareholders at a general meeting.
The ten (10)-year ESOS implemented by the Company on
28 April 2003 has expired on 27 April 2013. There is no share option
schemes for the employees of the Company at this juncture.
To enhance the Board and the Management’s accountability to
the Company and its shareholders, the Board has established
clear functions reserved for the Board and those delegated to the
Management. The Board has a Board Charter and Board Policy
Manual which establishes a formal schedule of matters and
outlines the types of information required for the Board’s attention
and deliberation at the Board meetings. The Board Charter is
available on the Company’s website at www.scomigroup.com.
my. Besides that, the Board’s approving authority is delegated to
the Management through a clear and formally defined Delegated
Authority Limits (“DAL”) which is the primary instrument that
governs and manages the business decision process in the Group.
Whilst the objective of the DAL is to empower Management,
the key principle adhered to in its formulation is to ensure
that a system of internal controls and checks and balances are
incorporated therein. The DAL is implemented in accordance
with the Group’s policies and procedures and in compliance with
the applicable statutory and regulatory requirements. The DAL is
continuously reviewed and updated to ensure relevance to the
Group’s operations.
In discharging its duties and responsibilities, the Board is
guided by the Code of Conduct of the Group which provides
the framework to ensure that the Group conduct itself in
compliance with laws and ethical values. The Board and all
employees of the Company and the Group are committed
to adhering to best practices in corporate governance and
observing the highest standards of integrity and behaviour in all
activities conducted by the Company and the Group, including
the interaction with its customers, suppliers, shareholders,
employees and business partners, and within the community
and environment in which the Company and the Group
operate. The Board ensures that compliance is monitored
through a Confirmation of Compliance declaration process
where all employees of the Group of grades 15 and above are
required to confirm their receipt and understanding of the Code
of Conduct and further to certify their continued compliance with
the Code of Conduct on an annual basis. The Code of Conduct is
available on the Company’s website at www.scomigroup.com.my.
The Group is also committed to openness, probity and
accountability. An important aspect of accountability and
transparency is the existence of a mechanism to enable
employees of the Group to voice their concerns in a responsible
and effective manner. It is a fundamental term of every contract
of employment that an employee will faithfully serve his
employer and not disclose confidential information about the
employers’ affairs. Nevertheless, where an individual discovers
information which he believes shows serious malpractice or
wrongdoing within the organisation, there should be internal
mechanisms to enable him to safely report, in good faith, on any
suspected breaches of the law or company procedure that has
come to his notice.
To address this concern, the Group has formalised and established
a Whistleblower Framework and Policy, to provide an avenue
for employees to raise genuine concerns internally or report any
breach or suspected breach of any law or regulation, including
the Group’s policies and procedures, to the Disclosure Officer in a
safe and confidential manner, thereby ensuring that employees
may raise concerns without fear of reprisals. The Whistleblower
Framework and Policy is subject to periodic assessment and
review to ensure that it remains relevant to the Group’s changing
business circumstances. The Whistleblower Framework and Policy
is available on the Company’s website at www.scomigroup.com.my.
The Board is cognisant of the importance of business
sustainability and, in managing the Group’s business, take into
consideration its impact on the environment and society in
general. Balancing the environment, social and governance
aspects with the interest of various stakeholders is essential
to enhancing investor and public trust. We acknowledge
our responsibility to all the lives we touch either directly or
indirectly, and are committed to making a positive impact
in the many communities where we have a presence while
further strengthening our corporate reputation via upholding
a culture of integrity and transparency. Over the years, our
approach towards corporate social responsibility (CSR) has
become progressively more holistic, evolving from individual
acts of philanthropy to becoming a mindset that influences our
every decision and strategy. We further ensure that this mindset
is shared among all our employees by reinforcing the principles
of integrity and corporate citizenry in our training and internal
communication, and encouraging a spirit of volunteerism across
our operations globally. Apart from the Code of Conduct, the
Group has in place other internal policies and procedures to
address corporate sustainability. We also realise that, given
the nature of the businesses we are involved in, we can make
a positive impact on the environment. Hence, we invest
significantly in research and development to develop ‘green’
products that are efficient, cost-effective and, most importantly,
environmentally friendly.
Every Director has full and unrestricted access to information
within the Group. Where required, the Board and its Committees
are provided with independent professional advice, the cost
of which is borne by the Company. The Board may also seek
advice from the Management or request further explanation,
information or update on any aspect of the Group’s operations
or business concerns. The Board is supplied with quality
and timely information, which allows it to discharge its
responsibilities effectively and efficiently. The agenda for each
meeting together with a set of comprehensive Board Papers
for each agenda item are delivered to each Director in advance
of meetings, to enable the Board sufficient time to review the
matters to be deliberated for effective discussion and decision
making during the meeting, and where necessary, to obtain
supplementary information before the meeting.
In addition, the Directors have full and unrestricted access to the
/4 5
P
/4 6
advice and dedicated support services of the two (2) company
secretaries appointed by the Board. The Company Secretaries,
who are qualified, experienced and competent, advise the Board
on procedural and regulatory requirements to ensure that the
Board adheres to the board policies, procedures and regulatory
requirements in carrying out its roles and responsibilities effectively.
Principle 2 – Strengthen Composition
The success of the Board in fulfilling its oversight responsibility
depends on its size, composition and leadership qualities. During
the financial period under review, the Board consisted of ten (10)
members, comprising one (1) Executive Director and nine (9)
Non-Executive Directors (including the Chairman) of whom six
(6) are independent as defined by the MMLR. The Independent
Directors make up 60% of the composition of the Board. Hence,
the composition of the Board fulfils the prescribed requirement for
one-third (1/3) of the composition of the Board to be independent
directors. The appointment of the independent directors is to
ensure that the Board includes directors who can effectively
exercise their best judgment objectively for the exclusive benefit
of the Company and the Group. The composition of the Board
reflects a diversity of backgrounds, skills and experiences in the
areas of business, economics, finance, legal, general management
and strategy that contributes effectively in leading and directing
the management and affairs of the Group. Given the calibre and
integrity of its members and the objectivity and independent
judgment brought by the Independent Directors, the Board is of
the opinion that its current size and composition contribute to an
effective Board.
A brief description of the background of each Director is
presented within the Profile of Directors section as set out on
pages 12 to 15 of this Annual Report.
The NRC was formed on 11 May 2007 with the dissolution of
the Nomination Committee and the Remuneration Committee,
both of which were established on 1 July 2003. The objectives
of the NRC are to:
•ensure an effective process for selection of new directors
and assessment of the effectiveness of the Board and Board
Committees and the performance of individual directors
which will result in the required mix of skills, experience and
responsibilities being present on the Board;
•establish, review and report to the Board on a formal and
transparent policy on Executive directors’ remuneration; and
•review and recommend to the board the remuneration
of the Executive Directors in all its forms with the aim of
attracting, retaining and motivating individuals of the
highest quality needed to run the Company successfully.
The NRC is appointed by the Board and comprises at least three
(3) members who are all non-executive, a majority of whom are
independent directors. Members of the NRC elect a Chairman
from among themselves. In the absence of the Chairman at the
NRC meeting, other members present shall elect, from among
themselves, a Chairman for the said NRC meeting. All members
of the Committee, including the Chairman, shall hold office only
so long as they serve as Directors of the Company. Members of
the NRC may relinquish their membership in the NRC with prior
written notice to the Company Secretary. The NRC reports its
recommendations back to the Board for its consideration and
approval. The NRC meets at least once during a financial year.
In the interim period between meetings, if the need arises, issues
shall be resolved through circular resolution. A circular resolution
in writing, stating the reason(s) to arrive at a recommendation or
resolution, signed by a majority of the members, shall be valid
and effective as if it had been passed at a meeting duly convened
and constituted.
The salient Terms of Reference of the NRC include:
•to:
•recommend to the Board potential candidates for
directorships to be filled by the shareholders or the
Board giving consideration to:
• the candidates’ skills, knowledge, expertise and experience;
• the candidates’ professionalism;
• the candidates’ integrity; and
•in the case of candidates for the position of
independent non-executive directors, their ability to
discharge such responsibilities/functions as expected
from independent non-executive directors;
•consider, in making its recommendations, candidates
for directorships proposed by the GCEO and within the
bounds of practicability, candidates proposed by any
other senior executive or any director or shareholder; and
•recommend to the Board, Directors to fill the seats on the Board Committees;
•to conduct an annual review of the required mix of skills and
experience and other qualities, including core competencies
which non-executive directors should bring to the Board;
•to assess, on an annual basis, the effectiveness of the
Board as a whole, the Committees of the Board and the
contributions of each individual director, including
Independent Non-Executive Directors, as well as the
GCEO and to ensure that all assessments and evaluations
carried out in the discharge of this function are properly
documented;
•from time to time, to examine the size of the Board with
a view to present recommendations to the Board on the
optimum number of Directors on the Board to ensure its
effectiveness;
• to ensure that new appointees to the Board undergo orientation and education programmes;
•to make recommendations to the Board concerning the
re-election by shareholders of any directors under the
retirement by rotation provisions in the Company’s Articles
of Association;
• annually, review and assess the training needs of individual directors and propose suitable training programmes to be attended;
• to develop the GCEO’s mission and objectives, succession for the GCEO and annual evaluation of the performance of the GCEO;
•to establish and recommend to the Board a fair and
P
transparent Remuneration Policy framework for Executive
Directors designed to attract, retain and motivate individuals
of the highest quality. The key elements of this framework,
which would form the basis of deliberations on the
remuneration to be awarded, are:
•the Company’s financial performance which may
include financial indicators such as turnover, profitability,
market capitalisation and achievement of these
indicators vis-à-vis pre-determined goals;
• the skills, knowledge, expertise, performance and relative experience of the Executive Directors;
• the duties and responsibilities borne by the Executive Director; and
• the nature of the Company’s business e.g. international/ regional business presence;
•to conduct, on an annual basis (or when the need
arises as in the case of proposing remuneration and/or
compensation for a new Executive Director), a review and
thereon provide advice and recommendations to the Board
on all aspects of reward structure accorded to Executive
Directors in terms of the following components:
•basic salaries and basis of increment applied (as a
percentage of basic salary, fixed quantum or merit
increment);
•annual bonuses (in the mode of contractual,
discretionary or lump sum payment form);
• directorship fee (fixed and/or supplementary);
•long term incentive scheme including ESOS with
conditional terms for exercising options;
•fringe benefits in kind which include among others
club membership, company car, medical and insurance
benefits, outstation/overseas allowance etc; and
• other terms of employment/directorship;
•to determine and agree on the Company’s policy on the
duration of contracts with Executive Directors, and notice
periods and termination payments under such contracts,
with a view to ensuring that any termination payments are
fair to the individual and the Company, that failure is not
rewarded and the duty to mitigate loss is fully recognized; and
•to consider any published guidelines or recommendations
regarding the remuneration of directors of listed companies
which it considers relevant or appropriate.
The appointment of directors is a vital process as it determines
the composition and quality of the Board’s mix of skills and
competencies. The NRC is delegated the responsibility to
ensure an effective process for the selection of new directors
to the Board. The NRC will review and assess the proposed
appointment of new directors in terms of the appropriate
balance of skills, expertise, attributes and core competencies,
and thereupon make the appropriate recommendations to
the Board for approval. Such evaluation criteria does not take
into account the gender of the proposed new director as our
Code of Conduct prohibits any form of discrimination, whether
based on gender or otherwise, and in keeping with our Code
of Conduct the Board ensures that the gender of a particular
candidate for appointment to the Board is not an influencing
factor in any appointment.
The NRC is additionally responsible for making recommendations
to the Board on the re-election of Directors. The NRC is also
responsible for reviewing candidates for appointment to the
Board Committees and makes appropriate recommendations
thereon to the Board for approval. It is tasked with assessing
the effectiveness of the Board and Board Committees and the
performance of individual directors in order to ensure that the
required mix of skills and experience are present on the Board.
In the course of assessing the effectiveness of the Board and
the Board Committees and the contributions of each individual
director, the NRC also evaluates and determines the training
needs for each of the directors in order to enhance the skills of the
directors and aid them in the discharge of their duties as directors.
During the financial period under review, the NRC consisted
of three (3) members who are all non-executive, a majority of
whom are independent. In accordance with the approved
Terms of Reference of the NRC, the NRC carried out the following
activities during the financial period ended 31 March 2013:
•assessed the annual performance of each individual Director;
• assessed the independence of each Independent Directors;
•reviewed the skills, experience and competencies of each
individual Director and based thereupon, to assess the
training needs of each individual Director;
•assessed the effectiveness of the Board and the Committees
of the Board;
•reviewed the skills, experience and competencies of the
non-executive Directors;
• assessed the adequacy of the size and composition of the Board;
•reviewed the proposed remuneration for the Non-Executive
Directors of the Company;
•reviewed the retirement and re-election of the Directors
pursuant to the Articles of Association of the Company;
•evaluated and recommended to the Board the GCEO’s
Balanced Scorecard for the financial period under review;
•reviewed and recommended to the Board the GCEO’s
Balanced Scorecard for the new financial year;
•reviewed and recommended to the Board the remuneration
package for the GCEO;
•reviewed the developments relating to legal proceeding
taken by the authorities against one of the Directors and
provided its recommendation to the Board on this matter; and
•reviewed and recommended to the Board the appointment
of a new Director.
The NRC collectively conducted the assessments of the
effectiveness of the Board and its Committees and the
performance of each individual Director, which considered the
qualification, contribution and performance of Directors taking
into account their competencies, character, commitment,
integrity, experience and time expended in meeting the needs
of the Group. The assessment and comments by the NRC were
summarised and reported to the Board. The Chairman of the
NRC will discuss the NRC’s assessment of the performance of
each individual Director in separate one-on-one sessions. All
assessments and evaluations carried out by the NRC in the
discharge of its functions are properly documented.
/4 7
P
/4 8
In accordance with the Company’s Articles of Association and
Paragraph 7.26(2) of the MMLR, at least one-third (1/3) of the Board
is subject to retirement by rotation at each Annual General Meeting
(“AGM”). Pursuant to Article 82 of the Articles of Association of the
Company, Tan Sri Asmat Bin Kamaludin, Tan Sri Mohamed Azman
Bin Yahya and Mr Foong Choong Hong retired from the Board and
were re-elected at the 10th AGM held on 27 June 2012.
The NRC is also responsible for the review of the overall
remuneration policy for the Directors and the GCEO whereupon
recommendations are submitted to the Board for approval.
The NRC advocates a fair and transparent remuneration policy
framework such that the Group may attract, retain and motivate
high quality individuals to manage its business and other key areas
of the Group’s operations.
Based on the chronology of the Directors’ appointment to
the Board and upon recommendation by the NRC, the Board
has pleasure in proposing the re-election of the following
Directors who retire in accordance with Article 82 of the Articles of
Association of the Company and being eligible, offer themselves
for re-election at the forthcoming AGM of the Company:
(a) Tan Sri Nik Mohamed bin Nik Yaacob;
(b) Datuk Haron bin Siraj; and
(c) Dato’ Mohammed Azlan bin Hashim.
The remuneration of the GCEO comprises principally salary
and other benefits, taking into consideration market rates and
practices. Additionally, he was entitled to share options under
the Company’s ESOS, which were exercisable until the expiry date
of the scheme.
The Non-Executive Directors’ remuneration is based on standard
agreed fees, in addition to allowances for attendance at Board
and Board Committee meetings. The Directors were also entitled
to options under the Company’s ESOS was approved by the
shareholders of the Company.
All Directors who served during the financial period ended 31 March 2013 are to be paid an annual Directors’ fee upon shareholders’
approval at the forthcoming AGM of the Company. The aggregate remuneration paid to the Directors of the Group who served during
the financial period, and the bands, are as follows:
Salaries and bonuses
Defined contribution plan
Fees
Allowances
Estimated value of benefit-in-kind
Total
Executive Director
(RM’000)
Non-Executive Directors
(RM’000)
3,134
452
–
–
252
–
–
995
203
–
3,838
1,198
Total
(RM’000)
3,134
452
995
203
252
5,036
The aggregate remuneration above is categorised into the following bands:
RM30,000 to RM80,000
RM80,000 to RM130,000
RM130,001 to RM180,000
RM180,001 to RM230,000
Up to RM3,900,000
Executive Director
Non-Executive Directors
–
–
–
–
1
1
5
–
3
–
Principle 3 – Reinforce Independence
The role of the Chairman of the Board (“the Chairman”) and
the GCEO are separated with each having a clear scope of
duties and responsibilities. The distinct and separates roles of
the Chairman and the GCEO, with a clear division of functions
and responsibilities, ensure a balance of power and authority,
such that no one individual has unfettered powers of decision
making. This crucial partnership dictates the long term success
of the Company and the Group.
The Chairman plays a crucial and pivotal leadership role in
ensuring that the Board works effectively, whilst the GCEO has
Total
1
5
–
3
1
the overall responsibility for the operational and business units,
organisational effectiveness and implementation of Board
policies, directives, strategies and decisions. A periodical review
of the GCEO’s Balanced Scorecard is undertaken by the NRC.
The GCEO is supported by the Key Management Team, as set
out on pages 16 to 17 of this Annual Report, for the day-to-day
management of the business and operations of the Group.
The Independent Directors make up 60% of the composition
of the Board. The appointment of the independent directors is
to ensure that the Board includes directors who can effectively
exercise their independent and objective judgment to the
Board deliberations and to mitigate risks arising from conflict of
P
interest or undue influence from interested parties.
The Company does not have term limits for both Executive
Directors and Independent Non-Executive Directors as the Board
believes that continued contribution by Directors provides
benefits to the Board and the Group as a whole. The NRC has
assessed the independence of each Independent Directors and
recommended that they continue to act as an Independent NonExecutive Directors of the Company on the following basis:
(i)they have no interest or ties in the Company that could
adversely affect independent and objective judgement and
place the interest of the Company above all other interests;
(ii)they have met the criteria for independence set out in
Chapter 1 of the MMLR; and
(iii)they continue to be able to exercise independent
judgement and to act in the best interest of the Company.
The NRC will review and recommend to the Board, a policy on
the term of tenure of Directors of the Company and the Group,
excluding the tenure of the Chairman of the Company and
the Group. The Board is of the view that the independence of
directors cannot be assessed only based on the quantitative
aspect as stated in the MMLR, but that the true independence
emanates from intellectual honesty, manifested through a genuine
commitment to serve the best interests of the Company.
Following an assessment conducted by the Board through the
NRC, the Board is of the opinion that the Independent Directors
continue to remains objective and independent in expressing their
respective views and in participating in deliberations and decisionmaking of the Board and the Board Committees. The Board is
further of the view that the length of service of the Independent
Directors on the Board do not in any way interfere with their
independent judgment and ability to act in the best interest of
the Group. Hence, based on the recommendation by the NRC,
the Board recommends that the Independent Directors continue
to be designated as independent directors of the Company.
Principle 4 – Foster Commitment
The Board meets a minimum of six (6) times a year, with special
meetings convened as and when necessary. The Board is
responsible for setting the corporate goals of the Group and
in mapping medium and long term strategic plans, which are
reviewed on a regular basis. Regular periodic review of the Group’s
performance and implementation of the management’s action
plans are conducted by the Board to assess the progress made
towards achieving the overall goals of the Group.
The schedule of meetings of the Board and its Committees as
well as the AGM is prepared and circulated to the Board before
the beginning of the year to facilitate the Directors in planning
ahead. Special meetings of the Board and its Committees are
convened between the scheduled meetings as and when urgent
and important direction and/or decisions of the Board and/or its
Committees are required.
During the financial period ended 31 March 2013, eleven (11) Board Meetings were held. The attendance record of the Directors at the
meetings of the Board and its Committees is as follows:
Board Committees
Board of Directors
ARMC
NRC
OC
Chairman/Independent Non-Executive Director
10/11
–
3/3
1/1
Independent Non-Executive Directors
9/11
6/8
–
–
10/11
8/8
–
1/1
10/11
8/8
3/3
–
8/11
–
––
11/11
8/8
–
–
Non-Independent Non-Executive Directors
11/11
–
2/3
–
Mr Foong Choong Hong
11/11
–
–
–
Dato’ Teh Kean Ming@
4/4
–
–
–
GCEO/Non-Independent Executive Director
Encik Shah Hakim @ Shahzanim bin Zain
10/11
–
–
1/1
Alternate Director
Mr Lee Chun Fai#
–
–
–
–
NOTES
C
Chairman
M
Member
@
Appointed as a Non-Independent Non-Executive Director on 22 October 2012.
#
Appointed as an Alternate Director to Dato’ Teh Kean Ming on 22 May 2013.
/4 9
P
/5 0
The Board are supplied with quality and timely information,
which allows them to discharge their responsibilities effectively
and efficiently. The meeting agenda together with a set of
comprehensive Board Papers for each agenda item are delivered
to each Director in advance of meetings, to enable the Board
sufficient time to review the matters to be deliberated and
to allow for effective discussion and decision making during
the meeting, and where necessary, to obtain supplementary
information before the meeting. At the Board meeting, the
Chairman encourages constructive, open and healthy debate
and ensures that resolutions are circulated and deliberated
so that all Board decisions reflect the collective view of the
Board. Directors are given the chance to freely express their
views or share information with their peers in the course of
deliberation at the Board. Any Director who has a direct and/
or indirect interest in the subject matter to be deliberated will
abstain from deliberation and voting on the same during the
meeting. All deliberations at the meetings of the Board and its
Committees in arriving at the decisions and conclusions are
properly recorded by the Company Secretary by way of minutes
of meetings.
The Board also complied with Paragraph 15.06 of the MMLR
on the restriction on the number of directorships in listed
companies held by the Directors. The Company Secretary
monitors the number of directorships held by each Director to
ensure compliance at all times. The list of directorships of each
Director is updated regularly and is tabled for the notation of
the Board on a quarterly basis. The Board is satisfied that the
external directorships of the Board members have not impaired
their ability to devote sufficient time in discharging their roles
and responsibilities effectively as well as regularly updating and
enhancing their knowledge and skills.
All Directors have attended the Mandatory Accreditation
Programme as required under the MMLR. To remain relevant
in the rapidly changing and complex modern business
environment, our Directors are committed to continuing
education and lifelong learning to fulfil their responsibilities
to the Company and enhance their contributions to board
deliberations.
For this purpose, a dedicated training budget for the Directors’
continuing education is provided each year by the Company.
In addition to the NRC’s evaluation and determination of the
training needs for each of the Directors, the Directors may also
request to attend training courses according to their needs
as a Director or member of the respective Board Committees
on which they serve. Throughout the period under review,
the Directors were also invited to attend a series of talks on
Corporate Governance organised by Bursa Malaysia together
with various professional associations and regulatory bodies.
During the financial period ended 31 March 2013, all
members of the Board attended various training programmes,
conferences, seminars and courses organised by the relevant
regulatory authorities and professional bodies on areas relevant
to the Group’s business, Directors’ roles, responsibilities,
effectiveness and/or corporate governance issues. Training
programmes, conferences, seminars and courses attended by
Directors during the period under review are as follows:
Corporate Governance
•4th Annual Corporate Governance Summit Kuala Lumpur
2012 - Bringing Asia onto the Board
• Advocacy Session on Disclosure for CEOs and CFOs
•Bursa Malaysia Sustainability Training for Directors and
Practitioners
•Directors’ In-house Training - Briefing on the New Corporate
Governance Blueprint and Regulatory Updates
•Directors’ In-house Training - Corporate Governance and
Directors’ Duties
Business Management, Economics, Finance, Legal and
Industry Update
• “Blue Ocean Strategy” Workshop
•15th Annual Global CEO Survey - Making Talent Strategic
Dialogue
•15th Perdana Discourse Series - The Future of Affirmative
Action
•25th World Gas Conference 2012 - Gas: Sustaining Future
Global Growth
•38th ASEAN - Japan Business Meeting - Global Challenges:
Japan - ASEAN Response
• 8th Construction Industry Review and Outlook Seminar
• 8th World Islamic Economic Forum
•9th Annual Private Banking Asia 2013 and Asian Family
Office Forum 2013
• All Star Start-up Pitch
•CEO Forum 2012 - Malaysia in the New Global Context:
Realising Malaysia’s True Potential
• Competition Act 2010 - Property
•Directors and Officers Liability Talk - Key Trends in Directors
and Officers Liability
•Directors’ Continuing Education Programme 2012 Malaysia’s Consumer Trends, Responsible Investment
Outlook, IFRS Convergence and its Implication to Financial
Disclosures, the Code, Economic Outlook and Data Protection
Act and New Insights into the Competition Act 2010
•Directors’ In-house Training - Stress Management:
Transforming Business Pressure into Productive Energy
•Financial Institutions Directors’ Education Programme (FIDE
Training)
• Forum on “Citizenship in the Age of the Internet”
• High Performance Culture Alignment Workshop
•IJM Senior Management Forum 2012 - Priming for Growth
P
on All Fronts
• India: Economics, Politics and Investments
• India: The Road ahead Conference & Round Table
• Indonesia’s Private Equity Dilemma
•International Directors Summit 2012 - Awakening the
Corporate Entrepreneurship for High Income Economy
• Invest Malaysia 2012 Conference
• Job Evaluation Methodology Induction Session
•Keynote Speech - Labuan IBFC: Malaysia’s engine of foreign
investment
• Khazanah Global Lectures 2012
•Khazanah Megatrends Forum 2012 - The Big Shift: Traversing
the Complexities of a New World”
•Labuan IBFC: Asia Pacific’s Preferred IFC: A road show in
Hong Kong and Shanghai
•Leaders Luncheon with YB Dato’ Sri Idris Jala - Sustaining
Progress in the Face of Economic Uncertainty
•Market Rigging and Insider Trading Movement through
Moving Average (Indicator for Traders and Investors Psyche)
• Media Training and Crisis Communication
•MFRS 10, 11 & 12 Workshop - Control & Joint Arrangement
Redefined
• MINDA Directors Forum 2012
• Optimising IFRS/MFRS Convergence
• Senior Leaders as Coaches Workshop
•Should Real Estate Investment Trust (REITs) be part of your
Investment Portfolio
• Super Investor Asia 2013
• Talk on “An Overview of Property Market”
• TechVenture 2012 - The New Age of Asian Innovation
•The 5th Edition of the International Petroleum Technology
Conference
•The 6th Edition of the International Petroleum Technology
Conference
• The Business Angel Forum
•The Construction and Industries Payment and Adjudication
Act 2012 (CIPAA) Workshop
•The Kuala Lumpur Business Club (“KLBC”) Fireside Chat on
“Challenges in 2012: Economy and Politics” with YB Dato’
Mukhriz Mahathir, Deputy Minister of International Trade
and Industry
•The KLBC Luncheon Talk on “The 21st Century Malaysia:
Distractions & Solutions”
•The Malaysian Connection Forum - Politics Decoded:
Implications on Financial Markets
• Transition from Tied Agent to Independent Financial Adviser
• Understanding Upstream Oil and Gas Economics Evaluation
• Weaning of Foreign Worker through Mechanization
• World Economic Forum on East Asia (WEF)
Apart from attending the training programmes, conferences and
seminars organised by the relevant regulatory authorities and
professional bodies, the Directors also visited key operating units
of the Group and continuously received briefings and updates on
regulatory and industry development, including information on
the Group’s businesses and operations, risk management activities
and other initiatives undertaken by the Group.
Principle 5 – Uphold Integrity in Financial Reporting
The Board is committed to provide a balanced and true view of
the Group’s financial performance and prospects in all its reports
to stakeholders and regulatory authorities. Prompt release of
announcements of the quarterly financial statements and press
releases reflect the Board’s commitment to provide timely and
transparent disclosures of the performance of the Group. This
is also channelled through the audited financial statements,
quarterly announcements of the Group’s unaudited results as
well as the Chairman’s Statement and the Management Review
of Operations in the Annual Report.
The Statement of Directors’ Responsibility in respect of the
preparation of the annual audited financial statements for the
financial period under review is set out on page 67 of this Annual Report.
In discharging its fiduciary responsibility, the Board is assisted by
the ARMC to oversee the financial reporting processes and the
quality of the Group’s financial statements.
The primary objective of the ARMC is to assist the Board to review
the adequacy and integrity of the Group’s financial administration
and reporting, internal control and risk management systems, including
the management information system and systems for compliance with
applicable laws, regulations, rules, directives and guidelines.
The ARMC comprises four (4) Non-Executive Directors and all of
them are Independent. The ARMC meets as and when required,
and at least four (4) times during the financial year.
The Board, through the ARMC maintains an appropriate, formal
and transparent relationship with the Group’s internal and external
auditors. The ARMC has explicit authority to communicate directly
with the Group’s internal and external auditors and vice versa the
Group’s internal and external auditors also have direct access to
the ARMC to highlight any issues of concern at any time. Further,
the ARMC meets the external auditors without the presence of
Executive Directors or the Management whenever necessary,
but no less than twice a year. Meetings with the external auditors
are held to further discuss the Group’s audit plans, audit findings,
financial statements, as well as to seek their professional advice on
other related matters.
The ARMC is also tasked by the Board, amongst other, to
consider the appointment of the external auditor, the audit
fee and any questions of resignation or dismissal as well as all
/5 1
P
/5 2
non-audit services to be provided by the external auditors
to the Company with a view to auditor independence and
to provide its recommendations thereon to the Board. The
ARMC has received confirmation from the external auditors
that for the audit of the financial statements of the Group
and Company for the financial period ended 31 March 2013,
they have maintained their independence in accordance
with their firm’s requirements and with the provisions of
the By-Laws on Professional Independence of the Malaysian
Institute of Accountants and they have reviewed the non-audit
services provided to the Group during the financial period in
accordance with the independence requirements and are not
aware of any non-audit services that have compromised their
independence as external auditors of the Group. The external
auditors also reaffirmed their independence at the completion
of the audit.
directly to the ARMC. The internal audit plan that covers
internal audit coverage and scope of work is presented to
the ARMC and the Board for their respective consideration
and approval annually. Internal audit reports encompassing
the audit findings together with recommendations thereon
are presented to the ARMC during its quarterly meetings.
Senior and functional line management are tasked to ensure
management action plans are carried out effectively and
regular follow-up audits are performed to monitor the
continued compliance.
The ARMC Report, enumerating its membership, Terms of
Reference, its roles and relationship with both the internal
and external auditors and activities during the financial period
ended 31 March 2013 is set out on pages 60 to 63 of this
Annual Report.
The Board recognises the importance of maintaining transparency
and accountability to its shareholders. The Board ensures that
all the shareholders of the Company are treated equitably and
the rights of all investors are protected. The Board provides its
shareholders and investors with comprehensive, accurate and
quality information on a timely basis to keep them abreast of
all material business matters affecting the Group.
Principle 6 – Recognise and Manage Risks
The Board firmly believes in maintaining a sound risk management
framework and internal control system with a view to safeguard
shareholders’ investment and the assets of the Group. The
expanding size and geographical spread of the Group involves
exposure to a wide variety of risks, where the nature of these
risks means that events may occur which could give rise to
unanticipated or unavoidable losses.
In establishing and reviewing the risk management and
internal control systems, the Board recognise that such systems
can provide only reasonable, but not absolute, assurance
against the occurrence of any material misstatement or loss.
The ARMC meets on a regular basis to ensure that there is clear
accountability for managing significant identified risks and
that identified risks are satisfactorily addressed on an ongoing
basis. In addition, the adequacy and effectiveness of the risk
management and internal control systems is also periodically
reviewed by the ARMC.
Regular assessments on the adequacy and integrity of the
internal controls and monitoring of compliance with policies
and procedures are also carried out through internal audits.
The Group has outsourced the activities and function of the
internal audit to a professional service provider who reports
The Statement on Risk Management and Internal Control is set
out on pages 54 to 59 of this Annual Report.
Principle 7 – Ensure Timely and High Quality Disclosure
Timely disclosure of material information is critical towards
building and maintaining corporate creditability and investor
confidence. Recognising the importance of accurate and
timely public disclosures of corporate information in order
for the shareholders to exercise their ownership rights
on an informed basis, the Board has established a Group
Communication Policy with the following intention:
•to provide guidance and structure in disseminating
corporate information to, and in dealing with investors,
analysts, media representatives, employees and the public;
•to raise management and employees’ awareness on the
disclosure requirements and practices;
•to ensure compliance with legal and regulatory
requirements on disclosure; and
•to protect the brand equity of the Group by managing
the risk associated with the brand i.e. exposures to the
brand that can undermine its ability to maintain its desired
differentiation and competitive advantage.
The Group Communication Policy outlines how the Group
identifies and distributes information in a timely manner to
all shareholders. It also reinforces the Group’s commitment
to the continuous disclosure obligations imposed by law, and
describes the procedures implemented to ensure compliance.
The Board through the Management oversees the Group’s
P
corporate disclosure practices and ensures implementation
and adherence to the policy. The Board has authorised the
GCEO as the primary spokesperson responsible for communicating
information to all stakeholders including the public.
The Group also maintains a corporate website, www.
scomigroup.com.my to disseminate information and enhance
its investor relations. All timely disclosure, material information
and announcements made to Bursa Malaysia are published
on the website shortly after the same is released by the news
wire service or the relevant authorities. Supplemental, nonmaterial information will be posted on the website as soon as
practicable after it is available.
The Group recognises the need for due diligence in maintaining,
updating and clearly identifying the accuracy, veracity
and relevance of information on the website. All timely
disclosure and material information documents will be clearly
date-identified and retained on the website as part of the
public disclosure record for a minimum period of 2 years. The
Group Communications division has ongoing responsibility
for ensuring that information in the website is up-to-date. In
addition, the email address, name and contact nu mber of the
Company’s designated person is listed in the website to enable
the public to forward queries to the Company.
Besides that, the Company will also organise separate quarterly
briefings for fund managers, institutional investors and
investment analyst as well as the media, not only to promote
the dissemination of the financial results of the Company and
the Group but also to keep them updated on the progress and
development of the Group’s business and prospect.
Principle 8 – Strengthen Relationship Between Company
and Shareholders
Shareholders are encouraged to attend the AGM and any
general meetings of the shareholders where it provides
shareholders the opportunity to raise questions or concerns
with regards to the Group as a whole. Such meetings also
serve as a platform for shareholders to have direct access to
the Board.
The Company at all times dispatched its notices of the AGM
and any general meetings of the shareholders, Annual Report
and related circular to shareholders at least twenty one
(21) days before the AGM and any general meetings of the
shareholders, unless otherwise required by laws, in order to
provide sufficient time to shareholders to understand and
evaluate the matters involved as well as to make necessary
arrangements to attend, participate and vote either in person,
by corporate representative, by proxy or by attorney, to exercise
their ownership rights on an informed basis during the
AGM and any general meetings of the shareholders. Where
special business items are to be transacted, a full explanation is
provided in the notice of the AGM and any general meetings of
the shareholders or the related circular to shareholders in order
to assist the shareholders’ understanding of matters and the
implication of their decision in voting for or against a resolution.
All the resolutions set out in the notices of the AGM and any
general meetings of the shareholders are put to vote by show
of hands, unless otherwise required by shareholders or by law.
The Board encourages and facilitates poll voting where the
chairman of the general meeting will inform shareholders of
their right to demand a poll vote at the commencement of the
AGM. The outcome of the AGM and any general meetings of
the shareholders is announced to Bursa Malaysia on the same
day the meeting is held.
The Board, the Management Team, both Internal and External
Auditors of the Company and if required, the Advisers, are
present at the AGM and any general meetings of the shareholders
to answer questions or concerns raised by shareholders. Before
the commencement of the AGM and any general meetings of
the shareholders, the Directors and the Management Team will
take the opportunity to engage directly with the shareholders
to account for their stewardship of the Company. Direct
engagement with shareholders provides the shareholders a
better appreciation of the Company’s objectives, quality of
its management and the challenges faced, while also making
the Company aware of the expectations and concerns of its
shareholders. During the AGM and any general meetings of
the shareholders, there is always a presentation by the GCEO
or the Chief Investment and Performance Officer on the
operations and financial performance of the Company and
the Group, the prospects of the Group and the subject matters
tabled for decision. Besides that, the chairman of the AGM
and any general meetings of the shareholders will invite the
shareholders to raise questions pertaining to the Company’s
financial performance and other items for adoption at the
meeting, before putting a resolution to vote. The chairman of
the AGM and any general meetings of the shareholders will
also share with the shareholders the Company’s responses to
questions submitted in advance of the AGM and any general
meetings of the shareholders by the Minority Shareholder
Watchdog Group.
This Statement is made in accordance with the resolution of
the Board dated 23 August 2013.
/5 3
P
/5 4
STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
The duty of the Board of Directors,
amongst others, is to maintain a sound
risk management framework and
internal control system to safeguard
shareholders’ investment and the
assets of the Company and its group
of companies (“the Group”).
Introduction
In compliance with Paragraph 15.26(b) of the Main Market
Listing Requirements (“MMLR”) and Practice Note 9 issued
by Bursa Malaysia Securities Berhad (“Bursa Malaysia”), the
Board of Directors of Scomi Group Bhd (“the Company”) (“the
Board”) is pleased to set out below the Group’s Statement on
Risk Management and Internal Control for the financial period
ended 31 March 2013. This Statement covers all of the Group’s
operations, save for Scomi Engineering Bhd and Scomi Energy
Services Bhd (formerly known as Scomi Marine Bhd), both being
subsidiaries of the Company and are listed on Bursa Malaysia.
Board Responsibility
The Board is fully committed to ensure the existence of an
effective risk management and internal control systems within
the Group, and continuously reviews and evaluates the adequacy
and integrity of those systems. However, the Board recognises
that such systems are designed to manage and reduce, rather
than eliminate, the risks identified to acceptable levels. Therefore,
the systems implemented can provide only reasonable and
not absolute assurance against the occurrence of any material
misstatement or loss.
Whilst the Board has overall responsibility for the Group’s system
of risk management and internal control, it has delegated
the implementation of these internal control systems to the
Management who regularly report to the Audit and Risk
Management Committee (“ARMC”) on risks identified and action
steps taken to mitigate and/or minimise the risks. These internal
control systems are subject to the Board’s regular review with
a view towards appraising the adequacy, effectiveness and
efficiency of these systems within the Group in accordance with
the guidance set out in the “Statement on Risk Management and
Internal Control: Guideline for Directors of Listed Companies”,
which is issued by the Taskforce on Internal Control with the
support and endorsement of Bursa Malaysia.
The Board has received assurance from the Group Chief Executive
Officer (“GCEO”) and the Group Financial Controller that the Group’s
risk management and internal control system is operating
adequately and effectively, in all material aspects, based on the
risk management and internal control systems of the Group.
Taking into consideration the assurance from the Management
Team and input from the relevant assurance providers, the
Board is of the view that the risk management and internal
control systems of the Group are satisfactory and adequate to
safeguard shareholders’ investment and the assets of the Group.
The Group will continue to take measures to strengthen the risk
management and internal control environment of the Group.
Risk Management Framework
A company’s business strategies and activities involve risks.
With the increasingly global and dynamic business environment,
proactive management of the overall business risks is a
prerequisite in ensuring that the organisation achieves its
strategic objectives. Best practices require the company to have
well-defined processes for the management of these risks.
P
In addition to the prevailing laws, regulations and technical
and societal standards, the Group’s vision states that it has a
commitment to “provide value added service and total support
to its Business Operating Units, Stakeholders and Partners”. This
value coupled with individual leadership and accountability
empowers all of the employees of the Group to be responsible
and promote its Risk Management policy.
In line with these, the Company is committed in ensuring
that it plans and executes its activities to ensure that the risks
inherent in its business are identified and effectively managed.
Risk management activities are to be regarded an integral part
of the Group’s philosophy and business practices and not in
isolation. The management of risks is aimed at achieving an
appropriate balance between realising opportunities for gains
while minimising losses to the Group.
The Group’s Enterprise Risk Management Framework
(“Framework”) serves to inform and provide guidance to
Directors, senior management, functional line management
and staff in managing risk in the Group. Towards this end, the
Framework sets out:
•the fundamentals and principles of risk and risk
management that is to be applied in all situations and
throughout all levels of the organisation;
•the process for identifying, assessing, responding,
monitoring and reporting of risks and controls;
•the roles and responsibilities of each level of management
in the Group; and
•the mechanisms, tools and techniques for managing risk in
the Group.
These elements are summarised in the diagram below:
Policy
Identification
Objective
Area
Strategic
Operational
Reporting
Compliance
Corporate
Business Unit
Market Unit
Product
Project
Reporting
Acssessment
Risk Management
Process
Monitoring
Treatment
Risk Reporting Structure
Infrastructure
The Group’s Risk Management Policy is premised on the following key principles:
•effective risk management contributes to corporate governance and is integral to the achievement of the company’s overall
business objectives;
•every employees of the organisation have the responsibility to manage risks within their areas of responsibility;
•risk management should be embedded into the day-to-day management processes and is explicitly applied in decision-making
and strategic planning;
•the risk management processes applied should aim to take advantage of opportunities, manage uncertainties and avoid or
minimise threats;
•regular reporting and monitoring of activities emphasise the accountability for managing risks whereby they are assigned to the
relevant risk owner(s) and the execution of the action plan and progress is reflected in risk owner’s Balanced Scorecard; and
•each Business Operating Units has its own Ad-hoc Risk Management Working Committee and Risk Management Working
Committee to review the effectiveness of risk management systems. The respective Enterprise Risk Management/Assurance
Department will then update a quarterly risk report to the ARMC as well as to update any issues to the Board.
/5 5
P
/5 6
Risk Management Process
The objective of the risk management process is to ensure that risks are identified, analysed and responded to. The process includes
the systematic application of management policies, procedures and practices to the activities of risk identification, assessment,
treatment, monitoring and reporting as depicted by the diagram below:
Identification
Reporting
Acssessment
Risk Management
Process
Monitoring
Treatment
The Enterprise Risk Management process comprises the following steps:
• IDENTIFY risks
• ASSESS the potential impact and likelihood of the risk occurring
• TREAT risk by assigning relevant risk owner to consider existing controls and
selecting, prioritising and implementing appropriate actions in a given timeline
•MONITOR the internal and external environment for potential changes to risks
and ensure that risk responses continue to operate effectively
• REPORT on risks and the status of risk responses adopted
The risk management process is an ongoing process and is
applied at the beginning of any major new project, venture or
change in operational environment. A quarterly review of risks is
undertaken to ensure that the risk profile is kept up to date. The
risk management process applies to all levels of activity in the
Group, with the objective of establishing accountability for both
risks and mitigation at the source of the risk.
The Group will only accept a commercial level of risk that will
provide reasonable assurance on the long term profitability and
survival of the Group. New risks shall be:
•immediately reported to the Head of Business Operating
Unit, who shall make a decision on the appropriate risk
treatment strategy;
• updated into the Entity Unit’s risk register or database;
•reported to the respective Business Operating Unit’s
Enterprise Risk Management/ Assurance Department and
subsequently Risk Management Working Committee, for
monitoring of the risk; and
• monitored through the risk management process; and
• notified to the ARMC and, if required, the Board.
Risk Reporting Structure
Every individual in the Group plays an integral role in the
effective management of its risks. The risk management
reporting structure adopted by the Group to assign responsibility
for risk management and facilitate the process for assessing
and communicating risk issues from transactional levels to the
Board is summarised as follows:
Board of Directors
Audit & Risk
Management
Committee
Ad-hoc Risk Management
Working Committee
Internal Audit
Risk Management
Working Committee
Enterprise Assurance
Department
Business Units
Corporate Functions
P
The Framework implemented within the Group continues to
define, highlight, report and manage the key business and
operational risks faced by all Business Operating Units within
the Group. Monitoring of the management action plans during
the review period was performed by the Management and/
or the external service provider for internal audit services (“the
Internal Auditors”). The Management reported to the ARMC at
quarterly basis on areas of high risks faced by the Group and
the adequacy and effectiveness of the internal control systems
adopted throughout the Group.
Further information on the Group’s risk management activities
is highlighted in the ARMC Report on pages 60 to 63 of this
Annual Report.
Comprehensive Board papers, which include financial and nonfinancial matters such as quarterly results, business strategies,
explanation of Group and individual business divisions
performances, key operational issues, corporate activities
and exercises of the Group, etc are escalated to the Board for
deliberation and approval.
Annual Budget and Strategic Business Plan
An annual business strategic plan and budget is reviewed,
deliberated and approved by the Board. The Board is also
responsible for monitoring the implementation of the strategic
plan and performance of the Group.
The Group’s internal control environment comprises amongst
others various policies, procedures and frameworks, included
amongst which are:
On quarterly basis, the GCEO reviews the Group’s key
performance metrics with the ARMC and the Board and
highlights any concerns and issues, if any. The actual
performance of the Group is assessed against the approved
budget where explanations, clarifications and corrective action
taken are reported by the Management for significant variances
on quarterly basis to the ARMC and the Board.
Clear and Structured Organisational Reporting Lines
The Group has a well defined organisation structure that is
aligned to its business requirements and also to ensure checks
and balances exist through the segregation of duties.
The execution strategy towards achieving the corporate goal
and targets in alignment with the business objectives and
strategies of the Group is set out in the Balanced Scorecards of
employees.
Clear reporting lines and authority limits, driven by Delegated
Authority Limits set by the Board, govern the Group’s decision
making and approval process.
The GCEO reviews the progress of achievements in targeted key
results areas or initiatives as set out in the Balanced Scorecards
of his direct reports on a monthly basis, allowing for timely
response and corrective action to be taken to catch up their
targeted plan. Consequently, the Chief of Staff is tasked with
consolidating the achievements of the GCEO’s direct reports
and key performance data of the Group and continuously
monitors on a monthly basis the progress of achievements in
targeted key results areas or initiatives as set out in the Balanced
Scorecards of the GCEO.
Internal Control System
In addition, the Group employs the Balanced Scorecard
framework that implements and measures the goals and
targets for individual employees in alignment with the business
objectives and strategies of the Group.
At the Board level, all strategic, business and investment
plans are approved and monitored by the Board. The Board is
supported by three (3) Board committees that provide focus and
counsel in the areas of:
1. Audit and Risk Management;
2. Employees’ Share Option Scheme; and
3. Nomination and Remuneration of Directors.
Certain responsibilities are delegated to the Board Committees
through clearly defined Terms of Reference which are reviewed
from time to time.
Further details of the Board Committees are contained in the
Statement on Corporate Governance on pages 43 to 53 of this
Annual Report.
The Board has a Board Policy Manual which established a formal
schedule of matters and outlines types of information required
for the Board’s attention and deliberation at the Board meetings.
Delegated Authority Limits (“DAL”)
The Board’s approving authority is delegated to the Management
through a clearly and formally defined DAL which is the primary
instrument that governs and manages the business decision
making process in the Group. Whilst the objective of the DAL
is to empower Management, the key principle adhered to in its
formulation is to ensure that a system of internal control, and
checks and balances are incorporated therein.
The DAL is implemented in accordance with the Group’s policies
and procedures and in compliance with the applicable statutory
and regulatory requirements. The DAL is continuously reviewed
and updated to ensure its relevance to the Group’s operations.
Code of Conduct
The Board and employees of the Group are committed to
adhering to the best practice in corporate governance and
/5 7
P
/5 8
observing the highest standards of integrity and behaviour in
all activities conducted by the Group, including the interaction
with its customers, suppliers, shareholders, employees and
business partners, and within the community and environment
in which the Group operates.
The Board and employees of the Group play an important role
in establishing, maintaining and enhancing the reputation,
image and brand of the Group and ensuring the observance to
and compliance with the standards of integrity and behaviour
that the Group is committed to.
All employees of the Group of grades 15 and above are
required to confirm their receipt and understanding of the
Code of Conduct and further required to certify their continued
compliance with the Code of Conduct on an annual basis.
The Group is also committed to ensuring that its supply chain
adheres to the following:
• that it operates within safe working conditions,
• that its workers are treated with dignity and respect, and
• that environmentally responsible manufacturing processes are implemented and adhered to.
In addition to these commitments, the Group requires its
suppliers (“Suppliers”) to adhere, in all of their activities, to the
laws, rules and regulations of the countries in which they operate.
In furtherance of these commitments and towards the
advancement of social and environmental responsibility, the
Group requires its Suppliers to implement the Suppliers Code
of Conduct. The Suppliers Code of Conduct shall be read
together with the contract/agreement between the Group and
the Supplier. The Group expects the Supplier to abide by the
Suppliers Code of Conduct when conducting business with
or for the Group. It is the responsibility of every Supplier to
comply with the principles of the Suppliers Code of Conduct, as
amended from time to time.
The breach of the Suppliers Code of Conduct may lead to formal
warnings, disclosure of nature of breach to all employees of the
Group, removal from preferred vendor list and/or immediate
termination as the Group’s Supplier subject to terms of contract/
agreement, depending on the severity of the situation.
Policies and Procedures
Clear, formalised and documented internal policies and
procedures are in place to ensure compliance with internal
controls and relevant rules and regulations. Regular reviews are
performed to ensure that the policies and procedures remain
current and relevant.
Common Group policies are available on the Company’s
intranet and/or website for easy access by the employees.
Standard Operating Procedures, Processes and Systems
There are documented standard operating procedures and
guidelines that have been adopted by the Management to
regulate the Group’s functional processes.
The Group had successfully implemented SAP across 17
countries. The implementation of SAP marks a significant
milestone in the roll-out of Project BEST which is a global
initiative to establish best practice processes across key
functions promoting greater visibility, transparency and
efficiency across the Group.
Information and Communication
Flowing from a clear organisational reporting structure,
information is communicated and disseminated to all
employees in all locations within the Group.
To ensure compliance to Chapter 14 of the MMLR, the Board
and the Principal Officers of the Company are informed in
advance before the commencement of each closed period, in
which they are not allowed to deal in the listed securities of
the Company as long as they are in possession of material and
price-sensitive information relating to such listed securities in
order to avoid any insider trading.
The Group also has in place a Whistleblower Framework and
Policy, to provide an avenue for employees to raise genuine
concerns internally or report any breach or suspected breach
of any law or regulation, including the Group’s policies and
P
procedures, to the Disclosure Officer in a safe and confidential
manner, ensuring employees can raise concerns without fear of
reprisals.
Competency and Talent Management
To enhance the competencies of the Group’s talent pool and
establish a culture of continuous learning, Global Learning
and Development Sdn Bhd, a wholly owned subsidiary of
the Company runs a series of training and development
programmes based on the Learning and Development
Framework (OPUS) that defines training based on technical and
non-technical programmes. This ensures that employees are
kept up-to-date with the required competencies to carry out
their duties and responsibilities towards achieving the Group’s
objectives. A key performance indicator on average learning
hours per employee is in place to encourage employees’
learning, growth and knowledge-sharing.
letter were also presented to the ARMC for deliberations. In the
event of any non-compliance, appropriate corrective actions
have been taken in addition to amendments to the relevant
procedures, if required.
Quality, Health, Safety and Environment (“QHSE”)
A clear, formalised and documented Global QHSE manual is in
place to outline employees’ roles and responsibilities towards
the prevention of accidents, the elimination of hazards and in
ensuring a safe working environment. The Group adopts strict
standards and controls to continuously improve the application
and performance of the safety management systems as a safe
working environment is fundamental to the Group’s success in
business operations.
Review of this Statement
The Group also conducted the staff performance appraisals
semi-annually in order to enhance the level of staff competency
in carrying out their duties and responsibilities towards
achieving the Group’s objectives.
Independent Assurance Mechanism
Regular assessments on the adequacy and integrity of the
internal controls and monitoring of compliance with policies
and procedures are carried out through internal audits. The
Group has outsourced the activities and function of the internal
audit to a professional service provider. The internal audit plan that
sets out the internal audit coverage and scope of work is presented
for ARMC and the Board’s consideration and approval annually.
As required by Paragraph 15.23 of the MMLR, the External
Auditors have reviewed this Statement on Risk Management
and Internal Control. Their review was performed in accordance
with Recommended Practice Guide (“RPG”) 5 issued by the
Malaysian Institute of Accountants. Based on their review, 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 the Board has adopted in the review of the adequacy
and integrity of internal control of the Group. RPG 5 does not
require the External Auditors to and they did not consider whether
this Statement covers all risks and controls, or to form an opinion
on the effectiveness of the Group’s risk and control procedures.
Internal audit reports, which encompass the audit findings
together with recommendations thereon, are presented to
the ARMC during its quarterly meetings. Senior and functional
line management are tasked to ensure management action
plans are carried out effectively and regular follow-up audits are
performed to monitor the continued compliance.
Additionally, the Internal Auditors have also reviewed this
Statement and reported to the ARMC that, save for its
presentation to the ARMC of the individual lapses in internal
controls during the course of its internal audit assignment
for the financial period, it has not identified any other
circumstances which suggest any fundamental deficiencies in
the system of internal controls of the Group.
In addition to this internal mechanism, the Group also received
extensive and detailed ARMC reports and the management
letter from its External Auditors that primarily focuses on
financial controls. The ARMC reports and the management
This Statement is made in accordance with the resolution of the
Board dated 23 August 2013.
/5 9
P
/6 0
AUDIT AND RISK MANAGEMENT COMMITTEE REPORT
The Board of Directors of Scomi
Group Bhd (“the Company” or “SGB”)
(“the Board”) is pleased to present
the Report of the Audit and Risk
Management Committee (“ARMC”
or “the Committee”) for the financial
period ended 31 March 2013.
Terms of Reference of the ARMC
Objective
To assist the Board to review the adequacy and integrity of the
Group’s financial administration and reporting, internal control
and risk management systems including the management
information system and systems for compliance with
applicable laws, regulations, rules, directives and guidelines.
Balance and Composition
(a)The members of the ARMC shall be appointed by the
Board and shall comprise at least three (3) members, all of
whom must be non-executive directors with a majority of
them being independent directors.
(b) None of the members of the ARMC shall be an alternate director.
(c)A majority of the members of the Committee must be
financially literate with sufficient financial experience and
ability and at least one member of the ARMC must be
an Accountant or such other qualifications as defined by
the Bursa Malaysia Securities Berhad Main Market Listing
Requirements.
(d)The Committee shall have a mixture of expertise and
experience, including an understanding of the industries in
which the Group operates in.
(e)Members of the ARMC shall elect a Chairman from among
themselves who is an Independent Non-Executive Director.
(f )Members of the Committee may relinquish their
membership in the Committee with prior written notice to
the Company Secretary.
(g)In the event of any vacancies arising in the Committee
resulting in the number of members of the Committee
falling below three (3), the vacancy should be filled within
three (3) months of it arising.
(h)Appointment of each Committee member shall be for a
period of up to three (3) years. The Committee Chairman
shall not serve consecutive terms in that capacity,
although he may remain a member of the Committee and
may serve as Committee Chairman again in a future term.
Powers of the ARMC
(a)In carrying out its duties and responsibilities, the ARMC
shall, at the expense of the Company:
•have the authority to investigate any matter within its
terms of reference;
•have full, free and unrestricted access to the
Company’s and Group’s records, properties, personnel
and other resources;
•have direct communication channels with the external
auditors and person(s) carrying out the internal audit
function;
•be able to obtain independent professional or other
advice in furtherance of their duties; and
•be able to convene meetings with the external
auditors, the internal auditors or both, excluding the
attendance of the other directors and employees,
whenever deemed necessary.
P
(b)The ARMC is not authorized to implement its
recommendations on behalf of the Board but shall report
its recommendation back to the Board for its consideration
and implementation.
(c)Where the ARMC is of the view that a matter reported by it
to the Board has not been satisfactorily resolved resulting
in a breach of the Main Market Listing Requirements of Bursa
Malaysia Securities Berhad, the ARMC is authorized to promptly
report such matters to Bursa Malaysia Securities Berhad.
Duties and Responsibilities of the ARMC
(a)To consider the appointment of the external auditor, the
audit fee and any questions of resignation or dismissal;
(b)To pre-approve all non-audit services to be provided by
the independent auditors to the Company in accordance
with the Committee’s policies and procedures, and
regularly review:
(i)the adequacy of the Committee’s policies and
procedures for pre-approving the use of the
independent auditors for non-audit services with a
view to auditor independence;
(ii)the non-audit services pre-approved in accordance
with the Committee’s policies and procedures; and
(iii)fees paid to the independent auditors for pre-approved
non-audit services;
(i) In relation to the internal audit function:
•review the adequacy of the scope, functions,
competency and resources of the internal audit
function, and that it has the necessary authority to
carry out its work;
•review the internal audit plan and results of the
internal audit process and where necessary ensure that
appropriate action is taken on the recommendation of
the internal audit function;
• review the independence of the internal audit function;
•approve the appointment or termination of
employment of the head of the internal audit function
and to review his/her performance appraisal or
assessment; and
•receive reports from management on resignations of
other internal audit staff members, their reasons for
resigning and to review the performance appraisal or
assessment of the other internal audit staff conducted
by management;
(j)To consider and report back to the Board any related party
transactions and conflict of interest situation that may
arise within the company or group including any course of
conduct that raises questions of management integrity;
(k)To consider the major findings of internal investigations
and management’s response;
(l) To consider other topics as defined by the Board;
(c)To monitor regular rotation of audit partners by the
independent auditors;
(d) To discuss with the external auditor before the audit
commences, the nature and scope of the audit, and
ensure co-ordination where more than one audit firm
is involved;
(e)To act as an intermediary between the management or
other employees, and the external auditors;
(f )To review the quarterly and year-end financial statements,
focusing particularly on:
• any changes in accounting policies and practices;
• significant adjustments arising from the audit;
• litigation that could affect results materially;
• the going concern assumption; and
•compliance with accounting standards and other legal
requirements;
(g)To discuss problems and reservations arising from the
interim and final audits, and any matter the Auditor may
wish to discuss (in the absence of Management where
necessary);
(h)To review the External Auditor’s Management letter and
Management’s response;
(m)To review and verify that the allocation of options pursuant
to the Company’s share scheme for employees (“ESOS”)
complies with the criteria disclosed to the employees;
(n)To review and consider the appropriateness and adequacy
of internal processes for risk oversight and management.
In particular, the Committee shall:
•consider whether the Group has effective management
systems in place to identify, assess, monitor and manage
its key risk areas;
•review, approve and ensure adherence to the Group’s
risk management policy and strategies;
•establish the roles and respective accountabilities
of the Board, the Committee and Management in
managing risks;
•provide for regular review of the effectiveness of
the Group’s implementation of its risk management
system;
•receive regular reports on the risk profile of the Group,
describing material risks (both financial and nonfinancial) facing the Group and action plans taken by
management to mitigate the risks; and
•review the appropriateness of management’s response
to key risk areas;
(o) In relation to major business investment proposals:
•to review and evaluate the risk associated with
any proposal prepared by the project sponsor(s);
/6 1
P
/6 2
particularly that all risks have been considered and are
within the Group’s strategic goals and that action plans
or strategies to mitigate identified risks are adequate;
•to conduct meetings with the project sponsor(s) and
Chief Executive Officer (“CEO”), if necessary, to discuss
risk matters related to the proposal; and
•to make a recommendation to the Board on the
appropriate course of action to take;
(p)To oversee the Group’s internal compliance and control
systems established by management, including reviewing
the effectiveness of these systems and approving
management’s programmes and policies to ensure
effectiveness.
Meetings and Minutes
(a)
The ARMC shall meet at least four (4) times during a
financial year. In order to form a quorum, the majority of
members present must be independent directors.
(b)The CEO, the Head of the Group Internal Audit Department
and a representative of the external auditors shall normally
attend meetings. Other persons may attend meetings only
upon the invitation of the ARMC. However, at least twice a
year the Committee shall meet with the external auditors
without executive board members or management present.
and shall be responsible, with the concurrence of the
Chairman of the ARMC, for drawing up and circulating the
agenda and notice of meetings together with supporting
explanatory documentation to all ARMC members at least
five (5) days prior to each meeting. If there is a unanimous
consent by the members of the Committee present in the
meeting, a short notice shall suffice.
(d)The Secretary of the ARMC shall record all proceedings and
minutes are to be prepared and circulated to the ARMC
members and the Board of Directors. In addition, the
Chairman of the ARMC will report significant matters and
resolutions, at each Board meeting.
Membership and Meetings
During the period under review, the ARMC comprises four
(4) members, all of whom are Independent Non-Executive
Directors. The composition of the ARMC complies with
paragraph 15.09 of the Bursa Malaysia Securities Berhad Main
Market Listing Requirements.
A total of eight (8) ARMC meetings were held during the
period under review, which were on 21 February 2012, 28
February 2012, 26 April 2012, 24 May 2012, 28 August 2012,
22 November 2012, 28 February 2013 and 21 March 2013.
A quorum, established by the presence of the majority of
members who are Independent Directors, was always met.
(c)The Company Secretary shall act as secretary of the ARMC
The members of the ARMC and their attendance are as follows:
Name
ARMC
Designation
Attendance
(attended/held)
Chairman
8/8
Member
6/8
Member
8/8
Member
8/8
Summary of Activities for the Financial Period
In accordance with the approved Terms of Reference of the
ARMC, the ARMC carried out the following activities during the
financial period ended 31 March 2013:
1reviewed the quarterly and annual financial reports of the
Group and the Company prior to submission to the Board
for consideration and approval;
2reviewed the financial performance of contributing
subsidiaries and associated companies;
3reviewed and recommended to the Board the re-appointment
of the external auditors and the audit fee;
4reviewed and discussed with the external auditor the
nature and scope of their audit and ensure that the audit is
comprehensive;
5reviewed the external auditor’s ARMC report, Management
letter and management’s response thereto;
6reviewed the performance and effectiveness of the
external auditor for the statutory audit services;
7considered the major findings by the external auditors and
management’s responses thereto;
8conducted meetings with the external auditors without
the presence of the executive board members and
management;
P
9reviewed the internal audit plan and scope of work for
the year for the Group and the Company, prepared by the
external service provider for internal audit services;
10reviewed the internal audit reports which incorporated
audit findings, recommendations and management
responses for the Group and the Company by the external
service provider for internal audit services;
11reviewed the performance of the external service provider
for internal audit services;
12reviewed and recommended to the Board the
appointment of the external service provider for internal
audit services and the audit fee;
13reviewed the related party transactions to be entered
into by the Group with related parties and provide
recommendations on the same to the Board;
14reviewed the related party transactions and conflicts of
interest entered into by the Group with related parties on a
quarterly basis;
15reviewed and verified that the allocation of options
pursuant to the Company’s ESOS is in compliance with the
criteria for allocation of options as disclosed to employees
of the Company for the financial period;
16reviewed the Group’s systems and practices for the
identification and management of risks;
17reviewed the Group and each business divisions’ risk
profiles and actions plan taken by the Management to
control and mitigate the risks;
18reviewed and evaluated risk considerations in relation to
major business investment and/or divestment proposals,
corporate exercises and adequacy of action plans taken by
the Management to mitigate risks identified;
19reviewed the annual Statements on Corporate
Governance, Internal Control and ARMC report to be
published in the Annual Report; and
20tabled the minutes of the ARMC meetings to the Board on
a quarterly basis.
Internal Audit Function
The internal audit function of the Group is outsourced to an
external service provider of internal audit services, which is
independent of management and operations (“the Internal
Auditors”). The Internal Auditors provide independent and
objective assessments on the adequacy and effectiveness
of the risk management, internal control and governance
processes/framework of the Group. Through the internal audit
function, the Company undertakes regular and systematic
reviews of the risk management and internal control system so
as to provide reasonable assurance that such system continues
to operate satisfactorily and effectively in the Group.
The Internal Auditors report directly to the ARMC who reviews
the internal audit plans and scope of work for the year for the
Group and the Company as well as the performance of the
Internal Auditors in undertaking their internal audit function.
During the financial period under review, the Internal Auditors
conducted various internal audit engagements in accordance
with the approved risk-based internal audit plans that are
consistent with the corporate goal of the Group. Details of the
internal audit activities carried out by the Internal Auditors are
as follow:
1prepared and presented a risk-based audit plan, audit
strategy, scope of work and resource requirements to the
ARMC and the Board for deliberation and approval;
2evaluated and appraised the soundness, adequacy and
application of accounting, financial and other controls
and promoting effective controls in the Group and the
Company at reasonable cost;
3carried out investigation and special review requested by
management;
4ascertained the level of operational and business
compliance with established policies, procedures and
statutory requirements;
5ascertained the extent to which the Group’s and the
Company’s assets are accounted for, verification of their
existence and safeguarding assets from losses;
6appraised the reliability and usefulness of information
developed within the Group and the Company for
management;
7identified and recommended opportunities for
improvements to the existing system of internal control,
operations and processes in the Group and the Company;
and
8reviewed the annual Statement on Internal Control and
ARMC report to be published in the Annual Report.
All internal audit activities for the financial period ended
31 March 2013 were conducted by the Internal Auditors.
The total costs incurred by the Group for the internal audit
function for the financial period ended 31 March 2013 was
approximately RM682,698.
This Statement is made in accordance with the resolution of
the Board dated 23 August 2013.
/6 3
P
/6 4
ADDITIONAL INFORMATION
Additional
Information
1 Material Contracts of the Company and its Subsidiaries, involving Directors’ and Major Shareholders’ Interests
There are no material contracts involving Directors’ and Major Shareholders’ Interest, either still subsisting at the end of the
financial period or, entered into since the end of the previous financial period.
2 Status of Utilisation of Proceeds Raised from Corporate Exercises
(a)As disclosed in Note 42(b) to the financial statements, the Group completed the disposal of its 100% equity interest in
Scomi Nigeria Pte Ltd (“SNPL”) and 2% equity interest in Oiltools Africa Limited for a total cash consideration of RM122.9 million
on 17 October 2012.
The disposal proceeds were utilised as follows:
RM ‘million
Repayment of borrowings
86.1
Acquisition of remaining 49.9% interest in Titan Tubular Nigeria Limited
held by minority shareholders
10.8
Incidental expense related to the disposal
6.0
102.9
Working capital for the Group^
20.0
122.9
^ includes RM9.2 million which is held in escrow as retention sum
(b)As disclosed in Note 42(a)(iii), the Group completed the disposal of its Drilling Waste Management Business held through
Augean North Sea Services Ltd for a cash consideration of RM 10.3 million on 3 September 2012. The proceeds were
utilised as working capital for the Group.
(c)As disclosed in Note 44(k), the Company completed the issuance of 119,109,500 ordinary shares of RM0.10 each pursuant
to the private placement exercise to IJM Corporation Berhad at an issue price of RM0.33 per share on 3 October 2013.
The private placement proceeds were utilised as follows:
RM ‘million
38.9
Incidental expense related to the private placement
0.4
39.3
(d)As disclosed in Note 37, the company completed the issuance of 110.0 million zero coupon Convertible Redeemable
Secured Bonds (“Convertible Bond”) at its nominal value of RM1.00 each to IJM Corporation Berhad on 8 February 2013.
P
The Convertible Bond proceeds were utilised as follows:
RM ‘million
Incidental expenses related to the Convertible Bond
57.0
3.5
Working capital for the Group
60.5
49.5
110.0
3 Non-Audit Fees
Fees incurred in respect of non-audit services rendered by PricewaterhouseCoopers (PWC) during the Financial Period under
review ended 31 March 2013 amounted to RM2.3 million.
4 Share Buy-back
There was no share buy-back during the Financial Period under review ended 31 March 2013. As disclosed in Note [34(b)], all
shares bought back previously have been maintained as Treasury shares and there has not been any resale of the Company’s
Treasury shares.
Details of the Treasury shares are as tabulated below.
No. of
Average
shares
Lowest
Highest
purchase Total
bought
purchase
purchase
price of purchase
back
price
price
shares
price
RMRMRMRM
Balance as at 1 Jan 2012 /
31 Mar 2013
The purchase price tabulated above includes incidental costs and is the average price for all the shares purchased in a calendar month.
14,427,200
0.406
1.479
1.296
18,695,745.96
5 Options, Warrants and Convertible Securities
During the financial period, 376,852,207 new ordinary shares of RM0.10 each were issued by the Company by way of:
(i) issuance of 218,769,875 new ordinary shares of RM0.10 each pursuant to the conversion of Irredeemable Convertible Secured Loan Stocks;
(ii) issuance of 3,404,500 new ordinary shares of RM0.10 each pursuant to the exercise of options granted under the Company’s
Employees’ Share Options Scheme (“ESOS”) at an option price of 0.17 per share;
(iii) issuance of 15,500,000 new ordinary shares of RM0.10 each pursuant to the exercise of options under the Company’s ESOS at
an option price of 0.24 per share;
/6 5
P
/6 6
5 Options, Warrants and Convertible Securities (continued)
(iv) issuance of 20,068,332 new ordinary shares of RM0.10 each pursuant to the exercise of warrants at RM 0.40 per share; and,
(v)issuance of 119,109,500 new ordinary shares of RM0.10 each pursuant to the private placement of shares to IJM Corporation
Berhad at an issue price of RM0.33 per share.
For the financial period ended 31 March 2013, the actual percentage of ESOS Options granted to Directors and Senior
Management is 4% and the actual percentage of ESOS Options granted to the Directors and Senior Managements is 35% since
commencement of ESOS.
6 Director’s Conflict of Interest
Save as disclosed below and the disclosures in the Notes to the Financial Statements, the Directors do not have any existing
conflicts of interest or any personal interest in any business arrangement involving Scomi Group Bhd (“SGB” or “the Company”):
Director
Nature of existing conflict of interest
Transaction
Tan Sri Nik Mohamed
Bin Nik Yaacob
Tan Sri Nik Mohamed Bin Nik Yaacob is an
Independent Non-Executive Director of the Company;
and the Chairman and Independent Non-Executive
Director of Scomi Energy Services Bhd (formerly
known as Scomi Marine Bhd), a 65.65% owned
subsidiary of the Company (“SES”).
Tenancy Agreement between the
Company and Scomi Oiltools Sdn
Bhd, an indirect wholly owned
subsidiary of SES, for rental of
office space at Global Research and
Technology Center.
Tan Sri Mohamed
Azman Bin Yahya
Tan Sri Mohamed Azman Bin Yahya is a NonIndependent Non-Executive Director of the Company;
and the Group Chief Executive, Director and Major
Shareholder of Symphony House Berhad, the holding
company of Symphony Share Registrars Sdn Bhd,
Symphony Corporatehouse Sdn Bhd and Symphony
BPO Solutions Sdn Bhd.
Provisions of share registrar services
and human resources services to the
Company and its group of companies
by Symphony Share Registrars Sdn
Bhd, Symphony Corporatehouse Sdn
Bhd and Symphony BPO Solutions
Sdn Bhd respectively.
Dato’ Sreesanthan
A/L Eliathamby
Dato’ Sreesanthan A/L Eliathamby is an Independent NonExecutive Director of the Company; and an Advocate &
Solicitor and a Partner of Kadir Andri & Partners.
Provision of legal advisory services by
Kadir Andri & Partners to the Company
and its group of companies.
Shah Hakim @
Shahzanim Bin Zain
Mazlina Binti Zain, a person connected to Shah Hakim
@ Shahzanim Bin Zain, is the owner of Lintas Travel
Services (M) Sdn Bhd (“LTS”).
Provision of airline ticketing
reservation and ticket purchasing
services by LTS to the Company and
its group of companies.
Shah Hakim @ Shahzanim Bin Zain is the Chief
Executive Officer/Non-Independent Executive Director
of the Company; and a substantial shareholder of Suria
Business Solutions Sdn Bhd.
Leasing Agreement with Orix Rentec
(Malaysia) Sdn Bhd for the leasing
of personal computers, which are
supplied to them by a related party,
Suria Business Solutions Sdn Bhd.
In each of the transactions listed above, the relevant Director concerned had declared the nature of his conflict of interest and
had abstained from deliberating and voting on the relevant resolutions of the Board of Directors of the Company.
P
STATEMENT OF DIRECTORS’ RESPONSIBILITY
The Directors are required by the
Companies Act, 1965 (“the Act”) to prepare
the financial statements of Scomi Group
Bhd (“the Company”) and its subsidiaries
(“the Group”) for each financial year which
have been made out in accordance with the
applicable Malaysian Financial Reporting
Standards, the International Financial
Reporting Standards, the provisions of the Act
and the Main Market Listing Requirements of
Bursa Malaysia Securities Berhad.
The Directors are responsible to ensure that the financial
statements give a true and fair view of the state of affairs
of the Group and the Company at the end of the financial
period and of the results and cash flows of the Group and the
Company for the Financial Period.
In preparing the financial statements, the Directors have:
•adopted appropriate accounting policies and applied them
consistently;
•made judgments and estimates that are reasonable and
prudent; and
• prepared the financial statements on an ongoing concern basis.
The Directors are responsible to ensure that the Group and
the Company keep accounting records which disclose with
reasonable accuracy the financial position of the Group and
the Company which enable them to ensure that the financial
statements comply with the Act.
The Directors are also responsible for taking such steps as
are reasonably open to them to preserve the interests of
stakeholders and to safeguard the assets of the Group and to
detect and prevent fraud and other irregularities.
The financial statements of the Company and the Group
for the financial period ended 31 March 2013 are set out on
pages 70 to 206 of this Annual Report.
/6 7
Transforming a
simple element into
a symbol of precision.
A NAUTILUS SHELL
FINANCIAL STATEMENTS
Directors’ Report P 7 1
Statements of Comprehensive Income P 79 Statements of Financial Position P 80 Consolidated Statement of Changes in Equity P 82
Company Statement of Changes in Equity P 85
Statements of Cash Flows P 8 7 Notes to the Financial Statements P 90 Supplementary Information P 202
Statement by Directors P 2 0 3
Statutory Declaration P 2 0 4
Independent Auditors’ Report P 205
P
DIRECTORS’ REPORT
Directors’
Report
The Directors hereby submit their report with the audited financial statements of the Group and Company for the 15 month
Principal Activities
The principal activity of the Company is investment holding.
The principal activities of the Group consist of the provision of drilling fluids solutions and related engineering services, drilling
waste management equipment and services and an extensive range of production chemicals to the oil and gas industry; marine
transportations, other shipping related services; provision of a range of transport solutions encompassing the design and manufacture
of urban rail systems such as monorail and mass rapid transit vehicles, and commercial vehicles such as coaches and special
purpose vehicles; and provision of vessels to the oil and gas industry to support offshore services.
There were no significant changes in the nature of these activities except for the internal restructuring undertaken during the
financial period as disclosed in Note 42, Note 44 and Note 45.
Financial Results
Group
Company
RM’000
RM’000
(Loss)/Profit for the financial period
(69,449)
386,004
Attributable to:
Owners of the Company
(66,833)386,004
Non-controlling interests
(2,616)
–
Dividends
No dividend has been paid or proposed by the Company since the end of the Company’s previous financial year.
The Directors do not recommend any dividend for the financial period ended 31 March 2013.
Reserves and Provisions
Material transfers to or from reserves or provisions during the financial period are as disclosed in Note 36 to the financial statements.
Change of Financial Year End
On 14 December 2012, the Board of Directors of the Company had approved the change of financial year of the Company from
31 December to 31 March.
Consequently, the comparatives for the statement of comprehensive income, changes in equity and cash flows as well as certain
comparatives in the notes to the financial statements of the Group and the Company for the period of 15 months from 1 January
2012 to 31 March 2013, are not comparable to those of the previous 12 months ended 31 December 2011. The next financial
statements will be for a period of 12 months commencing from 1 April 2013.
/7 1
P
/7 2
DIRECTORS’ REPORT
Director’s Report
(continued)
Issue of Shares
(a) issuance of 218,769,875 new ordinary shares of RM0.10 each pursuant to the conversion of Irredeemable Convertible Secured Loan Stocks (“ICSLS”);
(b)issuance of 3,240,500 new ordinary shares of RM0.10 each pursuant to the exercise of options granted under the Company’s
Employees’ Share Options Scheme (“ESOS”) at an option price of RM0.17 per share;
(c)issuance of 15,664,000 new ordinary shares of RM0.10 each pursuant to the exercise of options under the Company’s ESOS at an
option price of RM0.24 per share;
(d)issuance of 20,068,332 new ordinary shares of RM0.10 each pursuant to the exercise of 20,068,332 warrants at an exercise price
of RM0.40 per share; and
(e)issuance of 119,109,500 new ordinary shares of RM0.10 each pursuant to the private placement of shares to IJM Corporation
Berhad (“IJM’) at an issue price of RM0.33 per share.
The newly issued shares ranked pari passu in all respects with the existing ordinary shares of the Company.
Details of movements in share capital are disclosed in Note 34(a) to the financial statements.
Treasury Shares
There was no purchase of Treasury shares during the financial period.
Details of the Treasury shares are set out in Note 34(b) to the financial statements.
Employees’ Share Option Scheme
The Company implemented the ESOS on 28 April 2003 for a period of 10 years. The ESOS is governed by the By-Laws which were
approved by the shareholders on 28 March 2003. The ESOS expired on 27 April 2013.
Details of the ESOS are set out in Note 34(c) to the financial statements.
The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose in this report,
the names of options holders who were granted less than 2,000,000 options under the ESOS during the financial period. This
information has been separately filed with the Companies Commission of Malaysia.
The option holders who have been granted ESOS during the financial period is as follows:
Exercise
price
Name of option holders
Granted
RM/share
Stephen Fredrick Bracker
2,000,000
0.36
Mohamed Suhaimi bin Yaacob
2,000,000
0.36
Michael Kent Walker
2,000,000
0.36
P
DIRECTORS’ REPORT
Significant Events During the financial period
Significant events during the financial period are disclosed in Note 44 to the financial statements.
Significant Events Subsequent to the Date of the Statement of Financial Position
Significant events subsequent to the date of the statement of financial position are disclosed in Note 46 to the financial statements.
Directors
The Directors who have held office during the period since the date of the last report are as follows:
(appointed on 22 October 2012)
Foong Choong Hong
Lee Chun Fai (Alternate Director to Dato’ Teh Kean Ming)
(appointed on 22 May 2013)
Directors’ Interests
According to the Register of Directors’ Shareholdings, particulars of interests of Directors who held office at the end of the financial
period in shares, options over shares, ICSLS, Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) and warrants in the Company
and its subsidiaries were as follow:
Number of ordinary shares of RM0.10 each in the Company
At
Converted/
At
1.1.2012
Bought
Sold
31.3.2013
‘000 ‘000‘000‘000
Direct interest in the Company
Tan Sri Asmat bin Kamaludin Datuk Haron bin Siraj
Foong Choong Hong
Indirect interest in the Company
Tan Sri Mohamed Azman bin Yahya Shah Hakim @ Shahzanim bin Zain 265 129
120
–
410
–
6
2,7796,036
1
4
10,0003,750
–
13,750
5
172,275––
172,275
3
5
– 2394
–
120
–
410
13
–
8,815
/7 3
P
/7 4
DIRECTORS’ REPORT
Director’s Report (continued)
Directors’ Interests (continued)
Number of ordinary shares of RM1.00 each in subsidiaries
At
At
1.1.2012 Bought
Sold
31.3.2013
‘000‘000‘000‘000
Direct interest in Scomi Engineering Bhd
Shah Hakim @ Shahzanim bin Zain 14
Direct interest in Scomi Energy Services Bhd
(formerly known as Scomi Marine Bhd)
220
–
–
220
15
623––
623
7
7
50––
50
16
–
2,108
–
2,108
Number of ordinary shares of RM1.00 each in subsidiaries
At
At
1.1.2012
Bought
Sold
31.3.2013
‘000‘000‘000‘000
Indirect interest in Scomi Engineering Bhd
Tan Sri Asmat bin Kamaludin Shah Hakim @ Shahzanim bin Zain
Indirect interest in Scomi Energy Services Bhd
(formerly known as Scomi Marine Bhd)
Tan Sri Asmat bin Kamaludin Shah Hakim @ Shahzanim bin Zain
8
17
17
12––
12
192,568––9 –
10
10––
10
313,393––9–
10
11
*Number of options over ordinary shares of RM0.10 each in the Company
Exercise
At
At
price
1.1.2012
Forfeited
Exercised
31.3.2013
RM/share‘000‘000‘000‘000
Datuk Mohamed Azman bin Yahya
Foong Choong Hong
1.24
1.34
1.24
1.24
1.34
1.21
1.24
0.17
1.12
700
600
600
600
600
420
350
1,357
6,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,357)
–
700
600
600
600
600
420
350
–
6,000
*The options held over ordinary shares in Scomi Group Bhd were granted pursuant to Scomi Group Bhd’s Employees’ Share
Option Scheme, which was implemented on 28 April 2003 and expired on 27 April 2013.
P
DIRECTORS’ REPORT
~
Number of options over ordinary shares of RM1.00 each in a subsidiary
Exercise
At
At
price
1.1.2012
Forfeited
Exercised
31.3.2013
RM/share‘000‘000‘000‘000
Direct interest in Scomi Engineering Bhd
1.00
1.00
1,500
300
–
–
–
–
1,500
300
The options held over ordinary shares in Scomi Engineering Bhd were granted pursuant to Scomi Engineering Bhd’s Employees’
Share Option Scheme, which was implemented on 26 January 2006.
~ ^
Number of options over ordinary shares of RM1.00 each in a subsidiary
Exercise
At
At
price
1.1.2012 Terminated
Exercised
31.3.2013
RM/share‘000‘000‘000‘000
Direct interest in Scomi Energy Services Bhd
^
1.15
600
(600)
–
–
The options held over ordinary shares in Scomi Energy Services Bhd were granted pursuant to Scomi Energy Services Bhd’s
Employees’ Share Option Scheme, which was implemented on 26 January 2006. The share option was terminated on 26 June 2012.
ICSLS in the Company
At
Converted/
At
1.1.2012
Bought
Sold
31.3.2013
‘000‘000‘000‘000
12
Tan Sri Asmat bin Kamaludin1
398
–(398)
–
Tan Sri Mohamed Azman bin Yahya –(15,000)
–
3
15,000
Warrants in the Company
At
Exercised/
At
1.1.2012
Bought
Sold
Expired
31.3.2013
‘000‘000‘000‘000‘000
Direct Interest in the Company
18
53 – (30)(23) –
Tan Sri Mohamed Azman bin Yahya Shah Hakim @ Shahzanim bin Zain
3
2,000––
(2,000)–
–
61,995
–
(61,995)
–
/7 5
P
/7 6
DIRECTORS’ REPORT
Directors’ Interests (continued)
ICULS in a subsidiary
At
Converted/
At
1.1.2012
Bought
Sold
31.3.2013
‘000‘000‘000‘000
Indirect interest in Scomi Engineering Bhd
8
54,782––9–
1 Deemed interested by virtue of Section 6A(2) of the Companies Act, 1965 through Tan Sri Asmat bin Kamaludin’s direct interest in Bi-Bot Holdings Sdn Bhd, whereby 215,000 shares are held through CIMSEC Nominees (Tempatan) Sdn Bhd Exempt An for CIMB trustee Berhad.
2Deemed interested by virtue of Section 6A(2) of the Companies Act, 1965 through Tan Sri Asmat bin Kamaludin’s direct interest
in Bi-Bot Holdings Sdn Bhd, whereby 325,625 ordinary shares are held through CIMSEC Nominees (Tempatan) Sdn Bhd Exempt
An for CIMB Trustee Berhad.
3Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through Tan Sri Mohamed Azman bin Yahya and his
spouse’s direct shareholdings in Gajahrimau Capital Sdn Bhd, whereby all 10,000,000 shares, 15,000,000 ICSLS and 2,000,000
warrants, are held through ABB Nominees (Tempatan) Sdn Bhd.
4Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through Tan Sri Mohamed Azman bin Yahya and his
spouse’s direct shareholdings in Gajahrimau Capital Sdn Bhd, whereby all the 13,750,000 shares are held through ABB Nominee
(Tempatan) Sdn Bhd.
5Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through Shah Hakim @ Shahzanim bin Zain’s
shareholding in Kaspadu Sdn Bhd.
6 2,250,000 shares held through BHLB Trustee Berhad (PCM for Shah Hakim @ Shahzanim bin Zain).
7Deemed interested by virtue of Section 6A(2) of the Companies Act, 1965 through Tan Sri Asmat bin Kamaludin’s interest in
Bi-Bot Holdings Sdn Bhd, whereby all the ordinary shares are held through CIMSEC Nominees (Tempatan) Sdn Bhd.
8Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through Shah Hakim @ Shahzanim bin Zain’s shareholding in Kaspadu Sdn. Bhd., which holds an interest in the Company, which in turn is a substantial shareholder of Scomi
Engineering Bhd.
9Ceased to be deemed interested pursuant to Section 6A(4) of the Companies Act, 1965.
10Deemed interested by virtue of Section 134(12)(c) of the Companies Act,1965 through the shareholding in the Company of h
is
spouse, Puan Sri Habibah bin Mohd Salleh.
11Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through his shareholding in Kaspadu Sdn. Bhd.,
which in turn is deemed interested in SES.
P
DIRECTORS’ REPORT
Bi-bot Holdings Sdn Bhd, whereby 322,500 ICSLS are held through CIMSEC Nominees (Tempatan) Sdn Bhd Exempt An for CIMB
Trustee Berhad.
138,286,000 shares held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim
@ Shahzanim Bin Zain (Margin) and Maybank Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim
@ Shahzanim Bin Zain.
14123,000 shares held through BHLB Trustee Berhad (PCM for Shah Hakim @ Shahzanim Bin Zain).
15123,000 shares held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim
@ Shahzanim Bin Zain (Margin).
16Held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shazanim
Bin Zain (Margin).
17Deemed interested by virtue of Section 134(12)(c) of the Companies Act, 1965 through Tan Sri Asmat bin Kamaludin’s children’s
direct share holding in Scomi Engineering Berhad.
Bi-bot Holdings Sdn Bhd, whereby 43,000 Warrants are held through CIMSEC Nominees (Tempatan) Sdn Bhd Exempt An for CIMB Trustee Berhad.
Other than as disclosed above, according to the Register of Directors’ Shareholdings, the Directors in office at the end of the
financial period did not hold any interest in the shares, options over shares, ICSLS and warrants in the Company or shares, options
over shares, ICULS and debentures of its related corporations during the financial period.
Directors’ Benefits
During and at the end of the financial period no arrangements subsisted to which the Company is a party, with the object or
objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of
the Company or any other body corporate, except for options over shares granted by the Company and subsidiaries, Scomi
Engineering Bhd and Scomi Energy Services Bhd (formerly known as Scomi Marine Bhd) to eligible employees including certain
Directors of the Company pursuant to the Company’s and Scomi Engineering Bhd’s and Scomi Energy Services Bhd’s respective
Employees’ Share Option Schemes, ICSLS and warrants granted by the Company and ICULS granted by a subsidiary, Scomi
Engineering Bhd. The options over shares granted by Scomi Energy Services Bhd were early terminated on 26 June 2012.
Since the end of the previous financial period, no Director has received or become entitled to receive a benefit (other than
Directors’ remuneration 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 he is a member, or with a company in which he has a substantial
financial interest, except as disclosed in Note 41 to the financial statements.
Statutory Information on the Financial Statements
Before the financial statements 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 satisfied themselves that all known bad debts had been written off and that adequate allowance had been
made for doubtful debts; and
/7 7
P
/7 8
DIRECTORS’ REPORT
Statutory Information on the Financial Statements (continued)
(b)to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their
values as shown in the accounting records of the Group and Company had been written down to an amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:
(a)which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial
statements of the Group and 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 Company misleading; or
(c)which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and
Company misleading or inappropriate.
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 period which, in the opinion of the Directors, will or may affect the ability of the Group or Company to meet
their obligations when they fall due.
In the opinion of the Directors:
(a)other than as disclosed in Note 42 and 44, the results of the operations of the Group and Company during the financial period
were not substantially affected by any item, transaction or event of a material and unusual nature; and
(b)other than as disclosed in Note 46, there has not arisen in the interval between the end of the financial period and the date of
this report any item, transaction or event of a material and unusual nature which is likely to affect substantially the results of the
operations of the Group or Company for the financial period in which this report is made.
Auditors
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
Signed on behalf of the Board of Directors in accordance with their resolution dated 31 July 2013.
Chairman
P
STATEMENTS OF COMPREHENSIVE INCOME FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2013
/7 9
Statements of
Comprehensive Income
for the Financial Period Ended 31 March 2013
Group
Company
Period
Year
Period
Year
endedendedendedended
Note 31.3.2013 31.12.2011 31.3.2013 31.12.2011
RM’000RM’000RM’000RM’000
(restated)
Revenue
5 1,922,3681,402,566
Cost of sales/services (1,515,797)(1,224,721)
–4,167
––
Gross profit
406,571177,845
–4,167
Other operating income
43,51823,683
571,2459,443
Administrative expenses
(59,208)(59,483)(14,449)(12,575)
Selling and distribution expenses
(79,484)(43,200)
––
Other operating expenses
(167,323)(218,472)(156,679)(152,400)
Finance costs
7
(129,678)(48,856)(16,349)(16,696)
Share of results of associates
133(2,978)
––
Share of results of joint ventures
6,5683,754
––
Profit/(loss) before taxation
Taxation
6
8
(Loss)/profit from continuing operations
Discontinued operations
Loss from discontinued operations, net of tax
25(a)
21,097(167,707)383,768(168,061)
(27,557)(19,298) 2,236(666)
(6,460)(187,005)386,004(168,727)
(62,989)(170,156)
–
–
(Loss)/profit for the period/ year
(69,449)(357,161)386,004(168,727)
Other comprehensive (loss)/income:
Currency translation differences
Available-for-sale financial assets
Cash flow hedges
(6,375)3,310
–2,403
(10,532)13,820
–
–
––
–
–
Other comprehensive (loss)/income for (16,907)19,533
–
–
the financial period/year, net of tax
Total comprehensive (loss)/income for the financial period/year
(86,356)(337,628)386,004(168,727)
(Loss)/profit for the financial period/year attributed to:
(66,833)(223,705)386,004(168,727)
(2,616)(133,456)
–
–
(Loss)/profit for the financial period/year
(69,449)(357,161)386,004(168,727)
Total comprehensive (loss)/income attributable to:
(69,300)(212,031)386,004(168,727)
(17,056)(125,597)
––
Total comprehensive (loss)/income for the financial period/year
(86,356)(337,628)386,004(168,727)
Sen
Sen
Loss per share attributable to owners of the Company:
10
- basic
(4.09)
(16.07)
- diluted
(4.08)
(16.04)
P
/8 0
STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2013
Statements of
Financial Position
as at 31 March 2013
Group
Company
Note 31.3.2013 31.12.2011 1.1.2011 31.3.2013 31.12.2011 1.1.2011
RM’000RM’000RM’000RM’000RM’000RM’000
(restated) (restated) (restated) (restated)
Non-Current Assets
Property, plant and equipment
Intangible assets
Investment properties
Prepaid land lease payments
Investments in subsidiaries
Investments in associates
Investments in joint ventures
Other financial receivables
Available-for-sale
financial assets
Deferred tax assets
Derivative financial assets
12
13
14
15
16
17
18
19
20
39
21
607,898713,253416,400
8181,6312,447
290,880328,713385,392
–––
1,3821,5591,2134,5204,5844,678
– 3161,787
–––
–––
1,219,303853,026997,543
403 2473,224
–––
55,49547,15725,081
–––
29,209––
33,348
–17,636
1041,5161,516
41,30846,64078,724
–
–24,465
–––
– 6721,674
–––
1,026,6791,139,401 937,802
1,257,989 859,9131,023,978
Current Assets
Inventories
Receivables, deposits,
and prepayments
Derivative financial assets
Short-term deposits,
cash and bank balances
22
23
21
24
213,397223,303200,380
–––
1,077,0121,073,059 922,655 47,387 67,007109,301
–
–7,691
–––
249,331236,181188,048 22,45913,082 9,334
1,539,7401,532,5431,318,774 69,846 80,089118,635
Assets classified as held for sale 25
108,112
–760,331
–––
1,647,8521,532,5432,079,105 69,846 80,089118,635
Less: Current Liabilities
Payables
27
Borrowings
28
Provisions
29
Derivative financial liabilities
21
Current tax liabilities
Deferred government grant
30
Irredeemable convertible
secured loan stocks
31
unsecured loan stocks
32
Provision for retirement
benefits
38
460,971602,066483,523 65,28111,72521,147
675,452757,821481,395
577222,305120,698
4,2312,8455,235
–––
489348 – –––
18,46935,67224,806
–––
1,7062,1551,568
–––
–3,1883,382
–3,1883,382
–1433 –––
–390323
–––
1,161,3181,404,4991,000,265 65,858237,218145,227
Liabilities classified as
held for sale
25
93,338
–123,219
–––
1,254,6561,404,4991,123,484 65,858237,218145,227
Net Current Assets/(Liabilities)
393,196128,044955,621 3,988(157,129) (26,592)
1,419,8751,267,4451,893,423
1,261,977702,784997,386
P
STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2013
/8 1
Group
Company
Note 31.3.2013 31.12.2011 1.1.2011 31.3.2013 31.12.2011 1.1.2011
RM’000RM’000RM’000RM’000RM’000RM’000
(restated) (restated) (restated) (restated)
Capital And Reserves Attributable
To Owners Of The Company
Share capital
34(a)
Share premium
35
Treasury shares
34(b)
Other reserves
36
Convertible bonds
37
Retained earnings
Equity and reserves
attributable to owners
of the Company
Total Equity And Reserves
Non-Current Liabilities
Payables
Borrowings
Deferred government grant
Provision for retirement
benefits
Deferred tax liabilities
secured loan stocks
unsecured loan stocks
27
28
30
21
38
39
156,454118,769118,266156,454118,769118,266
351,916276,793275,926351,916276,793275,926
(18,696) (18,696)(18,696)(18,696) (18,696)(18,696)
(85,810) (247,305)(252,105)
4,235 98,898111,739
106,471––
106,471––
88,309310,698525,288641,267224,779379,696
598,644440,259648,679
1,241,647700,543866,931
484,489489,884614,653
–––
1,083,133 930,1431,263,332
1,241,647700,543866,931
20,2305,6295,520
19,037 -260
300,092320,866608,219 1,293 2,241126,380
––––––
6,166
-4,919
–––
6,7447,0774,358
3,5103,7273,219
–––
–––
31
–
32
– 341 –––
–3,815
–
336,742337,302630,091 20,330
–3,815
2,241130,455
1,419,8751,267,4451,893,423
1,261,977702,784997,386
P
/8 2
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2013
Consolidated Statement
of Changes in Equity
Attributable to owners of the Company
Non-
Share
Share Treasury
Other Convertible Retained
controlling Total
Group
Note capital premium
shares reserves
bond earnings
Total interests
equity
RM’000RM’000RM’000RM’000 RM’000RM’000
RM’000
RM’000
RM’000
At 1 January 2012
- as previously
stated
- adjustments
for early adoption
of standards
48
At 1 January 2012,
as restated
Loss for the
financial period
118,769
276,793
––
118,769
(18,696)
(246,095)
–(1,210)
276,793
(18,696)
(247,305)
––
–
–
–
378,591
509,362
–
(67,893) (69,103)418,053 348,950
–
310,698
440,259
71,831
489,884
581,193
930,143
– (66,833)(66,833) (2,616)(69,449)
Other comprehensive
(loss)/income:
- Currency translation
differences
–––
4,554 ––
4,554
(10,929)
(6,375)
- Cash flow hedges
––
–(7,021)
–
– (7,021) (3,511)(10,532)
Total other comprehensive
(loss)/income
––
–(2,467)
–
Total comprehensive loss
––
–(2,467)
– (66,833)(69,300)(17,056)(86,356)
Share options:
- proceeds
from shares
issued
34(a),35
- value of
employee
services
36
- value of
options
terminated
36
Conversion
of ICSLS 34(a),35,36
Conversion
of ICULS
34(a),36
Warrants
- exercise of
warrants
- lapse of
unexercised
warrants
– (2,467)(14,440)(16,907)
1,890
2,408
–
–
–
–
4,298
–
4,298
–
–
–
3,986
–
–
3,986
–
3,986
–
–
–
(3,613)
–
3,613
–
–
–
21,877
36,443
–
(61,899)
–
–
(3,579)
–
(3,579)
–
–
–
(1,148)
–
–
(1,148)
1,148
–
2,007
9,231
–
(3,211)
–
–
8,027
–
8,027
–
–
–
(29,126)
–
29,126
–
–
–
P
/8 3
Non-
Share
Share Treasury
Other Convertible Retained
controlling Total
Group
Note capital premium
shares reserves
bond earnings
Total interests
equity
RM’000RM’000RM’000RM’000 RM’000RM’000
RM’000
RM’000
RM’000
Issuance of
convertible
bonds, net
37
––––
106,471–
106,471
–
106,471
Issuance of
shares, net34
11,911
27,041–– ––
38,952
–
38,952
Accretion/dilution
of interest in
subsidiaries, net
45
–
–
–
–
–
(110,669) (110,669)
88,207 (22,462)
Capital repayment
by a subsidiary
44(e)
–
–
–
–
–
–
–
(77,694) (77,694)
Put option
adjustment
upon expiry
27(b)
–
–
–
258,286
–
(77,626) 180,660
– 180,660
Disposal of
subsidiary
–
–
–
687
–
–
687
–
687
At 31 March 2013 156,454
351,916
(18,696)
(85,810)
106,471
88,309
598,644
484,489 1,083,133
Non-
Share
Share Treasury
Other Retained
controlling Total
Group
Note
capital premium
shares
reserves earnings
Total interests
equity
RM’000RM’000RM’000 RM’000RM’000
RM’000
RM’000
RM’000
At 1 January 2011
- as previously stated
- adjustment for
early adoption
of standards
48
118,266
275,926
(18,696)
(251,592)
602,647
726,551
134,610
861,161
–
–
–
(513)
(77,359)
(77,872)
480,043
402,171
At 1 January 2011,
as restated
118,266
275,926
(18,696)
(252,105)
525,288
648,679
614,653 1,263,332
Loss for the financial period
–
–
–
–
(223,705) (223,705) (133,456) (357,161)
Other comprehensive income:
- Currency translation differences–––198–
198
3,112
3,310
- Available-for-sale financial assets–––
1,719–
1,719
684
2,403
- Cash flow hedges
–
–
–
9,757
–
9,757
4,063
13,820
Total other comprehensive income
Total comprehensive loss
–
–
–
11,674
–
–
–
11,674
–
11,674
7,859
19,533
(223,705) (212,031) (125,597) (337,628)
P
/8 4
Consolidated Statement of Changes in Equity for the Financial Period Ended 31 March 2013 (continued)
Non-
Share
Share Treasury
Other Retained
controlling Total
Group
Note
capital premium
shares
reserves earnings
Total interests
equity
RM’000RM’000RM’000 RM’000RM’000
RM’000
RM’000
RM’000
Share of reserves in subsidiaries
Share options:
- proceeds from
shares issued
34(a),35
11379– ––
192
–
192
- value of
employee
services
36–––
3,520–
3,520
–
3,520
- value of
options lapsed/
forfeited
36–––
(10,080)
9,080
(1,000)
1,000
–
Conversion
of ICULS 34(a),36
–
–
–
(69)
–
(69)
–
(69)
Conversion
of ICSLS 34(a),35,36
390
788
–
(222)
–
956
–
956
Dilution of
interest in
subsidiaries––– ––
–
75
75
Disposal of a
joint venture
company 36,42(b)
–
–
–
(23)
35
12
–
12
Dividend paid to
non-controlling
interests of a subsidiary
–
–
–
–
–
–
(247)
(247)
At 31 December 2011
118,769
276,793
(18,696)
(247,305)
310,698
440,259
489,884
930,143
P
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2013
/8 5
Company Statement
of Changes in Equity
Non-distributable Distributable
Share
Share
Treasury
Other Convertible
Retained
Note
capital
premium
shares
reserves
bonds
earnings
Total
RM’000RM’000RM’000RM’000RM’000 RM’000
RM’000
Company
At 1 January 2012
118,769
276,793
(18,696)
98,898
–
224,779
700,543
Profit for the
financial period –
–
–
–
–
386,004
386,004
Share options:
- proceeds
from shares
issued
34(a), 35
1,890
2,408––– –
4,298
- value of
employees
services
36
–
–
–
888
–
–
888
- transferred
to subsidiaries –––43– –
43
- value of options
lapsed/ forfeited
–
–
–
(1,358)
–
1,358
–
Conversion
of ICSLS 34(a), 35, 36
21,877
36,443
–
(61,899)
–
–
(3,579)
Warrants
33
- exercise
of warrants
2,007
9,231
–
(3,211)
–
–
8,027
- expiry of
warrants
–––
(29,126)–
29,126
–
Issuance of
convertible
bonds, net
37
–
–
–
–
106,471
–
106,471
Issuance of
shares, net
34, 35
11,911
27,041
–
–
–
–
38,952
At 31 March 2013
156,454351,916 (18,696) 4,235106,471 641,267
1,241,647
P
/8 6
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2013
Company Statement of Changes in Equity for the Financial Period Ended 31 March 2013 (continued)
Non-distributable Distributable
ShareShare
TreasuryOther
Retained
Note
capital
premium
shares
reserves
earnings
Total
RM’000RM’000RM’000RM’000 RM’000
RM’000
Company
At 1 January 2011
118,266
275,926
(18,696)
111,739
379,696
866,931
Loss for the financial year –
–
–
–
(168,727)
(168,727)
113
79
–
–
–
192
–
–
–
1,191
–
1,191
–
–
–
(11,066)
11,066
–
–
–
–
(2,744)
2,744
–
34(a), 35, 36
390
788
–
(222)
–
956
At 31 December 2011
118,769
276,793
(18,696)
98,898
224,779
700,543
Share options:
- proceeds from
shares issued
34(a), 35
- value of employees
services
36
- Transferred to
subsidiaries - value of options
lapsed/ forfeited
Conversion
of ICSLS
P
STATEMENTS OF CASH FLOWS FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2013
Statements
of Cash Flows
Group
Company
Period YearPeriod Year
endedendedended
ended
Note31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
Cash Flows FromOperating Activites
Profit/(loss) before taxation from:
- continuing operations
- discontinued operations
21,097(167,707)383,768(168,061)
(59,113)
(112,077)
–
–
Adjustments for:
Depreciation
- property, plant and equipment
104,166119,012
820826
- investment properties
177144 6494
Amortisation
- intangible assets
2,0702,161
– –
- prepaid charter hire
–5,669
– –
- prepaid land lease payment
–1,460
– –
- borrowing costs
–150 – –
Government grant
(449) – ––
Impairment losses
- property, plant and equipment 10,20798,846
–
–
- intangible assets
41,29242,607
–
–
- receivables 4,10421,717
–
–
- investment properties
–455 – –
- available-for-sale investments
242,467
– –
- amounts due from subsidiaries
––
23,8927,807
Impairment on investment in a subsidiary
––
276,779144,592
Write back of impairment on investment in subsidiary
––
(143,992)–
Write back of impairment of receivable
(6,622)(675)
(6,406)–
Allowance for obsolete stocks
1,0102,972
––
Insurance claims receivable
–202 ––
Inventories written down
–957 ––
Unrealised loss/(gain) on foreign exchange
19,34622,815 (294)(344)
Monetary adjustments
(1,641)(2,417)
––
Hyperinflation adjustments
4,8043,218
––
Provision for tax penalties
–872 ––
Gain on disposal of property, plant and equipment
(5,389)(4,922) (60)
Property, plant and equipment written off
–361 ––
Bad debts (recovered)/written off
(13,298)2,085
––
Fair value gain on financial instrument
- derivatives 435(556) ––
Gain on disposal of/dilution of
interest in subsidiary companies
(21,118)–
(558,307)–
Loss on disposal of discontinued operations
–103,495
––
(Gain)/loss on disposal of a joint venture company
–(4,548)
–35
Provision for retirement benefits
1,1171,402
––
GroupCompany
/8 7
P
/8 8
Statements of Cash Flows for the Financial Year Ended 31 March 2013 (continued)
Group
Company
endedendedended
ended
Note31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
Share of results in associates
(133)2,978
––
Share of results in joint ventures
(6,568)(3,754)
––
Share option expense
3,9863,300 8881,081
Financing costs
160,97853,27716,34916,696
Interest income
(1,461)(3,384)(5,087)(6,303)
Operating cash flows before
working capital changes
259,021192,582(11,526)(3,637)
Changes in working capital:
Inventories
(19,908)(32,964)
––
Receivables
(75,739)(52,191)(10,897)51,025
Payables
(72,054)114,090 (5,915)(7,177)
Cash generated from/(used in) operations
Net tax (paid)/refund
Retirement benefits paid
Tax penalties paid
91,320221,517(28,338)40,211
(29,401)(29,231) 2,889471
(837)(349) ––
–(3,848)
––
Net cash generated from/(used in) operating activities
61,082 188,089 (25,449)40,682
Cash Flows From Investing Activities
Proceeds from capital repayment
44(e)
––
57,913
–
Net cash inflow from disposal of a joint venture company
–9,096
––
Proceeds from disposal of subsidiaries
106,82689,66885,370
–
Purchase of property, plant and equipment
(102,068)(78,820)
(7)(15)
Proceeds from disposal of property, plant and equipment
31,27114,787
–65
Development expenditure incurred
(15,799)(41,474)
––
Repayment of non-current payables
–446 ––
Government grant received
–587 ––
Interest received
1,4613,3841,5562,487
Advances to subsidiaries
–
–
(28,674)–
Net cash generated from/(used in) investing activities
21,691(2,326)
116,1582,537
P
/8 9
Group
Company
endedendedended
ended
Note31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
Cash Flows From Financing Activities
Issue of share capital arising from the exercise of ESOS
Issuance of shares, net
Issuance of convertible bonds net
Exercise of warrants
Proceeds from bank borrowings
Repayment of bank borrowings
Interest paid on borrowings
Decrease/(increase) in short-term
deposits pledged as security
Capital repayment by subsidiary
Net cash used in financing activities
4,298192
4,298192
38,952
–
38,952
–
106,471
–
106,471
–
8,027
–
8,027
–
471,296480,079118,000
–
(522,609)(585,811)(339,128)(20,316)
(68,618)(52,156)(17,952)(19,347)
19,506(16,399) 6,981457
(77,949)
(20,626)(174,095)(74,351)(39,014)
Net Increase in Cash and Cash Equivalents 62,14711,66816,3584,205
Cash and Cash Equivalents at Beginning of
financial period/year
54,32338,849 6,1011,896
Currency Translation Differences
(2,292)3,806
––
Cash and Cash Equivalents at end of
financial period/year
114,17854,32322,4596,101
Cash and Cash Equivalents Comprise:
Short-term deposits with licensed banks
Cash and bank balances
Cash classified as held for sale
Bank overdrafts
24
24
25
28
82,40690,611
–6,981
166,925145,57022,4596,101
2,977–––
(105,138)(129,360)
––
147,170106,82122,45913,082
Less: Short-term deposits pledged as security
24
(32,992)(52,498)
–(6,981)
114,17854,32322,4596,101
Significant non cash transactions
The details of the disposal of 76.1% interest in Scomi Oilfield Limited to Scomi Energy Services Bhd for shares are disclosed in Note 44 and Note 45.
P
/9 0
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2013
Notes to the
Financial Statements
1 General Information
The principal activity of the Company is investment holding.
The principal activities of the Group consist of the provision of drilling fluids solutions and related engineering services, drilling
waste management equipment and services and an extensive range of production chemicals to the oil and gas industry;
marine transportations, other shipping related services; provision of a range of transport solutions encompassing the design
and manufacture of urban rail systems such as monorail and mass rapid transit vehicles, and commercial vehicles such as
coaches and special purpose vehicles; and provision of vessels to the oil and gas industry to support offshore services.
There were no significant changes in the nature of these activities except for the internal restructuring undertaken during the
financial period as disclosed in Note 42, Note 44 and Note 45.
The Company is a public limited liability company, incorporated and domiciled in Malaysia. The Company is listed on the Main
Market of Bursa Malaysia Securities Berhad.
The registered office and principal place of business address of the Company is Level 17, 1 First Avenue, Bandar Utama, 47800
Petaling Jaya, Selangor Darul Ehsan.
2 Basis of Preparation
The financial statements of the Group and Company have been prepared in accordance with the provisions of the Malaysian
Financial Reporting Standards (‘MFRS’), International Financial Reporting Standards and the requirements of the Companies Act
1965 in Malaysia.
The financial statements of the Group and the Company for the financial period ended 31 March 2013 are the first set of
financial statements prepared in accordance with the MFRS, including MFRS 1, ‘First-time Adoption of Malaysian Financial
Reporting Standards’. Subject to certain transition elections disclosed in Note 2(i) and (ii), the Group and Company have
consistently applied the same accounting policies in its opening MFRS statements of financial position at 1 January 2011
(transition date) and throughout all years presented, as if these policies had always been in effect. Comparative figures for 2011
in these financial statements have been restated to give effect to these changes. Subsequent to the transition in the financial
reporting framework to MFRS on 1 January 2012, the restated comparative information has not been audited under MFRS.
However, the comparative statements of financial position as at 31 December 2011, comparative statements comprehensive
income, changes in equity and cash flows for the financial year then ended have been audited under the previous financial
reporting framework, Financial Reporting Standards in Malaysia. There is no significant impact of the transition to MFRS on the
Group and Company’s reported financial position, financial performance and cash flows.
The financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires
Directors to exercise their judgment in the process of applying the Group and Company’s accounting policies. Although these
estimates and judgment are based on the Directors’ best knowledge of current events and actions, actual results may differ. The
areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the
financial statements are disclosed in Note 4.
(i) MFRS 1 mandatory exceptions
Estimates
MFRS estimates as at transition date is consistent with the estimates as at the same date made in conformity with FRS.
P
(ii)
MFRS 1 exemption options
1
Exemption for business combinations
MFRS 1 provides the option to apply MFRS 3 “Business Combinations” prospectively for business combinations that occurred from the transition date or from a designated date prior to the transition date. This provides relief
from full retrospective application that would require restatement of all business combinations prior to the transition
date or a designated date prior to the transition date. The Group elected to apply MFRS 3 prospectively to business
combinations that occurred after 1 January 2011. Business combinations that occurred prior to 1 January 2011
have not been restated. In addition, the Group has also applied MFRS 127 “Consolidated and Separate Financial
Statements” from the same date.
2Exemption for deemed cost – investment in subsidiaries, joint ventures, associates, property, plant and equipment,
prepaid lease payments and investment properties
As allowed by MFRS 1, the Group elected to measure its investment in subsidiaries, joint ventures, associates,
property, plant and equipment, prepaid lease payments and investment properties at carrying amount as at
transition date, 1 January 2011, as their deemed cost as at that date.
3
Designation of previously recognised financial instruments
MFRS 1 permits a previously recognised financial instrument to be designated as available for sale or fair value
through the income statement on the transition date provided the criteria in MFRS 139 “Financial Instruments:
Recognition and Measurement” are met. The Group and Company elected to designate all its previously
recognised financial instruments based on the designation under its previous Generally Accepted Accounting
Principles (“GAAP”) which also complies with MFRS 139.
4
Share-based payment transactions
MFRS 1 provides retrospective relief from applying MFRS 2 ‘Share-based payment’ to equity instruments granted
on or after 7 November 2002 and vested before the transition date. The Group and Company elected to not apply
the requirements in MFRS 2 to equity instruments granted from 7 November 2002 but before 1 January 2005
and not vested at transition date. However the impact is not material.
5
Exemption for employee benefits
MFRS 1 provides retrospective relief from applying MFRS 119 ‘Employee benefits’, in respect of the recognition
of actuarial gains and losses. The Group elected to recognise all cumulative actuarial gains and losses that existed
at its transition date as liability in opening retained earnings for all its employee benefit plans. There is no significant
impact arising from this election as at the date of transition.
During the financial period, the Directors of the Group adopted the following Malaysian Financial Reporting Standards (“MFRS”) issued by the MASB:
(a)Standards, amendments to published standards and interpretations that are applicable to the Group but not
yet effective and have been early adopted.
•MFRS 10 “Consolidated financial statements” (effective from 1 January 2013) changes the definition of control.
An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee. It establishes control
as the basis for determining which entities are consolidated in the consolidated financial statements and sets
out the accounting requirements for the preparation of consolidated financial statements. It replaces all the
guidance on control and consolidation in MFRS 127 “Consolidated and separate financial statements” and IC
Interpretation 112 “Consolidation – special purpose entities”. There are three elements to the definition of
/9 1
P
/9 2
2 Basis of Preparation (continued)
control in MFRS 10: (i) power by investor over an investee, (ii) exposure, or rights, to variable returns from investor’s
involvement with the investee, and (iii) investor’s ability to affect those returns through its power over the investee.
•MFRS 11 “Joint arrangements” (effective from 1 January 2013) requires a party to a joint arrangement to determine
the type of joint arrangement in which it is involved by assessing its rights and obligations arising from the
arrangement, rather than its legal form. There are two types of joint arrangement: joint operations and joint
ventures. Joint operations arise where a joint operator has rights to the assets and obligations relating to the
arrangement and hence accounts for its interest in assets, liabilities, revenue and expenses. Joint ventures arise
where the joint operator has rights to the net assets of the arrangement and hence equity accounts for its interest.
Proportional consolidation of joint ventures is no longer allowed.
•MFRS 12 “Disclosures of interests in other entities” (effective from 1 January 2013) sets out the required disclosures
for entities reporting under the two new standards, MFRS 10 and MFRS 11, and replaces the disclosure requirements
currently found in MFRS 128 “Investments in associates”. It requires entities to disclose information that helps
financial statement readers to evaluate the nature, risks and financial effects associated with the entity’s interests
in subsidiaries, associates, joint arrangements and unconsolidated structured entities.
•The revised MFRS 127 “Separate financial statements” (effective from 1 January 2013) includes the provisions on
separate financial statements that are left after the control provisions of MFRS 127 have been included in the
new MFRS 10.
•The revised MFRS 128 “Investments in associates and joint ventures” (effective from 1 January 2013) includes the
requirements for joint ventures, as well as associates, to be equity accounted following the issue of MFRS 11.
The effects of early adoption of these standards are as disclosed in Note 48. The identification of Larsen & Toubro and
Scomi Engineering Bhd (“SEB”), as an unincorporated joint venture in which the Group had equity interest as a joint
operation as disclosed in Note 18.
(b)
Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group but not yet effective and have not been early adopted.
The Group will apply the new standards, amendments to standards and interpretations in the following period:
(i)
•MFRS 13 “Fair value measurement” (effective from 1 January 2013) aims to improve consistency and reduce
complexity by providing a precise definition of fair value and a single source of fair value measurement and
disclosure requirements for use across MFRSs. The requirements do not extend the use of fair value accounting
but provide guidance on how it should be applied where its use is already required or permitted by other
standards. The enhanced disclosure requirements are similar to those in MFRS 7 “Financial instruments:
Disclosures”, but apply to all assets and liabilities measured at fair value, not just financial ones.
•Amendment to MFRS 101 “Presentation of items of other comprehensive income” (effective from 1 July 2012)
requires entities to separate items presented in ‘other comprehensive income’ (“OCI”) in the statement of comprehensive
income into two groups, based on whether or not they may be recycled to income statement in the future. The
amendments do not address which items are presented in OCI.
•Amendment to MFRS 119 “Employee benefits” (effective from 1 January 2013) makes significant changes to the
Financial year beginning on/after 1 April 2013
P
recognition and measurement of defined benefit pension expense and termination benefits, and to the disclosures
for all employee benefits. Actuarial gains and losses will no longer be deferred using the corridor approach.
MFRS 119 shall be withdrawn on application of this amendment.
•Amendment to MFRS 7, ‘Financial Instruments: Disclosures’ (effective from 1 January 2013) requires more
extensive disclosures focusing on quantitative information about recognised financial instruments that are
offset in the statement of financial position and those that are subject to master netting or similar arrangements
irrespective of whether they are offset.
•Amendments to MFRS 134 ‘Interim Financial Reporting’ (effective from 1 January 2013) require additional disclo
sures on fair value information for financial instruments and segment reporting. The additional disclosures are
required in interim financial reports issued in financial periods commencing 1 January 2013.
Changes in accounting policies due to new standards or amendments that apply on or after 1 January 2013 also
require disclosures in interim financial reports where the changes are significant.
(ii)
•Amendment to MFRS 132, ‘Financial Instruments: Presentation’ (effective from 1 January 2014) does not change
the current offsetting model in MFRS 132. It clarifies the meaning of ‘currently has a legally enforceable right of
set-off’ that the right of set-off must be available today (not contingent on a future event) and legally enforceable
for all counterparties in the normal course of business. It clarifies that some gross settlement mechanisms with
features that are effectively equivalent to net settlement will satisfy the MFRS 132 offsetting criteria.
(iii)
•MFRS 9 “Financial instruments - classification and measurement of financial assets and financial liabilities”
(effective from 1 January 2015) replaces the multiple classification and measurement models in MFRS 139 with
a single model that has only two classification categories: amortised cost and fair value. The basis of classification
depends on the entity’s business model for managing the financial assets and the contractual cash flow
characteristics of the financial asset.
The accounting and presentation for financial liabilities and for de-recognising financial instruments has
been relocated from MFRS 139, without change, except for financial liabilities that are designated at fair value
through income statement (“FVTPL”). Entities with financial liabilities designated at FVTPL recognise changes in
the fair value due to changes in the liability’s credit risk directly in OCI. There is no subsequent recycling of the
amounts in OCI to income statement, but accumulated gains or losses may be transferred within equity.
The guidance in MFRS 139 on impairment of financial assets and hedge accounting continues to apply.
MFRS 7 requires disclosures on transition from MFRS 139 to MFRS 9.
The Group is assessing the impact of the new Standards, amendments to published standards and interpretations to existing
standards that are applicable to the Group but not yet effective and have not been early adopted to the Group and of the
Company.
Unless otherwise disclosed, the above standards, amendments to published standards and interpretations to existing standards
are not anticipated to have any significant impact on the financial statements of the Group and Company in the year of
initial application.
/9 3
P
/9 4
3 Summary of Significant Accounting Policies
Unless otherwise stated, the following accounting policies have been used consistently in dealing with items that are considered
material in relation to the financial statements.
3.1Basis of consolidation
The consolidated financial statements incorporate the audited financial statements of the Company and its subsidiaries
made up to the end of the financial period.
Subsidiaries are those entities (including special purpose entities) in which the Group has power to govern the financial and
operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and
effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the
Group controls another entity.
The Group also assesses existence of control where it does not have more 50% of the voting power but is able to govern
the financial and operating policies by virtue of de-facto control. De-facto control may arise in circumstances where the size
of the Group’s voting rights relative to the size and dispersion of holdings of other shareholders give the group the power
to govern the financial and operating policies.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from
the date that control ceases.
The Group applies the predecessor accounting to account for certain business combinations under common control. U
nder
the predecessor accounting, the results of entities or businesses under common control are presented as if the merger had
been effected from the date when these entities came under the control of the common controlling party (if shorter). The
assets and liabilities combined are accounted for based on the carrying amounts from the perspective of the common control
shareholder at the date of transfer. The difference between any consideration given, at fair value, and the aggregate carrying
amounts of the assets and liabilities of the acquired entity is classified as merger reserve. No additional goodwill is recognised.
The Group applies the acquisition method to account for other business combinations. The consideration transferred for
the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the
acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group
recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity
interest in the acquiree is remeasured to fair value at the successive acquisition dates at each stage, and the changes in fair
value is taken through income statement.
Income statement and each component of other comprehensive income of the subsidiaries are attributed to the
parent and the non-controlling interest, even if this results in the non-controlling interest having a deficit balance.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance
with MFRS 139 either in income statement or as a change to other comprehensive income. Contingent consideration that is
P
classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of noncontrolling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the
fair value of the net assets of the subsidiary acquired, the difference is recognised in income statement.
Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated.
Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
3.2Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions –
that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration
paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or
losses on disposals to non-controlling interests are also recorded in equity.
3.3Disposal of subsidiaries
When the Group ceases to have control over a subsidiary any retained interest in the entity is re-measured to its fair value
at the date when control is lost, with the change in carrying amount recognised in income statement. The fair value is the
initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture
or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity
are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts
previously recognised in other comprehensive income are reclassified to income statement.
3.4Investments in associates
Associates are those corporations, partnerships or other entities in which the Group exercises significant influence, but
which it does not control, generally accompanying a shareholding of between 20% and 50% of voting rights. Significant
influence is power to participate in financial and operating policy decisions of associates but not power to exercise control
over those policies. Investments in associates are accounted for using the equity method of accounting. Under the equity
method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the
investor’s share of the income statement of the investee after the date of acquisition. The Group’s investment includes
goodwill identified on acquisition.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the
amounts previously recognised in other comprehensive income is reclassified to income statement where appropriate.
Dilution gains and losses arising in investments in associates are recognised to income statement.
Dilution gains and losses arising in investments in associates are recognised in income statement.
The Group’s share of post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition
movements in reserves is recognised in other comprehensive income with a corresponding adjustment to the carrying
amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate,
including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or
constructive obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate
is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable
/9 5
P
/9 6
3 Summary of Significant Accounting Policies (continued)
3.4Investments in associates (continued)
amount of the associate and its carrying value and recognises the amount adjacent to ‘share of profit/(loss) of an associate’
in the income statement.
Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised
in the Group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses
are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency with the policies adopted by the Group. On disposal
of investments in anassociate, the difference between disposal proceeds and the carrying amounts of the investments are
recognised in income statement.
3.5Joint arrangements
Under MFRS 11 investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations each investor has rather than the legal structure of the joint arrangement. A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to
joint control. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the
strategic financial and operating decisions relating to the activity require the unanimous consent of all the parties sharing
control (the venturers).
Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted thereafter
to recognise the group’s share of the post-acquisition profits or losses and movements in other comprehensive income.
When the group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any
long-term interests that, in substance, form part of the group’s net investment in the joint ventures), the group does not
recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealised gains on transactions between the group and its joint ventures are eliminated to the extent of the group’s interest
in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with
the policies adopted by the group. There is no impact on the net assets of the periods presented.
A joint operator recognises in relation to its interest in a joint operation:
• its assets, including its share of any assets held jointly;
• its liabilities, including its share of any liabilities incurred jointly;
• its revenue from the sale of its share of the output of the joint operation;
• its share of the revenue from the sale of the output by the joint operation; and
• its expenses, including its share of any expenses incurred jointly.
A joint operator accounts for the assets, liabilities, revenues and expenses relating to its involvement in a joint operation.
A party that participates in, but does not have joint control of, a joint operation shall also account for its interest in the arrangement
in accordance with the above if that party has rights to the assets, and obligations for the liabilities, relating to the joint operation.
3.6Investments in subsidiaries, joint ventures and associates
In the Company’s separate financial statements, investments in subsidiaries, joint ventures and associates are carried at cost
P
less accumulated impairment losses. On disposal of investments in subsidiaries, joint ventures and associates, the difference
between disposal proceeds and the carrying amounts of the investments is recognised in the income statement. The accounting
policy in relation to impairment of non-financial assets is as disclosed in Note 3.11.
3.7Inflation adjustment
The financial statements of the Group are based on the historical cost convention. During the previous financial period, the
financial statements of the Group have been restated to take account of the effects of inflation in accordance with MFRS
129 (Financial Reporting in Hyperinflationary Economies), as described below.
The Group has subsidiaries operating in Venezuela and in late 2009, the Venezuelan economy was considered to be a
hyperinflationary economy. MFRS 129 requires that financial statements prepared in the currency of a hyperinflationary
economy be stated in terms of the measuring unit current at the date of the statement of financial position, and that corresponding
figures for the previous year at company level be restated in terms of the same measuring unit. Accordingly, the inflation
adjusted financial statements represent the primary financial statements of the Group.
In accordance with MFRS 129, the financial statements of the Group have been restated to account for the changes in the
general purchasing power of the Venezuelan Bolivar and, as a result, are stated in terms of the measuring unit current at the
date of the statement of financial position.
The indices and conversion factors used were as follows:
Date
Indices
Conversion Factors
March 2013 (NCPI)
December 2011 (NCPI)
December 2007 (CPI)
334.80
265.65
208.20
163.70
130.90
100.00
The Group has applied the official rate of $1: Bs6.3 (2011: $1: Bs4.3) to translate the financial statements of its Venezuelan subsidiary.
The main procedures applied in the above-mentioned restatement of transactions and balances are as follows:
(i) Monetary assets and liabilities and results from monetary position
1.2605
1.2757
1.2718
1.2506
1.3090
1.2245
Monetary assets and liabilities are not restated because they are already stated in terms of the measuring unit current at
the date of the statement of financial position.
(ii) Non-monetary assets and liabilities
Non-monetary assets and liabilities (inventories, fixed assets, intangibles, other assets and deferred income) have been restated by the CPI during the financial period.
(iii)
Equity
All equity components have been restated by the CPI from their date of origin until 31 December 2007 and by the NCPI as from 1 January 2008 until 31 March 2013.
/9 7
P
/9 8
3.7Inflation adjustment (continued)
(iv)
Income statement
All items in the income statement have been restated based on the date on which they were earned or incurred, with
the exception of those related to non-monetary items (cost of sales, depreciation expense and amortisation expense),
which have been reported in terms of the restated non-monetary items to which they relate, expressed in constant
currency at 31 March 2013.
Gains and losses arising from the net monetary asset or liability position are included in the income statement.
(v) Statement of cash flows
All items in the statement of cash flows are expressed in terms of the measuring unit current at the date of the statement
of financial position.
3.8Property, plant and equipment
Property, plant and equipment, other than freehold land and capital work-in-progress, are stated at cost less accumulated
depreciation or amortisation and impairment losses, if any. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended by management. Cost also includes borrowing costs that
are directly attributable to the acquisition, construction or production of a qualifying asset. See accounting policy Note 3.24.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are recognised
as expenses in the income statement during the financial period in which they are incurred.
Freehold land is not depreciated as it has an infinite life. Leasehold land classified as finance lease is amortised in equal
instalments over the period of the respective leases. See accounting policy Note 3.15(a) on finance leases. Capital work-inprogress is stated at cost. Expenditure relating to capital work-in-progress is capitalised when incurred and depreciated only
when the assets are ready for intended use.
Other property, plant and equipment are depreciated on the straight line method to allocate the cost of the assets to their residual values over their estimated useful lives. The principal annual rates used for this purpose are as follows:
Freehold buildings
Leasehold buildings
Tools, plant and machinery, marine and plant equipment
Renovation, office equipment, fittings and computers
Motor vehicles
Monorail test track
Marine vessels
Drydocking (included within vessels)
2 - 20%
2 - 33 1/3%
8 1/3 – 33 1/3%
10 - 33 1/3%
15 - 33 1/3%
3%
4%
20% - 40%
Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each statement of financial position date.
P
At each date of the statement of financial position, the Group assesses whether there is any indication of impairment.
Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its
recoverable amount. See accounting policy Note 3.11 on impairment of non-financial assets.
When property, plant and equipment are disposed of, the resulting gain or loss on disposal is determined by comparing the
disposal proceeds with the carrying amount and is included in the income statement.
3.9Investment properties
Investment properties, principally comprising freehold land and buildings, are held for long term rental yields or for capital
appreciation or both, and are not occupied by the Group.
Investment properties are measured initially at its cost, including related transaction costs and borrowings costs if the
investment property meets the definition of qualifying asset.
After the initial recognition, investment property is stated at cost less any accumulated depreciation and impairment losses.
Buildings are depreciated on the straight line basis to allocate the cost to their residual values over their estimated useful
lives of 20 to 50 years. Freehold land is not depreciated as it has an infinite life.
Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits
associated with the expenditure will flow to the Group and the cost of the item can be measured reliably. All other repairs
and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount
of the replaced part is derecognised.
Investment property is derecognised either when it has been disposed of or when the investment property is permanently
withdrawn from use and no future economic benefit is expected from its disposal.
Gains and losses on disposals are determined by comparing net disposal proceeds with the carrying amount and are included
in the income statement.
3.10 Intangible assets
(i)
Patents
Patent rights to use an intellectual property for the development of technologies relating to crude oil waste, oil
recovery recycling and treatment for oil and gas industry are shown at historical cost. Patent rights have a finite
useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line
method to allocate the cost of patent rights over their estimated useful economic lives of 5 years to 20 years.
(ii) Research and development
Research expenditure is recognised as an expense when incurred. Costs incurred on development projects
(relating to the design and testing of new or improved products) are recognised as intangible assets when the
following criteria are fulfilled:
(a) it is technically feasible to complete the intangible asset so that it will be available for use or sale;
(b) management intends to complete the intangible asset and use or sell it;
(c) there is an ability to use or sell the intangible asset;
(d) it can be demonstrated how the intangible asset will generate probable future economic benefits;
(e)adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset are available; and
/9 9
P
/1 0 0
3.10 Intangible assets (continued)
(ii) Research and development (continued)
(f ) the expenditure attributable to the intangible asset during its development can be reliably measured.
Other development expenditure that do not meet these criteria are recognised as an expense when incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Capitalised development costs recognised as intangible assets are amortised from the point at which the asset is
ready for use on a straight-line basis as follows:
(a) over the estimated sales units of 750 units (31.12.2011: 500 units) not exceeding ten years for monorail
development; or
(b) over a period not exceeding five years for bus development;
(c) not exceeding ten years for drilling waste management technology.
During the financial period, the Group changed the estimate of amortisation units from 500 units to 750 units for
monorail development. The effect on current period amortisation is a reduction of RM0.8 million. Development
costs in progress are tested for impairment annually, in accordance with MFRS 136 Impairment of Assets. See
accounting policy Note 3.11 on impairment of non-financial assets.
(iii)Goodwill
Goodwill represents the excess of the cost of acquisition of subsidiaries, joint ventures and associates over the fair
value of the Group’s share of the identifiable net assets at the date of acquisition.
Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is tested annually for impairment
and carried at cost less accumulated impairment losses. Impairment losses on goodwill (inclusive of impairment
losses recognised in a previous interim period) are not reversed. Gains and losses on the disposal of a subsidiary
include the carrying amount of goodwill relating to the subsidiary sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to
those cash-generating units or groups of cash-generating units that are expected to benefit from synergies of the
business combination in which the goodwill arose, identified according to operating segment.
In respect of acquisitions of joint ventures and associates, the carrying amount of goodwill is included in the carrying
amount of the investment in joint ventures and associates respectively. Such goodwill is also tested for impairment
as part of the overall balance. The accounting policy in relation to impairment of non-financial assets is as disclosed
in Note 3.11.
3.11 Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually
for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there is separately identifiable cash flows (cash-generating units). Non-financial
P
assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of
the reporting period.
The impairment loss is charged to income statement. Impairment losses on goodwill are not reversed. In respect of
other assets, any subsequent increase in recoverable amount is recognised in the income statement.
3.12 Financial assets
(i)Classification
The Group classifies its financial assets in the following categories: at fair value through income statement, loans
and receivables and available-for-sale. The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification at initial recognition.
(a) Financial assets at fair value through income statement
Financial assets at fair value through income statement are financial assets held for trading. A financial asset is
classified in this category if it is acquired or incurred principally for the purpose of selling or repurchasing it in
the near term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets
in this category are classified as current assets if expected to be settled within 12 months; otherwise there are
classified as non-current.
(b)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in current assets, except for maturities more than 12 months after the end of
the reporting period. These are classified as non-current assets. The Group’s loans and receivables comprise ‘trade
and other receivables’ and ‘cash and bank balances’ in the statement of financial position (Notes 23 and 24).
(c)
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified
in any of the other categories. They are included in non-current assets unless the investment matures or management
intends to dispose of it within 12 months of the end of the reporting period.
(ii) Recognition and initial measurement
Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Group
commits to purchase or sell the asset.
Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair
value through income statement. Financial assets carried at fair value through income statement are initially
recognised at fair value, and transaction costs are expensed in the income statement.
(iii)Subsequent measurement – gains and losses
Available-for-sale financial assets and financial assets at fair value through income statement are subsequently carried at
fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.
Changes in the fair values of financial assets at fair value through income statement, including the effects of currency
/1 0 1
P
/1 0 2
3.12 Financial assets (continued)
(iii)Subsequent measurement – gains and losses (continued)
translation, interest and dividend income are recognised in the income statement in the period in which the changes arise.
Changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income, except
for impairment losses (see accounting policy Note 3.12(iv) and foreign exchange gains and losses on monetary
assets. The exchange differences on monetary assets are recognised in the income statement, whereas exchange
differences on non-monetary assets are recognised in other comprehensive income as part of fair value change.
Interest and dividend income on available-for-sale financial assets are recognised separately in the income statement.
Interest on available-for-sale debt securities calculated using the effective interest method is recognised in the income
statement. Dividend income on available-for-sale equity instruments are recognised in the income statement when
the Group’s right to receive payments is established.
(iv)Subsequent measurement – Impairment of financial assets
Assets carried at amortised cost
The Group assesses at the end of the reporting period whether there is objective evidence that a financial asset or
group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses
are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the
initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash
flows of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
(a) Significant financial difficulty of the issuer or obligor;
(b) A breach of contract, such as a default or delinquency in interest or principal payments;
(c)The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a
concession that the lender would not otherwise consider;
(d) It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
(e) Disappearance of an active market for that financial asset because of financial difficulties; or
(f )Observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio
of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with
the individual financial assets in the portfolio, including adverse changes in the payment status of borrowers in the
portfolio; and national or local economic conditions that correlate with defaults on the assets in the portfolio.
The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial
asset’s original effective interest rate. The asset’s carrying amount of the asset is reduced and the amount of the loss is
recognised in the income statement. If loans and receivables has a variable interest rate, the discount rate for measuring
any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the
Group may measure impairment on the basis of an instrument’s fair value using an observable market price.
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 (such as an improvement in the debtor’s credit rating), the
P
reversal of the previously recognised impairment loss is recognised in the income statement.
When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all
the necessary procedures have been completed and the amount of the loss has been determined.
Assets classified as available-for-sale
The Group assesses at the end of the reporting period whether there is objective evidence that a financial asset or a
group of financial assets is impaired.
For debt securities, the Group uses criteria and measurement of impairment loss applicable for ‘assets carried at amortised’
cost above. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and
the increase can be objectively related to an event occurring after the impairment loss was recognised in the income
statement, the impairment loss is reversed through income statement.
In the case of equity securities classified as available-for-sale, in addition to the criteria for ‘assets carried at amortised
cost’ above, a significant or prolonged decline in the fair value of the security below its cost is also considered as an
indicator that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative
loss that had been recognised directly in equity is removed from equity and recognised in the income statement. The
amount of cumulative loss that is reclassified to income statement is the difference between the acquisition cost and
the current fair value, less any impairment loss on that financial asset previously recognised in the income statement.
Impairment losses recognised in the income statement on equity instruments classified as available-for-sale are not
reversed through income statement.
(v)
De-recognition
Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have
been transferred and the Group has transferred substantially all risks and rewards of ownership.
Receivables that are factored out to banks and other financial institutions with recourse to the Group are not derecognised
until the recourse period has expired and the risks and rewards of the receivables have been fully transferred. The
corresponding cash received from the financial institutions is recorded as borrowings.
When available-for-sale financial assets are sold, the accumulated fair value adjustments recognised in other comprehensive
income are reclassified to income statement.
3.13 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when there
is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise
the asset and settle the liability simultaneously.
3.14 Financial guarantee contracts
Financial guarantee contracts are contracts that require the Group or Company to make specified payments to reimburse the holder
for a loss it incurs because a specified debtors fails to make payments when due, in accordance with the terms of a debt instrument.
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is
initially measured at fair value and subsequently at the higher of the amount determined in accordance with MFRS 137
Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation
where appropriate.
/1 0 3
P
/1 0 4
3.14 Financial guarantee contracts (continued)
The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the
contractual payments under the debt instrument and the payments that would be required without the guarantee, or
the estimated amount that would be payable to a third party for assuming the obligations.
Where financial guarantees in relation to loans or payables of subsidiaries are provided by the Company for no compensation,
the fair values are accounted for as contributions and recognised as part of the cost of investment in subsidiaries.
3.15Leases
A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, or series of payments, the
right to use an asset for an agreed period of time.
Accounting by lessee
(a)
Finance leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership
are classified as finance leases.
Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property
and the present value of the minimum lease payments. Each lease payment is allocated between the liability and
finance charges so as to achieve a constant rate of interest on the remaining balance of the liability. The corresponding
rental obligations, net of finance charges, are included in borrowings.
The interest element of the finance cost is charged to income statement over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of the liability for each period. Property, plant and
equipment acquired under finance leases are depreciated over the shorter of the estimated useful life of the asset
and the lease term.
Initial direct costs incurred by the Group in negotiating and arranging finance leases are added to the carrying
amount of the leased assets and recognised as an expense in income statement over the lease term on the same
basis as the lease expense.
(b)
Operating leases
Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases (net of any incentives received from the
lessor) are charged to income statement on the straight line basis over the lease period.
Initial direct costs incurred by the Group in negotiating and arranging operating leases are capitalised as prepayments
and recognised in income statement over the lease term on a straight-line basis.
P
Accounting by lessor
(a) Finance lease
When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable.
The difference between the gross receivable and the present value of the receivable as unearned finance income.
Lease income is recognised over the term of the lease using net investment method so as to reflect a constant
periodic rate of return.
(b) Operating lease
When assets are leased out under an operating lease, the asset is included in the statement of financial position
based on the nature of the assets. Lease income is recognised over the term of the lease on a straight-line basis.
3.16Inventories
Inventories are stated at the lower of cost and net realisable value. Raw material cost is determined on a weighted average basis.
The cost of finished goods comprises design costs, raw materials, direct labour, other direct costs and related-production
overheads (based on normal operating capacity). It excludes borrowing costs.
For work-in-progress and manufactured inventories, cost consists of direct materials, incidental costs in bringing the
inventories to their present location, direct labour and an appropriate proportion of fixed and variable manufacturing
overheads (based on normal operating capacity).
Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and
applicable variable selling expenses.
3.17
Non-current assets (or disposal groups) classified as assets held for sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is recovered principally
through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair
value less costs to sell. The assets are not depreciated or amortised while they are classified as held-for-sale. Any impairment
loss on initial classification and subsequent measurement is recognised as an expense. Any subsequent increase in fair value
less costs to sell (not exceeding the accumulated impairment loss that has been previously recognised) is recognised in
income statement.
Non-current assets (or disposal groups) cease to be classified as assets held-for-sale if there are changes to a plan of sale
resulting from certain event or circumstances.
The non-current assets (or disposal group) that cease to be classified as held for sale are measured at the lower of (1) its carrying
amount before the asset (or disposal group) was classified as held-for-sale, adjusted for any depreciation or amortisation that
would have been recognised had the assets (or disposal groups) not been classified as held-for-sale, and (2) its recoverable
amount at the date of the subsequent decision not to sell.
Any adjustment arising from the re-measurement of the carrying amount of the non-current assets (or disposal group) that
cease to be classified as held-for-sale are recognised in profit or loss within “other operating expenses” from the date of the
subsequent decision not to sell.
/1 0 5
P
/1 0 6
3.18
Construction contracts
A construction contract is a contract specifically negotiated for the construction of an asset or a combination of assets that
are closely interrelated or interdependent in terms of their design, technology and functions or their ultimate purpose or use.
Construction contracts costs are recognised as expenses in the period in which they are incurred.
When the outcome of a construction contract can be estimated reliably and it is probable that the contract will be profitable,
contract revenue is recognised over the period of the contract. When it is probable that total contract costs will exceed total
contract revenue, the expected loss is recognised as an expense immediately.
Variations in contract work, claims and incentive payments are included in contract revenue to the extent agreed with the
customer and are capable of being reliably measured. Liquidated ascertained damages, are disclosed as a deduction of contract
revenue, which are deemed variable consideration.
The Group uses the percentage-of-completion method to determine the appropriate amount to recognise in a given period.
The stage of completion is measured by reference to the contract costs incurred up to the end of the reporting period as a
percentage of total estimated costs for each contract. Costs incurred in the year in connection with future activity on a contract
are excluded from contract costs in determining the stage of completion. They are presented as inventories, prepayments or
other assets, depending on their nature. When the outcome of the construction contract cannot be estimated reliably, contract
revenue is recognised only to the extent of contract costs incurred that is probable will be recoverable.
The Group presents as an asset the gross amount due from customers for contract work for all contracts in progress for
which costs incurred plus recognised profits (less recognised losses) exceed progress billings. Progress billings not yet
paid by customers and retention are included within ‘trade and other receivables’. The Group presents as a liability the
gross amount due to customers for contract work for all contracts in progress for which progress billings exceed costs
incurred plus recognised profits (less recognised losses). The asset balances are classified as current or non-current
based on expectation of realisation.
3.19 Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise cash in hand, bank balances, deposits
held at call with banks excluding deposits which are pledged for banking facilities, and other short term, highly liquid
investments with original maturities of three months or less, less bank overdrafts. Bank overdrafts are included within
borrowings in current liabilities in the statement of financial position.
3.20 Share capital
(i)
Classification
Ordinary shares with discretionary dividends are classified as equity.
(ii)
Share issue costs
Incremental costs directly attributable to the issue of new shares or options are deducted against share premium account.
(iii)Dividends to shareholders of the Company
Distributions to holders of an equity instrument are debited directly to equity, net of any related income tax benefit P
and the corresponding liability is recognised in the period in which the dividends are approved.
(iv)
Warrant reserve
Proceeds from issuance of warrants, net of issue costs, are credited to warrant reserve which is non-distributable. Warrant reserve is transferred to the share premium upon exercise of warrants and warrant reserve in relation to unexercised warrants at the expiry of the warrants period will be transferred to retained earnings.
(v) Purchase of own shares
Where the Company or its subsidiaries purchase the Company’s equity share capital (treasury shares), the consideration
paid, including any directly attributable incremental external costs, net of tax, is included in equity attributable to
the controlling equity holders as Treasury shares until they are cancelled, reissued or disposed of. Where such shares
are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction
costs and the related tax effects, is included in equity attributable to the controlling equity holders.
3.21Irredeemable Convertible Secured Loan Stocks (“ICSLS”), Irredeemable Convertible Unsecured Loan Stocks
(“ICULS”) and Convertible Redeemable Secured Bond (“CRSB”)
Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital
at option of the holder, and the number of shares to be issued does not vary with changes in their fair value.
ICSLS, ICULS and CRSB are regarded as compound financial statements, consisting of a liability and an equity component.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar
convertible loan stocks. The difference between the proceeds of issue of both ICSLS, ICULS and CRSB and the fair value
assigned to the liability component, representing the conversion option, is included in equity. The liability component is
subsequently stated at amortised cost using the effective interest rate method until extinguished on conversion, whilst the
value of the equity component is not adjusted in subsequent periods. Attributable transaction costs are apportioned and
deducted directly from the liability and equity components based on the carrying amounts at the date of issue.
Under the effective interest rate method, the interest expense on the liability component is calculated by applying the
prevailing market interest rate for a similar convertible loan stock to the instrument at the date of issue. The difference
between this amount and the interest paid is added to the carrying amount of each ICSLS, ICULS and CRSB.
Upon conversion of convertible instrument into equity shares, the amount credited to share capital and share premium
is the aggregate of the carrying amounts of the liability components classified within liability and equity at the time of
conversion. No gain or loss is recognised.
3.22 Put option arrangements
The potential cash payments related to put options issued by the Group over the equity of subsidiary companies are
accounted for as financial liabilities when such options may only be settled other than by exchange of a fixed amount
of cash or another financial asset for a fixed number of shares in the subsidiary. The amount that may become payable
under the option on exercise is initially recognised at fair value within payables with a corresponding charge directly to
equity. The charge to equity is recognised separately as written put options over non-controlling interests, adjacent to
non-controlling interests in the net assets of consolidated subsidiaries.
The Group recognises the cost of writing such put options, determined as the excess of the fair value of the option over
any consideration received as a financing cost. The put option is measured at the fair value of the liability payable, and
/1 0 7
P
/1 0 8
3.22 Put option arrangements (continued)
remeasured to fair value at each statement of financial position date. The charge arising is recorded as a finance cost.
The extinguishment of the put option is disclosed in Note 44(d).
3.23 Financial liabilities
Financial liabilities are recognised on the statement of financial position when, and only when, the Group becomes a
party to the contractual provisions of the financial instrument.
Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives,
directly attributable transactions costs.
Subsequent to initial recognition, all financial liabilities are measured at amortised cost using the effective interest
method except for derivatives which are measured at fair value.
For financial liabilities other than derivatives, gains and losses are recognised in income statement when the liabilities are
derecognised, and through the amortisation process. Any gains or losses arising from changes in fair value of derivatives are
recognised in income statement. Net gains or losses on derivatives include exchange differences.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability
is replaced by another from the same lender on substantially difference terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as derecognition of the original liability and the recognition
of a new liability, and the difference in the respective carrying amounts is recognised in income statement.
Trade payable
Trade payables are obligation to pay for goods or services that have acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities if payment is due within 1 year or less (or in the normal
operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at their value and subsequently measured at amortised cost using the effective
interest method.
3.24
Borrowings and borrowing costs
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between initial recognised amount and the redemption value is recognised in the income
statement over the period of the borrowings using the effective interest method, except for borrowing costs incurred for
the construction of any qualifying asset.
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is
required to complete and prepare the asset for its intended use or sale.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent
there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment
for liquidity services and amortised over the period of the facility to which it relates.
P
3.25
Income taxes
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except to
the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also
recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Group’s subsidiaries and associates operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities. This liability is measured using the single best estimate of the most likely outcome.
Deferred tax is recognised, using the liability method, on temporary differences arising between the amounts attributed to
assets and liabilities for tax purposes and their carrying amounts in the financial statements. However, deferred tax is not
accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business c ombination
that at the time of the transaction affects neither accounting nor taxable income statement.
Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the
reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, unused tax losses or unused tax credits can be utilised.
Deferred tax is recognised on temporary differences arising on investments in subsidiaries, associates and joint ventures
except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that
the temporary difference will not reverse in the foreseeable future.
Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income tax assets and liabilities relate to taxes levied by the same taxation
authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
3.26
Employee benefits
(i)
Short term benefits
Wages, salaries and bonuses are recognised as an expense in the financial period in which the associated services are
rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are
recognised when services are rendered by employees that increase their entitlement to future compensated absences,
and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.
(ii)
As required by law, companies in Malaysia make contributions to the Employees’ Provident Fund (“EPF”). Some of
the Group’s foreign subsidiaries make contributions to publicly or privately administered pension insurance plans on
a mandatory contractual or voluntary basis. Such contributions are recognised as employee benefit expense when
they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the
future payments is available.
/1 0 9
P
/1 1 0
3.26
Employee benefits (continued)
(iii)
Defined benefit plan
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit plans define
an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors
such as age, years of service and compensation.
The liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the statement of financial position date less the fair value of plan
assets, together with adjustments for actuarial gains or losses and past service costs. The defined benefit obligation
is calculated by independent actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the
benefits will be paid and that have terms to maturity approximating the terms of the related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions in excess of
the greater of 10% of the value of plan assets or 10% of the defined benefit obligation are charged or credited to
income over the employees’ expected average remaining working lives.
Past-service costs are recognised immediately in income, unless the changes to the plan are conditional on the
employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs
are amortised on a straight-line basis over the vesting period.
(iv)
Termination benefits
The Group recognises termination benefits when it is demonstrably committed to either terminating the employment
of current employees according to a detailed formal plan without possibility of withdrawal, or providing termination
benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits are payable when
employment is terminated by the Group before the normal retirement date, or whenever an employee accepts
voluntary redundancy in exchange for these benefits. Benefits falling due more than 12 months after the date of the
statement of financial position are discounted to present value.
(v)
Share-based compensation
The Company operates an equity-settled, share-based compensation plan for the Directors and employees of the
Company and its subsidiaries (“ESOS”).
The fair value of the employee services received in exchange for the grant of the options is recognised as an
expense in the income statement. The total amount to be recognised over the vesting period is calculated by
reference to the fair value of the options granted. At each date of the statement of financial position, the Company
revises its estimates of the number of options that are expected to become exercisable.
The total amount to be expensed is determined by reference to the fair value of the options granted:
- including any market performance conditions;
- excluding the impact of any service and non-market performance vesting conditions (for example, profitability,
sales growth targets and remaining an employee of the entity over a specified time period); and
- excluding the impact of any non-vesting conditions (for example, the requirement for employees).
P
The effect of any revision of the original estimates is recognised in the income statement and a corresponding
adjustment is made to equity over the remaining vesting period.
When the options are exercised, the proceeds received (net of directly attributable transaction costs) are credited to
share capital and share premium respectively.
When options are not exercised, lapsed or forfeited, the share option reserve is transferred to retained earnings.
Salient features of the Company’s share option scheme are disclosed in Note 34(c) to the financial statements.
In the separate financial statements of the Company, the grant by the Company of options over its equity instruments to
the employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee
services received, measured by reference to the grant date fair value, is recognised over the vesting period as an
increase to investment in subsidiary undertakings, with a corresponding credit to equity.
3.27 Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will
be received and the Group will comply with all attached conditions.
Government grants relating to property, plant and equipment are included in non-current liabilities as deferred government
grants and are credited to income statement on a straight-line basis over the expected lives of the related assets.
Government grants relating to costs are deferred and recognised in the income statement over the period necessary to
match them with the costs that they are intended to compensate.
3.28Provisions
Provisions are recognised when:
•the Group has a present legal or constructive obligation as a result of past events;
• it is probable that an outflow of resources will be required to settle the obligation; and
• a reliable estimate of the amount can be made.
Where the Group expects a provision to be reimbursed (for example, under an insurance contract), the reimbursement is recognised
as a separate asset but only when the reimbursement is virtually certain. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to
any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a
pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The
increase in the provision due to the passage of time is recognised as interest expense.
3.29
Contingent liabilities and contingent assets
The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability
is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of
one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because
/1 1 1
P
/1 1 2
3.29
Contingent liabilities and contingent assets (continued)
it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the
extremely rare case where there is a liability that cannot be recognised because it cannot be measured reliably. However,
contingent liabilities do not include financial guarantee contracts.
A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or nonoccurrence of one or more uncertain future events beyond the control of the Group. The Group does not recognise contingent
assets but discloses their existence where inflows of economic benefits are probable, but not virtually certain.
In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are measured
initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interests.
The Group recognises separately the contingent liabilities of the acquirees as part of allocating the cost of a business combination
where their fair values can be measured reliably. Where the fair values cannot be measured reliably, the resulting effect will be
reflected in the goodwill arising from the acquisitions.
Subsequent to the initial recognition, the Group measures the contingent liabilities that are recognised separately at the date
of acquisition at the higher of the amount that would be recognised in accordance with the provisions of MFRS 137 Provisions,
contingent liabilities and contingent assets and the amount initially recognised, when appropriate, cumulative amortisation
recognised in accordance with MFRS 118 Revenue.
3.30
Revenue recognition
Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group
and the amount of the revenue can be measured reliably. Revenue is shown net of value-added tax, returns, rebates and
discounts, and after eliminating sales within the Group.
(i)
Sale of goods
Sale of goods is recognised when significant risks and rewards of ownership of the goods are transferred to the buyer.
(ii)
Rendering of services
Revenue from rendering of services is recognised in the accounting period.
(iii)
Interest income
Interest is recognised on a time proportion basis that reflects the effective yield on the asset, taking into account the principal
outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the Group.
(iv)
Rental income
Rental income from operating leases is recognised on a straight-line basis over the term of the lease.
(v)
Charter hire income
Revenue from charter hire is recognised on an accrual basis but is deferred when the terms of billings have not been
agreed by third parties or when certain conditions necessary for realisation have yet to be fulfilled.
P
(vi)
Dividend income
Dividend income is recognised when the right to receive payment is established.
(vii)Management and agency fees
Management and agency fees are recognised on an accrual basis by reference to completion of the specific
transaction, assessed on the basis of the actual services provided as a proportion of the total services to be provided.
(viii)Commission income
Commission income is recognised in the accounting period in which the services are rendered, by reference to completion of
the specific transaction, assessed on the basis of the actual service provided as a proportion of the total services to be provided.
(ix)
Construction contracts
Revenue from construction contracts is recognised on the percentage of completion method by reference to the stage of
completion of the contract work to date. See accounting policy Note 3.18 on construction contracts.
3.31
Foreign currencies
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (the “functional currency”). The financial statements are presented in
Ringgit Malaysia, which is the Company’s functional and presentation currency.
(ii)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the income statement, except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income
statement within ‘finance income or cost’. All other foreign exchange gains and losses are presented in the income statement
within other operating income and other operating expenses respectively.
For translation differences on financial assets and liabilities held at fair value through income statement and available-forsale financial assets, refer to Note 3.12(iii).
(iii)
Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy
other than entities in Venezuela) that have a functional currency different from the presentation currency are translated into
the presentation currency as follows:
•assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of
that statement of financial position;
•income and expenses for each statement of comprehensive income presented are translated at average exchange
rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the
/1 1 3
P
/1 1 4
(iii)
Group companies (continued)
transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
• all resulting exchange differences are recognised as a separate component of other comprehensive income.
•all amounts (i.e. assets, liabilities, equity items, income and expenses, including comparatives) are translated at
the closing rate at the date of the most recent statement of financial position; and
•when amounts are translated into the currency of a non-hyperinflationary economy, comparative amounts shall
be those that were presented as current year amounts in the relevant prior year financial statements (i.e. not
adjusted for subsequent changes in the price level or subsequent changes in exchange rates)
On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings
and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income.
When a foreign operation is sold, or any borrowings forming part of the net investment are repaid, a proportionate share
of such exchange differences is reclassified to income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities
of the foreign entity and translated at the closing rate.
3.32 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating
segments, has been identified as the Group Chief Executive Officer.
3.33 Derivatives financial instruments and hedging activities
Derivatives that are used/designated as hedging instruments are initially recognised at fair value on the date the derivative
contract is entered into. Such derivatives are subsequently remeasured at their fair value, with the resulting gain or loss
being recognised in the income statement as other operating income or expense. The Group accounts for derivatives
used as hedging instruments depending on their designation as follows:
(i)
Fair value hedges
Resulting gains or losses from the subsequent remeasurement of hedging derivatives at their fair value are recognised
in the income statement. In addition, offsetting changes in the fair value of the hedged item are recognised in the
income statement and presented net of changes in fair value of the hedging derivatives.
If hedge accounting is discontinued, the adjustment to the carrying amount of a hedged item, for which the effective
interest method is used, is amortised to income statement over the period to maturity.
(ii)
Cash flow hedges
Resulting gains or losses from the subsequent remeasurement of hedging derivatives at their fair values are deferred
to the hedging reserves as part of other comprehensive income to the extent of their effective portion. The ineffective
portion is recognised directly in the income statement as other operating income or expense. Fair value changes
from subsequent remeasurement of hedging derivatives deferred to hedging reserves are recycled to income statement
P
under finance cost in the periods when the underlying hedged item affects income statement and statement of
financial position of the Group.
When a hedging instrument expires or is sold, or when hedge accounting is discontinued, any cumulative gain or loss existing
in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income
statement. When a forecast transaction in no longer expected to occur, the cumulative gain or loss that was reported in other
comprehensive income is immediately transferred to income statement within other operating income/expenses.
The Group has entered in Cross Currency Interest Rate Swaps (“CCIRS”) that are designated as cash flow hedges for the
Group’s exposure to foreign exchange risk on its Murabahah Medium Term Notes, which were issued by a subsidiary.
The CCIRS involve the exchange of principals and fixed interest receipts in the foreign currency, in which the issued Murabahah
Medium Term Notes are denominated, for principals and fixed interest payments in the subsidiary’s functional currency.
The fair values of derivative instruments used for hedging purposes are disclosed in Note 21. Movements in the hedging
reserve are shown in Note 36. The full fair value of a hedging derivative is classified as a non-current asset or liability
when the remaining maturity of the hedged item is more than 12 months and as a current asset or liability when the
remaining maturity of the hedged item is less than 12 months.
4 Critical Accounting Estimates and Judgments
Estimates and judgments are continually evaluated by the Directors and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are
anticipated to have a material impact to the Group’s results and financial position are tested for sensitivity to changes in the
underlying parameters. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial period are outlined below.
(a) Estimated impairment of goodwill and amortisation of intangible asset
The Group tests goodwill for impairment annually in accordance with its accounting policy. More regular reviews are
performed if events indicate that this is necessary.
Determining whether goodwill is impaired requires an estimation of the value in use and fair value less costs to sell of the
cash-generating units to which goodwill has been allocated. The value in use calculation requires the entity to estimate the
future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present
value. Fair value less costs to sell is determined based on indicative values on a willing buyer willing seller basis, as provided
by an independent valuer. The recoverable amounts of goodwill have been determined based on the higher of fair value
less costs to sell and value-in-use calculations.
(i)The Group tests goodwill and capitalised development costs work-in-progress for impairment annually and has also tested
capitalised development costs for impairment due to certain impairment indicators. The recoverable amounts of cash generating
units (“CGUs”) were determined based on the value in use calculations. The calculations require the use of estimates and
assumptions as set out in Note 13 to the financial statements, which resulted in no impairment arising other than an amount
of RM41.3 million relating to goodwill on the western hemisphere unit of the Oilfield Services segment.
/1 1 5
P
/1 1 6
4 Critical Accounting Estimates and Judgments (continued)
(a) Estimated impairment of goodwill and amortisation of intangible asset (continued)
(ii)Capitalised development expenditure is recognised when the criteria for recognition is met. Significant judgement is required
in estimating the estimated sales units, which is based on technological obsolescence, secured contracts, projects tendered and
expectations of market growth, which determine the amount of amortisation recognised. During the current financial period, the
estimated sales units for monorail were increased from 500 to 750 units. The impact was a reduction in the amortisation charge of
sales units delivered during the financial period by RM0.8 million.
The Directors are of the opinion that any reasonably expected change in the key assumptions used to determine the recoverable
amounts of the CGUs, would not result in any further impairment.
The carrying amount of goodwill and estimates used in the calculation are disclosed in Note 13 to the financial statements.
(b) Income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining recoverability
of withholding and income taxes worldwide provision for income taxes, including determination of taxable income, capital
allowances and deductibility of certain expenses during the estimation of the provision for income taxes. There are many
transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business.
The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due.
The Group has made assumptions and judgements in relation to provision for tax disputes based on, among others, historical
experience with local tax authorities in the relevant countries and timing of the potential liabilities. These assumptions
and judgements are made in consultation with and according to the advice from local independent tax professionals. Any
changes to these assumptions and judgements will impact the carrying amount of the potential liabilities.
Where the final tax outcome of these matters is different from the amounts that were initially recorded, such as if the actual
future taxable profits, or if the amounts of carry forward tax losses, unutilised tax incentives and capital allowances that are
approved by the tax authorities differ from those currently estimated by the Group, such differences will impact the income
tax and deferred income tax provisions in the period in which such determination is made.
(i) Tax recoverable – Oilfield Services
The Group has carried forward tax recoverable amounts of RM8.9 million related to certain subsidiaries. The Directors
and local independent tax professionals believe that the amount can be set off against future tax payables.
(ii) Tax penalties and fines in Oilfield Services
In relation to tax disputes of certain subsidiaries, the Directors are of the opinion that the amount recorded as of 31
March 2013 and disclosed in Note 29 is sufficient based on tax advice obtained. In the event that the assumptions and
judgement exercised by the Directors do not materialise, there is a further potential exposure amounting to RM6.8 million.
(iii)
Deferred taxes
The Group has significant unrecognised tax losses, unutilised tax incentives and capital allowances as disclosed in Note 39. In
the current financial period, the Group has recognised deferred tax assets amounting to RM41.3 million (31.12.2011: RM46.6
million; 1.1.2011: RM 78.7 million) in relation to significant unrecognised tax losses, unutilised tax incentives and capital allowances.
In addition, two subsidiaries of Scomi Engineering Bhd have recognised deferred tax assets on tax losses, unabsorbed capital
allowances and double deduction on research and development expenditure incurred amounting to approximately RM4.2
million and RM59.1 million based on projections of future taxable income and the non-commencement of pioneer stats. The
P
recognition of the double deduction on research and development expenditure for one subsidiary is based on approvals by
the Inland Revenue Boards for years of assessment (YA) 2008 to 2010, and the intended submission for YA 2011, which is of
the same nature and is therefore highly probably of being approved.
The deferred tax assets were recognised based on budgeted future taxable profits as the Directors are of the opinion
that it is probable that the future taxable profits will be achieved within those entities.
(iv)Assessment of indirect taxes payable in Scomi Engineering Bhd (“SEB”)
During the course of execution of the Project described in Note 4(c), SEB and its wholly-owned subsidiary, Scomi Rail
Bhd (“SRB”), will supply goods and services which would typically attract various indirect taxes in India. The tax consultants
of SEB have assessed the potential indirect taxes payable to the Central Government, State Government and Local
Municipality of that country and are of the view that:
(i)There are certain legislations empowering the Central Government, State Government and Local Authority to grant
exemptions/concessions in cases where the respective Governments and authorities are satisfied that the project is
in the interest of the public;
(ii)Past precedents indicated that the respective Governments and Authorities have exercised their discretionary powers
to grant exemptions/concessions for specific projects in the interest of the public; and
(iii)Given the legal provisions, and past precedents, a reasonable case for tax exemptions/concessions can be made,
subject to discretions of the respective Governments and Authorities.
Applications and representations have been made by management to the respective Governments and Authorities
and the matter is under consideration at the respective authorities.
Following the Central Government of India budget in March 2012, the custom duty rates have been reduced. As a
result, the total imputed value of custom duties based on delivery of 15 trains and applying the revised applicable
tax rates have reduced indirect taxes by RM13.1 million (Rs 22 crores). In the recent Central Government of India
Budget announced in March 2013, the custom duty rates have been reduced further from 16% to 13% which have
reduced indirect taxes exposure by RM2.8 million (Rs 5 crores). In addition, with effect from 1 January 2014, under
the India-Malaysia Comprehensive Economic Cooperation Agreement, the basic custom duties for rolling stocks will
be reduced to 0%, which will further reduce the exposure by RM1 million (Rs 2 crores). Based on the above, there is
no residual financial exposure on the indirect taxes payable, as the impact of any remaining indirect taxes payable
can be offset against the maximum amount contractually reimbursable by MMRDA.
SEB has also issued a writ of summons against the Local Authority to recover indirect taxes paid to date and are confident
of a successful outcome based on past legal precedents.
Based on the above, the Directors are of the opinion that:
(i) There is a reasonable case for claim of tax exemptions/concessions.;
(ii)A reasonable estimate of the likely outcome of additional indirect taxes payable, if any, cannot be ascertained at
this stage; and
(iii) The full recovery of indirect taxes paid in advance amounting to RM39 million is expected.
(c) Assessment of penalties payable by Scomi Engineering Bhd (“SEB”)
(i)On 7, November 2008, the Mumbai Metropolitan Region Development Authority (“MMRDA”) of India awarded a contract
for the Design, Development and Construction of a Monorail System (“the Project” or “ the Contract”) for a lump sum
amount of Rs 2460 crores (RM1.7 billion) to the unincorporated consortium of Larsen & Toubro Ltd and Scomi Engineering
/1 1 7
P
/1 1 8
(c) Assessment of penalties payable by Scomi Engineering Bhd (“SEB”) (continued)
Bhd (“the Consortium”), for which Scomi Engineering Bhd’s (“SEB”) share of the value of the Contract is Rs 1097
crores (RM720 million) based on its scope of works. The design, development, construction/manufacture/supply,
testing and commissioning of the system including safety certification for commercial operations are to be completed
within 30 months from the award of the Contract.
The Consortium has continuously appraised MMRDA of the status of the project and sought extensions of time as
allowed under the Contract terms. Following discussions, MMRDA had on 31 May 2011 granted the Consortium with
an EOT for each of the Phase 1 and Phase 2 works completion key-dates to 31 December 2011 and 22 November 2012
respectively.
As the Project encountered further delays, certain Phase 1 key milestones stated in the Contract were not met as at
31 December 2011.
SEB engaged specialist advisors to assist in the assessment of delay events, submission of claims for extension of time
and assessing the Consortium’s contractual obligations.
The Consortium subsequently requested for a further EOT for Phase 1 and Phase 2 until 26 July 2014 vide its letter
dated 9 November 2012.
Subsequent to the above submissions, MMRDA vide a letter dated 4 December 2012 had granted the Consortium a
further EOT of up to 31 March 2013 for Phase 1 and up to 31 December 2013 for Phase 2.
Monies amounting to RM9.6 million withheld by MMRDA in April 2012 as deemed penalties payable had been
released to SEB in November 2012 and no further retention has been imposed on subsequent billings or any further
monies witheld up to the date of approval of the financial statements.
The Project activities and work continue normally with MMRDA approving claims, billings and making payments accordingly.
A specialist advisor via an EOT claim report dated 8 November 2012 has stated that the Consortium has very strong
grounds to apply for a further extension of time for both Phase I and Phase II up to July 2014.
In reliance of the EOT granted by MMRDA on 4 December 2012 and the opinion of the specialist advisor, the Directors
are of the opinion that no provision for potential penalties is required as at 31 March 2013 as the likelihood of any
penalties to be borne by SEB is remote.
(ii)On 10 December 2010, Scomi Transit Projects Sdn Bhd, a wholly owned subsidiary of the Company, was awarded a
monorail expansion contract for RM494 million (“the Project”). Due to various circumstances, the Project has encountered
delays. The subsidiary has made several applications for extension of time as allowable under the terms of the
contract. The applications were based on the advice of a specialist and legal advisors. In March 2013, the subsidiary
and the customer agreed to work towards a revised project plan without prejudice to either party’s rights while the
applications were being progressed.
Based on the advice of the specialist and legal advisors and taking into account the delays, the revised project plan
and the subsidiary’s contractual right to receive extensions of time, the Directors are of the opinion that no provision
for potential penalties is required as at 31 March 2013 as the likelihood of any penalties to be borne by the subsidiary
is remote.
P
(iii)Certain subsidiaries of the Group could be subject to penalties arising from delays in delivering coaches and special
purpose vehicles. The Directors are of the opinion, based on internal delay assessments, that no material penalties
are contractually claimable as the delays were primarily due to changes in customer specifications or difficulties by
customers in obtaining certain regulatory permits.
(d) Construction contract revenue
The Group has estimated total contract revenue based on the initial amount of revenue agreed in the contract, variations
in the contract work and claims that can be measured reliably based on the latest available information and past experience
and reliance on work of specialist. During the financial year, variation orders totalling RM137.8 million (2011: RM 10.0 million)
were recognised based on percentage of completion less related cost in respect of additional work scope instructions
by the customers and additional interest costs and overheads incurred due to delays, which have been granted EOTs or
based on external delay assessments by specialist advisors.
Where the actual approved variations and claims differ from the estimates, such difference will impact the contract
profits/(losses) recognised.
(e) Construction contracts profits
The Group recognises contract profits based on the percentage of completion method. The percentage of completion
of a construction contract is determined based on the proportion that the contract costs incurred for work performed
to-date bear to the estimated total costs for the contract. When it is probable that the estimated total contract costs of
a contract will exceed the total contract revenue of the contract, the expected loss of the contract is recognised as an
expense immediately.
Significant judgement is required in the estimation of total contract costs. Where the actual total contract costs is different
from the estimated total contract costs, such differences will impact the contract profits recognised.
(f)
Litigations
The Group operates across many countries and is required to comply with all applicable laws and regulations of the
countries in which the Group operates. Significant judgement is required to determine the likelihood of the obligation
and the estimation of amounts to be recognised in respect of legal matters, subject to uncertain future events. The legal
cases may extend over several years and the amount or timing may differ from current assumptions.
Based on legal advice, the Group has recognised RM3.5 million as provisions as disclosed in Note 29. Contingent liabilities
of RM0.1 million (31.12.2011: RM 3.8 million) are as disclosed in Note 40(c).
(g) Impairment of receivables
The Group makes allowance for doubtful debts on an assessment of the recoverability of receivables. Allowances are
applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable.
The Group specifically analyses historical bad debts, customer concentration, customer creditworthiness, current
economic trends and changes in customer payment terms when making a judgment to evaluate the adequacy of the
allowance for doubtful debts. Where the expectations differ from the original estimates, the differences will impact the
carrying value of receivables as disclosed in Notes 19 and 23.
The purchase consideration of RM 51.6 million arising from the disposal of SOKL was to have been received over 3 years
commencing from the first anniversary of the date of disposal. As at 31 March 2013, RM 11.1 million had been received.
Subsequent to the financial period, the Group entered into a revised payment scheme with the vendor to extend the
repayment term for another year. This has resulted in a discounting impact of RM9.6 million to the income statement.
/1 1 9
P
/1 2 0
(g) Impairment of receivables (continued)
Notwithstanding the revised payment scheme, the Directors are of the opinion that the remaining amounts due will be
received on the revised repayment due dates and no impairment is required.
(h) Impairment of property, plant and equipment – marine vessels
The recoverable amounts of vessels have been determined based on the higher of fair value less costs to sell and valuein-use calculation as disclosed in Note 12. Based on management’s assessment, there was an impairment charge of
RM4,628,100 (31.12.2011: RM95,218,000) recognised in income statement for the financial period ended 31 March 2013.
(i) Impairment of investments in subsidiaries, associates and joint ventures
The Company assesses the impairment of investments in subsidiaries, associates and joint ventures when there is an
indication of impairment. The carrying amounts are disclosed in Note 16, 17 and 18 respectively. Based on their assessment,
there was an impairment charge of RM276.8 million (31.12.2011: RM144.0 million) for investment in a subsidiary
recognised in income statement for the financial period ended 31 March 2013. The recoverable amount of investment in
subsidiary was determined based on the value-in-use calculation as disclosed in Note 16.
5Revenue
1.
Group
Company
Period
YearPeriod
Year
2.
endedendedended
ended
31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
Sales of goods
663,301511,976
––
Rental/charter hire income
680,915556,914
––
178,349132,409
––
Construction contract income
397,794198,695
––
Management fee
1,9462,572
–4,167
Commission income
63–––
1,922,3681,402,566
–4,167
Rental income
21,814173,455
––
104,917155,043
––
Sales of goods
27,205132,207
––
2,076,3041,863,271
–4,167
P
/1 2 1
6 Profit/(Loss) Before Taxation
Group
Company
endedendedended
ended
31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
Profit/(loss) before taxation from continuing and
discontinued operations is stated after charging/(crediting):
Amortisation of intangible assets
2,0702,161
––
Amortisation of prepaid land lease payments
–1,460
––
Allowance for obsolete stocks
1,0102,972
––
Inventories written down
–957 ––
Impairment losses
- intangible assets
41,29242,607
––
- property, plant and equipment 10,20798,846
––
- receivables
4,10421,717
––
- amount due from subsidiaries
––
23,8927,807
- investment in subsidiary
––
276,779144,592
Write back of impairment losses
- investment in subsidiary
Write back of impairment of receivable
Auditors’ remuneration:
PricewaterhouseCoopers Malaysian firm
Statutory audit
- current year
- under provision in prior year
Non-audit fees
- current year
Overseas affiliates of
PricewaterhouseCoopers Malaysian firm
Statutory audit
- current year
- over provision in prior year
Other external auditors
Statutory audit
- current year
- under provision in prior year
Non-audit fees
- current year
Bad debts (recovered)/written off
Depreciation of property, plant and equipment Depreciation of investment properties
––
(143,992)–
(6,622)(675)
(6,406)–
2,1191,735 301212
38––
–
2,214–
587–
2,2811,777
––
(176)– ––
119202 ––
102–––
99–––
(13,298)2,085
––
104,166123,615
820826
177144 6494
P
/1 2 2
6 Profit/(Loss) Before Taxation (continued)
Group
Company
endedendedended
ended
31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
Gain on disposal of property, plant and equipment
(5,389)(4,922)
–(60)
Fair value gain on financial instruments - derivatives 435(556) ––
Property, plant and equipment written off –361 ––
Provision for tax penalties
–872 ––
Loss/(gain) on foreign exchange
- realised
(13,616)15,300 (101)(131)
- unrealised
19,34622,815 (294)(344)
Monetary adjustments
(1,641)(2,417)
––
Hyperinflation adjustments
4,8043,218
––
Gain on disposal of/dilution of
interest in subsidiary companies (21,118)–
(558,307)–ended
d
ended
n end
Interest income
(1,461)(3,384)(5,087)(6,303)
Lease rental
- plant and machinery
19,92856,975
––
- property
3,55113,102
––
Rental of land and premises
2,7813,967 591445
Rental of equipment
1,2733,559 3597
Rental income
(133)(135)(476)(408)
Research and development expenses
–101 ––
Government grant
(449)– ––
(Gain)/loss on disposal of a joint venture company
–(4,548)
–35
3,9863,300 8881,081
Employee benefits costs (including Executive Director):
Wages, salaries and bonuses
Defined benefit plan (Note 38)
Termination benefits
Share option expense (Note 36)
Employment costs
Other employee benefits (including allowances)
250,997251,750 4,4734,917
10,72711,285 618519
1,1171,402
––
2,258633 ––
3,9863,620 8881,081
7,0427,019 3583
31,02471,202 515485
307,151346,911 6,5297,085
Included in the cost of sales of the Group are the cost of inventories and services of RM677,893,000 (31.12.2011: RM877,568,000)
and construction contract costs of RM317,872,000 (31.12.2011: RM205,611,000).
P
/1 2 3
7 Finance Costs
8Taxation
Group
Company
endedendedended
ended
31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
Interest expense on borrowings, finance leases, ICSLS and ICULS
67,72060,48116,34916,696
Interest on CCIRS
8982,304
––
Hedging – fair value hedge
–21 ––
68,61862,80616,34916,696
Currency exchange*
––––
Fair value loss/(gain) on CCIRS designated as fair value hedges
–(893) ––
Fair value loss/(gain) on put option
61,060(13,057)
––
Interest expense on borrowings and leases
129,67848,85616,34916,696
31,3003,754
––
160,97852,61016,34916,696
* Included in currency exchange is a gain of RM3,058,000 (2011: loss of RM11,831,000) transferred from hedging reserve which is
offset by a corresponding exchange (loss)/gain of the same amount arising from revaluation of the underlying hedged borrowings.
8Taxation
Group
Company
endedendedended
ended
31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
Current tax
- Malaysian income tax
- Foreign tax
6,498(28,015)(1,409)–
16,09531,580
––
22,5933,565
(1,409)–
Deferred tax (Note 39)
4,96415,733 (827)666
27,55719,298(2,236)666
P
/1 2 4
8Taxation (continued)
Group
Company
endedendedended
ended
31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
Current tax
Current year
17,799(6,060)
––
Under/(over) accrual in prior years
4,7949,625
(1,409)–
Deferred tax
Reversal and origination of temporary differences
Benefit from previously unrecognised tax losses
Change in income tax rate
22,5933,565
(1,409)–
Total tax expense/(credit) from continuing operations
Discontinuing operations
Current tax
- Foreign tax
Deferred tax (Note 39)
4,96415,733 (827)666
3,0519,206 (827)666
1,9136,723
––
–(196) ––
27,55719,298(2,236)666
4,998 38,259
(1,122)19,820
3,87658,079
Current tax
Current year
4,99838,059
Under accrual in prior years
–200
Deferred tax
Reversal and origination of temporary differences Total tax expense from discontinued operations Total tax expense/(credit)
4,99838,259
(1,122)19,820
3,87658,079
––
–
–
––
––
––
–
–
––
––
31,43377,377(2,236)666
P
Group
Company
endedendedended
ended
31.3.2013
31.12.201131.3.2013
31.12.2011
%%%
%
(restated)
Numerical reconciliation between the average
effective tax rate and the applicable tax rate:
Applicable tax rate
Tax effects of:
- expenses not deductible for tax purposes
- Tax rates in other countries
- income not subject to tax
- deferred tax assets not recognised in respect of current
period’s tax losses and unabsorbed capital allowances
- under accrual in respect of prior years
- share of results of associates and joint ventures
Average effective tax rate
18142425
(10)(12) ––
(5)(4)
(50)–
821––
53––
1611 ––
131(12) (1)–
The income tax effect of each of other comprehensive (loss)/income item is Nil (2011: Nil) in the current financial period.
9 Directors’ Remuneration
The Directors of the Company in office during the financial period are as follows:
Non-executive Directors
Dato’ Teh Kean Ming (appointed on 22 October 2012)
Foong Choong Hong
Executive Director
25(25)25(25)
The applicable tax rate of the Group is derived from the consolidation of all the applicable tax for the companies within the Group, based on their domestic tax rates. The applicable tax rate of the Company is the Malaysian statutory tax rate of 25%.
/1 2 5
P
/1 2 6
9 Directors’ Remuneration (continued)
The aggregate amount of emoluments received/receivable by Directors of the Company during the financial period is as follows:
Group
Company
endedendedended
ended
31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
Non-executive Directors:
- fees
995767729555
- other emoluments
203194171171
1,198961900726
Executive Director (Note 41(b)):
- salaries and bonus
3,5852,3132,2481,320
- fees–34 ––
- defined contribution plan
452–
279–
- estimated monetary value of benefits-in-kind
252589252352
4,2892,9362,7791,672
5,4873,8973,6792,398
10 Loss Per Share
(a) Basic loss per share
Basic loss per share of the Group is calculated by dividing the profit attributable to owners of the Company for the financial
period by the weighted average number of ordinary shares in issue during the financial period and conversion of potential
ordinary shares from the mandatorily convertible instruments i.e. Irredeemable Convertible Secured Loan Stocks (“ICSLS”)
and Convertible Redeemable Secured Bonds, excluding ordinary shares purchased by the Company and held as Treasury
shares (Note 34(b)). The Convertible Redeemable Secured Bonds conversion is based on the assumption that the conversion
takes place upon maturity.
Group
Period
Year
ended
ended
31.3.2013
31.12.2011
(restated)
Loss attributable to owners of the Company
(RM’000)
(66,833)(223,705)
Weighted average number of ordinary shares in issue
(‘000)
1,634,4221,391,731
Basic loss per share
(Sen)
(4.09)(16.07)
P
b) Diluted loss per share
For the diluted loss per share calculation, the weighted average number of ordinary shares in issue is adjusted to assume
conversion of all dilutive potential ordinary shares. The Company has two categories of dilutive potential ordinary shares,
warrants and share options granted to employees.
For warrants, a calculation is done to determine the number of shares that could have been acquired at fair value (determined
as the average share price of the Company’s shares) based on the monetary value of the subscription rights attached to
outstanding warrants. The number of shares calculated above is compared with the number of shares that would have
been issued assuming the exercise of the warrants. The difference is added to the denominator as an issue of ordinary
shares for no consideration. This calculation serves to determine the “bonus” element to the ordinary shares outstanding
for the purpose of computing the dilution.
For share options granted to employees, a calculation is done to determine the number of shares that could have been
acquired at fair value (determined as the average share price of the Company’s shares) based on the monetary value of the
subscription rights attached to outstanding share options. The number of shares calculated above is compared with the
number of shares that would have been issued assuming the exercise of the share options. The difference is added to the
denominator as an issue of ordinary shares for no consideration. This calculation serves to determine the ‘bonus’ element to
the ordinary shares outstanding for the purpose of computing the dilution.
Group
Period
Year
ended
ended
31.3.2013
31.12.2011
(restated)
Loss attributable to owners of the Company
(RM’000)
(66,833)(223,705)
Weighted average number of ordinary shares in issue
(‘000)
1,634,4221,391,731
Adjustment for:
- share options
(‘000)
4,2712,797
Weighted average number of ordinary shares for diluted earnings per share (’000) 1,638,6931,394,528
Diluted loss per share (Sen)
11Dividends
The Directors do not recommend any dividend for the financial period ended 31 March 2013.
(4.08)(16.04)
/1 2 7
P
/1 2 8
12 Property, Plant and Equipment
Renovation,
Tools,
office
plant
equipment,
Monorail
Capital
Freehold Freehold Leasehold
Marine
and fittings and
Motor
test work-in
land buildings buildings
vessels machinery computers
vehicles
track progress
Total
RM’000RM’000 RM’000 RM’000 RM’000 RM’000 RM’000RM’000RM’000RM’000
Group
Cost
At 1 January
2012
20,076
58,783
26,165
776,080
607,571
66,860
14,319
14,795
2,058 1,586,707
Additions ––
1,280
28,713
62,2631,926620–
7,266
102,068
Disposals
(89) (159) (1,398) (71,740) (10,255)
(1,556)
(659)
–
–(85,856)
Write-offs –– – –(400)(118) –––
(518)
Reclassification
–– –
2,013 6 (6) ––
(2,013)
–
Disposal of
subsidiaries –
–
(5,228)
–
(21,435)
(19)
–
– (26,682)
Transfer to assets
held for sale (8,613) (16,717)
(5,940)
–
(191,334)
(6,229)
(5,296)
–
– (234,129)
Currency translation
differences
(313)
(372)
(156)
(14,612)
1,129
(419)
29
–
(19) (14,733)
At 31 March
2013
11,06141,535 14,723720,454 447,545
60,439
9,01314,795 7,292
1,326,857
Group
Accumulated depreciation and impairment
At 1 January 2012 –
16,781
12,532
405,579
383,705
40,713
11,325
2,819
– 873,454
Charge for the
1,043
821
45,467
44,755
10,623
840
617
– 104,166
Capitalised under
development costs –
–
–
–
78
–
207
–
–
285
Disposals
– (207)(1,324)
(47,303)(7,009) (1,514) (646) – –
(58,003)
Impairment losses –
–
500
4,176
6,131
–
–
–
–
10,807
Disposal of
subsidiaries––
(1,188)–
(6,801) (16) –––
(8,005)
Transfer to assets
held for sale
–
(11,137)
–
–
(169,606)
(8,758)
(4,785)
–
– (194,286)
differences
–
(50)
198
(7,545)
(1,652)
(346)
(64)
–
–
(9,459)
At 31 March 2013
–
6,430
Net book value
At 31 March
2013
11,06135,105
11,539
400,374
249,601
3,184320,080 197,944
40,702
6,877
3,436
– 718,959
19,737
2,13611,359 7,292607,898
P
Renovation,
Tools,
office
plant
equipment,
Monorail
Capital
Marine
and fittings and
Motor
test work-in
vehicles
track progress
Total
Group
Cost
At 1 January
2011
19,54855,120 28,950
– 735,432 65,892 13,55514,795
–
933,292
Early adoption
of standards
–
–
–
–
–
890
410
–
–
1,300
At 1 January 2011,
as restated
19,548
55,120
28,950
-
735,432
66,782
13,965
14,795
– 934,592
Additions – –383
23,757
46,5254,823628
1,995
78,111
Disposals (1,482)(948)(3,330)(8,299)
(172,616) (6,228)(2,186) – –
(195,089)
Transfer from assets
held for sale
1,218
2,493
3
760,134
799
2,058
1,871
–
– 768,576
differences
792
2,118
159
488
(2,569)
(575)
41
–
63
517
At 31 December
2011
20,076
58,783
Group
Accumulated depreciation
and impairment
At 1 January 2011 –
13,057
Early adoption
of standards
–
–
At 1 January 2011,
as restated
Charge for the
financial period Capitalised under
development costs
Disposals
Impairment losses
Write-offs
Transfer from assets
held for sale
differences
26,165
776,080
607,571
66,860
14,319
14,795
2,058 1,586,707
14,410
–
441,760
35,666
10,488
2,326
–
517,707
–
–
–
184
301
–
–
485
–
13,057
14,410
–
441,760
35,850
10,789
2,326
-
518,192
–
1,819
1,779
66,188
38,800
8,907
1,396
123
-
119,012
–
–
–
–
233
241
–
370
–
844
– (141)(3,580)(7,828)(97,896) (6,245)(2,014) – –
(117,704)
–
–
–
95,218
3,628
–
–
–
–
98,846
–– – –(73) – –––
(73)
–
2,045
–
1
–
247,146
271
(77)4,855 (3,018)
2,175
(215)
1,177
(23)
–
–
252,814
––
1,523
At 31 December 2011–
16,78112,532
405,579383,705 40,71311,3252,819
–
873,454
/1 2 9
P
/1 3 0
12 Property, Plant and Equipment (continued)
Renovation,
Tools,
office
plant
equipment,
Monorail
Capital
Marine
and fittings and
Motor
test work-in
vehicles
track progress
Total
Net book value
At 31 December
2011
20,076
42,002
13,633
370,501
223,866
26,147
2,994
11,976
2,058
713,253
Group
Net book value
At 1 January 201119,548
42,063
14,540
–
293,672
30,932
3,176
12,469
–
416,400
1.
Company
Cost
At 1 January 2012
Additions
At 31 March 2013
At 1 January 2012
Charge for the financial period At 31 March 2013
Net book value at 31 March 2013
Office
Motor equipment
vehicles and fittings Renovation
Total
RM’000RM’000RM’000
RM’000
1,479
–
3,655
7
741
–
5,875
7
1,479
3,662
741
5,882
1,304
168
2,692
344
248
308
4,244
820
1,472
3,036
556
5,064
7
626
185
818
Cost
At 1 January 2011
Additions
Disposal 1,839
–
(360)
3,640
15
–
741
–
–
6,220
15
(360)
At 31 December 2011
1,479
3,655
741
5,875
At 1 January 2011
Charge for the financial year
Disposal 1,363
296
(355)
2,408
284
–
2
246
–
3,773
826
(355)
At 31 December 2011
1,304
2,692
248
4,244
P
1.
Office
Motor equipment
vehicles and fittings Renovation
Total
RM’000RM’000RM’000
RM’000
Net book value at 31 December 2011
175
963
493
1,631
Net book value at 1 January 2011
476
1,232
739
2,447
(i) The net book values of property, plant and equipment of the Group acquired under finance leases are as follows:
Group
31.3.2013 31.12.2011 1.1.2011
RM’000RM’000
RM’000
–
–2,700
1,346 2,1031,835
–
–10,059
4,849
1,875
1,673
Freehold land and buildings
Motor vehicles
Tools, plant and machinery
Office equipment, fittings and computers
(ii) Certain property, plant and equipment of the Group are charged as security for banking facilities (Note 28) as follows:
Group
31.3.2013 31.12.2011 1.1.2011
RM’000RM’000
RM’000
Marine vessels
Land and buildings
152,860
1,216
154,076
92,066536,164
12,019
17,914
104,085
554,078
(iii) During the financial period, the Group acquired property, plant and equipment at aggregate costs of RM102,068,000 (31.12.2011: RM78,111,000), of which RM6,655,000 (31.12.2011: RM2,812,000 ) is by means of finance lease arrangements.
(iv)An impairment assessment was performed on certain vessels to assess the carrying amounts of these vessels due to a loss
of a major customer in the Marine Services segment. Arising from this assessment, the Group recognised an impairment
charge of RM4,628,100 (31.12.2011: RM95,218,000) which represented the write-down of certain vessels to their recoverable
amounts. The recoverable amount was based on the higher of fair value less cost to sell and value-in-use calculation, with
all tugs and barges being regarded as a cash-generating unit. The recoverable amounts of the vessels were determined
based on fair value (based on independent third party valuation reports) less costs to sell, which is the indicative values of
the vessels on a willing buyer willing seller basis.
/1 3 1
P
/1 3 2
13 Intangible Assets
Development cost
Capitalised development costs work-in-progress
Drilling
MassRapid
Drilling
waste
Transit/
waste
Goodwill
Patents
Monorail
Bus equipment Propulsion equipment
RM’000
RM’000
RM’000 RM’000 RM’000
RM’000 RM’000
Total
RM’000
Group
Cost
At 1 January 2012
248,03713,056
114,4181,0165,7992,5582,499
387,383
Additions
––––20
15,779–
15,799
Transfer to asset
held for sale
(9,900)
(557)
–
–
–
–
–
(10,457)
differences
(44)
(50)
–
–
(121)
–
–
(215)
At 31 March 2013
238,09312,449
114,4181,0165,69818,3372,499
392,510
Group
Accumulated impairment
and amortisation
At 1 January 2012
39,602
12,487
3,432
168
2,981
–
–
58,670
Amortisation for the
62
2,008
–
–
–
–
2,070
Transfer to held for sale
–
(547)
–
–
199
–
–
(348)
Impairment loss
41,292––––––
41,292
differences
(58)
(49)
–
–
53
–
–
(54)
At 31 March 2013
Net book value
At 31 March 2013
80,836
157,257
11,953 5,440
496108,978
168
3,233
–
–
101,630
848 2,465 18,337 2,499290,880
Group
Cost
At 1 January 2011
294,867
13,001
77,121
112
5,703
904
–
391,708
Early adoption of
standards 4,685––––––
4,685
At 1 January 2011,
as restated
299,552
13,001
77,121
112
5,703
904
–
396,393
Additions
––
37,297––
2,558
2,463
42,318
Reclassification –––
904–
(904)––
Transfer from asset
held for sale
39,845––––––
39,845
(90,179)––––––
(90,179)
differences
(1,181)
55
–
–
96
–
36
(994)
At 31 December 2011 248,037
13,056
114,418
1,016
5,799
2,558
2,499
387,383
P
Development cost
Capitalised development costs work-in-progress
Drilling
MassRapid
Drilling
waste
Transit/
waste
Goodwill
Patents
Monorail
Bus equipment Propulsion equipment
RM’000
RM’000
RM’000 RM’000 RM’000
RM’000 RM’000
Group
Accumulated impairment
and amortisation
At 1 January 2011
360
Early adoption of standards –
/1 3 3
Total
RM’000
7,501
1,616
66
1,458
–
–
11,001
–––––––
At 1 January 2011,
as restated
360
7,501
1,616
66
1,458
–
–
11,001
Amortisation for the
financial year
97
84
1,816
102
62
–
–
2,161
Impairment loss
36,294
4,856––
1,457––
42,607
differences2,85146––4––
2,901 At 31 December 2011
39,602
12,487
3,432
168
2,981
–
–
58,670
Net book value
At 31 December 2011
208,435
569
110,986
848
2,818
2,558
2,499
328,713
At 1 January 2011
299,192
5,500
75,505
46
4,245
904
–
385,392
(a) The carrying amounts of goodwill allocated to the Group’s cash-generating units (“CGUs”) are as follows:
Group
31.3.2013
31.12.2011
1.1.2011
RM’000
RM’000
RM’000
(restated)
(restated)
Oilfield services
101,574 152,752245,741
Marine services
7,014 7,0147,014
Transport solutions
48,669 48,66948,766
157,257 208,435301,521 The recoverable amount of the CGU in the current financial period is determined based on value in use calculations for oilfield
services and transport solutions and fair value less costs to sell for marine services. In the previous financial period, the
recoverable amount of all the CGUs were determined based on value in use calculations except for marine services which
was based on a fair value less costs to sell basis.
P
/1 3 4
13 Intangible Assets (continued)
Upon the completion of the restructuring as disclosed in Note 44, the goodwill relating to product enhancement CGU was
subsumed in the oilfield services CGU. The oilfield services and product enhancement CGUs are included within the oilfield
services reportable segment in Note 43.
The value in use calculations use pre-tax cash flow projections based on approved financial budgets. The projections were
based on an approved business plan and reflect the expectation of usage, revenue, growth, operating costs, technological
obsolescence and margins based on past experience and current assessment of market share, expectations of market
growth and industry growth.
(i) The key assumptions used in the value in use calculations for oilfield services and transport solutions are as follows:
Oilfield services
%
Growth rate/value in use basis
- 2013
6.0 – 30.0 - 2011
6.0 – 30.0
Terminal growth rate
- 2013
- 2011
Pre-tax discount rate
- 2013
- 2011
3.0 – 8.0
3.0 – 8.0
Transport
solutions
%
Existing secured projects
and anticipated projects
of existing technology
Existing secured projects
and expected terminal
value from operations
Not applicable
0%
9.0 – 23.010.0
9.0 – 23.0
14.0
(ii) Fair value less cost to sell of marine services
Goodwill allocated to Marine Services – Indonesia CGU arose from the Marine Logistics Business acquired from Chuan Hup
Holdings Limited on 30 September 2005.
During the financial period, the carrying amount of goodwill was reviewed for impairment using fair value less costs to sell.
The recoverable amount of the CGU is determined based on indicative values of the vessels in the CGU on a willing buyer willing
seller basis, as provided by an independent valuer. The indicative values were derived based on the specification of each vessel.
Based on the recoverable amounts determined using the basis stated above, therefore, no impairment charge (31.12.2011:
RM36,294,000) has been recognised in the financial period ended 31 March 2013.
(b)In 2009, the Group purchased the rights to use an intellectual property for the development of technologies relating to
crude oil waste, oil recovery recycling and treatment for oil and gas industry, amounting to RM9.4 million. During the previous
financial year, an impairment loss of RM4.8 million was recognised to fully write-down the remaining carrying
P
/1 3 5
amount of the intellectual property rights. During the financial period, an amount of RM3.8 million was received as a one-off
payment from a third party vendor.
(c) Capitalised development cost work in progress
Oilfield Services - EMS Engineering Package
The capitalised development cost work in progress relating to the EMS Engineering Package was tested for impairment
based in the following assumptions:
31.3.2013
%
Gross margin
Revenue growth rate in the first 5 years
Discount rate
Terminal growth rate
49.0 – 56.0
No growth
9.0 – 23.0
Nil
The projections over these periods reflect the expectation of usage, revenue, growth, operating costs and margins are
based current assessment of market share, expectations of market growth and industry growth. The discount rates used are
pre-tax and reflect specific risk relating to individual countries where this technology is expected to be used.
The EMS Engineering Package is expected to commence commercial production in 2014.
Transport Solutions
Development cost work-in-progress has been tested for impairment based on expectations of market growth and industry growth.
Pre-tax
Profit
Terminal
Value in use basis discount rate margin range
growth rate
31.3.2013
Mass rapid transit (MRT)
Anticipated projects over the expected
10%
14% Not applicable
useful life of the current MRT technology
Propulsion
Existing secured projects and anticipated
10%
10.9% - 24% Not applicable
projects over the remaining useful life
of the current propulsion technology
31.12.2011
Mass rapid transit (MRT)
Anticipated projects over the expected
13%
14% Not applicable
useful life of the current MRT technology
A reasonable possible change in the assumptions used will not result in any change to the impairment conclusion.
P
/1 3 6
14 Investment Properties
Group
Company
endedendedended
ended
31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
Cost
At beginning of financial period/year
Additions
3,8342,889
4,6784,678
–945 ––
At end of financial period/year
3,8343,8344,6784,678
Charge for the financial period/year
Impairment losses
2,2751,676 94–
17714464
94
–455 ––
2,4522,275 15894
Net book value
1,5591,213
4,5844,678
1,3821,559
4,5204,584
Fair value at end of financial period/year
3,7902,471
5,30011,800
The fair values of the investment properties in the prior years were determined based on current prices in active markets. The valuations for the current financial period were carried out on 16 May 2013 by a registered valuer.
Certain investment property owned by the Company is occupied by a subsidiary within the Group and therefore has been classified
under property, plant and equipment.
The following amounts have been recognised in the income statement:
Group
Company
endedendedended
ended
31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
Rental income
133135476408
There were no direct operating expenses arising from investment property that generated rental income during the year as all
expenses were incurred by the tenant.
P
/1 3 7
15 Prepaid Land Lease Payments
Group
Period
Year
ended
ended
31.3.2013
31.12.2011
RM’000
RM’000
(restated)
Disposal of a subsidiary
Amortisation for the financial period/year Currency translation differences
3161,787
(316)–
–(1,460)
–(11)
–316
16 Investments in Subsidiaries
Group
31.3.2013
31.12.2011
1.1.2011
RM’000
RM’000
RM’000
(restated)
(restated)
At cost:
- quoted shares in Malaysia
- unquoted shares
- quoted ICULS in Malaysia
1,219,026 646,931646,931
5,224 298,983298,908
– 54,78254,782
Less: Accumulated impairment
Deemed investment - financial guarantee
1,224,250 1,000,6961,000,621
(4,947)(148,938) (4,346)
- 1,2681,268
1,219,303 853,026997,543
At market value:
- quoted shares in Malaysia
- quoted ICULS in Malaysia
721,158 226,795371,003
- 29,03552,591
During the financial period, the Company recognised a reversal of impairment of RM143,991,000 on its cost of investment in
Scomi Energy Services Bhd (“SESB”) due to the internal restructuring. The reversal was made as the recoverable amount of its
investment is higher than the carrying value. The recoverable amount is based on the value-in use of the SESB Group based on
an average growth rate of 5.5% and discount rate of 16%.
P
/1 3 8
16 Investments in Subsidiaries (continued)
Details of the significant subsidiaries are as follows:
Country of
Group’s effective
Name of company
incorporation
equity interest
Principal activities
31.3.2013 31.12.2011 1.1.2011
%
%
%
Significant direct subsidiaries
of Scomi Group Bhd Scomi Energy
(1)
Services Bhd (“SESB”) *
Malaysia
65.6
42.7
42.7
Investment holding
Scomi Engineering Bhd (“SEB”)*
Significant direct subsidiaries
of Scomi Energy Services Bhd
Scomi Marine Services Pte Ltd # Singapore Scomi Oilfield Limited (“SOL”) *
Malaysia
Bermuda
(2)
72.3
67.4
69.8
Investment holding
65.6
42.7
42.7
Investment holding
65.6
76.1
76.1
Investment holding
Trans Advantage Sdn. Bhd.*
Malaysia
65.6
42.7
42.7
Provision of ship
chartering and ship
management
Scomi KMC Sdn Bhd *
Malaysia
34.1
52.0
52.0
(including 4% held by
Scomi Oiltools Sdn Bhd)
Provision of oilfield
equipment, supplies
and services
Scomi Sosma Sdn Bhd *
Malaysia
65.6
40.0
40.0
Distribution of chemical
products and services
Significant subsidiary of
Scomi Marine Services Pte Ltd
PT. Rig Tenders Indonesia,
Indonesia
52.8
42.7
42.7
Tbk #
Significant subsidiaries
of PT. Rig Tenders
Indonesia, Tbk
Rig Tenders Marine Pte. Ltd. #
Singapore
52.8
42.7
42.7
Ship chartering
Singapore
52.8
42.7
42.7
Investment holding
CH Ship Management Pte. Ltd. # Singapore
52.8
42.7
42.7
Provision of
management services
CH Logistic Pte. Ltd. #
Provision of ship
owning and
chartering
Goldship Private Limited #
Singapore
52.8
42.742.7
Dormant
P
Country of
Group’s effective
Name of company
incorporation
equity interest
31.3.2013 31.12.2011 1.1.2011
%
%
%
Grundtvig Marine Pte. Ltd. #
Singapore
52.8
42.7
42.7
Subsidiary of Grundtvig
Marine Pte. Ltd.
PT. Batuah Abadi Lines #
Indonesia
40.4
40.6
40.6
Investment holding
Ship owning and
chartering
Scomi Sosma Sdn Bhd
Scomi Anticor S.A. α France
65.6
40.0
40.0
Design and field
deployment of
various oil and
gas production
chemicals
Scomi Oilfield Limited
Scomi Oiltools Sdn Bhd *
Malaysia
65.6
76.1
76.1
equipment, supplies
and services and
provision of
management
services
Scomi Oiltools (Cayman) Ltd #
Cayman
65.6
76.1
76.1
Islands
equipment, supplies
and services
Scomi Oiltools Ltd *
Cayman
65.6
76.1
76.1
Islands
equipment, supplies
and services
Scomi Oiltools (Africa) Limited *
Cayman 65.6
76.1
76.1
Investment holding
Islands
and provision of
oilfield equipment,
supplies and services Scomi Oiltools (Thailand) Thailand
65.6
76.1
76.1
Limited #
equipment, supplies
and services
Scomi Oiltools Egypt SAE # (3)
Egypt
65.6
76.1
76.1
equipment, supplies
and services
/1 3 9
P
/1 4 0
16 Investments in Subsidiaries (continued)
Country of
Group’s effective
Name of company
incorporation
equity interest
31.3.2013 31.12.2011 1.1.2011
%
%
%
Scomi Oiltools Pty Ltd #
Australia
65.6
76.1
76.1
equipment, supplies
and services
Scomi Oiltools (S) Pte Ltd α
Singapore
65.6
76.1
76.1
Investment holding
and provision
of oilfield equipment,
supplies and services KMCOB Capital Berhad *
Malaysia
65.6
76.1
76.1
Undertake the
issuance of private
debt securities and
refinancing exercise
Scomi Oiltools Oman LLC# Oman
33.4
38.8
38.8
equipment, supplies
and services
Scomi Equipment Inc
USA
65.6
–
–
Dormant, intended
to be principally
involved in research
and development and
provision of
engineering services
Significant subsidiaries of
Scomi Oiltools (S) Pte Ltd
KMC Oiltools India Ptv Ltd #
India
65.6
76.1
76.1
equipment, supplies
and services
PT Scomi Oiltools #
Indonesia
65.6
76.1
76.1
equipment, supplies
and services
Scomi Oiltools Russia LLC #
Russia
65.6
76.1
76.1
equipment, supplies
and services
Significant subsidiaries of
Scomi Engineering Bhd
72.3
67.4
69.8
Engage in the business
Urban Transit Private Limited αIndia
of development,
manufacture and
supply of monorail
P
Country of
Group’s effective
Name of company
incorporation
equity interest
31.3.2013 31.12.2011 1.1.2011
%
%
%
transportation
infrastructure
systems equipment
and services
Urban Transit Servicos Brazil
72.3
67.4
–
Engage in the business
Do Brasil LTDA #
of development,
manufacture and
supply of monorail
transportation
infrastructure
systems equipment
and services
Scomi Special Vehicles Sdn Bhd * Malaysia
72.3
67.4
69.8
Manufacturing and
fabrication of road
transport equipment,
material handling
equipment and in
the provision of
related engineering
services
Scomi Transportation Malaysia
72.3
67.4
69.8
Investment holding
Systems Sdn Bhd *
Scomi Transit Project
Brazil 72.3 67.469.8
Development,
(Sao Paulo) Sdn Bhd *
manufacture and
supply of monorail
transportation
systems equipment
and services
of Scomi Special
Vehicles Sdn Bhd
Scomi Trading Sdn Bhd *
Malaysia
72.3
67.4
69.8
of Scomi Transportation
Systems Sdn Bhd
Scomi Rail Bhd * Marketing agent
for road transport
equipment
Malaysia
72.3
67.4
69.8
Design, manufacture,
/1 4 1
P
/1 4 2
16 Investments In Subsidiaries (continued)
Country of
Group’s effective
Name of company
incorporation
equity interest
31.3.2013 31.12.2011 1.1.2011
%
%
%
and supply of
monorail trains and
related services
Scomi Coach Sdn Bhd *
Malaysia
72.3 67.469.8
Manufacturing,
fabrication and
assembly of
commercial coaches and
truck vehicle bodies
* Audited by PricewaterhouseCoopers, Malaysia
#
Audited by affiliates of PricewaterhouseCoopers, Malaysia
α
Audited by firms other than PricewaterhouseCoopers, Malaysia and its affiliates
(1)During the financial period, the shares held by the Company increased from 313,043,478 ordinary shares to 1,536,992,712 ordinary shares following the issuance
of SESB’s shares in respect of the sale of Scomi Oilfield Limited to Scomi Energy Services Bhd.
(2)During the financial period, the shares held by the Group increased from 286,044,224 ordinary shares of RM1.00 each to 342,079,503 ordinary shares of RM1.00
each following the issuance of 56,035,279 new ordinary shares of RM1.00 each upon conversion of ICULS held by the Company at a price of RM1.00 per share
on its maturity.
(3)Scomi Oilfield Limited (“SOL”), a subsidiary of the Group entered into a Letter of Variation to defer the transfer of shares of Scomi Oiltools Egypt SAE (“SOES”)
from Scomi Oiltools Bermuda Limited (“SOBL”), a subsidiary of the ultimate holding company, to SOL to a date to be mutually agreed later and until such time,
SOBL will continue to hold the SOES Sale Shares in its name as trustee for SOL’s sole and exclusive benefit as the beneficiary, based on the terms of a trust deed
entered into by SOBL and SOL. As a result thereof, SOES has been consolidated as a subsidiary.
17 Investments in Associates
Group
31.3.2013
31.12.2011
1.1.2011
RM’000
RM’000
RM’000
(restated)
(restated)
Shares unquoted cost
16,857 16,85716,857
Share of post-acquisition
- loss
(16,454) (16,610)(13,633)
403
2473,224
P
/1 4 3
The Group’s share of the results of its associates is as follows:
Group
Period Year
ended
ended
31.3.2013
31.12.2011
RM’000
RM’000
(restated)
Revenue
Loss after tax
Group’s share of results
The Group’s share of the assets and liabilities of associates is as follows:
21,70814,123
(5,244)(7,616)
133(2,978)
Group
31.3.2013
31.12.2011
1.1.2011
RM’000
RM’000
RM’000
(restated)
(restated)
Total assets
43,942 183,081202,583
Total liabilities
(43,152) (174,596)(187,121)
Net assets
790
8,48515,462
Country of
Group’s effective
Name of company
incorporation
equity interest
31.3.2013 31.12.2011 1.1.2011
%
%
%
Held by Scomi
Energy Services Bhd
Southern Petroleum
Vietnam
13.1
8.6
8.6
Transportation Joint
Stock Company
Owner and operator
of tankers
Emerald Logistics Sdn Bhd
Malaysia
32.2
20.9
20.9
Ship chartering and
management
Held by Scomi Marine
Services Pte. Ltd.
King Bridge Enterprise Ltd.
British Virgin
32.2
20.9
20.9
Investment holding
Islands
P
/1 4 4
18 Investments in Joint Ventures
Group
31.3.2013
31.12.2011
1.1.2011
RM’000
RM’000
RM’000
(restated)
(restated)
Share of net assets of joint ventures
(i) The Group’s share of the results of joint ventures is as follows:
55,495 47,15725,081
Group
Period Year
ended
ended
31.3.2013
31.12.2011
RM’000
RM’000
(restated)
Revenue
Profit after taxation
Group’s share of results for the financial period/year
41,222 30,728
11,0265,314
6,5684,140
The significant joint venture is Rig Tenders Offshore which contributes RM3.4 million to the Group’s share of results for the
financial period and constitutes RM19.8 million of the share of net assets of joint ventures.
The Group’s share of the assets and liabilities of the joint ventures is as follows:
Group
31.3.2013
31.12.2011
1.1.2011
RM’000
RM’000
RM’000
(restated)
(restated)
Total assets
75,832 71,06136,239
Total liabilities
(38,949) (42,516)(29,770)
Net assets
36,883 28,5456,469
Capital contribution
18,612 18,61218,612
Group’s share of the joint venture assets
55,495 47,15725,081
P
Details of the joint ventures are as follows:
Country of
Group’s effective
Name of company
incorporation
equity interest
31.3.2013 31.12.2011 1.1.2011
%
%
%
Held by the Scomi
Energy Services Bhd
MarineCo Limited *
Malaysia
33.5
21.8
21.8
Ship chartering
Gemini Sprint Sdn. Bhd.*
Malaysia
33.5
21.8
21.8
Ship chartering and
Management
Rig Tenders Offshore Pte Ltd
Singapore
46.0
29.9
29.9
Ship owning and
chartering
Held by the Scomi
Sosma Sdn Bhd
Sosma (B) Sdn Bhd
Brunei
32.8
20.0
20.0 Held by the Scomi
Oilfield Limited
Vibratherm Limited England and Wales
32.8
–
–
Dormant
Development of
microwave thermal
treatment equipment
(ii) Joint operations
Country of
Group’s effective
Name of joint operation
operation
equity interest held
31.3.2013 31.12.2011 1.1.2011
%
%
%
Larsen & Toubro and
India
36.1
33.7
34.9 Design, civil construction,
manufacture and supply
unincorporated consortium
of monorail trains,
provision of related
engineering support
services and engineering
works involving the
design, construction,
installation, testing and
commissioning of mechanical
electrical and systems
in relation to the Mumbai
monorail project.
*Companies with ownership of more than half of the equity shareholding in the companies but treated as joint ventures pursuant
to the contractual rights and obligations of the respective joint venture agreements.
/1 4 5
P
/1 4 6
19 Other Financial Receivable
Group
Company
Note 31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
RM’000RM’000RM’000RM’000RM’000
RM’000
(restated)(restated)(restated)
(restated)
Amounts due from subsidiaries
– Non current (a)
Retention sum (b)
Other receivables (c)
–––
28,771
–17,636
4,577––
4,577 ––
24,632––– ––
29,209––
33,348
–17,636
(a)As at 1 January 2011, included in the amounts due from subsidiaries was an amount of RM18.49 million which was unsecured
and repayable in 3 years. The fair value of this amount as at the date of the statement of financial position was RM17.64 million
computed based on cash flows discounted at market borrowing rates of 5.5% per annum. This amount was repaid in 2011.
Included in amounts receivable from subsidiaries of the Company as at 31 March 2013 is advances to Scomi Engineering
Bhd of RM28,674,000 as at 31 March 2013, which was subsequently increased to RM37,500,000 as at the date of the financial
statements. The Company has expressed its intention not to recall these amounts due within a period of 12 months from
the date of the financial statements and provide financial support up to the limit required by the subsidiary.
(b)As disclosed in Note 23(c), this relates to the non-current portion of the retention sum receivable in October 2014. The amount
is held in escrow arising from the disposal of a subsidiary, Scomi Nigeria Pte Ltd, which was completed on 17 October 2012.
(c) The other receivable relating to the balance sale consideration due from a vendor is disclosed in Note 42 (a)(i).
20 Available-for-Sale Financial Assets
Group
31.3.2013
31.12.2011
1.1.2011
RM’000
RM’000
RM’000
At fair value:
Shares quoted in Malaysia 104 127127
Unquoted shares – 1,3891,389
104 1,5161,516
Market value of quoted investments
104 127127
P
/1 4 7
21 Derivative Financial Assets/(Liabilities)
Group
31.3.2013
31.12.2011
1.1.2011
Fair value
Fair value Fair value
assets/
assets/
assets/
(liabilities)
(liabilities)
(liabilities)
RM’000
RM’000
RM’000
(restated)
(restated)
Forward foreign exchange contracts
Cash flow hedges
- cross currency interest rate swaps
- Interest rate swaps
(15) (348)949
(6,640)
–26,288
– ––
(6,655)
(348)27,237
Included in:
Non-current assets––
24,465
Current assets––
7,691
Non-current liabilities
(6,166)
–(4,919)
Current liabilities
(489)(348) –
(6,655)
(348)27,237
(i) Forward foreign exchange contracts
As at 31 March 2013, the Group has no outstanding forward foreign exchange contracts (31.12.2011: NIL, 1.1.2011: RM14.8 million).
(ii) Cross currency interest rate swap contracts (CCIRSs)
The notional principal amounts of the outstanding CCIRSs at 31 March 2013 were RM199.5 million (31.12.2011: NIL, 1.1.2011:
RM463.5 million).
The Group had entered into Cross Currency Interest Rate Swaps (“CCIRS”) during 2012 and early 2013, that were designated as
cash flow hedges to hedge the Group’s exposure to foreign exchange risk on its Sukuk Murabahah (“the Sukuk”). These contracts
entitled the Group to receive principal and fixed interest amounts in RM and obliged the Group to pay principal and fixed interest
amounts in USD. The new CCIRS contracts have maturities of up to 5 years from 31 March 2013. Based on the terms of the Sukuk,
the semi-annual interest cash flows are built up on a monthly basis in the Financial Services Reserve Account (“FSRA”) and the
principal is built up in the 6 months preceding the maturity of the Sukuk tranches. The CCIRSs reflect the timing of these cash flows.
As at 31 March 2013, the Group had hedged approximately 66% of the RM denominated Sukuk. The USD interest rates on the
CCIRS contracts designated as hedging instruments in the cash flow hedges ranged from 6.16% to 7.82% per annum (31.12.2011:
NIL and 1.1.2011: 5.53% to 7.23% per annum) and the interest rates in RM ranged from 6.25% to 7.20% per annum (31.12.2011:
NIL and 1.1.2011: 5.85% to 6.95% per annum). Gains and losses recognised in the hedging reserve in equity on the CCIRSs as of 31
March 2013 will be continuously released to the income statement within finance cost until the full repayment of the Sukuk (Note 28).
(iii)Interest rate swap contracts
As at 31 March 2013, the Group has no outstanding interest rate swap contracts (31.12.2011: NIL, 1.1.2011: RM78.3 million).
P
/1 4 8
22Inventories
Group
31.3.2013
31.12.2011
1.1.2011
RM’000
RM’000
RM’000
At cost
Consumables
16,936 26,40430,417
Raw materials
22,781 13,86614,620
Work in progress
8,148 8,61315,186
Finished goods
165,532 174,420140,157
213,397 223,303200,380
23 Receivables, Deposits and Prepayments
Group
Company
31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
RM’000RM’000RM’000RM’000RM’000
RM’000
(restated)(restated)
Trade receivables
Less: Allowance for
impairment
415,871621,958400,029
– ––
(37,769)(45,365)(33,465)
– ––
Trade receivable – net
378,102576,593366,564
– ––
Amounts due from customers
on contract (Note 26)
499,350330,455364,692
–
Amounts receivable from:
- subsidiaries
- joint ventures
- associate
- related parties
- staff
Less: Allowance for impairment
Other receivables
Deposits
Prepayments
Tax recoverable
Less: Allowance for
impairment
––
–––
41,331 57,87596,423
21 46556 – –27
12,16718,12817,895
– ––
–––– 2831
– 7401,590 94 94100
(12,139)(16,957)(17,404)
–
–
–
491,9572,637
41,425 57,99796,581
94,309100,188117,626 5,546 6,0558,998
26,70210,099 7,870 392 624871
29,90632,27422,262
24 3786
57,29734,00641,004
–
2,294
2,765
(8,703)(12,513)
–
– ––
199,511164,054188,762 5,962
1,077,0121,073,059 922,655 47,387
9,01012,720
67,007109,301
P
(a) Trade receivables
Trade receivables are non-interest bearing and credit terms for trade receivables range from 30 to 120 days. They are recognised
at their original invoice amounts which represent their fair values on initial recognition.
(b) Related party balances and receivables of the Group and Company
-Amounts due from subsidiaries are unsecured and non-interest bearing except for certain advances which bear interest at
6.00% (31.12.2011: 1.80% to 7.00%; 1.1.2011: 1.80% to 7.00%) per annum and are repayable within the next 12 months.
-
Amounts due from related parties, joint ventures and associates are unsecured, interest free and are repayable upon demand.
-
Amounts due from staff are unsecured, interest free and repayable within 30 days.
(c)Included in other receivables of the Group and Company is a retention sum of RM4,577,000 (31.12.2011: Nil; 1.1.2011: Nil)
held in escrow by an agent in relation to the disposal of Scomi Nigeria Pte Limited.
(d)Included in prepayments of the Group is an amount of RM4,924,000 (31.12.2011: RM12,119,000 ; 1.1.2011: RM Nil) relating to
advances purchases of oil and bunker.
(e)Included in prepayments are amounts of RM3.6 million and RM4.9 million relating to advances to suppliers in respect of the
propulsion technology development work in progress and an operation and maintenance contract respectively.
(f ) Included in tax recoverable relates to the Mumbai Monorail Project.
24 Short-Term Deposits, Cash and Bank Balances
Group
Company
31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
RM’000RM’000RM’000RM’000RM’000
RM’000
(restated)(restated)
Short term deposits with
licensed banks
Cash and bank balances
82,40690,61164,070
– 6,9817,438
166,925145,570123,97822,459 6,1011,896
249,331236,181188,04822,459 13,0829,334
The effective interest rates for short term deposits, cash and bank balances at the date of the statement of financial position
were as follows:
Group
Company
31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
%%%%%
%
(restated) (restated)
Short term deposits with
licensed banks
0.06-6.250.06-6.25 0.05-3.1
–
2.3-3.11.45-3.5
/1 4 9
P
/1 5 0
24 Short Term Deposits, Cash and Bank Balances (continued)
Short term deposits of the Group have maturity periods ranging from 1 to 365 days (31.12.2011: 1 to 365 days ; 1.1.2011: 1 to
365 days). Bank balances are deposits held at call with banks.
Short term deposits of certain subsidiaries amounting to RM32,992,000 (31.12.2011: RM52,498,000; 1.1.2011: RM36,099,000)
have been pledged to licensed banks for banking facilities as disclosed in Note 28 to the financial statements.
In the prior financial years, short term deposits of the Company amounting to RM6,981,000 (1.1.2011: RM7,438,000) have been
pledged to licensed banks for banking facilities. The short term deposits were uplifted in the current year.
25 Assets/(Liabilities) Classified as Held for Sale
(a) Assets/(liabilities) classified as held for sale as at 31 March 2013
As disclosed in Note 44, the Group undertook a corporate exercise which involved the internal restructuring of its Oilfield
business into Eastern and Western Hemisphere entities and subsequently, the disposal by the Company of its interest in the
Eastern Hemisphere entities, Scomi Sosma Sdn Bhd and Scomi KMC Sdn Bhd to Scomi Energy Services Bhd (“SESB”).
Following the completion of the corporate exercise on 12 March 2013, the Oilfield Eastern Hemisphere entities are held
under SESB and the Oilfield western hemisphere entities are held directly under Scomi Oiltools Bermuda Limited (“SOBL”), a
wholly-owned subsidiary of the Company. The significant entities within the SOBL Group classified as held for sale and the
effective interest to the Group are disclosed below.
The Company had, vide a letter of undertaking dated 24 July 2012, irrevocably undertaken and confirmed to SESB that it
will gradually exit from the drilling fluids and drilling waste management businesses in the western hemisphere. The said
undertaking is binding and valid unless and until:
(i) The Company exits from the drilling fluids and drilling waste management businesses in the western hemisphere; or
(ii) Scomi Energy Services Bhd releases the Company from the said undertaking.
The Company has commenced the process of exiting the western hemisphere and expects to complete the disposal within
a period of 12 months from 31 March 2013.
During the course of the corporate exercise, the Group had completed the disposal of various business assets and entities
under the western hemisphere. The results of these business assets and entities, together with the entities classified as held
for sale are as follows:
P
/1 5 1
Group
Period Year
ended
ended
Note
31.3.2013
31.12.2011
RM’000
RM’000
(restated)
Revenue
153,936460,705
Expenses
(167,637)(469,287)
Loss on disposal
(45,412)(103,495)
Loss before tax from discontinued operations
6
(59,113)(112,077)
Taxation
(3,876)(58,079)
Loss for the year from discontinued operations
(62,989)(170,156)
The prior financial year results included the discontinued operations relating to the US and Mexico operations.
The details of the assets/(liabilities) held by the Group in the disposal group classified as held for sale are as follows:
Group
31.3.2013
31.12.2011
1.1.2011
RM’000
RM’000
RM’000
(restated)
(restated)
Inventory
4,540
Cash and cash equivalent
2,977
Restricted cash–
Trade and other receivables
96,901
Other assets–
Interest in joint venture
879
1,514
Goodwill–
Derivative financial instruments
–
Deferred income tax assets
1,301
––
–52,048
–2,195
–119,977
–22,108
–18,979
–505,905
–39,084
–22
–13
108,112
–760,331
Trade and other payables
(86,429)
(4,277)
Derivate financial instruments–
Borrowings
(1,322)
Finance leases–
Retirement benefit obligations
–
Other liabilities
(1,310)
–(44,072)
–(3,058)
–(1,506)
–(72,648)
–(53)
–(1,882)
––
(93,338)
–(123,219)
14,774
–637,112
Group share of net assets in disposal group
P
/1 5 2
25 Assets/(Liabilities) Classified as Held for Sale (continued)
(a) Assets/(liabilities) classified as held for sale as at 31 March 2013 (continued)
The impact of the discontinued operations on the cash flows of the Group is as follows:
Group
Period Year
ended
ended
31.3.2013
31.12.2011
RM’000
RM’000
(restated)
Operating cash flow
(38,199)(33,091)
Investing cash flow
33,99484,637
Financing cash flow
(25,966)(29,390)
Total cash inflow/(outflow)
(30,171)22,156
(b) Assets/(liabilities) classified as held for sale as at 1 January 2011
The assets/(liabilities) classified as held for sale as at 1 January 2011 were in respect of the following:
(i)Investment in a joint venture, Scomi NTC Sdn Bhd, which the Group, through a wholly-owned subsidiary of the
Company, Scomi Energy Sdn Bhd, had on 23 December 2010 entered into a conditional share sale agreement to
dispose to Cameron Solutions Inc.
The disposal was completed on 2 February 2011.
(ii)Pursuant to signing of the Master Framework Agreement (“the Agreement”) and Share Purchase Agreement (“SPA”)
on 29 September 2010 and 16 December 2010 respectively, a wholly owned subsidiaries, Scomi Marine Services
Pte Ltd (“SMS”) shall disposed off the entire equity shareholding in its subsidiaries, CH Ship Management Pte Ltd,
CH Logistics Pte Ltd, Goldship Private Limited and Grundtvig Marine Pte Ltd (“Target companies”) to PT Rig Tenders
Indonesia Tbk (“ PTRT”) and SMS’s interest in PTRT will be diluted following a proposed renunciation by SMS of its
entitlement to a proposed rights issue.
On 15 June 2011, SMS entered into the Deed of Mutual Termination, Discharge and Release (“the Deed”) to mutually
terminate the Agreement. Following the mutual termination of the Agreement, the Group ceased to classify PTRT
and the target companies as a disposal groups held-for-sale, and reclassified the entire results of PTRT and the target
companies as continuing operations for the years ended 31 December 2011, with amounts in the prior period being
described as “restated”.
Subsequent to the Group ceasing to classify PTRT and the target companies as disposal groups held-for-sale,
management assessed the recoverable amount of the assets and liabilities of the disposal group, after adjusting for
depreciation and amortisation that would have been recognised had the assets not been classified as held-for-sale.
Accordingly, depreciation of property, plant and equipment of RM39,500,000 was recognised in the consolidated
statement of comprehensive income.
P
/1 5 3
Other than impairment of vessels of RM95,218,000 (Note 12) and goodwill of RM36,294,000 in respect of Marine
Logistics (Note 13), there was no other impairment for the assets associated with the disposal group.
(c) Assets/(liabilities) of the disposal group
The details of the assets/(liabilities) held by the Company in the disposal group classified as held for sale are as follows:
Company
31.3.2013
31.12.2011
1.1.2011
RM’000
RM’000
RM’000
(restated)
(restated)
At cost 276,779 ––
Less: Accumulated impairment (276,779) ––
– ––
Details of the significant subsidiaries classified as held for sale are as follows:
Country of
Group’s effective
Name of company
incorporation
equity interest
31.3.2013 31.12.2011 1.1.2011
%
%
%
Scomi Oiltools
Bermuda Limited
Bermuda
100.0
76.1
76.1
Investment holding
(“SOBL”) Significant subsidiaries
of Scomi Oiltools
Bermuda Limited
Scomi Oiltools de
Venezuela
100.0
76.1
76.1
Venezuela S.A. equipment, supplies
and services
Scomi Oiltools United Kingdom
100.0 76.176.1
Dormant
(Europe) Limited Scomi Oiltools
United Kingdom
100.0 76.176.1
Dormant
(Shetland) Limited Scomi Oiltools Inc
United States
100.0 76.176.1
Dormant
Scomi Oiltools
Algeria
100.0 76.176.1
Dormant
Algeria EURL
Augean North Sea
Scotland
30.0
–
–
Services Ltd Provision of drilling
waste management
services
P
/1 5 4
26 Amounts Due from/(to) Customers on Contracts
Group
31.3.2013
31.12.2011
1.1.2011
RM’000
RM’000
RM’000
(restated)
(restated)
Construction contract costs incurred to date and attributable profits 1,188,184
852,472 653,777
Less : Progress billings (688,834) (522,018)(289,085)
Amounts due from customers on contracts (Note 23)
Retention receivable on contract, included in trade receivables
499,350 330,454364,692
Advance received on contract, included under other payables
7,904 ––
(3,585)
–(859)
Amounts due from customers on contracts have been collateralised for borrowings. In the event SEB defaults under the loan
agreement, the bank has the right to receive the cash flows from these amounts. Without default, SEB will bill and collect these
amounts and allocate new amounts as collateral.
27Payables
Group
Company
31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
RM’000RM’000RM’000RM’000RM’000
RM’000
Current
Trade payables (a)
Put option over non-controlling
interests (b)
Amounts due to subsidiaries (c)
Amount due to an associate (c)
Amount due to related company (c)
Accruals
Other payables
Financial guarantee (d)
297,920300,233216,518
– ––
–119,598132,656
– ––
–
–
–
59,624
157
74,575
5021,5416,311
– ––
–
267
222––
–
156,687
99,831
67,032
5,593 11,46516,059
5,86280,59660,784
64 5416
–––– 49497
460,971602,066483,52365,281 11,72521,147
Non-current
Financial guarantee
Other payables (e)
––––
–260
20,2305,6295,520
19,037 ––
20,2305,6295,520
19,037
–260
P
(a)
Trade payables
T rade payables are non-interest bearing and credit terms for trade payables range from cash term to 120 days (31.12.2011:
cash term to 120 days; 1.1.2011: cash term to 120 days).
(b)
Put option over non-controlling interests (“NCI”)
The put option over non-controlling interests represented the fair value of a put option granted to non-controlling interests
over their equity interests held in a subsidiary, Scomi Oilfield Ltd. The financial liability recognised was remeasured in accordance
with MFRS 139 “Financial Instruments: Recognition and Measurement”, which requires that changes in measurement are
recognised in the income statement.
The fair value was determined based on the projected adjusted earnings of the subsidiary concerned. During the financial
period, the put option was extinguished with the balance debited against the put option reserve.
The extinguishment of the put option liability was preceded by the completion on 8 March 2013 of the SOL Reorganisation
to carve out its Eastern and Western Hemisphere business into two separate legal entities which had resulted in an increase
in the fair value of the underlying assets. The increase in the underlying assets resulted in a fair value loss on the option of
RM61.1 million (Note 7), and was accounted for in the income statement. If the fair value loss had not been adjusted for, the
consolidated loss for the financial period attributable to the owners of the Company would have reduced from RM66.8 million
to RM5.7 million.
(c) Amounts due to subsidiaries, an associate and related companies
Amounts due to subsidiaries, an associate and related companies are unsecured, non-interest bearing and repayable on d
emand.
(d) Financial guarantee
Financial guarantee relates to a corporate guarantee provided by the Company to a licensed bank for a loan taken by a
subsidiary which was settled during the financial period (Note 28).
(e) Other payables
Included in non-current liabilities of the Group and Company as at 31 March 2013 is an amount of RM19.04 million owing
to Standard Chartered Private Equity Limited (“SCPEL”) and Fuji Investment I (“FII”) arising from the acquisition on a 23.9%
equity interest in Scomi Oiltools Bermuda Limited (“SOBL”), which is repayable in full in June 2014, as disclosed in Note 44(i).
The effect of discounting was not material.
/1 5 5
P
/1 5 6
28Borrowings
Group
Company
31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
RM’000RM’000RM’000RM’000RM’000
RM’000

Current
Bonds (secured)
Bank overdrafts
Bank borrowings
Other term loans (secured)
Finance lease payables
242,640174,174
129,360114,106
266,227124,264
119,35968,574
235276
– 201,552100,000
– ––
– ––
439 20,61620,560
138 137138
675,452
757,821481,394
577 222,305120,698
Non-current
Bonds (secured)
Bank borrowings
300,518507,271
–28,000
19,59171,835
7571,113
–
–103,934
– ––
1,204 1,99022,058
89 251388
300,092
320,866608,219
1,293
543,158681,445
129,360114,106
266,228152,264
138,950140,409
9921,389
– 201,552203,934
– ––
– ––
1,643 22,60642,618
227 388526
Total borrowings
Bonds (secured)
Bank overdrafts
Bank borrowings
50,243
105,138
346,311 173,039
721
257,258
–
39,887
2,947
307,501
105,138
346,311
212,926
3,668
975,544
1,078,6881,089,613
2,241126,380
1,870 224,546247,078
The maturity profile of borrowings is as follows:
Group
Company
31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
RM’000RM’000RM’000RM’000RM’000
RM’000
Due within the next 12 months
675,452
757,821481,394
577 222,305120,698
Due between 1 to 2 years
Due after 5 years
48,673
49,374
48,918
48,914
104,213
48,673214,513
48,168178,940
49,37468,405
48,91864,816
125,73481,545
516
576124,578
452 533576
325 459533
– 440693
–233 –
300,092
320,867608,219
975,544
1,078,6881,089,613
1,293
2,241126,380
1,870 224,546247,078
P
The effective interest rates per annum on the Group’s and Company’s borrowings at the date of the statement of financial position are as follows:
Group
31.3.2013
31.12.2011
1.1.2011
%
%
%
(restated)
(restated)
Bank overdrafts
Bonds (secured)
Bank borrowings
2.60-14.50
5.20- 7.60
3.30- 7.60
1.98-7.60
2.40-4.50
2.60 - 11.00 2.60 - 13.80
4.25 - 7.50 4.50 - 6.20
2.38 - 7.60 4.69 - 7.55
0.26 - 7.60 0.26 - 7.55
2.40 - 3.10 2.40 - 3.10
Company
31.3.2013
31.12.2011
1.1.2011
%
%
%
Bonds (secured)
(a)Bonds
–
–
2.40 – 3.10
4.25 - 7.50
2.38 – 6.31
2.40 - 3.10
4.50 - 7.50
4.69 – 6.31
2.40 - 3.10
RM500.0 million Murabahah Bonds
During the financial period, the Company has fully repaid the outstanding balance of the medium term note. The bond was
established through a medium term notes (“MTN”) programme of RM500.0 million issued on 25 September 2005. The MTN
Notes were pared down by RM250.0 million and RM50.0 million in 2006 and 2010 respectively, with the RM200.0 million
remaining as at 31 December 2011.
RM630 million Murabahah Bonds
The RM630 million of Medium Term Notes was issued by KMCOB Capital Berhad (“KMCOB Capital”), a subsidiary, on
14 December 2006, under the Murabahah Islamic principle (“Murabahah Bonds”).
The Murabahah Bonds were issued in 4 series with tenures from 4 to 7 years from 14 December 2006, being the date of
issuance. The profit rate ranges from 5.75% to 6.15% per annum, payable semi-annually in arrears.
KMCOB Capital had restructured the Notes in 2010, with the tenure and repayment terms varied from 7 to 10 years from 14 December
2006 and the profit rate varied to 6.05% to 6.95% per annum. The Notes was fully repaid as at 31 December 2011 as described below.
RM342.55 million Sukuk Murabahah
On 14 December 2011, the Group had issued a Sukuk Murabahah of RM342.55 million (“the Sukuk”). The proceeds raised
from the issuance under the Sukuk was utilised for early redemption of the outstanding amount of the existing Murabahah
Bonds in full. The Sukuk was issued with a tenure and repayment term of 1 to 7 years from 14 December 2011 and a profit
rate ranging from 6.25% to 7.50% per annum.
The Sukuk are secured by:
(i) Corporate guarantees from Scomi Oilfield Limited (“SOL”), if applicable;
/1 5 7
P
/1 5 8
28Borrowings (continued)
RM342.55 million Sukuk Murabahah (continued)
(ii)Corporate guarantees from certain existing and future principal subsidiaries of SOL whose revenue or profit/loss after
tax are at least 5% of the consolidated revenue or consolidated profit/loss after tax of the SOL Group;
(iii) Charge over the issued and paid up share capital of the existing and future principal subsidiaries in the SOL Group;
(iv) Debenture over the present and future assets of the KMCOB Capital;
(v)Assignment over Financial Services Reserve Account (“FSRA”) maintained by KMCOB Capital to meet its most immediate
six months profit and principal payment obligations; and
(vi)Any other security as may be required by the rating agency to achieve the requisite rating. As at 31 March 2013, no
security is given to the rating agency to achieve the requisite rating.
The outstanding amount of Sukuk as at the end of the financial period is RM341.6 million (31.12.2011: RM480.0 million for the Notes).
(b) Other term loans, bank overdrafts and bank borrowings
The other term loans, bank overdrafts and bank borrowings of the Group are secured by:
(i) Legal charge over certain landed properties and vessels of certain subsidiaries;
(ii) Negative pledge over the present and future, fixed and floating assets of certain subsidiaries;
(iii) Assignment of contract proceeds, insurance policies and performance bond; and
(iv) Standby Letter of Credit (“SBLC”) facility secured by corporate guarantee provided by certain subsidiaries;
(v) Change over shares and/or acceptable stocks in subsidiaries of the Company;
(vi)A charge over the 3-month interest of the Facility Limit placed upfront (“Upfront Deposit”) in a debt service reserve
account (“DSRA”); and
(vii)Corporate Guarantees from certain entities
During the financial period, the Company obtained a bridging loan facility of RM118 million from a financial institution to
settle the RM200 million bond that was due on 12 October 2012. The bridging loan was repaid in full in the same period
principally via the proceeds of the Convertible Redeemable Secured Bonds (Note 37 and Note 44(l)).
(c) Finance lease payables
Group
Company
31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
RM’000RM’000RM’000RM’000RM’000
RM’000
Instalments payable:
Not later than 1 year
Between 1 to 2 years
Later than 5 years
590
770
770
769
769
–
Less: Future finance charges
3,668
–
3,668
Present value of finance lease payables
292333
162162
274413
79162
199274
25110
114199–25
89114––
203293––
1,1711,626267459
(179)(237)
(40)(71)
9921,389
227388
162
162
162
110
25
–
621
(95)
526
P
Group
Company
31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
RM’000RM’000RM’000RM’000RM’000
RM’000
Analysed as:
Due within 12 months
Due to 1 to 2 years
Due to 2 to 3 years
Due to 3 to 4 years
Due to 4 to 5 years
Due more than 5 years
590
770
770
769
769
–
3,668
235276
148137
225360
66137
161227
1394
90164–20
7494––
207268––
9921,389
227388
138
137
137
94
20
–
526
Breaches of loan covenant
As at 31 March 2013
(i)A subsidiary within the Group did not fulfill one of its clauses in relation to term loan. Accordingly, the bank was contractually
entitled to request for immediate repayment of the outstanding balance of RM9.9 million as at 31 March 2013. At the end of the
reporting period, the carrying value of RM9.9 million has been included within borrowings under current liabilities. Subsequent
to the end of the reporting period, approval from the bank in respect of the clause was received.
(ii)A subsidiary within the Group did not fulfil its Annual Debt Service Cover Ratio (“ADSCR”). Management had obtained indulgence
from the bondholders of a waiver of any breach of terms prior to the end of the reporting period as a result of non-maintenance
of the ADSCR for the period.
29Provisions
GroupTax
Litigation penalties
TotalT
otal
RM’000 RM’000RM’000
At 1 January 2012
Charged/reversed during the period
Paid during the period
Currency translation differences 578
2,950
–
–
At 31 March 2013
At 1 January 2011
Charged during the year
Paid during the year
–
578
–
–
5,235
872
(3,848) 8
5,235
1,450
(3,848)
8
At 31 December 2011
578
2,267
2,845
3,528
2,267
(367)
(824)
(373)
2,845
2,583
(824)
(373)
7034,231
/1 5 9
P
/1 6 0
30 Deferred Government Grant
The Group received approval for a government grant of RM2,155,000 in 2008 to execute and develop new technology for a monorail
bogie design and development program with improvement to the design of the current monorail bogie and development of a commercially
ready prototype bogie.
As at 31 December 2011, the grant of RM2,155,000 was fully disbursed to the Group. Amortisation over the expected life of the related
assets commenced in the current financial period to mirror the pattern of consumption of the related intangible asset estimated to
be 5 years.
31 Irredeemable Convertible Secured Loan Stocks
On 14 December 2009, the Company issued 1,515,796,791 of three (3)-year 4% Irredeemable Convertible Secured Loan Stocks
(“ICSLS”) at nominal value of RM0.10 each for cash together with 202,106,238 free detachable warrants to subscribe the entitlement
of the Rights Issue by Scomi Engineering Bhd (“SEB”) and working capital requirements of the Group.
The ICSLS matured on 14 December 2012 and all outstanding ICSLS as at that date were converted to ordinary shares of the
Company on the basis of every 4 ICSLS being converted into one ordinary share.
The salient features of the ICSLS were as follows:
(a) The conversion price is fixed at RM0.40 per share;
(b)The registered holder of the ICSLS has the right at any time during the conversion period to convert the ICSLS at the conversion price into fully paid new ordinary shares of RM0.10 per share in the Company;
(c)The ICSLS can be converted into fully paid new ordinary shares of RM0.10 each in the Company at any time during its 3
years tenure. At the end of the tenure, any outstanding ICSLS will be automatically converted into fully paid new ordinary
shares of RM0.10 per share;
(d) The ICSLS are not redeemable (save upon declaration of an event of default);
(e)The ICSLS bear interest at 4% per annum based on the nominal amount of the ICSLS. The interest shall be payable quarterly
in arrears; and
(f )The ICSLS are secured by the cash proceeds from the Rights Issue by Scomi Engineering Bhd (“SEB ICULS Funds”) which will
be held in the form of fixed deposit receipts (“FDR”) over which a memorandum of deposit will be executed in favour of the
Trustee (“FDR MOD”).
The fair value of the liability component was calculated using a market rate for an equivalent convertible loan stock. The
residual amount, representing the value of the equity component, was included in other reserves (Note 36).
P
/1 6 1
Group and Company
Period
Year
ended
ended
31.3.2013
31.12.2011
RM’000
RM’000
Other reserves:
Conversion of ICSLS (Note 36)
61,89962,121
(61,899)(222)
–61,899
Liability component:
3,1887,197
Conversion of ICSLS
(1,729)(176)
Decrement – amortised cost
(1,458)(2,667)
Reclassification
–(1,166)
–3,188
Group and Company
31.3.2013
31.12.2011
1.1.2011
RM’000
RM’000
RM’000
Included in:
Current liabilities
– 3,188
–
–
3,382
3,815
– 3,188
7,197
Interest expense on the ICSLS is calculated on the effective yield basis by applying the effective interest rate of 8% per annum
(31.12.2011: 8% per annum).
32 Irredeemable Convertible Unsecured Loan Stocks
On 23 March 2011, SEB issued 61,352,936 3-year 4% Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) at nominal
value of RM1.00 each for cash, of which 54,782,491 ICULS was subscribed by the Company.
The ICULS has matured on 23 March 2013 and all outstanding ICULS as at that date were converted to ordinary shares of SEB on
the basis of one ICUL being converted to one ordinary share.
The salient features of the ICULS were as follows:
(a) The conversion price is fixed at RM1.00 per share;
P
/1 6 2
32 Irredeemable Convertible Unsecured Loan Stocks (continued)
(b)The registered holder of the ICULS has the right at any time during the conversion period to convert the ICULS at the conversion
price into fully paid new ordinary shares of RM1.00 per share in the SEB;
(c)The ICULS can be converted into fully paid new ordinary shares of RM1.00 each in SEB at any time during its 3 years tenure. At the
end of the tenure, any outstanding ICULS will be automatically converted into fully paid new ordinary shares of RM1.00 per share;
(d)The ICULS are not redeemable;
(e)The ICULS bear interest at 4% per annum based on the nominal amount of the ICULS. The interest shall be payable quarterly
in arrears; and
(f )The holders of the ICULS are not entitled to participate in any distribution and/or offer of securities in SEB until and unless
such holders of the ICULS convert the ICULS into new ordinary shares in SEB.
The fair value of the liability component was calculated using a market rate for an equivalent convertible loan stock. The residual
amount, representing the value of the equity component, is included in other reserves (Note 36).
Group and Company
Period
Year
ended
ended
31.3.2013
31.12.2011
RM’000
RM’000
31.12.2011
Other reserves:
Conversion of ICULS
Liability component:
Conversion of ICULS
Repayment during the financial period/year
Interest expense
1,1481,217
(1,148)(69)
–1,148
1774
(17)(8)
–(53)
–4
–17
Group
31.3.2013
31.12.2011
1.1.2011
RM’000
RM’000
RM’000
Included in:
Current liabilities
–
–
14
3
33
41
– 1774
P
/1 6 3
33Warrants
On 14 December 2009, the Company issued 202,106,238 free detachable warrants pursuant to the issuance of 1,515,796,791 of
three (3)-year 4% ICSLS at nominal value of RM0.10 each.
During the financial period, 20,068,332 warrants were exercised into ordinary shares of RM0.10 each.
The warrants matured as at 14 December 2012 and the warrant reserve relating to the unexercised warrants was transferred to
retained earnings.
As at the date of the statement of financial position, nil (31.12.2011: 202,105,258 ; 1.1.2011: 202,105,258) warrants remained unexercised.
34 Share Capital
Group and Company
Period
Year
ended
ended
31.3.2013
31.12.2011
No of
Nominal
No of
Nominal
shares
value
shares
value
000
RM’000
000
RM’000
Authorised
Ordinary shares of RM0.10 each:
At beginning and end of the financial period/year
3,000,000300,0003,000,000
300,000
Issued and fully paid
Ordinary shares of RM0.10 each:
At beginning of the financial period/year
1,187,688118,7691,182,658
118,266
Issued during the financial period/year:
- conversion of ICSLS
- exercise of warrants
- exercise of ESOS
- private placement
At end of the financial period/year
218,77021,8773,905 392
20,0682,007– –
18,9041,8901,125 111
119,11011,911– –
1,564,540156,4541,187,688
118,769
(a) Increase in share capital
(a)Issuance of 218,769,875 new ordinary shares of RM0.10 each pursuant to the conversion of Irredeemable Convertible
Secured Loan Stocks (“ICSLS”);
(b) Issuance of 3,404,500 new ordinary shares of RM0.10 each pursuant to the exercise of share options under the Company’s
(c)Issuance of 15,500,000 new ordinary shares of RM0.10 each pursuant to the exercise of share options under the Company’s
P
/1 6 4
34
Share Capital (continued)
(d) Issuance of 20,068,332 new ordinary shares of RM0.10 each pursuant to the exercise of warrants at RM0.40 per share; and
(e)Issuance of 119,109,500 new ordinary shares of RM0.10 each pursuant to the private placement exercise to IJM Bhd at
RM0.33 per share.
In the prior financial year, the issued and paid-up share capital of the Company was increased from RM118,265,777 comprising
1,182,657,772 ordinary shares of RM0.10 each, to RM118,768,765 comprising 1,187,687,647 ordinary shares of RM0.10 each,
by way of the issuance of:
(i)3,904,875 new ordinary shares of RM0.10 each pursuant to the conversion of Irredeemable Convertible Secured Loan
Stocks (“ICSLS”);
(ii)1,125,000 new ordinary shares of RM0.10 each pursuant to the exercise of options granted under the ESOS at an option
price of RM0.17 per share; and
(b) Treasury shares
The shareholders of the Company, by an ordinary resolution passed in an Annual General Meeting held on 27 June 2012,
renewed their approval for the Company to repurchase its own shares. The Directors of the Company are committed to
enhancing 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.
There were no purchases of Treasury shares during the financial period. As Treasury shares, the rights attached as to voting, dividends
and participation in other distribution are suspended. None of the Treasury shares repurchased has been sold as at 31 March 2013.
At the date of the statement of financial position, 14,427,200 (31.12.2011: 14,427,200 ; 1.1.2011: 14,427,200) ordinary shares
are held as Treasury shares at a carrying value of RM18,695,746 (31.12.2011: RM18,695,746 ; 1.1.2011: RM18,695,746), and the
number of outstanding shares in issue after setting off against Treasury shares is 1,550,112,654 (31.12.2011: 1,173,260,447 ;
1.1.2011: 1,168,230,572).
(c) Employees’ Share Option Scheme
The movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
31.3.2013
31.12.2011
1.1.2011
AverageAverageAverage
exerciseexerciseexercise
price
Options
price
Options
price
Options
RM’000RM
’000RM
’000
At beginning of the financial period/year 0.7982,176
1.02
76,175
1.01
87,755
Granted
Forfeited
Exercised
0.3613,000
1.22(17,148)
0.23(18,905)
0.24
1.10
0.17
18,000
(10,874)
(1,125)
–
1.07
0.17
–
(10,225)
(1,355)
0.8359,123
0.79
82,176
1.02
76,175
P
/1 6 5
Out of the outstanding options, 59,123,000 units (31.12.2011: 56,035,900 units; 1.1.2011: 55,222,900) of options were exercisable.
Share options were exercised on a regular basis throughout the financial period, and the weighted average share price for
the financial period was RM0.30 (31.12.2011: RM0.31 ; 1.1.2011: RM0.42).
The options outstanding at the financial period end had exercise prices ranging RM0.17 to RM1.51 (31.12.2011: RM0.17 to
RM1.51 ; 1.1.2011: RM0.17 to RM1.51) and a remaining contractual life of less than 1 year (31.12.2011: 2 years ; 1.1.2011: 3 years).
The weighted average fair value of options granted during the financial period was determined using the Trinomial valuation
model was RM0.05 (31.12.2011: RM0.09 ; 1.1.2011: RM Nil) per option. The significant inputs into the model were as follows:
Group
Period Year
ended
ended
31.3.2013
31.12.2011
Valuation assumptions:
Expected volatility of share prices
Expected dividend yield
Expected option life
Weighted average share price at the date of grant
Risk- free interest rate (per annum)
40%40%
––
6 months
1.0 - 2.0 years
RM0.40/shareRM0.28/share
3.24%3.39%
The Company implemented an ESOS on 28 April 2003 for a period of 10 years. The ESOS is governed by the By-Laws which
were approved by the shareholders on 28 March 2003.
All options granted under the scheme expired on 27 April 2013.
On 15 June 2004, the Company amended the By-Laws and its Articles of Association (“Articles”) to align them with the
amendments to the Listing Requirements issued by Bursa Malaysia Securities Berhad which became effective on 10 February 2004,
and the amendments to Schedule I of the Securities Commission (“SC”) Act, 1993.
With the amendments, the total number of shares under the ESOS was increased from ten percent (10%) to fifteen percent
(15%) of the total issued and paid-up share capital of the Company and participation in the ESOS was extended to include
Non-Executive Directors.
The amendments to the By-Laws and Articles were approved by the shareholders of the Company on 16 June 2004 at the
2nd Annual General Meeting.
The salient features of the ESOS are as follows:
(i)The total number of shares comprising options exercised, options remaining exercisable and unexercised offers
pending acceptance under the ESOS shall not exceed fifteen percent (15%) of the total issued and paid-up share
capital of the Company, such that not more than fifty percent (50%) of the shares available under the ESOS are
allocated, in aggregate, to the Directors and senior management of the Group;
Not more than ten percent (10%) of the shares available under the ESOS is allocated to any individual Director or
employee who, either singly or collectively through his/her associates, holds twenty percent (20%) or more in the
issued and paid-up share capital of the Company;
P
/1 6 6
34
Share Capital (continued)
(c) Employees’ Share Option Scheme (continued)
(ii)Options shall lapse if the Director ceases his/her directorship with the Company or employee ceases his/her employment
with the Company or its subsidiaries prior to the full exercise of his/her options, except when such cessation occurs
by reason as provided by the Company’s ESOS By-Laws such as retirement, ill health, injury, physical or mental disability,
and subjected always to the discretion and written approval of the Options Committee of the Company;
(iii)The option price under the ESOS is the volume weighted average market price quoted on Bursa Malaysia for the
past five (5) consecutive market days prior to the date of grant, save that a discount of not more than ten percent
(10%) may be given at the absolute discretion of the Options Committee for options granted after the listing of the
Company. The option price shall not be lower than the par value of the shares of the Company of RM0.10;
(iv)Options granted under the ESOS carry no dividend or voting rights. Upon exercise of the options, shares issued rank
pari passu in all respects with existing ordinary shares of the Company; and
(vi)The options granted are exercisable upon receipt of notice of entitlement to exercise from the ESOS Secretariat by
or before 1 April of each year based on annual entitlement. Acceleration of the annual entitlement is dependent on
the Employee Performance Rating achieved in the preceding year.
35 Share Premium
Group and Company
Period
Year
ended
ended
31.3.2013
31.12.2011
RM’000
RM’000
Other reserves:
276,793275,926
Additions arising from:
- conversion of ICSLS, net
36,443788
- exercise of ESOS
2,40879
- exercise of warrants
9,231–
- private placement, net (Note 44(k))
27,041–
351,916276,793
P
36 Other Reserves
Exchange
fluctuation
Hedge
Group
Note reserve
reserve
RM’000 RM’000
At 1 January 2012,
as restated
(98,527)
311
Put Available
Share
option
for sale
Warrants
option
reserve
reserve
reserve
reserve
ICSLS
ICULS
Total
RM’000 RM’000 RM’000 RM’000RM’000RM’000RM’000
(258,286)
–
32,337
13,813
61,899
1,148 (247,305)
Other comprehensive
(loss)/income:
differences
4,554––– ––
–
–
4,554
- Change in fair value
of cash flow hedge CCIRS
–
(311)
–
–
–
–
–
–
(311)
- transfer to income
statement
–
(6,710) –
–
–
–
–
–
(6,710)
Total other comprehensive
(loss)/income 4,554
(7,021)
–
–
–
–
–
–
(2,467)
Share option
recognised in:
6
- company– – – –
- subsidiaries– – – –
- value of share options
lapsed/forfeited/exercised
–
–
–
–
–
(3,613)
–
–
(3,613)
–
373
–
–
373
–
Put option
extinguishment–
Conversion
of ICSLS
31
–
Conversion
of ICULS
32
–
Warrants
- exercised33–
- lapsed–
Disposal of
subsidiary
44
687
At 31 March 2013
–
–
–
–888––
888
–
3,098––
3,098
–
258,286 –
– –––
258,286
–
–
–
–
–
(61,899)
–
(61,899)
–
–
–
–
–
–
(1,148)
(1,148)
– – –(3,211) –––
(3,211)
– – –
(29,126) –––
(29,126)
–
–
–
(93,286)
(6,710)– –
–
–
–
–
687
–
14,186––
(85,810)
/1 6 7
P
/1 6 8
36 Other Reserves (continued)
Exchange
fluctuation
Hedge
Group
Note reserve
reserve
RM’000 RM’000
At 1 January 2011
- as previously stated
(98,725)
(9,446)
- effect of adoption
of standards
48
–
–
At 1 January 2011,
as restated
(98,725)
(9,446)
Put Available
Share
option
for sale
Warrants
option
reserve
reserve
reserve
reserve
ICSLS
ICULS
Total
RM’000 RM’000 RM’000 RM’000RM’000RM’000RM’000
(258,286)
(1,719)
32,337
20,909
62,121
–
–
–
(513)
–
(258,286)
(1,719)
32,337
20,396
62,121
1,217(251,592)
–
(513)
1,217 (252,105)
Other comprehensive income:
differences
198––– ––
–
–
198
- Available-for-sale
financial assets
–
–
–
1,719
–
–
–
–
1,719
- Derecognition of
cash flow hedge CCIRS
–
9,757
–
–
–
–
–
–
9,757
Total other
comprehensive
(loss)/income 198
9,757
–
1,719
–
–
–
–
11,674
Share option
recognised in:
6
- company– – – –
- subsidiaries– – – –
- value of share options
lapsed/forfeited
–
–
–
–
–
(10,080)
–
–
(10,080)
Transferred to share
premium arising from
exercise of ESOS
Conversion
of ICSLS
31
Conversion
of ICULS
32
Disposal of a joint
venture company 42(c)
–
1,191––
1,191
–
2,329––
2,329
–
–
–
–
–
(6,560)
–
–
(6,560)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(222)
–
(222)
–
–
–
–
–
–
–
(69)
(69)
–
–
–
–
–
(23)
–
–
(23)
(98,527)
311
(258,286)
–
32,337
At 31 December 2011
13,813
61,899
1,148 (247,305)
P
/1 6 9
Share
Warrants
option
Note
reserve
reserve
ICSLS
Total
RM’000RM’000RM’000
RM’000
Company
31.3.2013
At 1 January 2012
6
Transferred to subsidiaries
Value of options lapsed/forfeited
Conversion of ICSLS 31
Exercise of warrants
Expiry of warrants
32,337
4,662
–
888
–
43
–
(1,358)
––
(3,211)
–
(29,126)
–
4,235
61,899
–
–
–
(61,899) –
–
–
98,898
888
43
(1,358)
(61,899)
(3,211)
(29,126)
At 31 March 2013
–
4,235
31.12.2011
At 1 January 2011
6
Transferred to subsidiaries
Value of options lapsed/forfeited
Conversion of ICSLS 31
32,337
–
–
–
–
17,281
1,191
(11,066)
(2,744)
–
62,121
–
–
–
(222)
111,739
1,191
(11,066)
(2,744)
(222)
At 31 December 2011
32,337
4,662
61,899
98,898
37 Convertible Redeemable Secured Bonds (“Convertible Bonds”)
Group and Company
Period
Year
ended
ended
31.3.2013
31.12.2011
RM’000
RM’000
Proceeds from issuance
Directly attributable issuance costs
––
110,000–
(3,529)–
106,471–
The Company issued 110.0 million zero coupon Convertible Redeemable Secured Bonds at its nominal value of RM1.00 each
share to IJM Corporation Berhad (“IJM”) for cash on 8 February 2013 (“Issue Date”) as disclosed in Note 44 (l)
The salient features of the Convertible Bond are as follows:
(i)The Convertible Bonds are secured vide a first party legal charge over 313,043,478 ordinary shares of RM0.45 each in Scomi
P
/1 7 0
37 Convertible Redeemable Secured Bonds (“Convertible Bonds”) (continued)
Energy Services Berhad held by the Company (“Charged SESB Shares”).
(ii) The Charged SESB Shares will be proportionately discharged upon redemption/conversion of the Convertible Bond (as the
case may be).
(iii)IJM has the option to convert all or any part of the Convertible Bonds into fully paid SGB Shares at any time on or before
5 February 2016.
(iv) For the purposes of conversion, the Convertible Bonds will carry a yield of 5% per annum calculated daily.
All outstanding Convertible Bonds will automatically be converted into SGB Shares upon maturity.
(v) The conversion price is at RM0.33.
(v)The Company has the option to redeem all or any part of the outstanding Convertible Bonds in cash at each anniversary
of the Issue Date, subject to the following terms :
(a)the redemption price will be the nominal value of the Convertible Bond plus 10% yield for each full year that the Convertible
Bond remain outstanding; and,
(b) consent is obtained from IJM in respect of the redemption on the 1st and 2nd anniversary from the Issue Date unless:
(i)the Group Shares have been traded at a price of not less than RM0.50 (based on daily volume weighted average market
price) for 90 days consecutively prior to the respective 1st and 2nd anniversary of the Issue Date; and
(ii)SGB has recorded profit after taxation and minority interest (consolidated basis) for the latest 2 quarters prior to the
redemption.
All Bonds redeemed by SGB shall be cancelled and cannot be resold.
P
/1 7 1
38 Provisionfor Retirement Benefits
Group
31.3.2013
31.12.2011
1.1.2011
RM’000
RM’000
RM’000
(restated)
(restated)
Statement of financial position obligations for retirement benefits
Included in:
Current liabilities
6,744 7,4674,681
– 390323
6,744 7,0774,358
6,744 7,4674,681
Charged to income statement (Note 6)
1,117 1,4022,026
Present value of funded obligations
Present value of unfunded obligations
Unrecognised actuarial (loss)/gain
–390 85
7,513 7,7214,358
(769) (644)238
Liability in the statement of financial position
6,744 7,4674,681
The amounts recognised in the income statement are as follows:
Period
Year
ended
ended
31.3.2013
31.12.2011
RM’000
RM’000
(restated)
Current service cost
Interest cost
Amortisation of actuarial gain/(loss)
Past service cost
1,3321,773
397226
(609)56
(3)(653)
Total included in staff costs
1,1171,402
P
/1 7 2
38 Provision for Retirement Benefits (continued)
The movements in the liability recognised in the statement of financial position are as follows:
Group and Company
Period
Year
ended
ended
31.3.2013
31.12.2011
RM’000
RM’000
(restated)
Charged to income statement (Note 6)
Benefits paid
Reclassification from/(to) disposal group held for sale
Currency translation differences 7,4674,681
1,1171,402
(837)(349)
–1,919
(1,003)(186)
6,7447,467
The principal actuarial assumptions used were as follows:
Group and Company
Period
Year
ended
ended
31.3.2013
31.12.2011
RM’000
RM’000
(restated)
Discount rate
Future salary increases
Normal retirement age
4% -11%
5% - 10%
45 - 60
6.5% - 7.5%
5% - 8%
55 – 60
Assumptions regarding future mortality experience are based on advice from published statistics and experience in each territory.
The most recent actuarial valuation was carried out by independent professional actuaries using the projected unit credit method.
P
/1 7 3
39 Deferred Tax
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts, determined after appropriate
offsetting, are shown in the statement of financial position:
Group
Company
31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
RM’000RM’000RM’000RM’000RM’000
RM’000
Deferred tax assets
Deferred tax liabilities:
-subject to income tax
(41,308)(46,640)(78,724)
(37,798)(42,913)(75,505)
3,5103,7273,219
–
(672)(1,674)
– ––
–
(672)(1,674)
Group
Company
endedendedended
ended
31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
(Credited)/charged to income statement (Note 8)
- property, plant and equipment
- tax losses, capital allowances and tax incentives
- provisions for other liabilitiesand charges
- ICSLS
- ICULS
- others
Transfer from/(to) equity
Discontinued operation/disposal of a subsidiary/assets held for sale
Others
(42,913)(75,505) (672)(1,674)
(71)(11,471)
––
5,61022,991
––
23––
(827)666(827)666
231 ––
2483,513
––
4,96415,733 (827)666
2,314338
2,314336
(1,122)19,820
––
–(855)
(815)–
(1,041)(2,444)
––
(37,798)(42,913)
–(672)
P
/1 7 4
39 Deferred Tax (continued)
Group
Company
31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
RM’000RM’000RM’000RM’000RM’000
RM’000
Deferred tax assets
Tax losses, capital allowances
and tax incentives
(35,560)(41,170)(85,097) (177)––
Provision for other liabilities and charges (3,541)(1,086)(1,069)
– ––
Payables
– –(61) – ––
ICSLS
– (833)(1,835)
–
(833)(1,835)
ICULS
– (4)(37) – ––
Others
(2,207)(3,547)(3,635)
– ––
Offsetting
–
–13,010 177 161161
(41,308)(46,640)(78,724)
–
(672)(1,674)
Property, plant and equipment Others
Offsetting
2,837 2,76615,451 177 161161
673961778 – ––
–
–(13,010) (177) (161)(161)
3,5103,7273,219
– ––
The amount of deductible temporary differences, unabsorbed tax losses and tax incentives (which is subject to agreement by
the tax authorities) for which no deferred tax asset is recognised in the statement of financial position is as follows:
Group
Company
31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
RM’000RM’000RM’000RM’000RM’000
RM’000
Deductible temporary differences
Unabsorbed tax losses
and tax incentives
32,47451,37057,27110,22510,042 2,674
123,438147,449
5,22637,364 37,31628,048
Deferred tax assets have not been recognised on the deductible temporary differences, unabsorbed tax losses and tax incentives
of the Company and certain companies in the Group as it is uncertain that there will be future taxable profits to utilise the
deferred tax assets.
P
/1 7 5
40 Commitments and Contingent Liabilities
Group
Company
31.3.201331.12.2011 1.1.2011 31.3.201331.12.2011 1.1.2011
RM’000RM’000RM’000RM’000RM’000
RM’000
(a) Authorised capital expenditure
not recognised in the
financial statements:
- contracted
20,75227,513 6,441
- not contracted 272,98525,39755,285
– ––
– ––
293,73752,91061,726
– ––
Analysed as follows:
- property, plant and equipment 109,88346,72540,977
- development costs 25,5913,6125,632
- others 158,263 2,57315,117
– ––
– ––
– ––
293,73752,91061,726
– ––
(b) Operating lease commitments:
Instalments payable
- not later than 1 year
- later than 1 year but not
later than 5 years
- later than 5 years
(c) Contingent liabilities:
- claims by sub-contractors
- litigation
- taxation
13,99525,38533,465
9,73011,89113,699
5972,8283,192
24,32240,10450,356
10
49 116
12
92 94
– ––
22
141 210
5,724––– ––
953,7872,776
– ––
7744,734
–
– ––
The Company has provided financial support letters to certain of its subsidiaries to enable them to meet their obligations
as and when they fall due. In addition, the Company has also confirmed its intention to provide financial support to a
subsidiary to meet its liabilities and obligations under a specific project as and when they fall due until the cumulative limit
imposed by a lender has been uplifted.
P
/1 7 6
41 Significant Related Party Transactions
(a)In addition to the related party disclosures mentioned elsewhere in the financial statements, set out below are other significant
related party transactions. The related party transactions described below were carried out under agreed terms with related parties:
Group
Company
ended
ended
ended
endedendedended
31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
Significant transactions with related parties:
Subsidiaries:
Management fees receivable
Interest income
–
–
Joint ventures:
Management fees receivable from Scomi NTC Sdn Bhd
–125
Related parties:
Share registration fee paid to Symphony
Airline ticketing services provided by Lintas
Advances to SEB Advances to SOL
Receivables written off
–
–
–3,840
4,9016,008
–
–
273224174153
3,2192,606 4517
–
–
24,000
–
–
–
11,572
–
––
23,8927,807
Symphony Share Registers Sdn Bhd (“Symphony”) and Lintas Travel & Tours Sdn Bhd (“Lintas”) are companies connected to
certain Directors;
The details of interest charged on advances provided to subsidiaries are disclosed in Note 23.
The intercompany receivables written off are in relation to advances to a subsidiary, Scomi Ecosolve Ltd, which became inactive.
Information regarding outstanding balances arising from related party transactions as at 31 March 2013 is disclosed in Note
23 and Note 27.
(b) Compensation of key management personnel
Key management personnel comprise Directors and senior vice presidents and above of the Company, having authority
and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly.
P
/1 7 7
The remuneration of Directors and members of key management during the financial period were as follows:
1.
Group
Company
ended
ended
ended
endedendedended
31.3.2013
31.12.201131.3.2013
31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
Fees
Salaries and short-term employee benefits
18,20011,882 1,551656
1,499879235149
Other long-term benefits
–26 –26
Share-based payments
925633 –
–
20,62413,420 1,786831
Directors of the Group and Company and other members of key Management have been granted the following number of
options under the Employee Share Options Scheme (“ESOS”):
Group and Company
Period
Year
ended
endedendedended
31.3.2013
31.12.2011
’000
’000
35,76624,606
Granted
Forfeited
Exercised
7,00016,000
–(4,480)
(14,508)(360)
28,25835,766
42 Significant Disposal of Subsidiaries, Business and Joint Venture Company
(a) Disposal of subsidiaries
Financial period ended 31 March 2013
(i) Disposal of Scomi Oiltools Kish Limited (“SOKL”)
On 23 April 2012, a subsidiary completed the disposal of its 99.6% equity interest in SOKL to a third party for a total sale
consideration of RM51.6 million, which is payable in three cash instalments.
P
/1 7 8
42 Significant Disposal of Subsidiaries, Business and Joint Venture Company (continued)
Financial period ended 31 March 2013 (continued)
(i) Disposal of Scomi Oiltools Kish Limited (“SOKL”) (continued)
Details of the assets, liabilities and net cash inflow arising from the disposal are as follows:
Group
RM’000
Intangible assets
Inventories
Cash and cash equivalents
Other reserves
Share of net assets of non controlling interest
2,395
16,312
5,668
26,561
12,398
(10,043)
507
(5,069)
48,729
(6,959)
Net assets disposed
Loss on disposal
Total consideration
Effects of discounting
41,770
9,969
51,739
Less: Receivables
Cash and cash equivalent
(47,576)
(12,398)
Net cash outflow
(8,235)
(ii) Disposal of Scomi Oiltools AS (“SOAS”) and Norwegian branch of Scomi Oiltools Europe Limited (“SOEL”)
On 2 July 2012, SOEL completed the disposal of its wholly-owned subsidiary SOAS to Knud Holm Prosjekt AS for a
total sale consideration of NOK0.1 million (approximately RM0.04 million). As part of the same agreement, SOEL
entered into an agreement with SOAS to dispose the assets and liabilities in the Norwegian Branch of SOEL for a
total sale consideration of RM10.2 million (NOK20.0 million).
Details of the assets, liabilities and net cash inflow arising from the disposal are as follows:
Group
RM’000
Intangible assets
Inventories
9,988
10,291
230
Total assets disposed
Share of non controlling interest
Loss on disposal attributable to the Group
Proceeds from disposal/ net cash inflow
20,509
(2,456)
(7,812)
10,241
P
(iii)Disposal of Augean North Sea Services Ltd (“ANSSL”, formerly known as Woodside North Sea Services Ltd)
On 31 May 2012, SOEL transferred its business to ANSSL for a purchase consideration of GBP2.7 million (RM13.3 million),
satisfied via 100 ordinary shares of ANSSL.
On 3 September 2012, SOEL completed the disposal of 70 ordinary shares of ANSSL (representing a 70% equity interest)
to Augean plc for a total sale consideration of GBP2.0 million (approximately RM10.3 million). The transaction was
completed on 3 September 2012.
Details of the assets, liabilities and net cash inflow arising from the disposal of business are as follows:
Group
RM’000
Intangible assets
Inventories
Borrowings
16,879
19,387
98
2,387
(6,013)
(4,462)
Net assets disposed
Loss on disposal 28,276
(14,191)
Proceeds from disposal Fair value of 30% interest in joint venture retained (ANSSL)
14,085
(3,794)
Net cash inflow on disposal 10,291
(b) Disposal of business
Financial period ended 31 March 2013
(iv)Disposal of Scomi Nigeria Pte Ltd (“SNPL”) and 2% equity interest in Titan Nigeria Ltd (“TTNL”)
SNPL had completed the acquisition of the remaining 49.9% interest in TTNL which it did not hold from Enercon Nigeria
Limited for a purchase consideration of USD3.5 million (approximately RM10.7 million) on 30 April 2012.
Upon completion of the above acquisition, SNPL is a wholly owned subsidiary of SGB which has two subsidiaries,
namely Oiltools Africa Ltd (“OAL”), a 98% owned subsidiary of SNPL, with balance 2% held by SGB and Titan Turbulars
Nigeria Ltd (“TTNL”) which was disposed for a cash consideration of USD39.7 million (approximately RM126.5 million),
which consists of a cash payment of USD36.7 million (approximately RM116.0 million) and a retention sum of USD3.0
million (approximately RM9.2 million) which is receivable in two years from the date of the completion.
The transaction was completed on 17 October 2012.
/1 7 9
P
/1 8 0
42 Significant Disposal of Subsidiaries, Business and Joint Venture Company (continued)
(iv)Disposal of Scomi Nigeria Pte Ltd (“SNPL”) and 2% equity interest in Titan Nigeria Ltd (“TTNL”) (continued)
Details of the assets, liabilities and net cash inflow arising from the disposal of business are as follows:
Group
RM’000
Intangible assets
Inventories
Provision for taxation
Exchange fluctuation reserve
Net assets disposed
Incidental expenses
Cost to acquire TTNL
Net gain on disposal 18,677
9,900
16,307
18,777
2,256
(10,626)
(40)
687
Proceeds from disposal Repayment of existing borrowings Retention sum 122,877
(29,122)
(9,155)
Net cash inflow on disposal 84,600
55,938
6,019
10,840
50,080
(c) Disposal of a joint venture company
Financial year ended 31 December 2011
(v) Disposal of Scomi NTC Sdn Bhd
On 2 February 2011, Scomi Energy Sdn Bhd (a wholly-owned subsidiary of the Company) completed the disposal of its
70,000 ordinary shares of RM1.00 each (representing 70% interest in the ordinary shares) and 612 irredeemable non-cumulative
convertible preference shares of RM1.00 each (representing 51% interest in the preference shares) in Scomi NTC Sdn Bhd to
Cameron Solutions Inc for a cash consideration of USD3.0 million.
Details of the share of net assets, net cash inflow and gains arising from the disposal of the joint venture company are as follows:
Group
2011
RM’000
Net cash inflow
Share of net assets
9,096
(4,548)
Gain on disposal
4,548
P
/1 8 1
The impact of the disposal to the Group’s statement of comprehensive income are as follows:
1.
Year
ended
31.12.2011
RM’000
Share of results in joint ventures
(115)
43 Segment Information
Management has determined the operating segments based on the reports reviewed by the Chief Operating Decision Maker
(“CODM”) that are used for allocating resources and assessing performance of the operating segments.
The CODM considers the business from based on products and services rendered by industry. The following reportable operating
segments have identified:
(i) Oilfield services
-provision of drilling fluids and related engineering services to the upstream oil and gas industry;
- provision of drilling waste management services and equipment to the upstream oil and gas industry;
- supply of production chemicals to the upstream oil and gas industry;
-
production enhancement
(ii) Transport solutions
- urban transportation solutions provider through design and manufacture of monorails, buses and
a wide range of special purpose vehicles such as tankers, trucks and airport ground support
equipment; and
-
rail solutions systems provider
(iii) Marine services
- provision of marine vessel transportation service and leasing of marine vessels.
Inter-segment revenue in the current and prior financial period comprises management services and dividend. During the
financial period, the production enhancement segment was merged with the oilfield services segment due to a change in
reports reviewed by the CODM following the completion of the restructuring disclosed in Note 44. To ensure a consistent comparison
with the new reporting structure, the prior financial period segmental information has been restated.
Segment assets and segment liabilities are not disclosed as it is not presented to the CODM.
1. 15 month period ended 31.3.2013
Inter
External
segment
Total
RM’000
RM’000
RM’000
Revenue
Revenue from continuing operations
Oilfield services
Transport solutions
Marine services
Reconciliation
Inter-segment revenue
1,153,394
–1,153,394
450,271
–450,271
318,299
–318,299
404
5409
– (5)(5)
1,922,368
–1,922,368
P
/1 8 2
43 Segment Information (continued)
1.
15 month period ended 31.3.2013
Inter
External
segment
Total
RM’000
RM’000
RM’000
(restated)
(restated)
(restated)
Revenue from discontinued operation
Oilfield services
153,936
2,076,304
Total revenue
–153,936
–2,076,304
1. 12 month year ended 31.12.2011
Inter
External
segment
Total
RM’000
RM’000
RM’000
(restated)
(restated)
(restated)
Revenue from continuing operations
Oilfield services
Transport solutions
Marine services
Reconciliation
Inter-segment revenue
Revenue from discontinued operation
Oilfield services
Total revenue
776,582
–
776,582
246,797
–
246,797
377,046
–
377,046
2,142 33,36935,511
–
(33,369)
(33,369)
1,402,567
– 1,402,567
460,828
–
460,828
1,863,395
–
1,863,395
1. Continuing operations
Oilfield Transport
MarineDiscontinued
Services
Solutions
Services
Total
operationsReconciliationTotal
RM’000RM’000RM’000RM’000RM’000 RM’000
RM’000
Period ended 31.3.2013
Results
Segment results
133,941 (9,367)35,416159,990(48,931) (17,735)
93,324
Gain on disposal
––––
21,118 –
21,118
Finance costs
(37,969)(11,714) (3,387)(53,070)(31,300) (76,608)
(160,978)
Share of results of associates
– –133133 –
–
133
–
–6,5686,568
–
–
6,568
Loss before taxation
95,972(21,081)38,730113,621(59,113) (94,343)
(39,835)
Taxation expense
(29,614)
Loss for the financial period
(69,449)
P
/1 8 3
1.
Oilfield Transport
MarineDiscontinued
Services
Solutions
Services
Total
operationsReconciliationTotal
RM’000RM’000RM’000RM’000RM’000 RM’000
RM’000
Year ended 31.12.2011
Results
Segment results82,738(68,425)
(111,087)
(96,774)(66,661) 49,176
(114,259)
Loss on disposal
––––
(103,495) –
(103,495)
Finance costs (net)
(49,517)
(6,004)
(1,821)
(57,342)
–
(5,464)
(62,806)
Share of results
of associates
––
(2,978)
(2,978)– –
(2,978)
Share of results of
joint ventures
(439)
–
4,193
3,754
–
–
3,754
Profit/(loss) before
taxation
32,782
(74,429)
(111,693)
(153,340)
(170,156)
43,712
(279,784)
Taxation expense
(77,377)
Profit/(loss) for the financial year
(357,161)
44 Significant Events During the financial period
(a) Disposal of Scomi Oilfield Limited by the Company (“SGB”) to SESB
On 12 March 2013, the Company completed the disposal of its 76.08% equity interest in Scomi Oilfield Limited (“SOL”) to
Scomi Energy Services Bhd (“SESB”)
Prior to the above disposal, the Group undertook an internal restructuring of the SOL business operations as follows:
•
Stage 1
Disposal by Scomi Oiltools Europe Limited (“SOEL”) , a wholly-owned subsidiary of Scomi Oiltools Bermuda Limited
(“SOBL”), which in turn is a wholly-owned subsidiary of SOL, of its 100% equity interest in Scomi Oiltools (RUS) Limited
Liability Company (“SORL”) to Scomi Oiltools (S) Pte Ltd (“SOSPL”), a wholly-owned subsidiary of SOBL, for a disposal
consideration of USD2.9 million (approximately RM9.3 million) (“ SORL Disposal”).
Stage 2a
•
Disposal by SOSPL of the following entities to SOBL:
(i)99.97% equity interest in Scomi Oiltools de Mexico S de RL de CV (“SOMS”) for a disposal consideration of RM3
(“SOMS Disposal”); and
(ii)99.97% equity interest in Oilfield Services de Mexico S de RL de CV (“OSMS”) for a disposal consideration of RM3
(“OSMS Disposal”)
P
/1 8 4
44 Significant Events During the financial period (continued)
•
Stage 2a (continued)
(collectively referred to as “SOSPL Group Disposal”)
The transaction was completed on 24 July 2012.
•
Stage 2b
After the completion of the SOSPL Group Disposal, disposal by SOBL of its 100% equity interest in SOSPL to SOL for a
disposal consideration of RM2.1 million (“SOSPL Disposal”);
Stage 3
•
After the completion of the SORL Disposal and the SOSPL Disposal, disposal by SOL of 76.08%, 16.71% and 7.21% equity
interest in SOBL to SGB, Standard Chartered Private Equity Limited (“SCPEL”) and Fuji Investment I (“FII”) respectively for a
total disposal consideration of RM327.9 million (“SOBL Disposal”);
The transaction was completed on 8 November 2012.
Stage 4
•
After the completion of the SOBL Disposal, disposal by SOBL to SOL of the following:
(i) 100% equity interest in Scomi Oiltools Sdn Bhd (“SOSB”) for a disposal consideration of RM92.1 million (“SOSB Disposal”);
(ii)51% equity interest in Scomi Oiltools Oman LLC (“SOOL”) for a disposal consideration of RM6.1 million (USD1.9 million)
(“SOOL Disposal”);
(iii) 100% equity interest in Scomi Oiltools Pty Ltd (“SOPL”) for a disposal consideration of RM28.2 million (“SOPL Disposal”);
(iv)99.95% equity interest in Scomi Oiltools Egypt SAE (“SOES”) for a disposal consideration of RM11.6 million (“SOES Disposal”);
(v)99.99% equity interest in Scomi Oiltools (Thailand) Ltd (“SOT”) for a disposal consideration of RM22.6 million (“SOT Disposal”);
(vi) 100% equity interest in KMC Oiltools BV (“KOB”) for a disposal consideration of RM5.8 million (“KOB Disposal”);
(vii)50% equity interest in Vibratherm Limited (“Vibratherm”) for a disposal consideration of RM3 (“Vibratherm Disposal”);
(viii)100% equity interest in Scomi Oiltools (Cayman) Limited (“SOCL”) for a disposal consideration of RM23.6 million (“SOCL Disposal”);
(ix) 100% equity interest in Scomi Oiltools Ltd (“SOLC”) for a disposal consideration of RM 37.4 million (“SOLC Disposal”);
(x) 100% equity interest in Scomi Oiltools (Africa) Limited (“SOAL”) for a disposal consideration of RM89.1 million (“SOAL
Disposal”); and
P
(xi) 100% equity interest in KMCOB Capital Berhad (“KMCOB”) for a disposal consideration of RM3 (“KMCOB Disposal”).
(collectively referred to as “SOBL Group Disposal”)
(The SORL Disposal, SOSPL Group Disposal, SOSPL Disposal, SOBL Disposal and SOBL Group Disposal are collectively referred
to as “SOL Reorganisation”).
After the SOL Reorganisation, the Company has disposed of its 76.1% issued and paid-up ordinary and preference shares of
SOL, to SESB for RM776.03 million. The sale consideration has been settled via issuance of 1,223,949,234 new SESB Shares at
RM0.47 per share and novation of an amount owing by SGB to SOL amounting to RM264.3 million (“SOL Disposal”).
Simultaneously, SCPEL and FII has disposed of their respective 16.71% and 7.21% issued and paid-up ordinary and preference
shares in SOL (“SOL Disposals by SCPEL and FII”) to SESB. As a result, the extinguishment of the option granted in prior years
over the shares in SOL owned by SCPEL and FII has occurred upon the SOL Disposals by SCPEL and FII as disclosed in Note 27.
The transaction was completed on 12 March 2013.
Upon completion of the above disposals, the Group’s effective interest in SOLE decreased from 76.1% to 65.6% and simultaneously,
SCPEL and FII has disposed of their respective 16.71% and 7.21% issued and paid-up ordinary and preference shares in SOL
(“SOL Disposals by SCPEL and FII”) to SESB. The financial impact of the transaction is summarised in Note 45.
(b) Acquisition of 60% interest in Scomi Sosma Sdn Bhd (“SSSB”) and disposal of SSSB to SESB
Scomi Chemicals Sdn Bhd (“SChemicals”) completed the acquisition of 60% equity interest in SSSB from Ombak Elegan Sdn
Bhd for a purchase consideration of RM3.9 million. Thereafter, SSSB was disposed to the Company for a purchase consideration
of RM5.6 million. Both transactions were completed on 26 February 2013.
On 8 March 2013, SChemicals completed the disposal of its wholly-owned subsidiary, SSSB to SESB for a sale consideration of
RM6.7 million and the assumption of RM12.2 million owing by SSSB to the Company (“Amount Owing”) resulting in Group’s
effective interest reducing to 65.65%.
The sale consideration and SSSB Payable were satisfied by way of an assignment to the Company of the SESB rights and
benefits of an inter-company loan owing by PT. Rig Tenders Indonesia, Tbk. (“PTRT”) to Scomi Marine Services Pte Ltd
(“SMS”), both subsidiaries of SESB, amounting to USD6.0 million (approximately RM18.9 million). The financial impact of the
transaction is summarised in Note 45.
(c) Disposal of Scomi KMC Sdn Bhd (“SKMC”) to SESB
On 12 March 2013, the Company completed the disposal of its 48% equity interest in SKMC to SESB for a cash consideration
of RM0.7 million resulting in Group’s effective interest in reducing to 34.1%. The financial impact of the transaction is summarised in Note 45.
(d) Termination of SESB Employees’ Share option Scheme
On 26 June 2012, SESB obtained the approval from its shareholders to terminate its Employee Share Option Scheme earlier
than the expiry date of 17 October 2015. There is no significant financial impact to the equity of the Group.
(e) SESB Capital Repayment and Reduction
On 29 August 2012, SESB completed its capital reduction and repayment of the par value of the existing ordinary shares
/1 8 5
P
/1 8 6
44 Significant Events During the financial period (continued)
(e) SESB Capital Repayment and Reduction (continued)
of RM1.00 each to RM0.45 each by cancelling RM0.55 each share pursuant to Section 64 of the Companies Act, 1965. The
capital repayment of RM135.0 million to the shareholders of SESB was completed on 29 August 2012. The capital repayment
resulted in a net cash inflow to the Company of RM57.9 million.
(f)Disposal of Marine Logistics Companies by Scomi Marine Services Pte Ltd (“SMS”) to PT Rig Tenders Indonesia,
Tbk (“PTRT”)
On 12 April 2012, SMS ,a wholly-owned subsidiary of Scomi Energy Services Bhd (“SESB”), completed the disposal of its
entire equity interest in the following companies:
(i) CH Logistics Pte Ltd (“CHL”) and its wholly-owned subsidiary, Sea Master Pte. Ltd. (“Sea Master”);
(ii) CH Ship Management Pte Ltd (“CHSM”); and
(iii) Grundtvig Marine Pte Ltd (“GMPL”) and its 95% owned subsidiary, PT Batuah Abadi Lines (“PBAL”)
(all collectively referred to as “Marine Logistics Companies”) to its 80.5%-owned subsidiary, PTRT, for a total consideration
of USD57.0 million (approximately RM179.9 million), which was settled via an issuance of a vendor note to SMS.
Upon completion of the above disposal by SMS, the Group effective interest in the Marine Logistics Companies has
decreased and reduced the Group’s share of net assets in the Marine Logistics Companies. The financial impact of the
transaction is summarised in Note 45.
(g) Acquisition of 49.9% equity interest in Titan Tubulars Nigeria Ltd (“TTNL”)
As disclosed in Note 42(a)(iv), SNPL had completed the acquisition of the remaining 49.9% interest in TTNL which it did not hold
from Enercon Nigeria Limited for a purchase consideration of USD3.5 million (approximately RM10.7 million) on 30 April 2012.
Upon completion of the above acquisition, the Group’s effective interest in TTNL increased from 51.1% to 100%. The effect
of the increase in interest to the Group’s equity was not material.
(h) Acquisition of 60% interest in Scomi Sosma Sdn Bhd (“SSSB”)
As disclosed in Note 44(b), Scomi Chemicals Sdn Bhd (“SChemicals”) completed the acquisition of 60% equity interest in
SSSB from Ombak Elegan Sdn Bhd for a purchase consideration of RM3.9 million on 26 February 2013.
Upon completion of the above acquisition, the Group’s effective interest in SSSB increased from 40.0% to 100.0% and increased
the Group’s share of equity in SSSB by RM1.0 million.
(i) Acquisition of Scomi Oiltools Bermuda Limited (“SOBL”)
The Company completed the acquisition of 16.71% and 7.21% equity interest in SOBL from SCPEL and FII respectively on
12 March 2013, for a purchase consideration consisting of :
(i) cash consideration of USD6.2 million (approximately RM19.4 million)to be settled in June 2014; and,
(ii) the assumption of SCPEL and FII’s debt totalling USD4.8 million (approximately RM15.2 million) owing to SOBL.
P
Upon completion of the above acquisition, the Group’s effective interest in SOBL increased from 76.1% to 100.0%. The financial
impact of the transaction is summarised in Note 45.
(j) Disposal of SOL, SSSB and SKMC to SESB
As disclosed in Note 44(a) to (c), the Company completed the disposal of its equity interests in SOL, SSSB and SKMC to SESB
on 12 March 2013.
Simultaneously, SCPEL and FII has disposed of their respective 16.71% and 7.21% issued and paid-up ordinary and preference
shares in SOL (“SOL Disposals by SCPEL and FII”) to SESB.
Upon completion of the above disposals, the Group’s effective interest in SOL decreased from 76.1.0% to 65.6% and increased
the Group’s share of equity in the SOL.
(k) Private placement of SGB Shares
On 24 September 2012, SGB entered into an agreement with IJM Corporation Berhad (“IJM”) for the issuance of 119,109,500
new ordinary shares of RM0.10 each in SGB representing approximately 10% of the issued and paid-up share capital of the
SGB (net of treasury shares), by way of private placement for a total cash proceeds of RM39.3 million less expenses amounting to
RM 0.4 million.
The new SGB Shares were listed on the Main Market of Bursa Malaysia Securities Berhad (“Bursa Securities”) on 3 October 2012.
(l) Bonds issue to IJM
On 24 September 2012, SGB entered into an agreement with IJM for the Bonds Issue, as disclosed in Note 37.
45 Transactions with Non-Controlling Interests
The effects of transactions with non-controlling interests on the equity attributable to owners of the parent for the period
31 March 2013 is as follows:
Group
31.3.2013
RM’000
Changes in equity attributable to shareholders of the company arising from:
- Accretion of additional interests in a subsidiary
- Dilution of interests in a subsidiary without loss of control
88,207
(110,669)
Net effect in Group’s equity
(22,462)
46 Significant Events Subsequent to the date of the Statement of Financial Position
Refinancing of Sukuk Murabahah
As set out in the Sukuk Murabahah Trust Deed dated 7 December 2011, the Group is permitted to undertake the SOL Assets
Disposals (herein defined as collectively the US/Mexico Asset Disposal and West Africa Disposal) subject to the terms and conditions
/1 8 7
P
/1 8 8
46 Significant Events Subsequent to the date of the Statement of Financial Position (continued)
Refinancing of Sukuk Murabahah (continued)
set out and in accordance to Clause 11(c) in, the SOL Asset Disposal shall be completed on or before 31 December 2012.
The US/Mexico Asset Disposal was completed in November 2011.
In February 2012, the Company announced that SOL Group has obtained an indulgence to complete or cause to be completed
the West Africa Disposal (herein defined as the disposal of SOL assets located in Nigeria and Congo) on or before 31 December 2013.
Negotiations with certain financial institutions are currently ongoing to obtain refinancing for the early redemption of the remaining
Sukuk Murabahah for the portion due in 2018 amounting to RM88.7 million at par instead of raising funds via the West Africa Disposal.
Subsequent to the end of financial period, the Sukukholders on 28 June 2013 approved the following in relation to the refinancing: (a) refinancing exercise to be undertaken by the Issuer (“Refinancing”) as a plan and source of funding for the early redemption of
the remaining Sukuk at par (being the full nominal value) together with the accrued profit thereon (if any) on such date to be notified
by the Issuer to the Facility Agent, at least five (5) Business Days prior to the proposed date of redemption of the sukuk; and
(b)KMCOB Capital Berhad pursuant to the refinancing, to redeem the remaining outstanding Series under the Sukuk Murabahah
(“Remaining Outstanding Sukuk”), prior to their respective Maturity Date, at per (being the full nominal value) together with
the accrued profit thereon (if any) on such date to be notified by the Issuer to the Facility Agent, at least five (5) Business Days
prior to the proposed date of redemption of the Remaining Outstanding Sukuk,
However, the early redemption exercise is subject to the completion of the refinancing being no later than 13 December 2013.
The Directors are of the opinion that the refinancing will be completed by this date.
Joint venture between Freight Management Holdings Bhd (“FMHB”) and Scomi Energy Services Bhd (“SESB”)
On 3 June 2013, the Company entered into a joint venture agreement has entered into with FMHB for the purpose of: (i) Setting up a joint venture company (Vessel Owner) to jointly acquire and own marine vessels.
(ii) Setting up another joint venture company (Vessel Operator) to jointly operate marine vessels.
One of the joint venture companies, Transenergy Shipping Pte Ltd, has been incorporated as at the date of the financial statements.
The Company will own a 50% equity interest in each entity.
47 Financial Risk Management
The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of
the Group’s businesses whilst managing its interest rate, foreign exchange, liquidity and credit risks. The Group operates within
clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transactions.
(a) Financial risk factors
(i) Market risk
Foreign exchange risk
The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other
P
than the respective functional currencies of Group entities. The currencies giving rise to this risk are primarily United States
Dollar (USD), Indian Rupee (INR) and Brazilian Real (BRL).
The Group maintains a natural hedge, whenever possible, by borrowing in currencies or entering into CCIRS that match the
future revenue stream to be generated from its investments.
The Group is exposed to the risk of significant forex fluctuation due to hyperinflationary economy in Venezuela.
Currency profile of monetary financial assets and financial liabilities are as follows:
Functional curriencies
Group Ringgit
USD
Indian Brazillian
31.3.2013 Malaysia
Dollar
Rupee
Real
Others
Total
RM’000RM’000RM’000RM’000RM’000
RM’000
Receivables, deposits and prepayments
385,535
-Ringgit Malaysia 385,535 ––––
-US Dollar
92,879 182,809 –
–
26,956 302,644
-Indian Rupee 204,939–
92,204 ––
297,143
-Brazillian Real 24,694 –
–
17,880 –
42,574
-Others
20,173 22,117 –
–
6,826 49,116
Total
Short-term deposits, cash
and bank balances
-Ringgit Malaysia
-US Dollar
-Indian Rupee
-Others
728,220
204,92692,20417,88033,782
1,077,012
68,998
7,134–––
76,132
89,138
22,823––
1,570
113,531
––
769––
769
9,04511,152
–36,807 1,895
58,899
Total
167,18141,109
Payables
-Ringgit Malaysia
-US Dollar
-Indian Rupee
-Others
168,767
3,910–––
172,677
101,99090,450
–
–12,460 204,900
––
21,044
568–
21,612
35,741
40,238––
6,033
82,012
Total
306,498
134,598
76936,807 3,465
249,331
21,044 568
18,493 481,201
Group
Ringgit
USD
Indian
31.3.2013 Malaysia
Dollar
Rupee
Others
Total
RM’000RM’000RM’000RM’000
RM’000
Borrowings
-Ringgit Malaysia
-US Dollar
-Indian Rupee
-Others
421,151
307,501––
728,652
94,07431,679
–50,630
176,383
––
60,574–
60,574
–9,935
–
–9,935
515,225
349,11560,57450,630
975,544
/1 8 9
P
/1 9 0
47 Financial Risk Management (continued)
Company
Ringgit
USD
31.3.2013
Malaysia
Dollar
Total
RM’000
RM’000
RM’000
38,233 9,15447,387
Short term deposits, cash and bank balances
21,531
92822,459
Payables
(46,244) (19,037)(65,281)
Borrowings
(1,870)
–(1,870)
11,650 (8,955)2,695
Group Ringgit
USD
Indian
31.12.2011 Malaysia
Dollar
Rupee
Others
Total
RM’000RM’000RM’000RM’000
RM’000
-Ringgit Malaysia
-US Dollar
-Indian Rupee
-Others
271,750–––
271,750
87,463 355,202
– 15,738458,403
157,314–
98,972–
256,286
53,75819,956
–12,906
86,620
Total
570,285
375,15898,97228,644
1,073,059
-Ringgit Malaysia
-US Dollar
-Indian Rupee
-Others
86,871
2,017––
88,888
78,673 24,243
–
3,863106,779
––
1,260–
1,260
8,16414,450
–16,640
39,254
Total
173,70840,710 1,26020,503 236,181
Payables
-Ringgit Malaysia
-US Dollar
-Indian Rupee
-Others
227,926
2,207 125,966
–356,099
103,654 126,630
1,163 14,851246,298
––
5,131–
5,131
––
167–
167
Total
331,580 Borrowings
-Ringgit Malaysia
-US Dollar
-Others
445,113
341,606––
786,719
132,00677,388
–19,362
228,756
––
63,212–
63,212
577,119
418,99463,21219,362
1,078,687
128,837
132,427
14,851
607,695
P
/1 9 1
Company
Ringgit
USD
31.12.2011
Malaysia
Dollar
Total
RM’000
RM’000
RM’000
38,601 28,40667,007
12,986
9613,082
Payables
(11,676)
(49)(11,725)
Borrowings
(204,036) (20,510)(224,546)
(164,125)
7,943(156,182)
The following table demonstrates the sensitivity of the Group’s income statement before tax to a reasonably possible
change in the USD and Indian Rupee exchange rates with all other variables held constant. The sensitivity analysis includes
outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 3% change
in the exchange rate.
(Loss)/profit before tax
Group
Company
RM’000
RM’000
USD/RM
+3% (7,130)(269)
-3% 7130269
INR/RM
+3% 341–
-3% (341)–
(Loss)/profit before tax
Group
Company
RM’000
RM’000
USD/RM
+3%
-3%
INR/RM
+3%
-3%
(747) 747
(451)
451
(2,416) –
2,416
–
Interest rate risk
The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The
Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. The investments
in financial assets are mainly short term in nature and have been placed mostly in fixed deposits and occasionally, in short
term commercial paper and investment funds.
The Group manages its interest rate exposure by maintaining a mix of fixed 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
P
/1 9 2
Interest rate risk (continued)
cheaper funding in a low interest rate environment and achieve a certain level of protection against rate hikes. The Group
also uses hedging instruments such as interest rate swaps to minimise its exposure to interest rate volatility.
The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments, based on carrying
amounts as at the end of the reporting period was:
Group
Company
31.3.2013
RM’000
RM’000
Fixed liabilities
Fixed rate instruments
325,6221,870
Floating rate instruments
649,921–
975,5431,870
Group
Company
31.12.2011
RM’000
RM’000
Fixed liabilities
Fixed rate instruments
555,151
201,940
Floating rate instruments
523,537
22,606
1,078,688
224,546
The disclosures above are made before considering the effects of hedging.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables
held constant, of the Group and Company’s income statement before taxation. The sensitivity analysis is determined based
on the impact on a 1% change in intent on floating rate financial instruments at the statement of financial position date.
Increase/
Effect on
decrease in
(loss)/profit
basis points
before tax
RM’000
RM’000
Group
+1%
(6,499) -1%6,499
Company
+1%(18)
-1%
18
P
Increase/
Effect on
decrease in
(loss)/profit
basis points
before tax
RM’000
RM’000
Group
+1%
-1%
(5,552)
5,552
Company
+1%
-1%
(215)
215
(ii) Credit risk
Credit risk or the risk of counterparties defaulting, are controlled by the application of credit approvals, limits and monitoring
procedures. Credit risks are minimised and monitored by limiting the Group’s associations to business partners with high
creditworthiness. The Group’s exposure to credit risk arises principally from its receivables from customers. The Company’s
exposure to credit risk arises principally from loans and advances to subsidiaries and financial guarantees given. The Group
considers the risk of the debtor defaulting in payments to be unlikely in view of the counterparty’s financial strength.
(I)Trade receivables
As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by
the carrying amounts in the statement of financial position. Trade receivables are monitored on an ongoing basis via
Group’s management reporting procedures.
The credit quality of trade receivables that were neither past due nor impaired as at date of the statement of financial
position, can be assessed by reference to historical information relating to counterparty default rates:
31.3.2013
Group
RM’000
Neither past due nor impaired:
Customer with no defaults in the past
Customer with some defaults in the past (all defaults were fully recovered)
Past due but not impaired:
1 to 30 days
31 to 60 days
61 to 90 days
91 to 120 days
More than 121 days
212,886
6,934
72,571
39,578
13,725
11,294
21,114
378,102
/1 9 3
P
/1 9 4
(I)Trade receivables (continued)
31.12.2011
Group
RM’000
Neither past due nor impaired:
Customer with no defaults in the past
Customer with some defaults in the past (all defaults were fully recovered)
Past due but not impaired:
1 to 30 days
31 to 60 days
61 to 90 days
91 to 120 days
More than 121 days
300,213
–
576,593
31.3.2013
Group
RM’000
37,769
(37,769)
Gross amount
102,440
44,870
41,449
26,820
60,801
–
At beginning of financial period
45,365
Allowance made
Allowance utilised
Recovery of debts
Transfer from/(to) assets held for sale
1,741
4,101
(583)
(3,365)
(9,490)
At end of financial period
37,769
31.12.2011
Gross amount
Group
RM’000
45,365
(45,365)
–
At beginning of financial period
33,465
Allowance made
Allowance utilised
Recovery of debts
(1,704)
21,715
(5,098)
(3,013)
At end of financial period
45,365 P
/1 9 5
There were no financial assets that would otherwise be past due or impaired whose terms have been renegotiated.
(II) Intercompany balances
The Company provided unsecured loans and advances to subsidiaries. The Company monitors the results of the
subsidiaries regularly.
Group Period
Year
ended
endedendedended
31.3.2013
31.12.2011
RM’000
RM’000
16,95717,404
Recovery of debt
(4,818)(447)
12,13916,957
As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the
statement of financial position and there was no indication that the loans and advances to the subsidiaries are not recoverable.
(III)Other receivables
Group Period
Year
ended
endedendedended
31.3.2013
31.12.2011
RM’000
RM’000
Allowance made
Recovery of debt
(iii)Liquidity risk
12,513–
–12,513
(3,810)–
8,703
12,513
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
exposure to liquidity risk arises principally from its various payables, loans and borrowings.
The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that
refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains
sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group
strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the
Group raises committed funding from both capital markets and financial institutions and balances its portfolio with
some short term funding so as to achieve overall cost effectiveness.
The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at 31 March 2013
based on undiscounted contractual payments:
P
/1 9 6
(iii)Liquidity risk (continued)
Between
Between
Within
1 and 2
2 and 5
Over
1 year
years
years
5 years
RM’000RM’000RM’000
RM’000
Group
31.3.2013
Payables
Borrowings
410,97120,230
–
–
675,452 48,673 147,206104,213
Between
Between
Within
1 and 2
2 and 5
Over
1 year
years
years
5 years
RM’000RM’000RM’000
RM’000
Company
31.3.2013
Payables
Amounts due to subsidiaries
Borrowings
5,65719,037
–
–
59,624––
–
577516777 –
Between
Between
Within
1 and 2
2 and 5
Over
1 year
years
years
5 years
RM’000RM’000RM’000
RM’000
Group
31.12.2011
Payables
Borrowings
602,066
757,821
5,629
48,673
–
–
146,460 125,734
Between
Between
Within
1 and 2
2 and 5
Over
1 year
years
years
5 years
RM’000RM’000RM’000
RM’000
Company
31.12.2011
Payables
Amounts due to subsidiaries
Borrowings
11,568
157
222,305
–
–
576
–
–
1,432
–
–
233
P
/1 9 7
Financial guarantees
The Company provides financial guarantee to banks in respect of banking facilities granted to certain subsidiaries, with a
utilised amount of RM93.2 million as at 31 March 2013.
The Company monitors on an ongoing basis, the results of the subsidiaries and repayments made by the subsidiaries.
As at the end of the reporting period, there was no indication that any subsidiary would default on repayment, which could
lead to the amount guaranteed above being recalled.
(b)
Capital risk management
The Group’s objectives when managing capital, which is defined as total equity, are to safeguard the Group’s ability to continue
as a going concern in order to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may issue new shares or adjust the amount of dividends paid
to shareholders.
The gearing ratios are as follows:
Group
As at
As at
31.3.2013
31.12.2011
RM’000
RM’000
Total borrowings of SGB
975,5441,078,688
Total equity and reserves attributable to the owners of SGB
598,644440,259
Gearing ratio (times)
1.632.45
The Group are in compliance with all externally imposed capital requirements for the financial period/year ended 31 March
2013 and 31 December 2011 except for breaches of loan covenants as disclosed in Note 28. The breaches do not affect the
Group’s overall strategy for capital risk management. Details of significant financial covenant ratios are as follows:
Scomi Oilfield Limited (“SOL”)
The Group’s subsidiary, SOL is required by the bondholders of the Sukuk Murabahah to maintain financial covenants such
as Net Debt to Equity Ratio and Annual Debt Service Cover Ratio, to be tested at every reporting period until the Sukuk
Murabahah is fully repaid in year 2018.
Other than as disclosed in Note 28. SOL met all required financial covenants.
PT Rig Tenders Indonesia TBK (“PTRT”)
The Group’s subsidiary, PTRT is required under its loan to observe the financial covenants, to be assessed at every reporting
period, including Debt Service Coverage Ratio, Ratio of Total Debt over Earnings Before Interest, Taxation, Depreciation and
Amortisation (“EBITDA”), Total Debt over Shareholders’ Funds and a specified ratio of Vessel Valuation over Loan Amount.
P
/1 9 8
PT Rig Tenders Indonesia TBK (“PTRT”) (continued)
PTRT met all the required financial ratios as at 31 March 2013.
In addition, SEB has various financial covenants based on debt service coverage ratio, debt to equity ratio and total net
worth, all of which were complied with as at 31 March 2013, except for a financial covenant ratio in relation to financing for
the Mumbai project was more than the financial ratio prescribed in the facility agreement. This will however only impact
the ability of the Group to request for additional borrowings beyond the current facility limit from that financial institution
in relation to this project being financed.
(c) Financial instruments measured at fair value
The fair value measurement hierarchies used to measure financial assets carried at fair value in the statements of financial
position as at 31 March 2013 are as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. prices) or indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Level 1
Level 2
Level 3
Total
RM’000RM’000RM’000
RM’000
Group
31.3.2013
Financial assets
AFS investments
Financial liabilities
Derivatives
104––
104
– (294)
–(294)
Level 1
Level 2
Level 3
Total
RM’000RM’000RM’000
RM’000
Group
31.12.2011
Financial assets
AFS investments
Financial liabilities
Derivatives
127
– 1,3891,516
– (348)
–(348)
P
/1 9 9
48 Early Adoption of Standards
The Directors have resolved to early adopt FRS 10: Consolidated Financial Statements, MFRS 11: Joint arrangements, MFRS 12:
Disclosure of interest in other entities, MFRS 127: Separate Financial Statements (revised) and MFRS 128: Investments in Associates
and Joint Ventures (revised). As at 31 December 2011, SESB is an associate of the Company in which SGB has an effective equity
interest of 42.76% in SESB. SESB has been equity accounted under MFRS 128: Investments in Associates in the audited financial
statements of SGB for the financial year ended 31 December 2011. The early adoption of MFRS 10 by the Company has resulted
in SGB considering SESB as its subsidiary.
In addition, the Group no longer has control over Gemini Sprint Sdn Bhd and MarineCo Limited as they are deemed as joint
ventures. Therefore the financial statements have been restated due to the impact of the early adoption.
The following table summarises the adjustments made to the Group’s statements of financial position at 1 January 2011 and
31 December 2011 and its statements of comprehensive income and cash flows for the year ended 31 December 2011 as a
result of the early adoption of standards.
(a) Statement of financial position
(i)Group
31 December 2011
As previously
reported Adjustments As restated
RM’000
RM’000
RM’000
Intangible assets and goodwill
321,699
7,014
328,713
336,590
376,663
713,253
Investment in associate
216,514
(216,267)
247
Investment in joint ventures –
47,157
47,157
Deferred tax asset 46,634
6
46,640
902,080
170,979
1,073,059
157,447
78,734
236,181
Overall impact on total assets
1,980,964
464,286
2,445,250
539,976
62,090
602,066
Borrowings
1,065,693
12,994
1,078,687
294
54
348
32,815
2,857
35,672
3,285
442
3,727
Provision for retirement benefits
4,762
(4,372)
390
Overall impact on total liabilities
1,646,825
74,065
1,720,890
Other reserves
(246,095)
(1,210)
(247,305)
Retained profits
378,591
(67,893)
310,698
71,831
418,053
489,884
Overall impact on total equity
204,327
348,950
553,277
P
/2 0 0
48 Early Adoption of Standards (continued)
1 January 2011
As previously
RM’000
RM’000
RM’000
Intangible assets and goodwill
380,707
4,685
385,392
415,585
815
416,400
Investment in associate
268,859
(265,635)
3,224
Investment in joint ventures 19
25,062
25,081
863,388
59,267
922,655
176,388
11,660
188,048
Non-current assets held for sale
4,663
755,668
760,331
2,109,609
591,522
2,701,131
468,985
14,538
483,523
Borrowings
1,079,520
10,094
1,089,614
24,743
63
24,806
2,786
433
3,219
Non-current liabilities held for sale
–
123,219
123,219
Overall impact on total liabilities
1,576,034
148,347
1,724,381
Other reserves
(251,592)
(513)
(252,105)
Retained profits
602,647
(77,359)
525,288
134,610
480,043
614,653
Overall impact on total equity
485,665
402,171
887,836
(ii)Company
31 December 2011
As previously
RM’000
RM’000
RM’000
Investment in subsidiaries
636,894
216,132
853,026
Investment in associates
216,132
(216,132)
–
853,026
–
853,026
P
/2 0 1
1 January 2011
As previously
RM’000
RM’000
RM’000
Investment in subsidiaries
637,419
360,124
997,543
Investment in associates
360,124
(360,124)
–
997,543
–
997,543
(a)Statement of comprehensive income
(i)Group
For the year ended 31 December 2011
As previously
RM’000
RM’000
RM’000
Revenue
1,383,737
18,829
1,402,566
Cost of revenue
(1,080,616)
(144,105)
(1,224,721)
Other operating income
19,269
4,414
23,683
Administrative expenses
(81,144)
21,661
(59,483)
Selling and distribution expenses
(77,186)
33,986
(43,200)
Other operating expenses
(184,482)
(33,990) (218,472)
Finance costs
(50,789)
1,933
(48,856)
Share of results of an associates
(48,536)
45,558
(2,978)
(439)
4,193
3,754
Tax expense
(48,692)
29,394
(19,298)
Loss from discontinued operations (127,653)
(42,503) (170,156)
Overall impact on profit (296,531)
(60,630)
(357,161)
Cash flow hedges
Share of other comprehensive of an associate
(5,971)
11,816
4,480
9,281
2,004
(4,480)
3,310
13,820
–
Overall impact on total comprehensive income
attributable to non-controlling interests
(63,081)
(62,516)
(125,597)
(ii) There is no impact to the statement of comprehensive income of the Company.
P
/2 0 2
48 Early Adoption of Standards (continued)
(a)Statement of cash flows (continued)
(i)Group (continued)
For the year ended 31 December 2011
As previously
RM’000
RM’000
RM’000
Cash flow from operating activities
Cash flows from investing activities
Cash flows from financing activities
25,266
19,522
(94,175)
(49,387)
162,823
(21,848)
(79,920)
188,189
(2,326)
(174,095)
61,055
11,668
(ii) There is no impact to the statement of cash flows of the Company.
49 Approval Of Financial Statements
The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 31 July 2013.
Supplementary Information
50 Supplementary Information on Realised and Unrealised Retained Profits or Accumulated Losses
The breakdown and components of retained profits or accumulated losses are identified and disclosed in accordance with the
listing requirements of Bursa Malaysia Securities as follows:
Group
Company
31.3.2013 31.12.2011
31.3.2013 31.12.2011
RM’000RM’000RM’000
RM’000
(restated)
Total retained earnings:
- realised
- unrealised
909,196
319,181
640,973
226,912
(369,657)(3,805) 294(2,133)
539,539
315,376
641,267
224,779
Total share of accumulated losses from associate:
- realised
- unrealised
40,031
–
(86,459)
(2,077)
–
–
–
–
Total share of retained earnings from joint ventures:
- realised
- unrealised
17,348
–
(19)
–
–
–
–
–
Less: Consolidation adjustments
Total retained earnings
To
re]tained earnings
596,918
(508,609)
88,309
88,309
226,821
83,877
641,267
–
224,779
–
310,698
641,267
224,779
310,698
641,267 224
P
STATEMENT BY DIRECTORS
Statement by
Directors
Pursuant to Section 169(15) of the Companies Act, 1965
We, Tan Sri Asmat Bin Kamaludin and Shah Hakim @ Shahzanim Bin Zain, being two of the Directors of Scomi Group Bhd, state that,
in the opinion of the Directors, the financial statements set out on pages 79 to 202 are drawn up so as to give a true and fair view of
the state of affairs of the Group and Company as at 31 March 2013 and of the results and the cash flows of the Group and Company
for the financial period ended on that date in accordance with Malaysian Financial Reporting Standards, International Financial
Reporting Standards and the provisions of the Companies Act, 1965.
The supplementary information set out in Note 50 have been prepared in accordance with the Guidance of Special Matter No. 1,
Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad
Listing Requirements, as issued by the Malaysian Institute of Accountants.
Signed on behalf of the Board of Directors in accordance with their resolution dated 31 July 2013.
Chairman
Petaling Jaya
Shah Hakim@ Shahzanim Bin Zain
/2 0 3
P
/2 0 4
STATUTORY DECLARATION
Statutory
Declaration
Pursuant to Section 169(16) of the Companies Act, 1965
I, Abu Zaharoff Bin Abu Bakar, the officer primarily responsible for the financial management of Scomi Group Bhd., do solemnly and
sincerely declare that the financial statements set out on pages 79 to 202 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.
Abu Zaharoff Bin Abu Bakar
Subscribed and solemnly declared by the abovenamed Abu Zaharoff bin Abu Bakar at Petaling Jaya, Selangor in Malaysia on 31 July 2013,
before me.
Commissioner for Oaths
P
INDEPENDENT AUDITORS’ REPORT
Independent
Auditors’ Report
to the Members of Scomi Group Bhd
(Incorporated in Malaysia)
(Company No. 571212 A)
Report on the Financial Statements
We have audited the financial statements of Scomi Group Bhd on pages 79 to 202 which comprise the statements of financial position as
at 31 March 2013 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and
statements of cash flows of the Group and of the Company for the financial period then ended, and a summary of significant accounting
policies and other explanatory notes, as set out on Notes 1 to 49.
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 other requirements of the Companies Act,
1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with
approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the 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 the Directors, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of
31 March 2013 and of their financial performance and cash flows for the financial period then ended in accordance with Malaysian
Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
Report on Other Legal and Regulatory Requirements
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a)In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its
subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b)We have considered the accounts and the auditors’ reports of all subsidiaries of which we have not acted as auditors, which are indicated
in Note 16 to the financial statements.
(c)We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statements are in
form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have
received satisfactory information and explanations required by us for those purposes.
/2 0 5
P
/2 0 6
INDEPENDENT AUDITORS’ REPORT
(d)The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made
under Section 174(3) of the Act.
Other Reporting Responsibilities
The supplementary information set out in Note 52 on page 202 is disclosed to meet the requirements 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
1.As stated in Note 2 to the financial statements, Scomi Group Bhd adopted Malaysian Financial Reporting Standards on 1 January 2012
with a transition date of 1 January 2011. These standards were applied retrospectively by Directors to the comparative information in
these financial statements, including the statements of financial position as at 31 December 2011 and 1 January 2011, and the statements
of comprehensive income, statements of changes in equity and statements of cash flows for the year ended 31 December 2011 and
related disclosures. We were not engaged to report on the restated comparative information and it is unaudited. Our responsibilities
as part of our audit of the financial statements of the Group and of the Company for the period ended 31 March 2013 have, in these
circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 January 2012 do not contain
misstatements that materially affect the financial position as of 31 March 2013 and the financial performance and cash flows for the
period then ended.
2.This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in
Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
PricewaterhouseCoopers
(No. AF: 1146)
Chartered Accountants
Kuala Lumpur
31 July 2013
Yee Wai Yin
(No. 2081/08/14 (J))
Chartered Accountant
P
ANALYSIS OF SHAREHOLDINGS AS AT 31 JULY 2013
Analysis of
Shareholdings
as at 31 July 2013
Authorised share capital
: RM300,000,000.00 divided into 3,000,000,000 ordinary shares of RM0.10 each
Issued and paid-up capital
:RM156,863,685.40 divided into 1,568,636,854 ordinary shares of RM0.10 each. This included
14,427,200 ordinary shares purchased by the Company under share buy-back scheme and
retained as treasury shares (“Treasury Shares”)
Types of shares
: Ordinary shares of RM0.10 each
Voting rights
: One vote per ordinary share
Distribution of Shareholdings as at 31 July 2013
Size of Shareholding
Shareholder
No. of Shareholders
Less than 100
161
100 to 1,000
1,910
1,001 to 10,000
9,955
10,001 to 100,000
6,991
100,001 to less than 5% of issued shares
1,006
5% and above of issued shares
3
Total:
%
20,026
Shareholding
No. of Shares Held
%**
0.80
9.54
49.71
34.91
5.02
0.02
5,534
1,667,124
55,499,042
234,168,056
949,726,368
313,143,530
0.00
0.11
3.57
15.07
61.11
20.15
100.00
1,554,209,654
100.00
NOTE
* The percentage shareholdings have been computed net of the Company’s Treasury Shares.
List of Top Thirty (30) Largest Shareholders as at 31 July 2013
No
Name of Shareholder
No. of Shares Held
1
2
3
4
5
6
7
8
9
10
IJM Corporation Berhad
UOBM Nominees (Asing) Sdn Bhd
TAEL One Partners Ltd for Amadia Investments Ltd
UOBM Nominees (Tempatan) Sdn Bhd
TOIC Investments Ltd for Onstream Marine Sdn Bhd
Abu Sahid Bin Mohamed HLIB Nominees (Asing) Sdn Bhd
Exempt An for UOB Kay Hian Pte Ltd (A/C Clients)
CIMSEC Nominees (Tempatan) Sdn Bdn
CIMB for United Flagship Sdn Bhd (PB)
UOB Kay Hian Nominees (Tempatan) Sdn Bhd
Multi-Purpose Credit Sdn Bhd for Kaspadu Sdn Bhd RHB Capital Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Kaspadu Sdn Bhd (SBSSB 1311005)
EB Nominees (Tempatan) Sendirian Berhad
Pledged Securities Account for Kaspadu Sdn Bhd (SFC) Citigroup Nominees (Asing) Sdn Bhd
CBNY for Dimensional Emerging Markets Value Fund
%*
119,109,500
7.66
108,637,400
6.99
85,396,630
58,413,400
5.49
3.76
43,107,625
2.77
41,835,600
2.69
33,053,055
2.13
27,000,000
1.74
25,700,000
1.65
23,771,700
1.53
/2 0 7
P
/2 0 8
No
Name of Shareholder
No. of Shares Held
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
CIMSEC Nominees (Tempatan) Sdn Bhd
CIMB Bank for Siew Mun Chuang (MY1275)
Kenanga Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Ong Tee Thong
JF Apex Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Abu Sahid Bin Mohamed (Margin)
CIMB Bank for Seow Lun Hoo @ Seow Wah Chong (PBCL-OGOO14)
M&A Nominee (Tempatan) Sdn Bhd
Pledged Securities Account for Lau Joo Liang (M&A)
Citigroup Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Abu Sahid Bin Mohamed (000187773)
Lim Fong Peng @ Lim Fung Feng
ABB Nominee (Tempatan) Sdn Bhd
Pledged Securities Account for Gajahrimau Capital Sdn Bhd
CIMB for Siew Mun Chuang (PB)
Maybank Securities Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Shah Hakim @ Shahzanim bin Zain (Margin)
Maybank Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Ang Piang Kok
HLB Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Abu Sahid bin Mohamed
UOBM Nominees (Tempatan) Sdn Bhd
TOIC Investments Ltd for Zubaidi bin Harun
HSBC Nominees (Asing) Sdn Bhd
Exempt An for Credit Suisse (SG BR-TST-Asing)
M&A Nominee (Asing) Sdn Bhd
Exempt An for UOB Kay Hian Pte Ltd (A/C Clients)
Citigroup Nominees (Asing) Sdn Bhd
CBNY for DFA Emerging Markets Small Cap Series
Citigroup Nominees (Asing) Sdn Bhd
CBNY for Emerging Market Core Equity Portfolio
DFA Investment Dimensions Group Inc
Chan Kid Ching
ECML Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Ang Piang Kok (001)
HSBC Nominees (Asing) Sdn Bhd
Exempt An for JPMorgan Chase Bank, National Association (U.S.A.)
NOTE
%*
22,854,700
1.44
20,975,200
1.35
20,117,100
1.29
17,962,300
1.16
15,736,400
1.01
14,000,000
13,962,240
0.90
0.90
13,750,000
0.88
12,474,800
0.80
11,964,500
0.77
11,170,000
0.72
11,000,000
0.71
9,970,000
0.64
9,852,500
0.63
9,260,625
0.60
7,933,200
0.51
7,310,700
6,900,000
0.47
0.44
6,740,000
0.43
6,661,800
0.43
P
/2 0 9
Shareholdings of Substantial Shareholders as at 31 July 2013
Name of Shareholder
Direct Shareholding
No. of Shares Held
%*
Kaspadu Sdn Bhd
Onstream Marine Sdn Bhd
Dato’ Kamaluddin bin Abdullah
Tan Sri Abu Sahid bin Mohamed
IJM Corporation Berhad
Amadia Investments Ltd
TAEL One Partners Ltd (acting in its
capacity as the general partner of
The Asian Entrepreneur Legacy
One, L.P.) (“the Fund”)
United Overseas Bank Limited
Indirect Shareholding
No. of Shares Held
85,753,055(1)5.52
86,521,970(3)5.57
13,850,100(4)0.89
–
–
105,368,100
6.78
119,109,500
7.66
151,637,400(7)9.76
–
–
–
–
%**
86,521,970(2)(3)5.57
– –
175,917,025(5)11.32
172,275,025(6)11.09
–
–
–
–
– –
151,637,400(8)9.76
151,637,400(9)
9.76
NOTES
(1)Held through RHB Capital Nominees (Tempatan) Sdn Bhd, EB Nominees (Tempatan) Sdn Bhd and UOB Kay Hian Nominees
(Tempatan) Sdn Bhd.
(2) Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through its shareholding in Onstream Marine Sdn Bhd.
(3) 85,396,630 shares held through UOBM Nominees (Tempatan) Sdn Bhd.
(4)13,321,000 shares held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim bin Zain (Margin) and
Maybank Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim bin Zain.
(5)Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through his shareholding in Kaspadu Sdn Bhd and Rentak Rimbun Sdn Bhd.
(6)
Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through his shareholding in Kaspadu Sdn Bhd.
(7)
Held through UOBM Nominees (Asing) Sdn Bhd for TAEL One Partners Ltd for Amadia Investments Ltd and HLG Nominees (Asing) Sdn Bhd Exempt An for UOB Kay
Hian Pte Ltd (A/C Clients).
(8)Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965. Amadia Investments Ltd is an investment vehicle of the Fund.
(9)
Deemed interested by virtue of its investment in the Fund.
Shareholdings of Directors as at 31 July 2013
Name of Director
Direct Shareholding
No. of Shares Held
%*
Scomi Group Bhd
Foong Choong Hong
Lee Chun Fai (Alternate Director
to Dato’ Teh Kean Ming)
(1)
No. of Shares Held
394,375 0.03
–
–
–
–
120,000
0.01
–
–
–
–
–
–
–
–
410,000
0.03
13,850,100(3)0.89
–
–
%**
– –
–
–
(2)
13,750,000 0.88
–
–
–
–
–
–
–
–
–
–
–
–
175,917,025(4)11.32
–
–
P
/2 1 0
Related Companies
- Scomi Engineering Bhd (“SEB”)
Name of Director
Direct Shareholding
No. of
%
No. of
Shares Held
Options
–
219,700
623,000(6)
No. of
%
No. of
Shares Held Options
#
–
–
12,222(5)
–
0.06
300,000^
–– –
#
0.181,500,000^282,000(7)
–
- Scomi Energy Services Bhd (formerly known as Scomi Marine Bhd) (“SES”)
Name of Director
Direct Shareholding
No. of Shares Held
%
No. of Shares Held
#
50,000(8)
10,000(9)
(10)
2,108,000 0.09
5,056,900(7)
%
#
0.22
NOTES
The percentage shareholdings have been computed net of the Company’s Treasury Shares.
*
#Negligible
^ Options granted pursuant to SEB’s Employees’ Share Option Scheme to subscribe for ordinary shares in SEB.
(1)
Deemed interested by virtue of Section 6A(2) of the Companies Act, 1965 through his interest in Bi-bot Holdings Sdn Bhd, whereby 325,625 ordinary shares are held
through CIMSEC Nominees (Tempatan) Sdn Bhd Exempt An for CIMB Trustee Berhad (TR1038).
(2)Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through his and his wife’s direct shareholdings in Gajahrimau Capital Sdn Bhd, whereby all
the 13,750,000 shares are held through ABB Nominee (Tempatan) Sdn Bhd.
(3)13,321,000 shares held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim Bin Zain (Margin) and
Maybank Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim Bin Zain.
(4) Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through his shareholding in Kaspadu Sdn Bhd and Rentak Rimbun Sdn Bhd.
(5)Deemed interested by virtue of Section 134(12)(c) of the Companies Act, 1965 through his child’s direct shareholding in SEB.
(6)123,000 shares held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim Bin Zain (Margin).
(7)Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through his shareholding in Rentak Rimbun Sdn Bhd.
(8)Deemed interested by virtue of Section 6A(2) of the Companies Act, 1965 through his interest in Bi-bot Holdings Sdn Bhd, whereby all the ordinary shares are held
through CIMSEC Nominees (Tempatan) Sdn Bhd.
(9)Deemed interested by virtue of Section 134(12)(c) of the Companies Act, 1965 through his spouse, Puan Sri Habibah Mohd Salleh’s shareholding in SES.
(10)All shares are held through Maybank Securities Nominees (Tempatan) Sdn Bhd pledged Securities Account for Shah Hakim @ Shahzanim Bin Zain (Margin).
P
LIST OF PROPERTIES AS AT 31 MARCH 2013
List of
Properties
as at 31 March 2013
No Registered
Description / Existing use Tenure of
Land area/
Approximate
Owner
location address
land: Built-up
age of
freehold area
building
or leasehold
(years)/date
of acquisition
1 Scomi Coach Sdn Bhd Land and Building: Factory and Freehold /
Land area:
Building 1:
EMR 2751 Lot 795 and Office
15.04.1996
61,714 sq
31⁄2 year
Serendah, Daerah Hulu meters
Buildup areas: Building 2:
Selangor, Malaysia
26,556
16 years
sq meters
2 Scomi Oiltools Sdn Bhd Master: Land held under Five-storey
Freehold
Built-up area: 16 years
Geran 46494, shop office
31.10.1999
11,755 sq ft
Lot 42410 Pekan Cempaka, Daerah
Petaling, Negeri Selangor,
Malaysia
(formerly known as
PT 42410 H.S.(D)
135924 part of
Geran 35997 Lot
102 Geran 40176 Lot
15386 and Geran 43061
Lot 15386, Mukim of
Sungai Buloh Daerah
Petaling, Negeri
Selangor, Malaysia)
3 Scomi Oiltools Sdn Bhd Kemaman Warehouse No. 24, Kemaman Supply Base, 24007 Kemaman, Terengganu, Malaysia
Audited net
book value as
at 31.03.2013
RM’000
Land: 8,020
Building 1:
15,175
Building 2:
9,290
Land &
building: 891
Warehouse for Not applicable Built-up areas: 22 years
Building: 219
office use,
15.11.1991
19,200 sq ft
laboratory, milling
and storage
activities
4 Scomi Oiltools de
Land and Building: Land Farm
Freehold
Venezuela, S.A
Carretera Santa Barbara,
01.07.2001
Ent. Well SBC
-10-19-23-40 Santa Barbara Edo. Monagas, Venezuela
Land area: 18 years
Land &
6,478,850
Building:
sq ft
46
(60.19
hectares)
Structure:
1,290 sq ft
5 PT. Inti Jatam Pura
Jl. Raya Duri – Dumai, Office and
Leasehold:
Km. 131 Duri, Riau 28884 workshop
24.03.1992
Indonesia
– 24.03.2012 (21 years)
Land area:
23 years
Nil
23,865 m2
Building
area: 207.5
m2
/2 1 1
P
/2 1 2
List of
Properties
as at 31 March 2013
No Registered
Description / Existing use
Owner
location address
Tenure of
Land area/
Approximate
land: Built-up
age of
freehold area
building
or leasehold
(years)/date
of acquisition
6 Scomi Group Bhd
Land and building: Office and
Freehold:
Geran 58840 Lot 64254, warehouse
23.12.2009
Mukim of Damansara, District of Petaling, Selangor Darul Ehsan
7 Scomi Sosma Sdn Bhd Land held under Land
Freehold: Geran 250133, Lot 7627, 7.4.2011
Mukim of Sepang, Selangor Darul Ehsan
Audited net
book value as
at 31.03.2013
RM’000
Land area:
8 years
Land and
1,575 sq
building:
metres
4,520
Built-up
area: 1,795
sq metres
Land area:
0.7412
hectares
N/A176
Land area:
0.6229
hectares
N/A
Land held under Land
Freehold:
Geran 250134, Lot 7628 7.4.2011
Mukim of Sepang, Selangor Darul Ehsan
148
8 P.T. Rig Tenders
Indonesia, Tbk
Land held under
Land
Freehold:
Land area:
N/A
166
Geran 250135, Lot 7629 7.4.2011
0.6993
Mukim of Sepang, hectares
Office building
Office building Freehold/
Land area: 13 years
29.5
Wisma Rig Tenders
29.07.1993
n/a
Jl. Dr Saharjo
Built- up area:
No.129
512 m2
Jakarta 12860
9 P.T. Rig Tenders
Indonesia, Tbk
10 P.T. Rig Tenders Indonesia, Tbk
Land
Jl. Dr Saharjo
No.129
Jakarta 12860
Land for the Freehold/
building as
01.01.1997
mentioned
in item 3
Land area: n/a
–
490 m2
Built- up area:
n/a
Single storey house
Staff
Freehold
Land area:
15
21.2
Simpang Gatot accommodation 01.10.1995
n/a
Subroto VIII
Built-up area:
Jl. Garuda no.8
371 m2
Banjarmasin 70236
11 P.T. Rig Tenders
Indonesia, Tbk
Single storey house
Staff
Freehold
Jl. Veteran Simpang accommodation 31.12.1996
SMP VII Rt.29 no. 66
Banjarmasin 70232
Land area:
16
7.4
n/a
Built-up area:
388 m2
P
No Registered
Description / Existing use
Owner
location address
Tenure of
Land area/
Approximate
land: Built-up
age of
freehold area
building
or leasehold
(years)/date
of acquisition
Land for
Freehold
the building 09.01.2003
as mentioned
in item 7
Audited net
book value as
at 31.03.2013
RM’000
12P.T. Rig Tenders Indonesia, Tbk
Land
Jl Belitung Darat no.88 Banjarmasin 70116
Land area:
n/a
–
190 sq metres
Built-up area:
n/a
13 P.T. Rig Tenders Indonesia, Tbk
Single storey house
Staff
Freehold
Land area :
n/a
29.5
Persada Mas Bumi
accommodation
31.10.2000
n/a
Asri Barat
Built-up area:
Jl Ahmad Yani no. 8
200 sq metres
Banjarmasin
/2 1 3
P
/2 1 4
CORPORATE DIRECTORY
Corporate
Directory
CORPORATE
Scomi Group Bhd
Bandar Utama
47800 Petaling Jaya
Malaysia
Tel: +603 7717 3000
Fax: +603 7728 5258
Bandar Utama
47800 Petaling Jaya
Malaysia
Tel: +603 7717 3000
Fax: +603 7727 7935
Scomi Rail Bhd
Bandar Utama
47800 Petaling Jaya
Malaysia
Tel: +603 7717 3000
Fax: +603 7727 7935
Scomi Energy
Services Bhd
(formerly known as
Scomi Marine Bhd)
Bandar Utama
47800 Petaling Jaya
Malaysia
Tel: +603 7717 3000
Fax: +603 7725 9082
Scomi Oiltools Sdn Bhd
Bandar Utama
47800 Petaling Jaya
Malaysia
Tel: +603 7717 3000
Fax: +603 7728 5202
Scomi Sosma Sdn Bhd
Bandar Utama
47800 Petaling Jaya
Malaysia
Tel: +603 7717 3000
Fax: +603 7728 5202
OPERATING LOCATIONS
AM E R IC A –
L ATIN (Anaco)
Scomi Oiltools de
Venezuela SA
Via Los Pilones KM1
Sector Montana Alta
Anaco Estado Anzoategui
Venezuela
AM E R IC A – L ATIN
(Ciudad Ojeda)
Scomi Oiltools de
Venezuela SA
West District
Carratera “L” entre
Calle 33 y 34
al lado de Ferreteria FEDECA
Ciudad Ojeda
Estado Zulia
Venezuela
AM E R IC A – L ATIN
(M aturin)
Scomi Oiltools de
Venezuela SA
Av Alirio Ugarte Pelayo
Centro Empresarial
Davis, Piso 2, Ofc. 17 Frente
a la E/S Digecom Maturin
Estado-Monagas
Venezuela
AM E R IC A - N O R TH
(Ho usto n)
Scomi Equipment Inc
6818 N. Sam Houston
Parkway West
Houston, Texas
77064 USA
AU STR AL IA (Per th)
Scomi Oiltools Pty Ltd
15, Boulder Road
Malaga, Western Australia
6090, Australia
B R A Z IL (S ão Pa u lo)
Urban Transit Serviços
Do Brasil Ltda.
Head Office:
Edifício Panambi
Rua Geraldo Flausino Gomes
61, 9th floor, Cidade Monções
Zip Code 04575-060
São Paulo, Brazil
CHIN A (B eijin g)
Rm 1507, Tower B
Eagle Plaza
No. 26, Xiao Yun Road
Chaoyang District
Beijing 100027
P.R. China
CHIN A (Shekou )
Rm 23C Tower A
Neptunus Building
No. 2221, Nanhai Rd
Nanshan District
518054 Shenzhen
Guangdong Prov
P.R. China
CHIN A ( Tang gu )
A1-704, Teda New Skyline
No. 12, Nan Hai Road
Teda Tianjin, 300457
P.R. China
CO N G O (Po inte Noir )
Scomi Oiltools
Africa Limited
Zone Industrielle de la foire
Pointe-Noire
Congo
E G YP T (Cairo)
Scomi Oiltools Egypt S A E
Km 10, Ain Sukhna Road
Kattamia
Oilfield Services Complex
Cairo, Egypt
P
CORPORATE DIRECTORY
F R A N CE
Scomi Anticor S A E
6 Avenue des Amandiers
Z.A. du Mardaric
04310 Peyruis
France
I N DO N ESI A ( D uri)
PT Scomi Oiltools
Jl. Raya Duri Dumai Km 131
Duri, Pekanbaru
Sumatera 28884
Indonesia
I N D I A ( Mu m b ai )
KMC Oiltools India
Private Ltd
912-A, Building No. 9
Solitaire Corporate Park
Andheri-Ghatkopar Link Road
Chakala, Andheri (East)
Mumbai, 400093
India
I N DO N ESI A
( Jak ar t a)
PT Scomi Oiltools
Gedung Tetra Pak
Suite 101/104/103
Jl. Buncit Raya Kav 100
Jakarta Selatan 12510
Indonesia
Urban Transit Pvt Ltd
Mumbai Monorail
Project Office
Unit 102, B Wing
Business Square
Andheri-Ghatkopar Road
Chakala, Andheri (East)
Mumbai, 400093
India
I N D ON E S I A
(B a l i k pa pa n )
PT Scomi Oiltools
Jl. Mulawarman Rt 45
No. 2, Manggar
Balikpapan 76116
East Kalimantan
Indonesia
I N D ON E S I A
(B a n j a r m a si n )
PT Batuah Abadi Lines
Jl. Belitung Darat No. 88
Rt. 19 Banjarmasin
Kalimantan Selatan
Indonesia
PT Rig Tenders
Indonesia Tbk
Gedung Philips
Jl. Buncit Raya Kav. 100
Jakarta Selatan 12510
Indonesia
MA L AYSI A
( Kem aman )
Scomi Oiltools
Sdn Bhd
Warehouse 24
Letterbox No. 72
Kemaman Supply Base
24007 Kemaman
Terengganu Darul Iman
Malaysia
MA L AYSI A ( L abuan)
Asian Supply Base
Ranca-Ranca
Industrial Estate
P O Box 82023
87030 Labuan Federal
Territory
Labuan, Malaysia
MarineCo Limited
Level 6 (D), Main Office Tower
Financial Park, Jalan Merdeka
P O Box 80887
87018 Labuan
Federal Territory
Labuan, Malaysia
MAL AYSIA (M iri)
Lot 2164, 1st Floor
Saberkas Commercial Centre
Jalan Pujut-Lutong
98000 Miri, Sarawak
Malaysia
MAL AYSIA (S elang o r)
Scomi Rail Bhd
Scomi Coach Sdn Bhd
Scomi Coach Marketing
Sdn Bhd
Lot 795, Jalan Monorel
Sungai Choh
48000 Rawang
Malaysia
Scomi Special
Vehicles Sdn Bhd
Lot 9683
Kawasan Perindustrian
Desa Aman
Batu 11, Desa Aman
47000 Sungai Buloh
Malaysia
Global Research &
Technology Centre
No. 9, Jalan Astaka U8/83
Seksyen U8
40150 Shah Alam
Malaysia
M YAN MAR
Scomi Oiltools
(Thailand) Ltd
Unit #109, Building 1
Hotel Yangon
No.91/93, Corner of Pyay
Road and Kabaraye Pagoda
Road, 8th Mile Junction
Mayangone Township
Yangon, Myanmar
N IG E R IA (O nn e )
Wasco Oil Service
Company Nigeria Limited
#9 Wharf Road
Onne, Rivers State
Nigeria
Wasco Oil Service
Company Nigeria Limited
Onne Oil & Gas Free Zone
Complex
Onne, Rivers State
Nigeria
O MAN (Azaiba)
Scomi Oiltools Oman LLC
Building No. 272
Way No. 44803
Office No. 1104 (2nd Floor)
Azaiba
Sultanate of Oman
PAKISTAN
(Islamabad )
Scomi Oiltools Ltd
(Pakistan Branch)
Plot No. 212, Service Road
Industrial Area, I-10/3
Islamabad
Pakistan
/2 1 5
P
/2 1 6
CORPORATE DIRECTORY
Corporate
Directory
PA K I S TA N (K arac h i )
Scomi Oiltools Ltd
(Pakistan Branch)
B-31, Moghal Tobaco
Godown No 19-20
SITE, Karachi
Pakistan
QATA R
Scomi Oiltools
(Cayman) Limited
940 Al-Khalidia Street
Zone No.26
Najma, Doha, Qatar
P.O. Box 2471
RUS S I A ( M o s cow )
Scomi Oiltools (Rus) LLC
3rd floor, bld.1 24/2
Sretenka Str
107045 Moscow
Russia
RUS S I A
( We ste rn S i b er i a)
Scomi Oiltools (Rus) LLC
16 bld. 7, Industrialnaya Str
628616 Nizhnevartovsk
Tyumen Region
Russia
S AUD I A R A B IA
Scomi Oiltools
(Cayman) Limited
(Saudi Arabia Branch)
c/o Tanajib for General
Contracting Est.
P O Box 30415
Salman A-farezi Street
Near Silver Tower
Behind Saudi Hollandi Bank
Al-Khobar 31952
Kingdom of Saudi Arabia
SI N G A P O R E
50 Ubi Crescent #01-08
Ubi Tech Park
Singapore 408568
Scomi Marine
Services Pte Ltd
8 Admiralty Street
#07-09 Admirax
Singapore 757438
SU DA N ( Kh ar to um)
Scomi Oiltools
Overseas (M) Limited
No. 649, Square 4
El-Safa, Khartoum
Republic of Sudan
THAILAND
( B an g kok)
Scomi Oiltools
(Thailand) Ltd
13th Floor, CTI Tower
191/77, Ratchadapisek Road
Kwaeng Klongtoey
Khet Klongtoey
Bangkok
10110 Thailand
THAILAND
( L an k rab u e)
Scomi Oiltools
(Thailand) Ltd
163, Moo 6 Tumbol
Lankrabue
Amphur Lankrabue
Kamphaengphet
62170 Thailand
THAIL AN D
(S o ng k hla)
Scomi Oiltools
(Thailand) Ltd
424/9 Moo 2
Songkhla - Koh Yor Road
Amphur Muang, Songkhla
90100 Thailand
TU R KM E N ISTAN
(Ashg abat)
Scomi Oiltools Ltd
(Turkmenistan Branch)
Yimpash Business Centre
Office 101(A) Turkmenbashy
Street, 54 Ashgabat
Turkmenistan 744013
TU R KM E N ISTAN
(B alk anabat)
Scomi Oiltools Ltd
Jebel Base #2, Jebel v.
Balkanabat
Turkmenistan
TU R KM E N ISTAN
(Hazar)
Scomi Oiltools Ltd
High Road 9 kilometer
Hazar
Turkmenistan 745030
TU R KM E N ISTAN
( Turk menbashy )
Scomi Oiltools Ltd
Shagadam Street 8
Turkmenbashy City
Turkmenistan 745000
U. A. E. (D ubai )
Scomi Oiltools
(Cayman) Limited
Oilfield Supply Centre
Building B-10, Jebel Ali
Free Zone, Dubai
United Arab Emirates
U. A. E. (Abu D ha b i)
Scomi Oiltools
(Cayman) Ltd
Liwa Street/Liwa Tower
Mezzanine Floor, M02
P.O. Box 45333
Abu Dhabi
United Arab Emirates
U N ITE D KIN G DOM
(Ab erd een)
Scomi Oiltools
(Europe) Limited
Woodside Road
Bridge of Don, Aberdeen
AB23 8EF, Scotland
United Kingdom
V IE TN AM
Scomi Oiltools Ltd
(Vietnam Branch)
c/o PTSC Supply Base
65A, 30/4 Road
Thang Nhat Ward
Vung Tau City
S R Vietnam
P
NOTICE OF ANNUAL GENERAL MEETING
Notice of Annual
General Meeting
NOTICE IS HEREBY GIVEN that the 11th Annual General Meeting of SCOMI GROUP BHD (“the Company”) will be held at Ballroom 1, First
Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur, Malaysia on 26 September 2013 at 2:30 pm to transact
the following business:
As Ordinary Business:
To consider and, if thought fit, to pass the following as Ordinary Resolutions:
1 To receive the Financial Statements for the financial period ended 31 March 2013 and the Reports of the Directors and Auditors thereon.
2To re-elect the following Directors who retire in accordance with Article 82 of the Articles of
Association of the Company and being eligible, offer themselves for re-election:
(i) Tan Sri Nik Mohamed bin Nik Yaacob
(ii) Datuk Haron bin Siraj
(iii) Dato’ Mohammed Azlan bin Hashim
(Resolution 1)
(Resolution 2)
(Resolution 3)
3 To re-elect the following Director who retires under Article 89 of the Articles of Association of the Company and being eligible, offers himself for re-election:
(i) Dato’ Teh Kean Ming
(Resolution 4)
4To approve the payment of Directors’ fees amounting to RM729,112.90 for Non-Executive Directors in
respect of the financial period ended 31 March 2013.
5 To appoint Messrs KPMG as Auditors of the Company for the financial year ending 31 March 2014, in replacement of the retiring Auditors, Messrs PricewaterhouseCoopers, and to authorise the Directors to
fix their remuneration.
(Resolution 5)
(Resolution 6)
As Special Business:
To consider and, if thought fit, to pass the following as Ordinary Resolutions:
6
Authority to Issue and Allot Shares Pursuant to Section 132D of the Companies Act, 1965
“THAT, subject to the Companies Act, 1965 (as may be amended, modified or re-enacted from time
to time)(“the Act”), the Articles of Association of the Company and the approvals of the relevant
governmental and/or regulatory authorities, where necessary, the Directors be and are hereby
authorised, pursuant to Section 132D of the Act, to issue and allot shares in the Company, at any time
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 ten percent (10%) of the issued and paid-up share capital of the Company
for the time being and that such authority shall continue in force until the conclusion of the next
Annual General Meeting of the Company.”
7
Proposed Renewal of Authority for the Purchase by the Company of its ordinary shares of up
to ten percent (10%) of the issued & paid-up share capital “THAT, subject to the Act, the Memorandum and Articles of Association of the Company, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) (“Listing
Requirements”) and the approval of the relevant authorities, approval be and is hereby given for the
Company to purchase from the market of Bursa Securities such number of ordinary shares of RM0.10
each in the Company (“Share Buy-back”) as may be determined by the Directors of the Company
(Resolution 7)
(Resolution 8)
/2 1 7
P
/2 1 8
from time to time, and upon such terms and conditions as the Board of Directors may deem fit and
expedient in the interest of the Company PROVIDED THAT the aggregate number of ordinary shares
purchased and/or held pursuant to this resolution does not exceed ten percent (10%) of the total
issued and paid-up share capital of the Company at any point in time and an amount not exceeding
the total retained earnings of approximately RM641.27 million and/or share premium account of
approximately RM351.92 million of the Company based on the Audited Financial Statements for the
financial period ended 31 March 2013 be allocated by the Company for the Share Buy-back;
THAT such authority shall commence immediately upon the passing of this resolution and shall
continue to be in force until:
1the conclusion of the next Annual General Meeting at which time the authority will lapse, unless
by an ordinary resolution passed at the next Annual General Meeting, the authority is renewed; or
2the expiration of the period within which the next Annual General Meeting after that date is
required by law to be held; or
3 revoked or varied by an ordinary resolution of the shareholders of the Company in a general meeting,
whichever occurs the earliest, but not so as to prejudice the completion of purchase(s) by the
Company before the aforesaid expiry date;
AND THAT the Directors of the Company be and are hereby authorised to take all such steps and do
all acts and deeds and to execute, sign and deliver on behalf of the Company all necessary documents
to give full effect to and for the purpose of completing or implementing the Share Buy-back in the
manner set out in the Statement, and that following completion of the Share Buy-back, the power to
cancel or retain as treasury shares, any or all of the Scomi Shares so purchased, resell on the market
of Bursa Securities or distribute as dividends to the Company’s shareholders or subsequently cancel,
any or all of the treasury shares, with full power to assent to any condition, revaluation, modification,
variation and/or amendment in any manner as may be required by any relevant authority or otherwise
as they deem fit in the best interests of the Company.”
To consider and, if thought fit, to pass the following Special Resolution:
8 Proposed Amendments to the Articles of Association of the Company
“THAT the proposed amendments to the Articles of Association of the Company as set out under
Section 2 of Part B of the Circular to Shareholders of the Company dated 3 September 2013 be and
are hereby approved and that the Directors be and are hereby authorised to take steps as may be
necessary to give full effect to the said proposed amendments to the Articles of Association of the
Company.”
9 To transact any other business of the Company for which due notice shall have been given.
By Order of the Board
ONG WEI LENG (MAICSA 7053539)
CHONG MEI YAN (MAICSA 7047707)
Company Secretaries
Petaling Jaya
Date: 3 September 2013
(Resolution 9)
P
NOTES
(1)A member of the Company entitled to attend and vote at the meeting may appoint a proxy or proxies (but not more than two) to
attend and vote on his/her behalf. A proxy may but need not be a member of the Company.
(2)Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her holding
to be represented by each proxy.
(3)Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint
at least one proxy but not more than two proxies in respect of each securities account it holds with ordinary shares standing to the
credit of the said securities account.
(4)The instrument for the appointment of a proxy, in the case of an individual shall be signed by the appointer or his/her attorney duly
authorised in writing and in the case of a corporation, either under seal or under the hand of an officer or attorney duly authorised.
If no name is inserted in the space for the name of your proxy, the Chairman of the meeting will act as your proxy.
(5)The instrument for the appointment of a proxy must be completed and deposited at the office of the Share Registrar of the
Company, Symphony Share Registrars Sdn Bhd at Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301
Petaling Jaya, Selangor Darul Ehsan, Malaysia, not less than forty-eight (48) hours before the time appointed for holding the Annual
General Meeting or any adjournment thereof.
(6)For the purpose of determining a member who shall be entitled to attend this 11th AGM, the Company shall be requesting Bursa
Malaysia Depository Sdn Bhd in accordance with Articles 57 and 58 of the Articles of Association of the Company and Section 34(1)
of the Securities Industry (Central Depositories) Act, 1991 to issue a General Meeting Record of Depositors as at 20 September 2013.
Only a depositor whose name appears on the General Meeting Record of Depositors as at 20 September 2013 shall be entitled to
attend the said meeting or appoint proxies to attend and/or vote on his/her behalf.
Financial Statements for the financial period ended 31 March 2013 and the Reports of the Directors and Auditors thereon
(7)This agenda is tabled for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal
approval of the shareholders and hence is not put forward for voting.
Abstention from voting
(8)The interested Directors of the Company who are shareholders of the Company will abstain from voting on the relevant resolutions
in respect of their re-election as the Director of the Company at the 11th AGM.
(9)All the Non-Executive Directors of the Company who are shareholders of the Company will abstain from voting on Ordinary
Resolution 5 concerning remuneration to Non-Executive Directors at the 11th AGM.
Explanatory Notes on Special Business:
(10)Ordinary Resolution 7 - Proposed renewal of the authority for Directors to issue shares
The ordinary resolution 7 above is proposed for the purpose of granting a renewed general mandate for issuance of shares by the
Company under Section 132D of the Companies Act, 1965, and if passed, will give the Directors of the Company authority, from the
date of the above Annual General Meeting, to issue and allot shares in the Company at any time up to an aggregate amount not
/2 1 9
P
/2 2 0
exceeding ten percent (10%) of the issued and paid-up share capital of the Company for such purposes as the Directors deem fit
and in the interest of the Company (“Share Mandate”) without convening a General Meeting.
The Company had issued 119,109,500 new ordinary shares of RM0.10 each pursuant to the private placement in accordance to
Section 132D of the Companies Act, 1965 under the general authority which was approved at the 10th AGM held on 27 June 2012
and which will lapse at the conclusion of the forthcoming 11th AGM to be held on 26 September 2013.
This Share Mandate, unless revoked or varied at a General Meeting, will expire at the conclusion of the next Annual General Meeting
of the Company. With this Share Mandate, the Company will have the flexibility to undertake any possible fund raising activities,
including but not limited to further placing of shares, for the purpose of funding future investment project(s), working capital and/or
acquisition(s).
(11)Ordinary Resolution 8 - Proposed renewal of the authority to purchase own shares
The ordinary resolution 8 above, if passed, will empower the Directors to purchase up to ten percent (10%) of the issued and paidup share capital of the Company by utilising funds not exceeding the retained earnings and/or the share premium account of the
Company. This authority, unless revoked or varied at a general meeting, will expire at the earlier of either the conclusion of the next
Annual General Meeting of the Company or the expiry of the period within which the next Annual General Meeting is required by
law to be held.
The details relating to ordinary resolution 8 are set out in the Share Buy-back Statement dated 3 September 2013.
(12)Special Resolution 9- Proposed amendments to the Articles of Association of the Company
The special resolution 9 above is proposed for the purpose of amending the Articles of Association of the Company. The proposed
special resolution 9, if passed, will enable the Company to comply with the Paragraphs 7.21 and 7.21A of the Listing Requirements.
The details relating to special resolution 9 are set out in the Circular to Shareholders dated 3 September 2013.
This page has been intentionally left blank.
FORM OF PROXY
Scomi Group Bhd.
(Company No.: 571212-A)
(Incorporated in Malaysia under the Companies Act, 1965)
Registered Office: Level 17, 1 First Avenue, Bandar Utama,
47800 Petaling Jaya, Selangor Darul Ehsan, Malaysia
I/We
CDS Account No.
No. of Ordinary Shares Held
NRIC/Company No.
(Full name as per NRIC/Certificate of Incorporation in capital letters)
of
(Full address)
being a member/members of Scomi Group Bhd, hereby appoint
(Full name and NRIC/Passport No.)
of
(Full address)
or failing him/her
(Full name and NRIC/Passport No.)
of
(Full address)
or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the 11th Annual
General Meeting of Scomi Group Bhd (the “Company”) to be held at Ballroom 1, First Floor, Sime Darby Convention Centre,
1A Jalan Bukit Kiara 1, 60000 Kuala Lumpur, Malaysia on 26 September 2013 at 2:30 pm, or any adjournment thereof.
Ordinary Business
To re-elect the following Directors who retire in accordance
with Articles 82 of the Articles of Association of the Company and
being eligible, offer themselves for re-election:
Resolution 1(i)
Resolution 2(ii)
Resolution 3(ii)
For Against
To re-elect the following Director who retires under Article 89 of the Articles of
Association of the Company and being eligible, offers himself for re-election:
Resolution 4(i) Dato’ Teh Kean Ming
Resolution 5
To approve the payment of Directors’ fees amounting to RM729,112.90 for
Non-Executive Directors in respect of the financial period ended 31 March 2013
Resolution 6
To appoint Messrs KPMG as Auditors of the Company for the financial year ending 31 March 2014, in replacement of the retiring Auditors, Messrs PricewaterhouseCoopers,
and to authorise the Directors to fix their remuneration
Special Business
For Resolution 7
Authority to Issue and Allot Shares Pursuant to Section 132D of the Companies Act, 1965
Resolution 8
Proposed Renewal of Authority for the Purchase by the Company of its ordinary shares of up to ten percent (10%) of the issued & paid-up share capital
Against
Resolution 9
Proposed Amendments to the Articles of Association of the Company
(Special
Resolution)
Please indicate with a check mark (“ ”) in the space provided to show 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
2013
Signature/Seal
Fold this flap for sealing
NOTES
(i)A member of the Company entitled to attend and vote at the meeting may appoint a proxy or proxies (but not more than two) to attend and
vote on his/her behalf. A proxy may but need not be a member of the Company.
(ii)Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her holding to be
represented by each proxy.
(iii)Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one
proxy but not more than two proxies in respect of each securities account it holds with ordinary shares standing to the credit of the said
securities account.
(iv)The instrument for the appointment of a proxy, in the case of an individual shall be signed by the appointer or his/her attorney duly authorised
in writing and in the case of a corporation, either under seal or under the hand of an officer or attorney duly authorised. If no name is inserted
in the space for the name of your proxy, the Chairman of the meeting will act as your proxy.
(v)The instrument for the appointment of a proxy must be completed and deposited at the office of the Share Registrar of the Company, Symphony
Share Registrars Sdn Bhd at Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301, Petaling Jaya, Selangor Darul Ehsan,
Malaysia, not less than forty-eight (48) hours before the time appointed for holding the Annual General Meeting or any adjournment thereof.
(vi)For the purpose of determining a member who shall be entitled to attend this 11th AGM, the Company shall be requesting Bursa Malaysia
Depository Sdn Bhd in accordance with Articles 57 and 58 of the Articles of Association of the Company and Section 34(1) of the Securities
Industry (Central Depositories) Act, 1991 to issue a General Meeting Record of Depositors as at 20 September 2013. Only a depositor whose
name appears on the General Meeting Record of Depositors as at 20 September 2013 shall be entitled to attend the said meeting or appoint
proxies to attend and/or vote on his/her behalf.
Then fold here
Affix
Stamp
The Registrar of Scomi Group Bhd
Symphony Share Registrars Sdn Bhd
Level 6, Symphony House
Pusat Dagangan Dana 1
Jalan PJU 1A/46, 47301 Petaling Jaya
Selangor Darul Ehsan, Malaysia
1st fold here