Key Financial Highlights

Transcription

2014
1,416.0
2013
1,471.7
p3
S com i Energy S er vices B h d An n u al R ep o r t 2014
Key Financ ial Highlight s
Revenue
(RM Million)
12 months
2014
1,416.0
15 months
2013
1,471.7
12 months
15 months
2014
2013
1,416.0
1,471.7
Profit Before Tax
(RM Million)
12 months
2014
127.9
15 months
2013
134.7
12 months
15 months
2014
Profit after Tax2013
after
127.9
134.7
Minority Interests
(RM Million)
12 months
2014
81.9
15 months
2013
90.1
Total Assets (RM Million)
RM1,662.0
15 months
Earning 12
Permonths
Share (Basic)
2014
2013
3.50 sen127.9
134.7
RM1,491.1
12 months
2014
81.9
15 months
2013
90.1
3.85 sen
Net Tangible Assets (RM Million)
RM559.0
RM450.7
Shareholders’ Fund (RM Million)
RM673.4
RM564.7
Net Assets Per Share (Attributable to owners of the Company)
28.8 sen
12 months
15 months
2014
2013
2014 (As at 31.03.2014)
81.9
90.1
24.1 sen
2013 (As at 31.03.2013)
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S com i Energy S er v ices B h d An n u al R epo r t 2014
Corporate St r uc t ure
SCOMI ENERGY SERVICES BHD1
50%
50%
LABUAN
Transenergy
Shipping Pte Ltd
Transenergy
Shipping
Management
Sdn Bhd
Scomi D&P
Sdn Bhd
30%
Ophir Production
Sdn Bhd
LABUAN
Marineco
Limited
Trans Advantage
Sdn Bhd
48%
50%
21.08%
SINGAPORE
Goldship Pte Ltd
Scomi KMC
Sdn Bhd
TEXAS, USA
Scomi
Equipment Inc
THAILAND
Scomi Oiltools
(Thailand) Ltd4
SINGAPORE
Scomi Oiltools (S)
Pte Ltd
NETHERLANDS
KMC Oiltools BV
Scomi Sosma
Sdn Bhd
50%
80.54%
INDONESIA
PT Rig Tenders
Indonesia Tbk2
FRANCE
Scomi Anticor
S.A.S3
BRUNEI
Scomi (B)
Sdn Bhd
70%
SINGAPORE
Rig Tenders
Offshore
Pte Ltd
95%
INDIA
KMC Oiltools
India Pte Ltd5
SINGAPORE
Rig Tenders
Marine Pte Ltd
SINGAPORE
CH Ship
Management
Pte Ltd
95%
95%
SINGAPORE
Grundtvig
Marine Pte Ltd
INDONESIA
PT Batuah
Abadi Lines
SINGAPORE
CH Logistics Pte Ltd
SINGAPORE
Sea Master
Pte Ltd
49%
BRITISH VIRGIN
ISLANDS
King Bridge
Enterprises
Limited (BVI)
Scomi Platinum
Sdn Bhd
4%
VIETNAM
Southern Petroleum
Transportation Joint
Stock Company
SINGAPORE
Scomi Marine
Services Pte Ltd
AUSTRALIA
Scomi Oiltools
Pty Ltd
Scomi Oiltools
Sdn Bhd
51%
INDONESIA
PT Multi Jaya
Persada
INDONESIA
PT Scomi
Oiltools
95%
INDONESIA
PT Inti Jatam Pura
RUSSIA
Scomi Oiltools
(RUS) LLC
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49%
Emerald Logistics
Sdn Bhd
BERMUDA
Scomi Oilfield
Limited
51%
Gemini Sprint
Sdn Bhd
CAYMAN ISLANDS
Scomi Oiltools
Ltd
KMCOB Capital
Berhad
51%
OMAN
Scomi Oiltools
Oman LLC
CAYMAN ISLANDS
Scomi Oiltools
(Cayman) Ltd
50%
CAYMAN ISLANDS
Scomi Oiltools
(Africa) Limited
60%
NIGERIA
Wasco Oil Service
Company Nigeria
Limited
ENGLAND & WALES
Vibratherm Limited
96%
GABON
Oiltools
Gabon SA
Key
1 Listed on the Bursa Malaysia Securities Berhad.
2 Listed on the Indonesia Stock Exchange.
3 Includes 1 preferential share each held by 2 different individual.
4 Includes 1 Class A share each held by Scomi Oiltools Ltd and Scomi Oiltools (Cayman) Ltd.
5 Includes 1 share held by Scomi Oiltools Ltd.
Notes
• 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.
p6
Corpo rate St atement
Wi t h a p resence in 42 loc ations ac ros s
2 1 co u nt ri es, the S comi E n erg y S er vices
gro u p o f co m panies is a g lobal tec hn olog y
enterp ri se in th e en erg y and logis tic s
indus tr ies.
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.
p7
Corp orate Infor mat ion
Directors
Tan Sri Nik Mohamed Bin Nik Yaacob
(Chairman)
Dato’ Meer Sadik Bin Habib Mohamed
Dato’ Jamelah Binti Jamaluddin
Liew Willip
Lee Chun Fai
Ravinder Singh Grewal A/L Sarbjit S
Shah Hakim @ Shahzanim Bin Zain
Loong Chun Nee (Alternate to Shah Hakim @
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 : +603 7841 8000
Fax : +603 7841 8151/ 52
Helpdesk : 03-78490777
PT Bank Mandiri (Persero) Tbk
Cabang Jakarta Tebet Supomo
Jl. Dr. Supomo SH No. 43 Tebet
Jakarta Selatan 12810
Indonesia
Company Secretaries
Chong Mei Yan (MAICSA 7047707)
Ong Wei Leng (MAICSA 7053539)
Overseas-Chinese Banking
Corporation Ltd
65, Chulia Street, 10th Floor
OCBC Centre
Singapore 049513
Shahzanim Bin Zain)
Audit and Risk Management
Committee
Liew Willip (Chairman)
Lee Chun Fai
Nomination and Remuneration
Committee
(Chairman)
Liew Willip
Auditors
Messrs KPMG (AF: 0758)
Level 10, KPMG Tower,
8, First Avenue, Bandar Utama,
47800 Petaling Jaya,
Selangor Darul Ehsan
Malaysia
Principal Bankers
Registered Office
Level 17, 1 First Avenue
Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Administrative and Correspondence
Address
Level 17, 1 First Avenue, Bandar Utama
47800 Petaling Jaya
Tel : +603 7717 3000
Fax : +603 7725 9082
Email : info@my.scomienergy.com
Website: www.scomienergy.com.my
Standard Chartered Bank
8 Marina Boulevard
#24-00
Marina Bay Financial Centre Tower 1,
Singapore 018981
Hong Leong Bank Berhad
Level 1, Wisma Hong Leong,
18 Jalan Perak 50450 Kuala Lumpur,
Malaysia
Al Rajhi Banking & Investment
Corporation (Malaysia) Berhad
Ground & 1st Floor
No A-12, Block A Glomac Square
Jalan SS6/5A
47301 Petaling Jaya
Selangor, Malaysia
Bank Internasional Indonesia
Global Wholesale Banking
Sentral Senayan 3, 21st Floor
Jl. Asia Afrika No. 8, Gelora Bung Karno
Jakarta 10270, Indonesia
OCBC Bank (Malaysia) Berhad
Menara OCBC, 18 Jalan Tun Perak
50050 Kuala Lumpur, Malaysia
Stock Exchange Listing
Main Market of Bursa Malaysia Securities
Berhad
Stock Name: Scomies
Stock Code: 7045
CIMB Bank Berhad
Lot 27, 29, 31 Jalan 52/2
Seksyen 52, 46200 Petaling Jaya
Selangor, Malaysia
Currency
Ringgit Malaysia (RM)
Malayan Banking Berhad
Lot C.01, Concourse Level,
8, First Avenue, Bandar Utama
47800 Petaling Jaya
Selangor, Malaysia
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B oard of D irec tor s
Chief Executive Officer/ Non-Independent Executive
Director
Chairman, Independent Non-Executive Director
Liew Willip
Independent Non-Executive Director
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Lee Chun Fai
Non-Independent Non-Executive Director
Loong Chun Nee
Alternate Director to En Shah Hakim @ Shahzanim Bin Zain
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Pro f ile o f D i rec to r s
Tan Sri Asmat Bin Kamaludin
Chairman, Independent Non-Executive Director
Chairman, Non-Independent Non-Executive Director (Resigned on
31 May 2013)
Tan Sri Nik, 65, a Malaysian, is the Chairman and
Independent Non-Executive Director of the Company.
He was appointed as a member of the Board on 16 May
2013 and was designated as the Chairman of the Board
on 31 May 2013.
Tan Sri Nik holds a Diploma in Mechanical Engineering, a
B.E.(Hons) Degree from Monash University and a Masters
in Business Management from the Asian Institute of
Management. He also completed the Advanced Management
Programme at Harvard University in the United States.
He served as the Group Chief Executive of Sime Darby Berhad
from 1993 until his retirement in June 2004. He was Sime
Darby Berhad’s Director of Operations in Malaysia prior to
his appointment as the Group Chief Executive in 1993. He
also served on the Boards of many of the Sime Darby group
companies during this time. He was also the Chairman
of the Advisory Council of National Science Centre and
Chairman of the Board of 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. The
other Malaysian public companies in which he is a Director
are Scomi Group Bhd, GuocoLand (Malaysia) Berhad and
Symphony Life Berhad (formerly known as Bolton Berhad).
Tan Sri Nik Mohamed is also an Executive Director of Yayasan
Kepimpinan Perdana (Perdana Leadership Foundation).
Tan Sri Nik is the Chairman of the Nomination and
Remuneration Committee of the Board. He attended 5 out
of the 6 Board Meetings held in the financial year ended 31
March 2014.
Tan Sri Asmat, 70, a Malaysian, was a Non-Independent
Non-Executive Director and the Chairman of the
Company. He was appointed to the Board on 1 January
2010 and resigned on 31 May 2013.
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 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
(MITI), a position he held from 1992 to 2001. Between 1973
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), the World Trade Organisation (WTO) and the
Asia-Pacific Economic Corporation, 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 Tan Sri Asmat
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 the brother in-law of Vice Admiral Dato’ Haron
who was an Independent Non-Executive Director of the
Company and vacated office on 16 May 2013 pursuant to the
Article 96.1 of the Articles of Association of the Company.
Tan Sri Asmat was the Chairman of the Nomination and
Remuneration Committee of the Board and he attended the
only one Board Meeting held during the financial year ended
31 March 2014, before his resignation on 31 May 2013.
Vice Admiral Dato’ Haron Bin Dato’ (Dr) Mohd
Salleh (Rtd)
Independent Non-Executive Director (Vacated office on 16 May
2013)
Vice Admiral Dato’ Haron, 71, a Malaysian, is an
Independent Non-Executive Director of the Company.
He was appointed to the Board on 23 September
2005 and vacated office on 16 May 2013 pursuant to
the Article 96.1 of the Articles of Association of the
Company.
Vice Admiral Dato’ Haron began his Basic Cadet Training at
the Federation Military College Malaysia and continued his
training as Naval Officer at the Britannia Royal Navy College,
United Kingdom and the Royal Navy. He has held various
senior positions in the Royal Malaysian Navy including Fleet
Operations Commander in the rank of Rear Admiral, Deputy
Chief of Navy and Assistant Chief of Staff of the Malaysian
Armed Forces HQ and he was promoted to the rank of Vice
Admiral on assuming the appointment of Chief of Staff,
Malaysian Armed Forces HQ in 1994 before retiring from the
Royal Malaysian Navy in December 1995.
The other Malaysian public company in which Vice Admiral
Dato’ Haron is a Director is Yayasan Scomi. Vice Admiral Dato’
Haron , is the brother in-law to Tan Sri Asmat Bin Kamaludin,
who was the Chairman and Non-Independent Non-Executive
Director of the Company during the financial year ended 31
March 2014. Tan Sri Asmat resigned on 31 May 2013.
Vice Admiral Dato’ Haron was a member of the Audit and
Risk Management Committee and the Nomination and
Remuneration Committee.
Dato’ Meer Sadik, 51, a Malaysian, is an Independent
Non-Executive Director of the Company. He was
appointed to the Board on 19 November 1997.
Dato’ Meer Sadik graduated from Wichita State University,
United States of America, with a Degree in Business
Administration, and later qualified as a gemmologist
from the Gemmological Institute of America. Dato’ Meer
Sadik is currently the Managing Director of the Habib
Group of Companies which today is involved in retailing,
manufacturing and microfinancing.
Dato’ Meer Sadik is a Past President of the Young
Entrepreneurs Organisation (YEO) and was the Governor of
the Alice Smith School. Dato’ Meer Sadik has been serving
as the Honorary Secretary of Malaysian Retailers Association
in 2007.
The other Malaysian public company which he is a Director
is Yayasan Habib, which was established in 2008 to
undertake corporate social responsibility activities for the
Habib Group.
Dato’ Meer Sadik is a member of the Audit and Risk
Management Committee. He attended 5 out of the 6 Board
Meetings held in the financial year ended 31 March 2014.
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Mok Yuen Lok
(Resigned on 30 May 2014)
Dato´ Jamelah, 57, a Malaysian, is an Independent
Non-Executive Director of the Company. She was
appointed as a member of the Board on 15 November
2013.
Dato’ Jamelah holds a Diploma in Business Studies, a
BBA (Finance) Degree from Western Michigan University,
Michigan, USA and a Masters in Business Administration from
Central Michigan University, Michigan, USA.
Mr Mok, 53, a Malaysian, is an Independent NonExecutive Director of the Company. He was appointed
to the Board on 29 March 2002 and resigned on 30 May
2014.
Mr Mok graduated in 1981 with a Bachelor of Science from
Heriot Watt University, Edinburgh, and joined Ernst & Whinney
(now Ernst & Young) in 1982, where he trained and qualified
as a Chartered Accountant.
Dato’ Jamelah served as the Managing Director of Kuwait
Finance House (Malaysia) Labuan Berhad from March 2013 to
September 2013. She was the Chief Executive Officer (“CEO”)
of Kuwait Finance House (Malaysia) Berhad from February
2010 to March 2013. She also served RHB Islamic Bank Berhad
as Managing Director from August 2007 to January 2010. Her
previous working experience including as (i) the Deputy CEO
of Kuwait Finance House (Malaysia) Berhad from November
2006 to August 2007; (ii) Chief Operating Officer (“COO”)
of RHB Sakura Merchant Bankers Bhd from January 2004
to November 2006; and (iii) Division Director of Macquarie
Malaysia (M) Sdn Bhd and Macquarie Bank Limited (Labuan
Branch) from August 1999 to November 2003.
He co-founded Crowe Horwath in Malaysia in 1990 and is
currently the Regional Executive Director of Crowe Horwath
International for the Asia Pacific region, overseeing 27
countries. He is also Audit Committee Chairman of another
public listed company. Mr Mok is a member of the Young
Presidents’ Organization, Malaysian Chapter, where he has
served various Board positions. He has also been actively
involved with Hospis Malaysia, a charitable organization
which renders free palliative care to residents in the Klang
Valley diagnosed with life-limiting conditions. Other
Malaysian public companies which he is a Director are
Goodway Integrated Industries Bhd and Yayasan Habib.
Dato’ Jamelah is a member of the Nomination and
Remuneration Committee of the Board. She attended all the
3 Board Meetings since her appointment as a director held in
the financial year ended 31 March 2014.
Mr Mok chaired the Audit and Risk Management Committee,
and was also a member of the Nomination and Remuneration
Committee of the Board. He attended 5 out of the 6 Board
Liew Willip
Lee Chun Fai
Non-Independent Non-Executive Director
Mr Liew, 46, a Malaysian, is an Independent NonExecutive Director of the Company. He was appointed
to the Board on 21 February 2011.
Mr Lee, 43, a Malaysian, was appointed to the Board as
Non-Independent Non-Executive Director on 17 May
2013.
Mr Liew is a commerce graduate of the University of
Melbourne and a Chartered Financial Analyst. Upon
graduation, Mr Liew worked with international accounting
firm KPMG as an auditor.
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 (Kellogg) and The Hong Kong University of Science
& Technology in 2012.
Subsequently, he joined a local stockbroking company
as an investment analyst, and later, moved to the Kuala
Lumpur office of an international investment bank, Barclays
deZoete Wedd, where he was the senior equity analyst.
In 1996, Mr Liew was hired to set up the Malaysian equity
research operations of another international investment
bank, NatWest Markets, where he was the Director and
Head of Research. In 1998, Mr Liew joined the national asset
management company, Pengurusan Danaharta Nasional
Berhad (“Danaharta”), where he was among the pioneer staff
members. At Danaharta, Mr Liew was the Assistant General
Manager/Head of Research unit (Corporate Services Division).
After leaving Danaharta in 2000, Mr Liew co-founded
an independent investment advisory company, and a
consulting company that specializes in financial and investor
communications. Mr Liew is currently the Managing Director
of a company providing consulting services.
Mr Liew chairs the Audit and Risk Management Committee,
and is also a member of the Nomination and Remuneration
Committee of the Board. He attended all of the 6 Board
Mr Lee 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.
His directorships in other public companies include
Kumpulan Europlus Berhad, Scomi Engineering Bhd, Scomi
Group Bhd (Alternate Director), Road Builder (M) Holdings
Bhd (Alternate Director).
Mr Lee is a member of the Audit and Risk Management
Committee of the Board. He attended 4 out of the 6 Board
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Chief Executive Officer/ Non-Independent Executive Director
Ravinder, 44, a Malaysian, was appointed to the Board
as Independent Non-Executive Director on 21 May
2014.
Encik Shah Hakim, 49, a Malaysian, is the Chief
Executive Officer/ Non-Independent Executive Director
of the Company and was appointed to the Board on 23
September 2005.
Ravinder holds a Bachelor of Commerce from the University
Of New South Wales, Australia and is an Australian Certified
Practising Accountant.
Ravinder has over 20 years of experience in corporate finance
and private equity. His corporate finance deals have included
IPOs and bond issues in Singapore, merger & acquisition
transactions in South-East Asia as well as debt restructuring
transactions in Malaysia and Indonesia. His private equity
deals have included buy-out and development capital
investments in South-East Asia and Australia. He previously
worked for DBS Bank in Singapore and Standard Chartered
Bank, with his last position as a Managing Director in the
private equity division of Standard Chartered Bank.
Ravinder is a member of the Audit and Risk Management
Committee of the Board.
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 Group
Bhd, Scomi Engineering Bhd and KMCOB Capital Berhad.
He attended all the 6 Board Meetings held in the financial
year ended 31 March 2014.
Loong Chun Nee
Alternate Director to En Shah Hakim @ Shahzanim Bin Zain
Madam Loong, 56, a Malaysian, was appointed as an
Alternate Director to Encik Shah Hakim @ Shahzanim
Bin Zain on 27 February 2009.
She graduated with a Bachelor of Arts in Economics and
Social Studies from the University of Manchester, United
Kingdom.
Madam Loong was previously with the Renong Group
of companies for a total of 11 years covering companies
including Projek Lebuhraya Utara-Selatan Berhad (1988 –
1992) and United Engineers (Malaysia) Berhad (1993 – 1996)
and HBN Management Sdn. Bhd. (Group Management Office)
(1997 – 1999). She left the Renong Group in late 1999 to join
Tan Sri Dato’ (Dr) Rozali Ismail as Financial Advisor for Puncak
Group of companies before being appointed as the Finance
Director to the Board of Puncak Niaga Holdings Bhd in
January 2005 (2000 – June 2005).
She then joined Scomi Group Bhd in July 2005 as Senior
Vice President of Corporate Finance Division/Chief Financial
Officer of Scomi Energy Services Bhd. Thereafter, she was
transferred to Scomi Group Bhd as Group Chief Financial
Officer in August 2006. In early 2008, she was re-designated
as Chief Investment and Performance Officer.
She also serves on the Board of Scomi Group of Companies.
Madam Loong has vast experience in financial advisory
matters specialising in the areas of corporate debt
restructuring, corporate finance and project financing for
privatisation projects. Other Malaysian public companies
in which she is a Director are Scomi Engineering Bhd and
KMCOB Capital Berhad.
Madam Loong attended 3 out of the 6 Board Meetings held
in the financial year ended 31 March 2014 by invitation.
Save as disclose above the Directors do not have:
(i) any family relationship with any Director and/or substantial shareholder of the Company;
(ii) any conflict of interest with the Company; and
(iii) any conviction for offences within the past 10 years (other than traffic offences, if any)
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Management Team
Shah Hakim Zain
Chief Executive Officer
Dr. Mohd Fazrie Abd Wahid
Rohaida Ali Badaruddin
President - Integrated Project Management
Chief of Operations - Marine Services
Wan Ruzlan Iskandar
President - Oilfield Services (Australasia, Middle
East & Turkmenistan)
Ramesh Veetikat Ramachandran
Deputy Chief Financial Officer
Zubaidi Harun
Vice President - Business Development &
Communications
Mike Walker
Senior Vice President - Oilfield
Services (Africa & Russia)
p17
Sharifah Norizan Shahabudin
Steve Bracker
President - Oilfield Services (North &
South America)
Chief Legal & Governance Officer
Mukhnizam Mahmud
Chief Financial Officer
Dan Farrar
Vice President - Drilling Waste Management
Research & Engineering
Mastura Mansor
Vice President - Supply Chain Management
Jessie Chan Yuen Ling
Head - Human Resources Management
Vickneswaran Veloo
Head - Technical Services (Fluids & Integrated Services)
The Ar t of
Management
The success of any business depends
on the effectiveness of its managers. At
Scomi, our managers apply their skills and
years of experience to seize oppor tunities
that could push our business for ward and
realise potential for our stakeholders.
p2 0
Chairman
p21
Ch ai r man’s St atement
D e ar Stakeho lders,
I t ha s b een a ver y encouraging fin anc ial year
fo r S co m i Energ y S er vices B h d (“SE SB ” or
“ the Co m p a ny ” ), wh ic h h as s een exception ally
strong resu l t s i n our O ilfield S er vices divis ion .
B ei ng the f i rst f u ll year for the res tr uc tured SE SB
Gro u p, t he resu lts validated the res tr uc tur ing
exerci se em b a rked on in 2012 and whic h was
com p leted in M arc h 2013.
Our oilfield anchor markets of Indonesia,
Thailand and Turkmenistan each
performed exceptionally well. This was
supported by continued growing activity
in West Africa and Russia. Contribution
from our operations in these countries
more than buffered the slightly
dampened performances in Malaysia
and India where rig count was lower
than expected rig count while Egypt’s
political instability also curbed activity.
Overview
The calendar year 2013 in general saw
growth in the global economy, with
recovery in the developed world fuelling
greater demand for hydrocarbons. The
price of oil continued to be robust
at well over the USD100 per barrel
mark. This was reflected in increased
activity along the entire value chain
of the upstream oil and gas industry
from exploration, development and
production to maintenance, the sectors
in which SESB’s products are targeted.
Our own key markets of the Eastern
Hemisphere – encompassing Malaysia,
Indonesia, Thailand, Myanmar, India, the
Middle East, Russia and Turkmenistan –
as well as West Africa are experiencing
rapid growth in terms of upstream
activity, buoyed by fiscal incentives
as well as regulatory support by the
relevant governments. Heightened
market activity, coupled with SESB’s
continued research and investment
into cutting-edge products, as well as
concerted efforts to further enhance
our customer relationships and improve
our service quality collectively played a
significant role in this business division’s
very strong performance: its 12-month
results surpassing those of the preceding
15-month financial year.
New contracts in Indonesia led to an
almost doubling of revenue in this
market, while most of the other markets
we are in also charted growth. At the
same time, our more streamlined
operations post-restructuring led to
greater cost efficiencies which brought
down our operating expenses and
contributed to greater profit margins.
The Marine Services division continued
to be challenged by depressed global
prices of coal and a contraction in
mining activity. This has impacted
our key market of Indonesia. At the
same time, dampened demand for the
transport of coal affected time charter
contract rates. This development
supports the management’s decision
to divert our focus from coal logistics
to offshore support service. Although
we are committed to serving our
existing long-term coal customers,
during the financial year under review
we continued to right-size our offshore
fleet by disposing of older vessels and
acquiring new ones to bolster our
capacity to serve oil and gas clients.
p2 2
Ch airm an’s St atem ent
Financial Highlights
SESB recorded revenue of RM1.42 billion
for the financial year ended 31 March
2014. This marks a 20.3 per cent increase
from our previous 15-month financial
period ended 31 March 2013 on an
annualised basis. Our performance,
as noted above, was driven by the
Oilfield Services (“OFS”) division which
posted RM1.24 billion in revenue,
representing 34.0 per cent growth on
an annualised basis despite the low
rig count in Malaysia, India and Egypt.
OFS’ performance was driven by higher
contributions from other key markets
namely Indonesia, Myanmar, Russia,
Turkmenistan and West Africa.
The depressed price of coal,
refurbishment of key vessels and the
disposal of other vessels impacted
Marine Services’ performance for the
year, leading to a division contribution of
RM179.4 million to the Group’s revenue.
On the back of revenue growth from OFS
as well as increased cost efficiencies as a
result of various initiatives undertaken in
conjunction with the restructuring that
led to the creation of SESB, the Company
registered a Profit Before Tax (“PBT”) of
RM127.9 million, an increase of 18.7 per
cent compared to the annualised PBT for
the 2013 financial period.
It also gives me pleasure to note that
we have managed to strengthen our
balance sheet by further reducing our
net borrowings with RM31.4 million in
increased cash as compared to a year
previously. More efficient debt collection
has also improved our working capital.
Strategy For Growth
Following the corporate restructuring
which consolidated our Energy Logistics
and Oilfield Services divisions, we
are now building on our strengths to
provide our customers with a more
compelling value proposition, and
further grow our business. Towards this
end, SESB has embarked on a forward
plan to take our business to greater
heights. In essence, the strategy is to
build on the three fundamental pillars of
growing our core business; expanding
our product portfolio; and building
integration capability in oilfield services.
In terms of growing our core business,
the decision to be more customercentric has led to better relationships
with our customers, leading to more
insightful understanding of their
concerns and needs. This, is turn,
has influenced our product offering
and in particular the development
of green, graphene enhanced nanochemical solutions for drilling fluids and
production enhancement requirements.
This is coupled with drilling waste
management solutions that offer
significant cost benefits to our customers
while also enhancing efforts to reduce
their impact on the environment.
At the same time, we have placed more
emphasis on improving the quality of
our systems and processes in order to
enhance our service offering. Towards
this end, all country operations within
the SESB Group are gearing up for
Integrated Management Systems (“IMS”)
certification to reflect our capabilities
and quality. To date, our Malaysia,
Indonesia and Egypt operations have
secured all three ISO 14001, ISO 9001
and OHSAS 18001 certifications for
environment, quality management
system and occupational health and
safety respectively, while the other
country operations are in the process of
doing so.
Our product portfolio continued to
expand during the financial year, as
a result of both internal R & D as well
as partnerships with other leading
specialists. We have three research
and development centres, namely
the Global Research and Technology
Centre (“GRTC”) in Shah Alam, Malaysia;
Scomi Anticor’s laboratory in France for
Production Enhancement Technology;
and a Drilling Waste Management
Research and Engineering facility in
Houston, Texas.
Among our third-party technology
collaborators is Platinum NanoChem Sdn
Bhd (“Platinum NanoChem”) with whom
we are developing a series of grapheneenhanced green drilling nanofluids
that promises to be a game-changer
by being biodegradable. This product
will result in immense environmental
benefits over and above delivering
cost advantages from faster and more
efficient drilling operations.
While we already have a firm presence
in the development, production and
marketing of drilling and production
enhancement solutions, we are
expanding our offerings to include
integrated project management in
the areas of marginal fields, enhanced
oil recovery, brownfield development
and production management. In June
2014, SESB, together with its consortium
partners, successfully secured its maiden
risk service contract (“RSC”). This is a
significant milestone for the Company
which will provide us with a platform
to build integration capability in this
growing area within the upstream sector
of the oil and gas industry.
Board Of Directors
It is with regret that post the financial
period under review, we bade farewell
to Mr. Mok Yuen Lok, who resigned from
the SESB Board of Directors effective
30 May 2014. On behalf of the Board
of Directors, I would like to take this
opportunity to express our appreciation
to Mr. Mok for his contribution and
experience after serving on the board for
more than nine years.
It also gives me pleasure to announce
the appointment of two new Directors
to the Board during the financial year.
On 15 November 2013, Dato’ Jamelah
Binti Jamaluddin was appointed as an
Independent Non-Executive Director,
followed by Mr. Ravinder Singh Grewal,
whose appointment as Independent
Non-Director was effective from
21 May 2014.
Ch airm an’s St atem ent
Prospects
All indications point towards continued
global economic recovery which,
coupled with robust oil prices, will
drive demand for fuel, not just in the
financial year 2014-15 but also in the
medium term. Market sentiment has
been bullish in the Eastern Hemisphere,
the Middle East, Russia and Africa, and
we are confident this will continue.
Our geographical spread, moreover,
serves as a strong individual country
risk mitigation strategy; as any
upheaval in any of our key markets
should be compensated for by strong
performances in the rest of the markets.
Complementing our geographic
spread, SESB has in place a robust risk
management systems that should
protect our assets and shareholder value.
SESB has undergone extensive corporate
restructuring, and as our financial results
indicate, has emerged stronger than
before. Our performance this year gives
us confidence in our overall strategic
direction which we will be reinforcing by
further strengthening our fundamentals
– our products, our customer delivery
and quality operations. This will
contribute towards increasing our share
in existing markets while enhancing our
capability to penetrate new markets.
We are very excited about our
partnership with Platinum NanoChem,
with the graphene-based drilling
products showing some positive
results after tests in Malaysia and
Turkmenistan. This promises a whole
range of game-changing solutions that
will bring significant cost benefits to our
customers.
We believe in the immeasurable value
of both our people and technology and
will continue to invest in our human
and technical capabilities – developed
in-house as well as acquired via strategic
partnerships – to support the attainment
of our corporate vision.
Most importantly, I would like to express
my heartfelt gratitude to the entire
family at SESB for giving the Company
your 100 per cent and for working
together in a manner that has allowed
us to progress from strength to strength.
With your dedication and efforts, we
are now truly beginning to realise the
potential of this Company. Well done,
team, and let us keep the SESB flag flying
high!
Acknowledgements
SESB has made a very promising start
in our first year following the corporate
restructuring. This achievement would
not have been possible without the
strong support of our many stakeholders.
The list includes all our customers,
shareholders, business partners and
financiers, and I would like to thank
them on behalf of the Board of Directors.
I would also like to acknowledge the
various government agencies in all the
countries we operate in for presenting a
conducive work environment.
Chairman
p2 3
p24
p2 5
O ur s ucces s comes from the
dedic ation of our people. Throu g h
th eir s k ills and commitment, we
h ave been able to develop, proc u re
an d manag e in n ovations that c re ate
better effic ienc y and add valu e
to the growth of our par tn ers’
bus ines s es as well as our ow n .
p2 6
Prof i l e of Di re c tors
Shah Hak im Z ain
C hi ef Exec ut i ve O f f icer
p27
Man ag ement Review of O perat io ns
Th e f i na n c i a l ye a r e n de d 31 M arch 2014 h as be e n
ex t re m e ly e n coura gin g for S comi E n e rg y S e r vice s Bh d
( “SES B ” or “ t he Co m pany ”). O ur Oilfie ld S e r vice s divisio n
a cc ru e d m o re re ve nue ove r t h e 12-mont h pe r iod t h an
it d i d i n t he 1 5 - m o nt h pe r iod of t h e pre vious fin an cial
yea r ( w h e n S E S B c ha n g e d it s ye ar e n d from 31 De ce mber
to 3 1 M a rc h ) . O u r fin an cial ach ie ve me nt h as be e n
f ur t h e r com p l e m e nte d by sign ificant advan ce s in t h e
de ve lop m e nt o f c u t t in g - e dg e dr illin g fluids as we ll as
d ri lli ng wa s te m a n ag e me nt te ch n ologie s w h ich offe r
gre ate r b e n e f i t s to our custome r s in t h e upst re am
o i l an d g as se c tor.
Overview
After a rather bearish year that preceded
it, the calendar year 2013 was markedly
more vibrant as the global economy
finally began to pick up and consumer
spending increased. The price of oil
continued to hover steadily above
USD100 per barrel which, coupled with
widespread demand for fuel to support
economic growth, contributed to
increased upstream oil and gas activity.
On the whole, this had a positive bearing
on SESB despite the curtailment of
planned drilling during the year in Egypt,
India and Malaysia.
Thanks to our geographic spread,
reduced activity in these three nations
was more than compensated for
by much heightened exploration,
development and production in the
other markets in which we have a
presence, and most notably in Indonesia,
Thailand, Myanmar, West Africa, Russia
and Turkmenistan. As a result of more
focused efforts to build our customer
relationships as well as the provision
of more targeted drilling solutions,
we were able to secure some USD160
million worth of new contracts during
the financial year in Indonesia. In
Thailand and Myanmar, we clinched
nearly USD120 million in new projects.
West Africa, Russia and Turkmenistan,
meanwhile, all recorded growth in both
revenue and profit – as we built on
businesses with existing customers while
also achieving several breakthrough
contracts with new customers.
Our Marine Services division, meanwhile,
continued to be restructured with
greater emphasis on the provision of
offshore support vessels and a gradual
shift away from coal logistics. This
strategy is spurred by greater offshore oil
and gas activity as well as the continued
downward spiral in coal demand, which
has affected production globally and in
our key customer market, Indonesia.
p2 8
M an age m e nt R ev iew of O p erat i o ns
Financial Performance
Strategic initiatives implemented in
2012-2013 to differentiate ourselves by
offering drilling solutions developed
specifically with individual customers’
needs in mind have started to bear
fruit, as affirmed by our financial results
in the financial year ended 31 March
2014. During this period, we achieved
revenue of RM1.42 billion which, on an
annualised basis, represented a 20.3 per
cent increase from our revenue over
the 15-month financial period ended 31
March 2013.
This was driven primarily by our Oilfield
Services (“OFS”) division, which posted
RM1.24 billion in revenue, marking
growth of 34.0 per cent on an annualised
basis despite the low rig count in
Malaysia, India and Egypt. The increase
was due mainly to higher contribution
from other key markets such as
Indonesia, Myanmar, Russia, Thailand,
Turkmenistan and West Africa.
Marine Services faced the full-year
impact of the expiry of a major coal
contract in Indonesia in mid-2012
that was replaced with a time charter
contract at lower rates. Although this
was mitigated by commencement of a
new bulk coal affreightment contract in
the third quarter, revenue from Marine
Services was affected by a scheduled
docking for maintenance and continued
refurbishment of two accommodation
work barges. Together, these challenges
led to a 30.0 per cent decrease in
segmental revenue to RM179.4 million.
At the same time, concerted efforts to
rein in our costs at country operations
and corporate levels contributed to a
lower operating expense as a percentage
of revenue from 13.7 per cent in the
previous 15-month period to 12.6 per
cent this reporting year. This led to SESB
registering a Profit Before Tax (“PBT”) of
RM127.9 million, an increase of 18.7 per
cent compared to the annualised PBT for
the financial year 2013.
Our balance sheet continued to improve
with a further drop in net borrowings
as our cash position strengthened by
RM31.4 million from a year previously.
Accordingly, our net gearing has
dropped from 0.56 as at end March 2013
to 0.41 at end March 2014, leaving the
Company in a much stronger position to
further grow our business.
Operations Review
Oilfield Services
Our Oilfield Services benefited from
the generally vibrant upstream oil and
gas sector in our target markets. The
year’s results were also indicative of the
positive outcome of enhanced efforts
to further strengthen our customer
relationships.
We won new contracts during the
financial year, both in our traditional
strongholds as well as in fast growing
markets such as the West African nations
of Congo and Nigeria, which increased
our order book to RM5.2 billion as at end
March 2014.
Among the new wins during the
year was a contract estimated at
RM98.5 million to provide drilling and
completion fluid solutions to Dragon Oil
(Turkmenistan) Ltd over a period of two
years beginning January 2013.
We also reinforced our long-standing
relationship with PETRONAS, Malaysia’s
national oil corporation, by securing
two contracts in January 2014 from
its exploration and production arms,
PETRONAS Carigali Myanmar Inc (“PCMI”)
and PETRONAS Carigali (Hong Kong)
Limited (“PCML”) for the provision of
drilling fluids, solids control, well bore
cleanout, drilling waste management
equipment, materials and services. The
contract awards, with a combined value
of RM90 million is for a period of three
years. Work for PCML commenced in
December 2013 while we expect to start
on the PCMI contract in July 2014.
In Indonesia, among our more significant
wins was an RM75 million three-year
contract by Virginia Indonesia Company
(“VICO”) for the provision of solids control
equipment and environmental handling
services. VICO is another established
customer, and it gives us great pleasure
to be able to continue our working
relationship with this company that
started over 15 years ago. We truly value
our customers and the continuation of
working relationships as this testifies to
their confidence in our highly skilled and
experienced team in providing quality
service and value.
We also completed a liquid mud plant
for Total E&P Indonesie (“TEPI”) as part of
a three-year mega-project that we were
awarded in January 2013. The plant, with
a total capacity of 2,000 cubic metre
(m3) for solid gravity 2.2 synthetic oil
base mud, was commissioned on 1 July
2013. It has a 2,500m3 base oil storage
tanks, 400m3 brine tanks and 100m3
mixing tanks. It also has a 500 cubic feet
barite bulking storage capacity complete
with three big centrifuge bowls, a solids
treatment facility, rock catcher and
compressor. We were also responsible for
building its two-jetty port complete with
five liquid barges, five warehouse barges,
two shuttle barges and one landing craft
transport. We were commended by TEPI
for completing the job within a short
period of five months and fulfilling all
their requirements.
The largest contract in terms of value
secured during the financial year was
from PTTEP Siam Limited (“PTTEPS”) and
PTTEP International Limited (“PTTEPI”) for
the provision of drilling fluids services for
an onshore drilling campaign in Thailand
over a period of three years. Valued at
RM195 million, this project represents
SESB’s largest oilfield services contract
currently held in Thailand.
In West Africa, we are beginning to reap
the rewards of strategic investments
made over the last two years. Deepwater
contracts with Shell and Chevron in
Nigeria added to a total of RM38.4
million in fresh revenue over the next
three years. Our Russian operations,
meanwhile, was awarded a major
solids control service and maintenance
contract from RN-Burenie, the drilling
arm of Rosneft. The project covers
equipment utilised on over a dozen
high specification rigs drilling in Western
Siberia.
Marine Services
Our Marine Services comprise coal
logistics and offshore services to the
oil and gas sector. Given the protracted
contraction in demand for coal
worldwide, which industry analysts
believe will continue in the long term,
we are gradually shifting our focus
from the transport of coal towards
offshore-oriented services. At the same
time, we have term contracts with
established clients in the coal sector
and are committed to fulfilling their
needs. During the year under review, for
example, we were awarded a two-year
contract from Tenaga Nasional Fuel
Bhd (“TNFB”), with an option of a year’s
extension, for the carriage of bulk coal
worth approximately RM158.7 million for
the full duration.
While continuing to service TNB and
our other major clients, we are gradually
restructuring the division and resizing
our fleet of vessels to be skewed more
towards the offshore support services
sector and to ensure a higher utilisation
rate. During the year, we disposed two
coal tug sets and five offshore utility
vessels while entering into an agreement
with Freight Management Holdings
Bhd in June 2013 to acquire, own and
operate offshore service vessels which
we intend to lease or charter to clients
across Southeast Asia.
In the offshore support services
segment, we were set back by an earlier
than expected docking for maintenance
and continued refurbishment of two
accommodation work barges. This
was cushioned by the award of new
contracts such as that from Coastal
Energy Company (“CEC”) in Thailand,
for the provision of a 60 metric tonne
bollard pull anchor handling tug supply
(“AHTS”) vessel. This contract is for a year
beginning June 2013, with the option of
another year’s extension.
Developing Game-Changing
Technology
Our Oilfield Services division, which
contributed over 87 per cent of SESB’s
revenue, is highly dependent on the
quality of products that we are able to
offer our clients. With this in mind, SESB
has three research and development
(“R&D”) centres located in three
continents – in Shah Alam, Malaysia;
Peyruis, France; and Texas, USA – which
focus specifically on enhancing the
effectiveness and quality of our product
and service offerings. The Global
Research & Technology Centre in Shah
Alam specialises in high-performance
drilling fluids; the laboratory in
Peyruis concentrates on production
enhancement chemicals; while the
Houston centre is a hotbed of research
on drilling waste management.
Over the years, we have been offering
a suite of drilling fluids solutions
that are suitable for various offshore
environments, including deepwater,
ultra-deepwater and high-temperature,
high-pressure wells. As environmental
concerns have become more urgent
and regulators impose more stringent
requirements on operators, we have
placed greater emphasis on green
solutions that are functionally effective
as well as environment-friendly.
In late 2012, we collaborated with
a partner, to formulate a series of
graphene-enhanced green-based drilling
oils which deliver two critical benefits
to customers: superior functional
performance as well as biodegradability.
Functionally, these oils offer better
thermal conductivity, friction reducing
capability, anti-wear performance
and viscosity stability compared to
traditional formulations. And as they are
biodegradable, they leave a minimal
environmental footprint. While these
products are still undergoing final phases
of laboratory testing, we have an ‘early
win’ product – Confi N Surf, which has
already been marketed in Malaysia and
Thailand. Based on our early successes,
we entered into an exclusive product
formulation and marketing agreement
with Platinum NanoChem to deliver an
entire range of formulated PlatDrill series
for the oilfield chemicals market.
We are extremely excited about this new
direction in our drilling solutions offering
as graphene is truly a wonder chemical.
Essentially, graphene-enhanced greenbased oils satisfy demanding technical
and increasingly stringent environmental
requirements of modern-day drilling,
saving customers huge sums from faster,
more sustainable drilling operations and
vastly reduced need for treating drilling
waste, which in itself represents a large
portion of operators expenses.
p2 9
p3 0
Building Our Brand
To support our intense R&D initiatives,
SESB engages actively in the marketplace
to create awareness of and promote our
product and service offerings. The two
divisions – Oilfield Services and Marine
Services – keep abreast of high-profile
exhibitions, conferences and other
events that serve as suitable platforms
for us to showcase our unique tools and
technologies. During the financial year,
we took part in four major events – the
Offshore Technology Conference (“OTC”)
held in Houston in May 2013, the Asian
Oil, Gas and Petrochemical Engineering
Exhibition (“OGA”) 2013 held in Kuala
Lumpur in June 2013, the Abu Dhabi
International Petroleum Exhibition
and Conference (“ADIPEC”) 2013 held
in Abu Dhabi in November 2013 and
the inaugural Offshore Technology
Conference Asia (“OTC Asia”) organised in
Kuala Lumpur in March 2014.
OTC is the world’s foremost industry
event at which this year more than
80,000 oil, gas and energy professionals
from more than 110 countries
congregated. Making the most of the
opportunity, our technical and sales
teams at Scomi Equipment Inc (“SEI”)
showcased our latest solids control and
drilling waste management technology,
namely our SCM PrimaG 4 Panel Shale
Shaker, which was kitted out with the
brand-new Power Deck Adjustable
Module (“PDAM”); and our SCM 5500
Centrifuge.
A month later, both Oilfield Services and
Marine Services participated in the OGA,
one of the biggest and most soughtafter exhibitions in the Asian region.
This year’s event attracted over 2,000
companies from more than 72 countries
worldwide.
Over in the Gulf region, our team
participated in the ADIPEC 2013,
showcasing our drilling fluids and drilling
waste management offerings. Next,
we took part in the first OTC Asia 2014,
which drew a crowd of over 21,500
visitors representing more than 80
countries globally.
Awards & Recognition
As part of a Company-wide initiative to
increase our service quality, all country
operations under SESB are working
towards Integrated Management
Systems (“IMS”) certification comprising
the ISO 14001 for environmental
standards, ISO 9001 for quality
management systems and OHSAS 18001
for best practices in occupational safety
and health. To date, Egypt, Indonesia and
Malaysia operations have achieved all
three international certifications, while
the other country bases are following
suit.
Safety is of paramount importance to us,
and we strive constantly to achieve zero
accidents among our own personnel as
well as personnel of contractors. In early
2013, our drilling fluids team in Labuan,
Malaysia reached a significant milestone
by achieving one million man-hours
without any lost time injury (“LTI”).
Outlook
The global economy is expected to
continue on its upward trajectory in
2014, which paints a positive picture for
almost all industries, including oil and
gas. While we expect to ride on the crest
of a swelling wave of investment and
activity in the upstream sector, we will
ourselves be guided by a Company-
wide strategy which has clearly outlined
three key areas of focus moving forward:
growing our core business; expanding
our products; and building integration
capability in oilfield services. At its core,
this strategy seeks to increase our market
share in existing markets as well as gain
entry into new markets. We believe we
can achieve this goal by enhancing our
customer service delivery and further
improving our products.
Towards better customer service,
we have embarked on Key Account
Management (“KAM”) in each country
operation, through which we are
training our people to understand
our customers better to fulfil a larger
range of their requirements. At the
same time, enhanced knowledge of
our customers’ needs will help to shape
our R&D activities, providing us with a
keener insight into the kinds of products
that are relevant and that will offer our
customers added value. We are in the
process of fine-tuning our product range
to deliver fit-for-purpose solutions to
meet the requirements of customers in
different locations and who are faced
with different geophysical challenges.
As we are one of the few technologybased companies in the world focusing
on drilling solutions and drilling waste
management, we believe we have
a natural competitive edge in this
niche, which we will leverage on as we
continue to grow.
p31
p32
We believe the markets we are in present
very healthy opportunities for further
growth. Despite the lower than expected
rig count in Malaysia in the year under
review, the market as a whole is vibrant
as oil and gas represents one of 12
National Key Economic Areas (“NKEAs”)
outlined to elevate the country into a
high-income nation by year 2020 and
PETRONAS itself has earmarked RM300
billion over five years from 2011 to
2015 to boost oil and gas production
in order to meet the country’s needs.
According to industry regulator
SKKMigas, Indonesia is expected to drill
206 exploration wells in 2014, and stateowned Pertamina will continue investing
in drilling activities this year. Myanmar
and Thailand together represent the
largest oil and gas spending in AsiaPacific, while the Middle East has always
been one of the most prolific producers.
Russia, Turkmenistan and West Africa
represent rapidly growing new markets.
In West Africa, there is huge potential
for the provision of our services in the
French-speaking nations of Gabon, Chad,
Cameroon, Ivory Coast and Benin. Just
as our key exploration and production
customers are exploring this market, we
intend to leverage on our relationship
with them to establish our brand here.
We kicked off efforts to enter Gabon
early in the 2015 financial year and are
hopeful of expanding our presence in
other French-speaking West African
nations in due course.
While we continue to focus on
supplying our target markets with highperformance drilling fluids, drilling waste
management solutions and enhanced
production enhancement chemicals, we
are looking to enhance our portfolio of
services so as to be able to offer more
integrated, end-to-end solutions for the
upstream sector. We realise this is an
ambitious projection but we believe we
have the experience, the skills and the
capacity to take on a greater role in the
upstream with more focused allocation
of resources. The financial year 2014 has
been very encouraging, but we believe
2015 can be even better.
Shah Hakim Zain
Chief Executive Officer
p33
The Ar t of
Cari ng
As a good corporate citizen, we firmly
believe in leveraging our skills and
knowledge to help realise potential for the
global communities in which we operate.
p3 6
Thro u gh a wo rk c ulture
that u nd erscores people
a nd ta l ent d evel opment,
we seek to m a ke a pos itive
a nd m ea ni ngf u l i mpac t in
t he gl o b a l com mun ities
in whi ch we a re pres ent.
p37
p3 8
Corp orate S o c ial Responsibilit y
We at S com i En e rg y S e r vice s Bh d (“SE SB ” or “t h e
Co m p a ny ” ) b e li eve we h ave a re spon sibilit y to
ma i nt a i n t he u t m o s t inte gr it y in our de alin g s w it h all
s t ake hold e rs, w hi l e cont r ibut in g to t h e de ve lopme nt of
co m m un i t i e s w he re we ope rate. We t ake t h is cor porate,
s o c i a l a nd e nv i ro nme nt al re spon sibilit y se r iously as it
n o t on ly e n ri c he s t h e e cosyste m but also e n h an ce s our
re p ut at i o n a n d value as an org an isat ion .
We are guided by our Board of Directors
in upholding the highest level of
corporate governance encompassing
transparency and ethics. Led by the
management team, our people are
empowered to realise their potential
at work while contributing to society
via organised community outreach
programmes. We also invest in research
and development targeting greener,
more energy-efficient products and
technologies in the realisation that
a healthy environment is key to our
own sustainability and that of our
environment.
Corporate social responsibility (“CSR”)
is part of our very DNA and permeates
our every action and decision, guiding
our strategies and targeted outcomes.
It represents an ongoing mission
at SESB as we continue to abide by
international best practice to enhance
the efficacy and impact of our efforts.
For the purpose of this annual report,
we have adopted the Global Reporting
Initiative (“GRI”) standard of classifying
and reporting our initiatives under the
four broad categories of the Marketplace,
Workplace, Environment and the
Community.
The Marketplace
As a responsible organisation, we
ensure that we maintain utmost
integrity in our dealings with our
key stakeholders in the marketplace,
namely our customers, investors and
business partners, while also ensuring
knowledge and technology transfer in
our overseas operations and creating job
opportunities for local communities.
We are driven to provide our customers
with quality service and products, and
even to training their personnel to
use our products optimally. Across the
Group, each company undertakes Key
Account Management (“KAM”) through
which we develop a closer relationship
with our customers by understanding
their needs and offering solutions that
satisfy these needs. Our close working
relationships with customers allow us
to develop products that are geared
to their specific market environment
and requirements. For drilling fluids
and waste management, this means
offering differentiated products suited
to different geological locations in
order to deliver enhanced operational
efficiencies and optimal cost savings to
our customers.
We conduct technical training for
our customers at the Global Research
and Technology Centre (“GRTC”) in
Shah Alam, Malaysia as well as on site,
according to our customers’ convenience
and requirements. GRTC has extensive
facilities including computer training
and a dedicated training laboratory
with all the equipment a drilling fluid
technologist may encounter in any
offshore or onshore job. We have trained
numerous chemists, technologists and
engineers from over 20 countries to
the API 13L standard for drilling fluid
technologists at this centre. In addition,
we have conducted advanced seminars,
software training and drilling fluids
operations management training for
hundreds of personnel.
The effectiveness of our training
modules is reflected by requests from
clients for additional training. During the
financial year under review, for example,
we conducted a two-week course on
drilling fluids, completion fluids as well
as solids control and waste management
combining classroom theory and
laboratory exercises for a second
batch of 200 PETRONAS Carigali Sdn
Bhd engineers, following an inaugural
training in 2012.
Co rp o rate S o c ial R e s p o ns i b i l i t y
Taking our initiatives one step further,
we are exploring the possibility of
conducting soft skills training for
customers’ technical and non-technical
personnel under our established Global
Learning and Development (“GLaD”)
unit, which currently manages the
training and personal development
needs of the Company.
We keep our investors informed of
corporate updates via an active investor
relations programme that includes
regular briefings and meetings. These are
complemented by timely Bursa Malaysia
announcements on material activities
and events, the distribution of quarterly
Letters to Shareholders on our financial
and operational performance along with
media releases, all of which are readily
accessible on our company website.
Sharing our expertise with a wider
audience, we regularly participate
in local, regional and international
energy and transportation exhibitions,
conference and fora worldwide.
The Workplace
We recognise that our employees are
our greatest asset, and strive to provide
a work environment that is both
nurturing as well as challenging so as
to encourage and empower our people
to realise their true potential. Towards
the achievement of Scomi’s goals, we
endeavour to instil in each employee
the Company’s values, namely: New
Ideas, Working Together, Goal Oriented
and Customer Responsible. Every new
recruit undergoes a two-day induction
programme that exposes them to the
culture at SESB, our business, philosophy
and the way we do things.
We encourage free and open dialogue
among employees at all levels to
stimulate creativity and promote a
spirit of innovation. We believe it is
critical to keep our employees updated
on Group events, performance and
strategies in order to create a true sense
of belonging and connection. Hence
various engagement activities are
planned throughout the year, from staff
townhalls to regular communiques in
the form of our newsletter, Focus, as well
as email blasts to all staff globally on any
pertinent developments.
Fun social activities, such as the Scomi
Trivia Night, Scomi Treasure Hunt and
the Scomi World Cup Celebration were
also organised in addition to celebrating
festive occasions to promote a spirit of
camaraderie and togetherness among
our growing Team Scomi.
In line with our brand vision of
‘Realising Potential’, we provide a
structured framework for the training
and development of all employees. Our
dedicated GLaD team monitors the
Company’s training needs and creates
modules to fill in any functional gaps
that may exist. At the same time, the
team ensures all employees are provided
the opportunity to enhance their
professional knowledge and skills hence
advance their careers.
An Executive Management Programme
is offered to mid-level management from
our global operations to fine-tune their
leadership. Also, one-on-one coaching
and mentoring is provided to selected
managers who exhibit the potential to
take on positions of greater responsibility
within the organisation. These form part
of SESB’s succession planning to develop
staff who will eventually become the
leaders of SESB. In essence, we operate
on the credo: ‘You provide the Talent, we
provide Career Development’.
We acknowledge that it is important
for our staff to enjoy a healthy
work-life balance and have begun
to offer flexi working hours at our
global headquarters to enable staff
to better plan their daily schedules.
This is beneficial for employees to
accommodate personal and family
commitments especially staff who have
to juggle childcare needs with their work
demands.
Our efforts to be an employer of choice
have not gone unnoticed. In September
2013, Scomi was ranked among the
top five employers in Labuan, Malaysia,
edging out over 2,000 other companies
in the Malaysian Employees Provident
Fund (“EPF”) Best Employers Award 2013.
Recently in August 2014, Scomi’s Global
Learning and Development (“GLaD”)
team was awarded for excellence in
training at the 5th Asia Best Employer
Brand Award 2014.
The Environment
In light of global climate change
issues, we believe it is the duty of every
organisation to implement measures to
reduce their impact on the environment.
Towards this end, we have been focusing
intently on creating a greener portfolio
of products in both our core businesses
of Oilfield and Marine Services.
p39
p40
Within the oilfield sector, we have been
focusing on lighter, more durable and
effective drilling waste management
equipment while increasing the
biodegradability of our drilling fluids for
various drilling environments.
In recent months, through our joint
venture with Platinum NanoChem
Sdn Bhd, we have been developing
progressively ‘greener’ base oils for our
drilling fluids, replacing the conventional
paraffin-based lubricants with palm
oil waste such as oleic fatty acids and
sludge. We are also at an advanced
stage of combining these green-based
drilling oils with graphene to create
drilling solutions that have 86 per
cent greenhouse gas (“GHG”) savings
compared to conventional fossil-based
solutions but are also functionally more
efficient. Our product, Plat Drill R, is one
of the few drilling fluids that comply
with US-based Environment Protection
Agency (“EPA”) standards. It has further
been independently audited by a
UK-based firm and certified under the
International Sustainability and Carbon
Certification (“ISCC”) scheme while also
complying with the requirements of
the European Union Renewable Energy
Directive (“EURED”).
In addition to our green products,
we are based in one of the first green
buildings in the Klang Valley. At our
global headquarters in 1 First Avenue,
sensor-controlled lights and taps
prevent energy and water wastage; the
chilled water storage air-conditioning
system utilises off-peak idling electricity
supply that reduces electricity peak
demand by 35 per cent; and rainwater is
harvested to minimise the use of treated
chlorinated water.
Our staff also contribute to greening
efforts by embracing the 3R philosophy
of reducing, reusing and recycling,
and are constantly reminded of
environment-friendly habits via internal
announcements and signage around the
office. During a recent office clean-up at
our headquarters, a special recycling area
was set up for the collection of reusable
items which were subsequently donated
to charitable organisations.
The Community
Our community-centric efforts are
undertaken by our foundation, Yayasan
Scomi, which was established in 2005, as
well as directly by our employees.
Every year, Yayasan Scomi gives out
scholarships to deserving students for
tertiary education in Malaysia while
also providing funds to underprivileged
families to help pay for their children’s
education. In addition, the foundation
contributes to charities and provides
welfare support in response to requests
from the public.
Apart from Yayasan Scomi’s work,
each country operation is responsible
for outlining community outreach
programmes to be undertaken in any
given financial year. In Malaysia, a team
of 40 volunteers carry out fortnightly
community programmes and every
employee is required to take part in at
least two projects a year to fulfil their CSR
key performance indicators (“KPIs”).
For the financial year under review,
all global Scomi community projects
focused around children, based on the
theme: HeartBeAT: Showing your Heart
by Being A Team. In Malaysia, groups of
volunteers took children from homes
and orphanages shopping, treated
them to breaking of fast and organised
fun and educational treasure hunts.
Employees also joined forces to donate
books and clean up charitable homes
while others volunteered to visit hospital
wards to bring cheer to the children. In
total, their efforts brightened up the lives
of more than 450 children in the Klang
Valley. Over in Kemaman, Terengganu,
our colleagues organised an excursion
for 30 orphans to enjoy a fun day at the
Cherating Beach.
In Bangkok, 25 staff cooked a special
lunch for 50 special needs children from
Sataban Saeng Sawang Foundation
while in France, staff collaborated
with charitable organisation Reves to
bring cheer to the children. Our staff in
Australia organised various fund-raising
activities for the Princess Margaret
Children’s Hospital Foundation. In Russia,
our staff visited a centre for autistic
children and a home for homeless,
abused or neglected children where they
helped to clean up the homes, donated
clothes, blankets and other necessities
and engaged the children in various
activities. In Dubai, the team ran various
activities with a home for children with
special needs as well as with labourers.
We feel privileged to be able to play our
part in supporting the marginalised,
and are keen to increase our ‘heartprint’
in local communities around the world
as our business grows and brings us
into contact with a wider group of
stakeholders.
p 41
p 42
Statement o n Cor po rate G over nance
Corp orate g ove rnan ce is t h e proce ss an d frame wor k
u s e d to d i re c t a n d man ag e t h e busin e ss an d affair s of
t h e co m p a ny towa rds e n h an cin g busin e ss prospe r it y
a n d co rp o rate a cco u nt abilit y w it h t h e ult imate obj e c t ive
o f re a li s i n g l o ng - te rm sh are h olde r value, w h ilst t ak in g
into a cco u nt t h e i ntere st s of ot h e r st ake h olde r s. G ood
gove rn a n ce p rov i d e s a solid foun dat ion for a company
to a c hi e ve s us t a i n a b l e grow t h as we ll as e n g e n de r s t r ust
a n d i n f u s e s co nf i d e nce amon g it s sh are h olde r s an d ot h er
s t a ke h old e rs. St ron g busin e ss e t h ics, soun d policie s and
p roce d u re s a nd e f fec t ive inte r n al cont rol syste ms w it h
p ro p e r c he c k s a n d balan ce s are t h e in gre die nt s of g ood
corporate g ove r n an ce.
As such, the Board of Directors of Scomi
Energy Services 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 year
ended 31 March 2014.
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:
(1) 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 and optimization of
returns for the Company and the
Group;
(2) overseeing and evaluating the
conduct and performance of the
Company and the Group’s business;
(3) 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;
St ate m e nt o n Co rp o rate G overna nce
(4) reviewing the adequacy and the
integrity of the Company and the
Group’s risk management and
internal control systems;
(5) overseeing management
performance and ensure a sound
succession plan for key positions
within the Company;
(6) providing input and overseeing the
development and implementation
of the investor relations and
shareholder communications policy
and programme for the Company
and the Group; and
(7) reviewing the adequacy and the
integrity of the management
information of the Company and
the Group.
The Board has established and delegated
specific responsibilities to two (2)
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”); and
the Nomination and Remuneration
Committee (“NRC”).
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 list of 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.
During the financial year under review and up to the date of approval of this
statement, the composition of the Board and its Committees are as follow:
Board Committees
ARMC
NRC
Non-Independent Non-Executive Chairman
Tan Sri Asmat Bin Kamaludin(1)
-C
Independent Non-Executive Chairman
Tan Sri Nik Mohamed Bin Nik Yaacob(2)
-C
Independent Non-Executive Directors
M
Vice Admiral Dato’ Haron Bin Dato’ (Dr) Mohd Salleh (Rtd)(3)M M
CM
Mr Mok Yuen Lok(4)
(5)
CM
Mr Liew Willip (6)
-M
Dato’ Jamelah Binti Jamaluddin (7)
MRavinder Singh Grewal A/L Sarbjit S Non-Independent Non-Executive Director
Mr Lee Chun Fai(8)
M
Non-Independent Executive Directors
Encik Shah Hakim @ Shahzanim Bin Zain (“En. Shah”)
-
Madam Loong Chun Nee (Alternate Director to En. Shah)
-
Note:
C: Chairman
M: Member
1. Resigned on 31.05.2013
2. Appointed as Director on 16.05.2013 and designated as Chairman on 31.05.2013
3. Vacation of office on 16.05.2013
5. Appointed as member of ARMC on 07.11.2013 and designated as Chairman of ARMC on 09.07.2014
6. Appointed as Director on 15.11.2013
7. Appointed as Director and member of ARMC on 21.05.2014
8. Appointed as Director on 17.05.2013
p 43
p44
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 Composition Policy
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.scomienergy.com.my. Besides
that, the Board’s approving authority is
delegated to the Management through
a clear and formally defined Delegated
Authority Limits 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.scomienergy.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
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 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.
A brief description of the background
of each Director is presented within the
Profile of Directors section as set out on
pages 8 to 15 of this Annual Report.
The NRC was formed on 27 February
2008 and its objectives are to:
•
Principle 2 – Strengthen
Composition
The success of the Board in fulfilling its
oversight responsibility depends on
its size, composition and leadership
qualities. As at 14 August 2014, date
of approval of this statement, the
Board consisted of eight (8) members,
comprising two (2) Executive Directors,
one of whom is an alternate director,
and six (6) Non-Executive Directors
(including the Chairman) of whom five
(5) are independent as defined by the
MMLR. The Independent Directors
make up 63% 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.
ensure an effective process for
selection of new directors and
assessment of the Board, Board
Committees and 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
procedure for developing a
policy on Executive Directors’
remuneration and compensation of
Non-Executive Directors; and
•
review and recommend to the
board the remuneration of the
Executive Directors in all its forms
and compensation of NonExecutive Directors 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:
(a) 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;
•
in the case of candidates
for the position of
independent nonexecutive directors,
their ability to discharge
such responsibilities/
functions as expected
from independent nonexecutive directors; and
•
the Board Composition
Policy approved by the
Board.
for directorships to be filled
by the shareholder (or
Board) or that proposed by
the Chief Executive Officer
(“CEO”) or within the bounds
of practicability, candidates
proposed by any other senior
executive or any director or
shareholder; and
for the Board Committees
seats.
(b) 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.
p45
p46
(c) To review the annual assessment
of 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 CEO and
to ensure that all assessments
and evaluations carried out in
the discharge of this function are
properly documented.
(k)
To establish and recommend to
the Board a fair and transparent
Remuneration Policy framework
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:
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);
The Company’s financial
performance which may
include financial indicators
such as turnover, profitability,
market capitalisation and
achievement of these
indicators vis-à-vis predetermined goals;
Directorship fee (fixed and/or
supplementary);
Long term incentive scheme
including Employees’ Share
Option Scheme (“ESOS”)
with conditional terms for
exercising options;
The performance and relative
experience of individual
Directors;
The skills, knowledge,
expertise, performance and
relative experience of the
Executive Directors;
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.
(d) To conduct an annual review of
the independence of Independent
Directors.
(e) From time to time, 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.
(f )
To ensure that new appointees to
the Board undergo an orientation
and education programmes.
(g) To review Board succession plans,
at least once annually, to maintain
an appropriate balance of skills,
experience and expertise on the
Board and provide advice to the
Board accordingly.
(h) 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.
(i)
Annually, review and assess
the training needs of individual
directors and propose suitable
training programmes to be
attended.
(j)
To develop the CEO’s mission
and objectives, succession for the
CEO and annual evaluation of the
performance of the CEO.
(l)
The duties and responsibilities
borne by the Executive
Director; and
The nature of the Company’s
business e.g. international /
regional business presence;
The contributing hours &
attendance at meetings of the
individual Board members;
and
A benchmark of the Board’s
performance with other
comparable organisations/
competitors.
To conduct, on an annual basis (or
when the need arises as in the case
of proposing remuneration and/or
compensation for a new Director), a
review and thereon provide advice
and recommendations to the Board
on all aspects of reward structure
accorded to Executive Directors and
Non-Executive Directors in terms of
the following components:
(m) 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 recognised.
(n) To consider any published
guidelines or recommendations
regarding the remuneration of
directors of listed companies which
it considers relevant or appropriate.
(o) To review and, where necessary,
updating these terms of reference
annually or when it deems
appropriate.
(p) To consider other topics as defined
by the Board of Directors.
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 year 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
year ended 31 March 2014:
•
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 NonExecutive Directors of the
Company;
•
reviewed the retirement and reelection of the Directors pursuant
to the Articles of Association of the
Company;
•
evaluated and recommended
to the Board the CEO’s Balanced
Scorecard for the financial year
under review;
•
reviewed and recommended to
the Board the CEO’s Balanced
Scorecard for the new financial
year;
•
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.
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
86 of the Articles of Association of the
Company, Dato’ Meer Sadik Bin Habib
Mohamed retired from the Board and
were re-elected at the 17th AGM held on
25 September 2013.
Meanwhile, pursuant to Article 93 of the
Articles of Association of the Company,
Tan Sri Nik Mohamed Bin Nik Yaacob and
Mr Lee Chun Fai who were appointed
before the 17th AGM retired from the
Board and were re-elected at the said
AGM.
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 86 of the
Articles of Association of the Company
and being eligible, offer themselves for
re-election at the forthcoming AGM of
the Company:
(a) Encik Shah Hakim @ Shahzanim Bin
Zain; and
(b) Mr Liew Willip.
Pursuant to Article 93 of the Articles
of Association of the Company, the
following directors who were appointed
on 15 November 2013 and 21 May 2014
are required retired and being eligible,
offer themselves for re-election at the
forthcoming AGM of the Company:
(a) Dato’ Jamelah Binti Jamaluddin;
and
(b) Ravinder Singh Grewal A/L Sarbjit S.
p 47
p48
The Non-Executive Directors’ remuneration is based on standard agreed fees, in
addition to allowances for attendance at Board and Board Committee meetings.
All Directors who served during the financial year ended 31 March 2014 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 Company who
served during the financial year, and the bands, are as follows:
Salaries and bonuses
Fees
Allowances
Defined contribution plan
Estimated value of benefit-in-kind
Total
Executive Non-Executive Total
DirectorsDirectors
(RM’000) (RM’000)(RM’000)
1,096
52
-
1,096
404456
21 4667
185
-
185
-
-
-
1,354 4501,804
The aggregate remuneration above is broadly categorised into the following bands:
RM0 to RM50,000
RM50,001 to RM100,000
above RM100,000
Executive Non-Executive
DirectorsDirectors
Total
-
3
3
-
4
4
2
1
3
Principle 3 – Reinforce Independence
The role of the Chairman of the Board (“the Chairman”) and the CEO are separated
with each having a clear scope of duties and responsibilities. The distinct and
separates roles of the Chairman and the CEO, 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 privotal leadership role in ensuring that the Board
works effectively, whilst the CEO has the overall responsibility for the operational and
business units, organisational effectiveness and implementation of Board policies,
directives, strategies and decisions. An annual review of the CEO’s Balanced Scorecard
is undertaken by the NRC. The CEO 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 63% 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 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. Nevertheless, pursuant to the
Board Charter the NRC shall assess the
independence of the directors annually,
taking into consideration interests
disclosed by the Directors and having
regard to the criteria for assessing the
independence of Directors under the
annual Board Assessment.
The Board Composition Policy sets
out the guidance on Independent
Directors that in general, the tenure
of an Independent Director shall not
exceed a cumulative term of 9 years.
However, this general rule shall not
be applicable to any Independent
Director, who is holding office as the
chairman of the Company or any related
company, as defined in Section 6 of the
Companies Act 1965, that is listed on any
securities exchange. In such case, the
Director concerned shall be deemed an
Independent Director provided:
(a) he fulfils the criteria set out in the
definition of “Independent Director”
set out in Main Market Listing
Requirements of Bursa Malaysia
Securities Berhad (“LR”) or the
relevant regulations governing
entities listed on such other
securities exchange; and
(b) he provides confirmation in writing
that he is independent of the
Management, the Board and Major
Shareholders and is free from any
business or other relationship
which could interfere with the
exercise of independent judgment
or the ability to act in the best
interests of the Company and its
subsidiaries (“the Group”).
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 year ended 31 March 2014, six (6) Board Meetings were held. The
attendance record of the Directors at the meetings of the Board and its Committees is
as follows:
Board
of Directors
Board Committees
ARMC
NRC
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.
Non-Independent Non-Executive
Chairman
Tan Sri Asmat Bin Kamaludin
1/11
-
Chairman
5/6
-
1/1
Directors
Vice Admiral Dato’ Haron Bin
- 2
Dato’ (Dr) Mohd Salleh (Rtd)
-
5/6
4/5
The Board also complied with Paragraph
15.06 of the MMLR on the restriction
3
4
-Dato’ Jamelah Binti Jamaluddin
3/3 on the number of directorships in
Mr Mok Yuen Lok
5/6
4/5
1/1
listed companies held by the Directors.
The Company Secretary monitors the
Mr Liew Willip
6/6
2/251/1
number of directorships held by each
Director to ensure compliance at all
Non-Independent Non-Executive
times. The list of directorships of each
Directors
Director is updated regularly and is
Mr Lee Chun Fai
4/6
3/46
tabled for the notation of the Board on a
Non-Independent Executive Directors
quarterly basis. The Board is satisfied that
Encik Shah Hakim @ Shahzanim Bin Zain
6/6
-
the external directorships of the Board
members have not impaired their ability
Madam Loong Chun Nee
to devote sufficient time in discharging
(Alternate Director to En. Shah)
3/67
-their roles and responsibilities effectively
as well as regularly updating and
enhancing their knowledge and skills.
2.
3.
4.
5.
6.
7.
Vacation of office on 16.05.2013
Appointed as Director on 15.11.2013
Appointed as member of the NRC on 15.05.2014
Appointed as member of ARMC on 07.11.2013
Appointed as member of the ARMC on 03.06.2013
Attended meetings as an invitee.
p49
p50
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.
Malaysian Financial Reporting
Standards (MFRS)
Essential Elements of An Effective
Audit Committee
Financial Risk Management for
Public Listed Companies – W2:
Credit & Financial Analysis Seminar
Tax Deductibility of Expenses –
Practical Issues with Understanding
of Public Rulings (Part 2) Seminar
Directors Training – Update on
Legislations Relating to Strata
Development & Management of
Common Property
Briefing on Personal Data
Protection Act 2010 (PDPA)
Briefing on GST
International Roundtable “Surviving
the next global financial crisis”
Perdana Discourse Series 16 on
“Malaysia’s Higher Education: In
Need of Radical Transformation?”
CEO Forum titled: “Better Time
Ahead For Malaysia? Trends,
Predictions and Outlook for 2013 –
2020”
Perdana Discourse Series 17 on “
Current political trends and their
impact on the economic and social
direction of Malaysia”
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 CEO’s
Review of Operations in the Annual
Report.
Apart from attending the training
programmes, conferences and seminars
organised by the relevant regulatory
authorities and professional bodies, the
Directors also 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.
The ARMC comprises four (4) NonExecutive Directors, a majority of whom
are Independent. The ARMC meets as
and when required, and at least four (4)
times during the financial year.
•
•
•
•
•
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.
•
•
•
•
•
During the financial year ended
31 March 2014, 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:
•
•
•
•
•
•
•
•
•
Bursa Malaysia: Corporate
Disclosure Guide
Advocacy Session on Corporate
Disclosure for Directors
World Economic Forum (WEF) –
Davos
International Petroleum Technology
Conference (IPTC) – Beijing China
Specialized Marketing Mission
Myanmar – MSE Oil & Gas
(Myanmar)
Abu Dhabi International Petroleum
Exhibition & Conference (ADIPEC)
Directors’ In-house Training – Oil
& Gas Industry Overview, QHSE
and Personal Data Protection Act
Compliance
Mandatory Accreditation Program
for Directors of PLC
Directors’ Training: Enterprise Risk
Management
•
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
The Statement of Directors’
Responsibility in respect of the
preparation of the annual audited
financial statements for the financial year
under review is set out on page 65 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 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
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 year ended
31 March 2014, 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 year 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.
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 year ended 31 March
2014 is set out on pages 59 to 61 of this
Annual Report.
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 involve 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
outsourced the activities and function of
the internal audit to two (2) professional
service providers in the financial year
under review who reports directly to
the ARMC. There was also an Internal
Audit Department formed in January
2014. 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 followup audits are performed to monitor the
continued compliance.
The Statement on Risk Management and
Internal Control is set out on pages 53 to
58 of this Annual Report.
Principle 7 – Ensure Timely and High
Quality Disclosure
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.
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.
p 51
p 52
The Board through the Management
oversees the Group’s corporate
disclosure practices and ensures
implementation and adherence to
the policy. The Board has authorised
the CEO as the primary spokesperson
responsible for communicating
information to all stakeholders including
the public.
The Group also maintains a corporate
website, www.scomienergy.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, non-material 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 number 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 also organise
separate briefings for fund managers,
institutional investors and investment
analyst as well as via news releases for
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
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
there is always a presentation by the
CEO or the Chief Financial 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
14 August 2014.
p 53
Statement on R isk Management
an d Inter nal Co nt ro l
Th e d u t y of t h e B o a rd of Dire c tor s, amon g st ot h e r s, is to
m a i nt a i n a s oun d ri sk man ag e me nt an d inte r n al cont rol
s ys te m to s a fe g u a rd sh are h olde r s’ inve st me nt s an d t h e
a s s e t s o f S com i En e rgy S e r vice s Bh d an d it s subsidiar ie s
( “G ro u p” ) . I n com p l ian ce w it h Paragraph 15. 26(b) an d
Pra c t i ce N ote 9 of t h e M ain M ar ke t L ist in g Re quire me nts
( “ L i s t i ng R e q u i re m e nt s”) of Bur sa M alaysia S e cur it ie s
B e rh a d ( “ B urs a M alaysia”), t h e B oard is ple ase d to
p res e nt t h e St ate m e nt on R isk M an ag e me nt an d I nte r n a l
Cont ro l w h i c h out l in e s t h e n at ure an d scope of r isk
ma n a g e m e nt a nd i nte r n al cont rol of t h e Group for t h e
f i n a n c i a l ye ar e n de d 31 M arch 2014.
Responsibility of The Board
The Board, in ensuring its responsibility
to ensure the existence of a sound
risk management and internal control
system within the Group, continuously
reviews and evaluates the adequacy
and integrity of its system of risk
management and internal control.
Notwithstanding the above, the Board
recognises that such system has inherent
limitations as it is designed to manage,
mitigate and control, rather than
eliminate the risks faced in its efforts to
achieve the Group’s business objectives.
Therefore, such system of internal
control can provide only reasonable,
but not absolute, assurance against the
occurrence of any material misstatement
and 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 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 identified
risks. These internal control systems are
subject to the Board’s regular review
with a view towards appraising the
adequacy and effectiveness of these
systems within the Group.
The Board has received assurance from
the Chief Executive Officer (“CEO”)
and the Chief Financial Officer (“CFO”)
that the Group’s risk management and
internal control system is operating
adequately and effectively, in all material
aspects.
Risk Management Framework
Best practices require the company to
have well-defined processes for the
management of its risks. 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
the risks of 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 facets of
the Group:
•
The Board is of the view that the risk
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
environment of the Group.
•
•
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 risks in
the Group.
St ate m e nt o n R isk M an age m e nt An d I nterna l Co nt ro l
The elements of the risk management process are summarised in the diagram below:
Policy
Repo
Risk
Management
Process
g
rin
t
en
M
nit
o
Strategic
Operational
Reporting
Compliance
ent
Assessm
Objective
rting
Identification
atm
Tre
o
p54
Area
Corporate
Business Unit
Market Unit
Product
Project
Risk Reporting Structure
Infrastructure
The Group’s Risk Management Policy is premised on the key principle where each Business Operating Unit has its own Ad-hoc Risk
Management Working Committee and Risk Management Working Committee to review the effectiveness of its risk management
systems. The respective Enterprise Risk Management/Assurance Department will then update such reviews in its quarterly risk
report to the ARMC and to the Board, if required.
Risk Management Process
The risk management process is an ongoing process and applies 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 applied to all levels of activity in the Group, with the objective of establishing accountability for both risks
and mitigation at the source of risk.
St ate m e nt o n R isk M an age m e nt An d I nte rna l Co nt ro l
Risk Reporting Structure
Clear and Structured Organisational
Reporting Lines
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, which
assigns responsibility for risk management and facilitates the process for assessing and
communicating risk issues from transactional levels to the Board, is summarised as
follows:
Board of Directors
Audit and Risk
Management
Committee
Ad-hoc Risk Management
Working Committee
Clear reporting lines and authority limits,
driven by Delegated Authority Limits set
by the Board, govern the Group’s decision
making and approval process.
Internal Audit
Risk Management
Working Committee
Enterprise Assurance
Department
Business Units
The Group has a well defined
organisation structure that is aligned to
its business requirements and also to
ensure that checks and balances exist
through the organisation.
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 two (2) Board committees
that provide focus and counsel in the
areas of:
1.
2.
Corporate Functions
The Framework implemented within the Group continues to define, 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, the external service provider for internal
audit services and/or the in house Internal Audit function (“the Internal Auditors”).
The Management and Internal Auditors reports to the ARMC on a quarterly basis on
high risks areas faced by the Group and on the adequacy and effectiveness of the risk
management and internal control system adopted throughout the Group.
Further information on the Group’s risk management activities is highlighted in the
ARMC Report on pages 59 to 61 of this Annual Report.
Internal Control System
Internal control is a process effected jointly by the Board and the Management, with
the Management assuming the role to implement Board policies on risk and control.
The Group’s internal control environment comprises amongst others various policies,
procedures and frameworks, which includes:
Audit and Risk Management; and
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 42 to 52
of this Annual Report.
The Board has a Board Charter which
established a formal schedule of matters
and outlines types of information
required for the Board’s attention and
deliberation at the Board meetings.
Comprehensive Board papers, which
include financial and non-financial
matters such as quarterly results,
business strategies, explanation of the
performance of the Group and individual
business divisions and key operational
issues of the Group, etc are escalated to
the Board for deliberation and approval.
p 55
p56
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.
On a quarterly basis, the CEO 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
on a quarterly basis where explanations,
clarifications and corrective action for
significant variances are reported by the
Management on quarterly basis to the
ARMC and the Board.
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.
The CEO 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 with their targeted
plan, if necessary.
Delegated Authority Limits
The Board delegates appropriate
authority on certain specified activities
to the Management via a clearly defined
Delegated Authority Limits (“DAL”)
to govern and manage the business
decision making process of the Group.
Whilst the objective of the DAL is to
empower the Management, the 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 regularly reviewed and
updated to ensure its relevance to the
Group’s business environment and
operations.
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.
Policies and Procedures
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.
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.
The Group’s 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 has successfully implemented
SAP throughout most of its business
units. 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.
Code of Conduct
The Board and employees of the Group
are committed to adhering to the best
practice in corporate governance and
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 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 that its suppliers
(“Suppliers”) to adhere, in their business
activities, to the laws, rules and
regulations of the countries in which they
operate in.
In furtherance of these commitments
and towards the advancement of social
and environmental responsibility, the
Group requires that suppliers adhere
to 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 its suppliers 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.
St ate m e nt o n R isk M an age m e nt An d I nte rna l Co nt ro l
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.
Quality, Safety and Environmental
Policy
The Group places the highest priority
and is committed to provide all our
customers with services that meet their
expectations in relation to Quality, Safety
and Environmental Protection.
The high standard of work is achieved by
operating an integrated Quality, Safety
and Environmental Management System
(QHSE) that meets the requirements of
the ISO 9001:2008 (Quality) Standards,
the ISM Code for Safe Operation of
Ships and Pollution Prevention, OHSAS
18001:2007 and the ISO 14001:2004
Environmental Standards.
listed securities of the Company as long
as they are in possession of material and
price-sensitive information relating to
the Group in order to avoid any insider
trading.
Whistleblower Policy & Framework
Independent Assurance Mechanism
The Group has in place a Whistleblower
Policy & Framework, which provides an
avenue for employees to raise concerns
internally or report on any breach
or suspected breach of regulations
and other improprieties. Proper
arrangements have been put in place
for fair and independent investigation
on such matters, if required, ensuring
employees can raise concerns without
fear of reprisals. These disclosures are
investigated, pursuant to which remedial
and/or disciplinary actions may be taken,
if warranted. These disclosures and the
results of the investigations undertaken
are reported to the Board on a quarterly
basis. The effectiveness of this policy is
monitored and reviewed regularly by the
Whistleblower Steering Committee.
Competency and Talent Management
The ISPS (International Ship & Port
Facility Security) Code is implemented
for vessel operations and certified by
ISSC (International Ship Security).
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 Listing Requirements of Bursa
Malaysia, the Board and the Principal
Officers of the Company are informed in
advance before the commencement of
each closed period, during which time
they are to comply with the additional
disclosure requirements related to
their dealings as set out in the Listing
Requirements. They are also reminded
that they are not allowed to deal in the
The Group also conducted 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.
To enhance the competencies of the
Group’s talent pool and to establish a
culture of continuous learning, Global
Learning and Development Sdn Bhd,
a wholly owned subsidiary of Scomi
Group Bhd, runs a series of training
and development programmes based
on the Learning and Development
(“LEaD”) Framework that defines training
based on technical and non-technical
programmes. This LEaD Framework
forms part of the Group’s human
capital skills enhancement programme
known as our Organisational Plan for Us
(“OPUS”). 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.
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 professional services
firms up to 31 March 2014 and an inhouse Internal Audit Department has
been formed in January 2014.
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. 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 follow-up
audits are performed to monitor the
continued compliance.
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 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.
p 57
p58
Review of This Statement
The external auditors have reviewed
this Statement on Risk Management
and Internal Control pursuant to the
scope set out in Recommended Practice
Guide (“RPG”) 5 (Revised), Guidance for
Auditors on Engagements to Report on
the Statement on Risk Management and
Internal Control included in the Annual
Report issued by the Malaysian Institute
of Accountants (“MIA”) for inclusion in
the annual report of the Group for the
year ended 31 March 2014, and reported
to the Board that nothing has come
to their attention that cause them to
believe that the statement intended to
be included in the annual report of the
Group, in all material respects:
(a) has not been prepared in
accordance with the disclosures
required by paragraphs 41 and
42 of the Statement on Risk
Management and Internal Control:
Guidelines for Directors of Listed
Issuers, or
(b) is factually inaccurate.
RPG 5 (Revised) does not require the
external auditors to consider whether
the Directors’ Statement on Risk
Management and Internal Control
covers all risks and controls, or to
form an opinion on the adequacy
and effectiveness of the Group’s risk
system including the assessment and
opinion by the Board of Directors and
management thereon. The auditors are
also not required to consider whether
the processes described to deal with
material internal control aspects of any
significant problems disclosed in the
annual report will, in fact, remedy the
problems.
Additionally, the internal audit function
has also reviewed this statement and
reported to the ARMC that, save for
its presentations to the ARMC on the
individual lapses in internal controls
during the course of its internal audit
assignment for the year, to the best of its
knowledge the function has not identify,
any other circumstances within its scope
of work, which suggest any fundamental
deficiencies in the system of internal
control of the Group.
14 August 2014.
p 59
Audi t and R isk Management
Com mit tee Repo r t
Pu rs ua nt to Pa ra gra ph 15. 15 of t h e M ain M ar ke t L ist in g
R e q ui re m e nt s o f B ur sa M alaysia S e cur it ie s B e r h ad, t h e
B o a rd o f Di re c to rs ( “ t h e B oard ”) of S comi E n e rg y S e r vices
B h d ( “ t he Co m p a ny ”) an d it s subsidiar ie s (“t h e Group”)
is p l e a s e d to p re s e nt t h e Re por t of t h e Audit an d R isk
M an a g e m e nt Co m m i t te e (“ARM C ”) for t h e fin an cial ye ar
e nde d 31 M arch 2014.
Objective
The 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 systems and systems for
compliance with the applicable laws, regulations, rules, directives and guidelines.
Terms Of Reference Of The Armc
The details of the terms of reference of the ARMC are available for reference on the Company’s website at
Members And Meeting Attendance
The members of the ARMC during the financial year ended 31 March 2014 and their attendance at meetings are as follows:
ARMC DesignationAttendance
Name
(attended/held)
Mok Yuen Lok Chairman
Dato’ Meer Sadik Bin Habib Mohamed Member
Vice Admiral Dato’ Haron Bin Member
Dato’ (Dr) Mohd Salleh (Rtd)
Liew Willip
Member
Lee Chun Fai
Member
Non-independent Non-Executive Director
4/5
4/5
Not Applicable
(Vacated office on
16 May 2013)
2/2
3/4
The composition of the ARMC complies with paragraph 15.09 of the Main Market Listing Requirements of Bursa Malaysia Securities
Berhad.
p60
Audit an d R isk M an age m e nt Co m mi t tee R ep o r t
During the financial year ended 31
March 2014, a total of five (5) meetings
were held on 20 May 2013, 15 July 2013,
20 August 2013, 18 November 2013
and 19 February 2014 respectively. A
quorum, established by the presence
of the majority of members who are
independent directors, was met at all
times.
(h) reviewed the quarterly results and
annual financial reports of the
Group prior to submission to the
Board for their consideration and
approval;
(i)
reviewed the annual internal audit
plan and scope of work for the year
for the Group and the Company;
(j)
reviewed the internal audit charter,
prepared by the Head of Internal
Audit Department;
(k)
reviewed the internal audit
reports, which incorporated audit
findings, recommendations and
management responses of the
Group and the Company, provided
by the outsourced internal audit
function;
Summary Of Activities For The Year
The following activities were carried out
by the ARMC in the financial year ended
31 March 2014 in the performance of its
duties and responsibilities as set out in
the ARMC’s Terms of Reference:
(a) reviewed and recommended to
the Board the appointment of the
external auditors and their audit
fee;
(b) reviewed and discussed with the
external auditors the nature and
scope of their audit and ensure
that the audit is comprehensive;
(c) conducted two (2) meetings with
the external auditors without the
presence of the executive board
members and management;
(d) reviewed the external
auditor’s report to the ARMC,
the management letter and
management responses thereto;
(e) reviewed the policy on the
selection of External Auditors;
(f )
reviewed and approved the nonaudit services provided or to be
provided by external auditors;
(g) considered the major findings
by the external auditors and
management’s responses thereto;
(l)
reviewed and verified the related
party transactions and provide
recommendations on the same to
the Board;
(m) reviewed the transactions involving
related parties and/or conflicts of
interests situation entered into by
the Group on a quarterly basis;
(n) reviewed the Group’s system and
practices for the identification and
management of risks;
(o) reviewed and evaluated risk
considerations in relation to major
business proposals and adequacy
of action plans to mitigate risks
identified;
(p) reviewed the Statement on
Corporate Governance, Statement
on Risk Management and Internal
Control and ARMC Report to be
published in the Company’s Annual
Report; and
(q) tabled the minutes of the ARMC
meetings to the Board on a
quarterly basis.
Internal Audit Function
The Group’s internal audit function is
outsourced to two external professional
services firms to cover the Marine
Services Division and Oilfield Services
Division during the financial year under
review. Both of the professional services
firms are independent of management
and operations (“the Outsourced Internal
Audit Functions”). The Outsourced
Internal Audit Functions undertake
independent and planned reviews of
the system of internal control so as to
provide the necessary feedback on the
adequacy and integrity of the system.
An in-house Internal Audit Department
was formed in January 2014. Through
the internal audit functions from both
the Outsourced Internal Audit Functions
and the Internal Audit Department
(collectively refer as “Internal Auditors”),
the Company undertakes regular
and systematic reviews of the risk
system so as to provide reasonable
assurance that such system continues to
operate satisfactorily and effectively in
the Group.
The Outsourced Internal Audit
Functions and the Head of Internal
Audit Department report directly to the
ARMC, which reviews the annual internal
audit plans and scope of work for the
Group and the Company as well as the
performance of the outsourced internal
audit functions.
During the financial year under review,
the Internal Auditors conducted
various internal audit engagements in
accordance with the risk-based internal
audit plans that were reviewed and
approved by the ARMC. Details of the
internal audit activities carried out by the
Internal Auditors are as follows:
1.
prepared and presented a riskbased audit plan, audit approach,
scope of work and resource
requirements to the ARMC and
the Board for deliberation and
approval;
2.
3.
evaluated and appraised the
appropriateness, adequacy
and application of accounting,
financial and other controls
within their areas of review, and
promoted effective controls to be
implemented within the Group and
the Company after considering its
cost of implementation;
carried out investigations and
special reviews requested by
management;
4.
ascertained the level of operational
and business compliance with
established policies, procedures
and statutory requirements;
5.
ascertained the extent to which the
Group’s and the Company’s assets
were accounted for, performed
verification on their existence and
provided recommendations for
safeguarding such assets against
losses;
6.
appraised the reliability and
usefulness of information
developed within the Group and
the Company for management and
decision making;
7.
identified and recommended
opportunities for improvements
to the existing system of internal
control, operations and processes
in the Group and the Company;
8.
reviewed the annual Statement
on Risk Management and Internal
Control and ARMC report to be
published in the Annual Report;
and
9.
reviewed the Internal Audit Charter
developed by the Internal Audit
Department.
The costs incurred by the Group for
the internal audit function for the
period from 1 April 2013 to 31 March
2014 was RM145,479.50 for the Marine
Services Division and RM267,059.58
for the Oilfield Services Division. The
cost incurred by the Internal Audit
Department for period from 1 January
2014 to 31 March 2014 was RM12,496.02.
14 August 2014.
p 61
p62
Addi tio nal Info r mat io n
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.
Non-Audit Fees
Non-audit fees incurred during the financial year amounted to RM50,000 and is disclosed in note 23 to the financial
statements.
3.
Share Buy-back
During the financial year, there was no share buy-back by the Company.
There has been no resale of the Company’s treasury shares nor has there been any cancellation of shares during the period
under review. As at 31 March 2014, a total of 145,000 ordinary shares were held as treasury shares.
4.Options
No Employee Share Options Scheme (“ESOS”) options were granted to Directors and Senior Management during the financial
year ended 31 March 2014 as the ESOS had been terminated on 26 June 2012.
p63
p64
Addit io n al Info rm at i o n
5.
Director’s Conflict of Interest
Save as disclosed below, the Directors of the Company do not have any existing conflicts of interest with the Company:
Director of the Company
Nature of existing conflict of
interest
Transactions
(“Encik Shah Hakim”)
Encik Shah Hakim is the Chief
Executive Officer/Non-Independent
Executive Director of the Company;
and a substantial shareholder of
Suria Business Solutions Sdn. Bhd.
(“Suria”).
Leasing agreement with Orix Rentec
(Malaysia) Sdn. Bhd. for leasing of
personal computers, which will be
supplied to them by a related party,
Suria.
Encik Shah Hakim is the Chief
Executive Officer/Non-Independent
Executive Director of the Company;
and a substantial shareholder of
Suria.
Tenancy of office space at Dataran
Prima, Petaling Jaya, Selangor provided
by Scomi Oiltools Sdn. Bhd., a subsidiary
of the Company to Suria.
Puan Mazlina Binti Zain, the sister
of, and person connected to, Encik
Shah Hakim is the owner of Lintas
Travel Services Sdn. Bhd. (“LTS”).
Provision of airline ticketing reservation
and ticket purchasing services by LTS to
the Company and its subsidiaries.
In respect of the above transactions, Encik Shah Hakim 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.
p65
Statement o n D irec to r s’
Respo nsibilit y
Th e Di re c tors a re re quire d by t h e Compan ie s Ac t,
1 9 6 5 ( “ t he Ac t ” ) to pre pare t h e fin an cial st ate me nt s
of S co m i E n e rg y S e r vice s Bh d (“t h e Company ”) for
e a c h f i n a n c i a l ye a r w h ich h ave be e n prope r ly draw n
u p i n a ccord a n ce wit h t h e provision s of t h e Ac t, t h e
M a i n M a rke t L i s t i n g Re quire me nt s of Bur sa M alaysia
S e c uri t i e s B e rhad an d t h e applicable Fin an cial
Re p or t i ng St an dards in M alaysia.
The Directors are responsible for
ensuring that the Financial Statements
give a true and fair view of the state
of affairs of the Company and its
subsidiaries (“the Group”) at the end of
the financial year and of the results and
cash flows for the financial year.
The Directors are responsible to ensure
that the Group keeps accounting
records which disclose with reasonable
accuracy the financial position of the
Group which enable them to ensure
that the Financial Statements comply
with the Act.
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 a going concern basis.
The Directors are also responsible for
taking such steps as are reasonably
open to them to preserve the interests
of stakeholders, to safeguard the assets
of the Group and to detect and prevent
fraud and other irregularities.
The financial statements of the
Company for the financial year ended
31 March 2014 are set out on pages 68
to page 159 of this Annual Report.
The Ar t of
Accountability
Accountability is about being honest and
responsible. At Scomi, accountability and
integrity work hand-in-hand in ensuring
that each of us plays our par t in realising
potential for our stakeholders.
p69
Statements of Financial Position
Statements of Profit or Loss and Other Comprehensive Income
p 78
Consolidated Statement of Changes in Equity
p 80
Statement of Changes in Equity
p 81
Statements of Cash Flows
p 84
Notes to the Financial Statements
p 155
Supplementary Financial Information
p 156
Statement by Directors
p 157
Statutory Declaration
p 158
Independent Auditors’ Report
p 74
p 76
Directors’ Report
p69
D i rec tor s’ Repo r t
fo r th e yea r ended 31 M a rc h 2014
The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the
year ended 31 March 2014.
Principal activities
The principal activities of the Group consist of marine transportation, other shipping related services, provision of integrated drilling
fluids and drilling waste management solutions and production chemicals. There has been no significant change in the nature of these
activities during the year.
Results
Group
RM’000
Company
RM’000
Profit/(Loss) for the year attributable to:
Owners of the Company
81,875
Non-controlling interests
(944)
(3,191)
-
80,931(3,191)
Reserves and provisions
There were no material transfers to or from reserves and provisions during the year under review except as disclosed in the financial
statements.
Dividend
No dividend was paid during the year and the Directors do not recommend any dividend to be paid for the year under review.
Directors of the Company
Directors who served since the date of the last report are:
Tan Sri Nik Mohamed bin Nik Yaacob
Dato’ Meer Sadik bin Habib Mohamed
Mok Yuen Lok (resigned on 30 May 2014)
Lee Chun Fai
Liew Willip
Shah Hakim @ Shahzanim bin Zain
Loong Chun Nee (alternate director to Shah Hakim @ Shahzanim bin Zain)
Dato’ Jameelah binti Jamaluddin (appointed on 15 November 2013)
Ravinder Singh Grewal A/L Sarbjit Singh (appointed on 21 May 2014)
p70
D ire c to r s’ R ep o r t
Directors’ interests in shares
The interests and deemed interests in the shares and options over shares of the Company and of its related corporations (other than
wholly-owned subsidiaries) of those who were Directors at year end (including the interests of the spouses or children of the Directors
who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:
Number of ordinary shares of RM0.45 each
At At
1.4.2013 Bought
Sold31.3.2014
’000’000’000’000
The Company
Direct interests
Dato’ Meer Sadik bin Habib Mohamed(1)
42,784--
42,784
Mok Yuen Lok
20
-
-
20
Loong Chun Nee
130
-
(60)
70
Shah Hakim @ Shahzanim bin Zain(2)
2,108--
2,108
Indirect interests Dato’ Meer Sadik bin Habib Mohamed(3)
647 -(100)547
Shah Hakim @ Shahzanim bin Zain(4)
- 5,057(5,000) 57
At At
1.4.2013 Bought
Sold31.3.2014
’000’000’000’000
Ultimate holding company
Scomi Group Bhd
Direct interests
8,815(5) 5,035
-13,850(6)
Loong Chun Nee
1,701
-
(750)
951
Indirect interest
172,275(7) 3,642
-175,917(8)
At At
1.4.2013 Bought
Sold31.3.2014
’000’000’000’000
Related company
Scomi Engineering Bhd
Direct interests
623 (9)
-
-623(10)
Loong Chun Nee
25
-
-
25
Indirect interest
-
282 (11) -282
(1) 38,600,000 shares held through RHB Capital Nominees (Tempatan) Sdn. Bhd.
(2) Held through Maybank Securities Nominees (Tempatan) Sdn. Bhd. pledged Securities Account for Shah Hakim @ Shah Zanim bin
Zain (Margin).
(3) Deemed interested by virtue of Section 134 (12)(c) of the Companies Act, 1965 (“the Act”) through the shareholdings in the
Company of his spouse, Datin Zarida binti Noordin.
Directors’ interests in shares (continued)
(4) Deemed interested by virtue of Section 6A(4) of the Act through his shareholdings in Rentak Rimbun Sdn. Bhd. which in turn is
deemed interested in the Company. KAF Nominees (Tempatan) Sdn. Bhd. pledged Securities Account for Rentak Rimbun Sdn.
Bhd. (RE001).
(5) 8,286,000 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.
(6) 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.
(7) Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through Shah Hakim @ Shahzanim bin Zain’s
shareholding in Kaspadu Sdn. Bhd.
(8) Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through Shah Hakim @ Shahzanim bin Zain’s
shareholding in Kaspadu Sdn. Bhd. and Rentak Rimbun Sdn. Bhd.
(9) 123,000 shares held through BHLB Trustee Berhad (PCM for Shah Hakim @ Shahzanim bin Zain).
(10) 123,000 shares held through Maybank Securities Nominees (Tempatan) Sdn. Bhd. pledged Securities Account for Shah Hakim @
Shahzanim bin Zain (Margin).
(11) Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through his shareholding in Rentak Rimbun Sdn. Bhd.
in respect of the acquisition of shares by Rentak Rimbun Sdn. Bhd.
*Number of options over ordinary shares of RM0.10 each
ExerciseAtAt
price 1.4.2013 Exercised Expired31.3.2014
RM/Share’000’000’000’000
Scomi Group Bhd
Direct interests
Tan Sri Nik Mohammad bin Nik Yaacob
1.34
600
-
(600)
1.12
6,000
-
(6,000)
Loong Chun Nee
1.11
3,220
-
(3,220)
*
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 has expired on 27 April 2013.
+Number of options over ordinary shares of RM1.00 each
ExerciseAtAt
price 1.4.2013 Exercised Expired31.3.2014
RM/Share’000’000’000’000
Related company
Scomi Engineering Bhd
Direct interest
1.00
1,500
-
-
1,500
+ 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.
By virtue of his interests in the shares and options in the ultimate holding company as disclosed above, Shah Hakim @ Shahzanim bin
Zain is deemed to have an interest in the shares of the Company and subsidiaries during the year to the extent that the Company has
an interest.
None of the other Directors holding office at 31 March 2014 had any interest in the shares and options over shares of the Company and
of its related corporations during the year.
p71
p7 2
Directors’ benefits
Since the end of the previous period, no Director of the Company has received or become entitled to receive any benefit (other than
a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in 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 the Director has a substantial financial interest.
There were no arrangements during and at the end of the year which had the object of enabling Directors of the Company to acquire
benefits by means of the acquisition of shares in and debentures of the Company or any other body other than options over shares
granted by its ultimate holding company, Scomi Group Bhd (“SGB”) and a subsidiary of SGB, Scomi Engineering Bhd (“SEB”) to eligible
employees including certain Directors of the Company pursuant to SGB’s and SEB’s respective Employees’ Share Option Schemes
(“ESOS”).
Issue of shares and debentures
There were no changes in the authorised, issued and paid-up capital of the Company during the year. There were no debentures issued
during the year.
Treasury shares
There was no repurchase of the Company’s shares during the year.
Details of the treasury shares are as set out in Note 14 to the financial statements.
Options granted over unissued shares
No options were granted to any person to take up unissued shares of the Company during the year.
Other statutory information
Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:
i)
all known bad debts have been written off and adequate provision made for doubtful debts, and
ii)
any current assets which were unlikely to be realised in the ordinary course of business have 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:
i)
that would render the amount written off for bad debts or the amount of the provision for doubtful debts in the Group and in the
Company inadequate to any substantial extent, or
ii)
that would render the value attributed to the current assets in the financial statements of the Group and of the Company
misleading, or
iii)
which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the
Company misleading or inappropriate, or
iv)
not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements
of the Group and of the Company misleading.
Other statutory information (continued)
At the date of this report, there does not exist:
i)
any charge on the assets of the Group or of the Company that has arisen since the end of the year and which secures the liabilities
of any other person, or
ii)
any contingent liability in respect of the Group or of the Company that has arisen since the end of the year.
No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within
the period of twelve months after the end of the year which, in the opinion of the Directors, will or may substantially affect the ability of
the Group and of the Company to meet their obligations as and when they fall due.
In the opinion of the Directors, the financial performance of the Group and of the Company for the year ended 31 March 2014 have not
been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event
occurred in the interval between the end of that year and the date of this report.
Auditors
The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Tan Sri Nik Mohamed bin Nik Yaacob Petaling Jaya
Date: 25 July 2014
p7 3
p74
Statements o f Financ ial Posit io n
as a t 31 M a rc h 2014
GroupCompany
2014201320142013
NoteRM’000RM’000RM’000RM’000
Assets
Property, plant and equipment
3
561,757528,267 323493
Intangible assets
4
114,332113,991
- Investment properties
5
2,5161,382
- Investments in subsidiaries
6
--
1,270,6781,270,678
Investments in joint ventures
7
54,93551,72417,76019,663
Investments in associates
8
124380225225
Deferred tax assets
9
9,15718,502
- Trade and other receivables
10
141262 -742,962714,508
1,288,9861,291,059
Total non-current assets
Trade and other receivables
10
508,000404,39513,37411,119
Inventories
11214,739203,483
- Current tax assets
11,95216,006
- Cash and cash equivalents
12
184,443152,6713,3185,059
Total current assets
919,134776,55516,69216,178
Total assets
1,662,0961,491,063
1,305,6781,307,237
Equity
Share capital
Treasury shares
Reserves
13
1,005,5351,005,535
1,005,5351,005,535
14
(48)
(48) (48)(48)
15
(332,125)(440,762) 23,75226,943
Equity attributable to
owners of the Company
673,362564,725
1,029,2391,032,430
68,48370,349
-Non-controlling interests
Total equity
741,845635,074
1,029,2391,032,430
St ate m e nt s o f Fin an c i a l Po s i t i o n
p75
GroupCompany
2014201320142013
Liabilities
Loans and borrowings
16
223,460276,812
- Provision for retirement benefits
17
5,9526,744
- Trade and other payables
18
2,67619,775 2,676 Deferred tax liabilities
9
5,4182,837
- Derivative financial liabilities
19
23,7156,166
-Total non-current liabilities
261,221312,334 2,676-
16
246,090191,527
-14
Trade and other payables
18390,567333,881273,763274,736
Current tax liabilities
16,99517,701
-Derivative financial liabilities
19
5,378489 -Financial guarantee liabilities
20
-57 -57
Total current liabilities
659,030543,655273,763274,807
Total liabilities
920,251855,989276,439274,807
Total equity and liabilities
1,662,0961,491,063
1,305,6781,307,237
The notes on pages 84 to 154 are an integral part of these financial statements.
p76
Statements o f Profit o r Lo ss and O t her
Comprehensive Income
GroupCompany
Year ended
1.1.2012 to
Year ended
1.1.2012 to
31.3.201431.3.201331.3.201431.3.2013
Revenue21
1,415,9941,471,693 18,578Cost of sales/services
(1,081,859)(1,100,961) (18,341)Gross profit
334,135370,732 23715,73826,225 3388,760
Other income
Selling and distribution expenses
(76,537)(78,067)
-Administrative expenses
(114,397)(154,748) (4,263)(11,327)
Other expenses
(4,056)(12,924)
(72)(1,138)
154,883151,218 (3,760)(3,705)
Results from operating activities
Finance costs
22
Finance income
Net finance (costs)/income
(33,436)(41,356)
-(1,578)
1,40918,140 569460
(32,027)(23,216)
Share of (loss)/profit of
equity-accounted associates, net of tax
Share of profit of equity-accounted
joint ventures, net of tax
(247)133
5,3106,568
569(1,118)
---
Profit/(Loss) before tax23
127,919134,703 (3,191)(4,823)
Tax expense
24
(46,988)(37,611)
-80,93197,092(3,191)(4,823)
Profit/(Loss) for the year/period
Other comprehensive income,
net of tax
Items that are or may be reclassified
subsequently to profit or loss
15(b)
Cash flow hedges
Foreign currency translation
differences for foreign operations
(6,339)(9,673)
--
33,101(13,852)
--
Other comprehensive income/(loss)
26,762(23,525)
for the year/period, net of tax
--
Total comprehensive income/(loss)
for the year/period
107,69373,567(3,191)(4,823)
St ate m e nt s o f Pro f it o r Lo ss an d O t h e r Co m pre h e n s i ve Inco m e
p7 7
GroupCompany
Year ended
1.1.2012 to
Year ended
1.1.2012 to
31.3.201431.3.201331.3.201431.3.2013
Profit/(Loss) attributable to:
81,87590,096(3,191)(4,823)
(944)6,996
-Profit/(Loss) for the year/period
80,93197,092(3,191)(4,823)
Total comprehensive income/(loss)
attributable to:
108,63771,756(3,191)(4,823)
(944)1,811
-Total comprehensive income/(loss)
for the year/period
Basic earnings per share (sen)
107,69373,567(3,191)(4,823)
25
3.503.85
p78
Co n soli dated Statement o f Changes in Equit y
<----------------------- Attributable to owners of the Company ---------------------->
<------------------- Non-distributable ------------------>Distributable
NonShareShare
TreasuryOther
Retained
controlling Total
capitalpremium shares reserves earnings Total interests equity
Group
NoteRM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
At 1 January 2012733,009121,913
(47)(173,251)(64,971)616,653119,201735,854
-
-
-
(11,568)
-
(11,568)
(2,284)
(13,852)
Cash flow hedges
- fair value loss
15(b)
-
-
-
(9,673)
-
(9,673)
-
(9,673)
- transfer to profit or loss
15(b)
-
-
-
2,901
-
2,901
(2,901)
Total other comprehensive loss
for the period
-
-
-
(18,340)
-
(18,340)
(5,185)
(23,525)
Profit for the period----
90,096
90,096
6,996
97,092
Total comprehensive (loss)/
income for the period---
(18,340)
90,096
71,756
1,811
73,567
Contributions by and distributions
to owners of the Company Share options:
- value of employees services
15(e)
-
-
-
1,235
-
1,235
272
1,507
- value of options terminated
15(e)
-
-
-
(5,276)
5,276
-
-
Issuance of shares, net
675,681----
675,681-
675,681
Acquisition of non-controlling interests----
(150,684)
(150,684)
(73,047)
(223,731)
Dilution of interest in subsidiaries
-
-
-
-
(21,926)
(21,926)
22,112
186
Capital reduction & repayment
(403,155)
(121,913)
-
26,881
362,127
(136,060)
-
(136,060)
Purchase of treasury shares
14
-
-
(1)
-
-
(1)
-
(1)
Adjustment arising from predecessor
accounting method
-
-
-
(491,929)
-
(491,929)
-
(491,929)
Total transactions with owners
of the Company 272,526(121,913)
(1)(469,089)194,793(123,684) (50,663)(174,347)
At 31 March 2013
1,005,535
-
(48)(660,680)219,918564,725 70,349635,074
Co n so lidate d St ate m e nt o f Ch an g es i n Eq u i t y
<----------------------- Attributable to owners of the Company ---------------------->
<------------------- Non-distributable ------------------>Distributable
NonShareShare
TreasuryOther
Retained
controlling Total
capitalpremium shares reserves earnings Total interests equity
Graoup
NoteRM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
At 1 April 2013
1,005,535
-
(48)(660,680)219,918564,725 70,349635,074
-
-
-
33,101
-
33,101
-
33,101
Cash flow hedges - fair value loss
15(b)
-
-
-
(6,339)
-
(6,339)
-
(6,339)
Total other comprehensive income
for the year
-
-
-
26,762
-
26,762
-
26,762
Profit/(Loss) for the year----
81,875
81,875
(944)
80,931
Total comprehensive income
/(loss) for the year---
26,762
81,875
108,637
(944)
107,693
Dividends paid to non-controlling
interests of a subsidiary
-
-
-
-
-
-
(922)
(922)
Distributions to owners of the Company
Share options - value of option
terminated
15(e)---
(10,259)
10,259--Total transactions with owners
of the Company---
(10,259)
10,259--At 31 March 2014
1,005,535
-
(48)
(644,177)312,052673,362 68,483741,845
p79
p80
Statement of Changes in Equit y
<------------------------ Non-distributable ------------------------> Distributable
TreasuryOther
Retained Total
ShareShare
capitalpremium shares reserves earnings equity
Company
NoteRM’000RM’000RM’000RM’000RM’000RM’000
At 1 January 2012 733,009 121,913
(47) 4,879(362,518)497,236
Loss for the period----
(4,823)
(4,823)
Total comprehensive loss
for the period----
(4,823)
(4,823)
Share options:
- value of employees services
15(e)
-
-
-
397
-
397
- value of option terminated
15(e)
-
-
-
(5,276)
5,276
---
(4,879)
5,276
397
Issuance of shares, net
675,681----
675,681
Capital reduction repayment
(403,155)
(121,913)
-
26,881
362,127
(136,060)
Purchase of treasury shares
14
-
-
(1)
-
-
(1)
At 31 March 2013/1 April 20131,005,535
-
(48) 26,881
621,032,430
Loss for the year----
(3,191)
(3,191)
Total comprehensive loss for the year----
(3,191)
(3,191)
At 31 March 2014
1,005,535
-
(48)
26,881
(3,129)1,029,239
p 81
Statem ent s o f Cash Flows
GroupCompany
Year ended
1.1.2012 to
Year ended
1.1.2012 to
31.3.201431.3.201331.3.201431.3.2013
RM’000RM’000RM’000RM’000
Cash flows from operating activities
Profit/(Loss) before tax
127,919134,703 (3,191)(4,823)
Adjustments for:
Depreciation:
- Property, plant and equipment
81,52088,873 170247
161182 - Amortisation of intangible assets
216431 - Impairment loss:
-6,984
-5,7084,101
-- Receivables
Reversal of impairment loss:
-(216) -(3,972)(6,496)
-- Receivables
- Investment in subsidiaries
---(385)
-(9,467)
-- Insurance recoverable
- Other recoverable
(7,474)(3,811)
-- Associates and subsidiaries
-(5,265)
-(8,369)
Allowance for inventories
4,2721,638
- Net unrealised (gain)/loss on foreign exchange
(10,123)23,437
(17)4
Loss on disposal of property,
plant and equipment
5,6773,220
- Fair value loss/(gain) on financial
instrument-derivatives
-435 -(70)
Provision for retirement benefits
8761,117
-Share of loss/(profit) of equity-accounted
associates, net of tax
247(133) - Share of loss of equity-accounted joint
(5,310)(6,568)
-ventures, net of tax
Share option expense
-1,235
-397
Finance costs
33,43641,356
-1,578
Finance income
(1,409)(18,140) (569)(460)
p82
St ate m e nt s of Ca s h Fl ows
GroupCompany
Year ended
1.1.2012 to
Year ended
1.1.2012 to
31.3.201431.3.201331.3.201431.3.2013
RM’000RM’000RM’000RM’000
Operating profit/(loss) before changes
in working capital 231,744257,616 (3,607)(11,881)
Changes in working capital:
Inventories
(1,009)(23,720)
-Receivables
(45,175)21,402 (446)(10)
Payables
59,637(6,246)
(1,070)257
Amount due (to)/from ultimate holding company
(2,121)20,780 669(701)
Amount due (to)/from subsidiary companies
--
(1,901)4,916
Amount due (to)/from related companies
(37)(4,441)(9,975)347
Amount due from joint venture companies
4910,959
21Amount due from associated companies
-5,878
12,1675,962
Cash generated from/(used in) operations
Tax paid
Retirement benefits paid
Interest paid
Interest received
Net cash from/(used in) operating activities
243,088282,228 (4,142)(1,110)
(37,131)(19,852)
-(1,774)(837) -(28,407)
1,41118,140 569365
177,187279,679 (3,573)(745)
Cash flows from investing activities
Acquisition of investment
in an associated company
---(1,584)
Repayment of advance from associated
companies
---142,320
Purchase of property, plant and equipment
(ii)
(97,841)(94,794)
- Proceeds from disposal of property,
plant and equipment
6,60231,271
- Purchase of intangible assets
-(5,767)
- Repayment of advance from jointly controlled entity
4,150-
2,895 Additional investment in joint ventures
(1,360)-
(992) Net cash (used in)/from investing activities
(88,449)(69,290) 1,903140,736
St ate m e nt s o f Ca s h Fl ows
p83
GroupCompany
Year ended
1.1.2012 to
Year ended
1.1.2012 to
31.3.201431.3.201331.3.201431.3.2013
RM’000RM’000RM’000RM’000
Cash flows from financing activities
Proceeds from bank borrowings
359,79665,211
- Repayment of bank borrowings
(397,175)(83,677)
(71)(41)
Interest paid on borrowings
(28,407)(40,704)
-(3)
Increase in short-term deposits pledged
as securities
(43,853)(10,411) (2,649) Purchase of treasury shares
-(1) -(1)
Capital repayment to shareholders
-(136,060)
-(136,060)
Dividends paid to non-controlling interests
(922)- - Net cash used in financing activities
Net (decrease)/increase in
cash and cash equivalents
Effect of exchange rate fluctuations
on cash held
Cash and cash equivalents at 1 April/1 January (110,561)
(205,642)
(21,823)4,747(4,390)3,886
7,966(1,946)
-139,292136,491 5,0591,173
Cash and cash equivalents at 31 March(i) 125,435139,292
(i)
(2,720)(136,105)
6695,059
Cash and cash equivalents
Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position
amounts:
GroupCompany
2014201320142013
Deposits12
70,79763,455 2,649Less: Pledged deposits
12
(56,535)(12,682) (2,649)
14,26250,773
-Cash and bank balances
113,64689,216 6695,059
Bank overdrafts
16
(2,473)(697) -
125,435139,292
6695,059
(ii) Purchase of property, plant and equipment
During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM97,841,000 (2013:
RM94,794,000), of which RM711,000 (2013: Nil), were acquired by means of finance leases.
p84
N otes to the Financ ial St atement s
Scomi Energy Services Bhd is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market
of Bursa Malaysia Securities Berhad. The address of the principal place of business and registered office of the Company is as follows:
Principal place of business and registered office
Bandar Utama
47800 Petaling Jaya
The consolidated financial statements of the Company as at and for the year ended 31 March 2014 comprise the Company and its
subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”) and the Group’s interest in associates
and joint ventures.
The principal activities of the Group consist of marine transportation, other shipping related services, provision of integrated drilling
fluids and drilling waste management solutions and production chemicals.
The ultimate holding company is Scomi Group Bhd, a public limited liability company, incorporated and domiciled in Malaysia and is
listed on the Main Market of Bursa Malaysia Securities Berhad.
These financial statements were authorised for issue by the Board of Directors on 25 July 2014.
1.
Basis of preparation
(a) Statement of compliance
The financial statements of the Group and the Company have been prepared in accordance with Malaysian Financial
Reporting Standards (“MFRS”), International Financial Reporting Standards and the requirements of the Companies Act, 1965
in Malaysia.
The following are accounting standards, amendments and interpretations that have been issued by the Malaysian
Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company:
MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2014
•
•
•
•
•
•
•
Amendments to MFRS 10, Consolidated Financial Statements: Investment Entities
Amendments to MFRS 12, Disclosure of Interests in Other Entities: Investment Entities
Amendments to MFRS 127, Separate Financial Statements (2011): Investment Entities
Amendments to MFRS 132, Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities
Amendments to MFRS 136, Impairment of Assets – Recoverable Amount Disclosures for Non-Financial Assets
Amendments to MFRS 139, Financial Instruments: Recognition and Measurement – Novation of Derivatives and
Continuation of Hedge Accounting
IC Interpretation 21, Levies
1.
Basis of preparation (continued)
(a) Statement of compliance (continued)
No te s to t h e Fin an c ial St atem ent s
MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2014
•
•
•
•
•
•
•
•
•
•
Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements 2011-2013
Cycle)
Amendments to MFRS 2, Share-based Payment (Annual Improvements 2010-2012 Cycle)
Amendments to MFRS 3, Business Combinations (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)
Amendments to MFRS 8, Operating Segments (Annual Improvements 2010-2012 Cycle)
Amendments to MFRS 13, Fair Value Measurement (Annual Improvements 2010-2012 Cycle and 2011-2013 Cycle)
Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2010-2012 Cycle)
Amendments to MFRS 119, Employee Benefits – Defined Benefit Plans: Employee Contributions
Amendments to MFRS 124, Related Party Disclosures (Annual Improvements 2010-2012 Cycle)
Amendments to MFRS 138, Intangible Assets (Annual Improvements 2010-2012 Cycle)
Amendments to MFRS 140, Investment Property (Annual Improvements 2011-2013 Cycle)
MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2016
•
•
•
MFRS 14, Regulatory Deferral Accounts
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to MFRS 116 and MFRS 138)
Accounting for Acquisitions of Interests in Joint Operations (Amendments to MFRS 11)
MFRSs, Interpretations and amendments effective for a date yet to be confirmed
•
•
•
•
MFRS 9, Financial Instruments (2009)
MFRS 9, Financial Instruments (2010)
MFRS 9, Financial Instruments – Hedge Accounting and Amendments to MFRS 9, MFRS 7 and MFRS 139
Amendments to MFRS 7, Financial Instruments: Disclosures – Mandatory Effective Date of MFRS 9 and Transition
Disclosures
The Group and the Company plan to apply the above mentioned accounting standards, amendments and interpretations:
•
from the annual period beginning on 1 April 2014 for those accounting standards, amendments or interpretations
that are effective for annual periods beginning on or after 1 January 2014, except for IC Interpretation 21, which is not
applicable to the Group and the Company.
•
from the annual period beginning on 1 April 2015 for those accounting standards, amendments or interpretations that
are effective for annual periods beginning on or after 1 July 2014 and 1 January 2016.
The initial application of the accounting standards, amendments or interpretations are not expected to have any material
financial impacts to the current period and prior period financial statements of the Group and of the Company except as
mentioned below:
MFRS 9, Financial Instruments
MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and Measurement on the classification and
measurement of financial assets and financial liabilities, and on hedge accounting.
The Group is currently assessing the financial impact that may arise from the adoption of MFRS 9.
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1.
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2.
(c) Functional and presentation currency
These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial
information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.
(d) Critical accounting estimates and judgements
Estimates and judgements 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.
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 year are outlined below.
(i)
Estimated impairment of goodwill
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 of disposal
of the cash-generating units (“CGUs”) 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 of disposal 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 of disposal and value in use calculations, which resulted in no
impairment loss during the year.
The carrying amount of goodwill and estimates used in the calculation are disclosed in Note 4 to the financial
statements.
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 impairment.
(ii) Impairment of property, plant and equipment – marine vessels
The recoverable amounts of marine vessels have been determined based on the higher of fair value less costs of
disposal and value in use calculations as disclosed in Note 3. Based on this assessment, there was an impairment charge
of Nil (2013: RM4,176,000) recognised in profit or loss for the year ended 31 March 2014.
(iii) 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
indicator of impairment. The carrying amounts are disclosed in Note 6, Note 7 and Note 8 respectively. Based on this
assessment, there was no impairment of investments in subsidiaries (2013: reversal of impairment of investments in
subsidiaries of RM385,000). No impairment for investments in associates and joint ventures was recognised for the year
and period ended 31 March 2014 and 31 March 2013 respectively.
1.
(d) Critical accounting estimates and judgements (continued)
(iv)
Income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the
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, capital allowances
and tax recoverable amounts 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
As disclosed in the statement of financial position, the Group has carried forward certain tax recoverable related
to certain subsidiaries. The Directors and local independent tax professionals believe that the amount can be set
off against future tax payables.
Tax recoverable includes value added tax (VAT) that is related to a subsidiary in Indonesia and an amount
pertaining to tax recoverable for the period from 1991 to 2012 that is relevant to a subsidiary in Pakistan, both of
which are pending audit by the local tax authorities. The Directors and local independent tax professionals are
confident that the amount can be recovered.
(ii)
Deferred taxes
The Group has significant unrecognised tax losses, unutilised tax incentives and capital allowances as disclosed
in Note 9. As at 31 March 2014, the Group has deferred tax assets of RM9,157,000. 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.
(v)
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 provisions as disclosed in Note 18.
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2.
Significant accounting policies
The accounting policies set out below have been applied consistently to the periods presented in these financial statements and
have been applied consistently by Group entities, unless otherwise stated.
(a) Basis of consolidation
(i)
Subsidiaries
Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of
subsidiaries are included in the consolidated financial statements from the date that control commences until the date
that control ceases.
Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity. Potential voting rights are considered when
assessing control only when such rights are substantive. The Group considers it has de facto power over an investee
when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee
that significantly affect the investee’s return.
Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any impairment
losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction
costs.
(ii)
Business combinations
Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on
which control is transferred to the Group.
For new acquisitions, the Group measures the cost of goodwill at the acquisition date as:
•
the fair value of the consideration transferred; plus
•
the recognised amount of any non-controlling interests in the acquiree; plus
•
if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less
•
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree
either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in
connection with a business combination are expensed as incurred.
(iii) Acquisitions of non-controlling interests
The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity
transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of
net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.
(iv) Loss of control
Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any
non-controlling interests and the other components of equity related to the former subsidiary from the consolidated
statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the
Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control
is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale financial asset
depending on the level of influence retained.
2.
Significant accounting policies (continued)
(a) Basis of consolidation (continued)
(v)
Associates
Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control,
over the financial and operating policies.
Investments in associates are accounted for in the consolidated financial statements using the equity method less any
impairment losses, unless it is classified as held for sale or distribution. The cost of the investment includes transaction
costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive
income of the associates, after adjustments if any, to align the accounting policies with those of the Group, from the
date that significant influence commences until the date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any
long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent
that the Group has an obligation or has made payments on behalf of the associate.
When the Group ceases to have significant influence over an associate, any retained interest in the former associate at
the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying
amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the
interest disposed of and the carrying amount of the investment at the date when equity method is discontinued is
recognised in the profit or loss.
When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained
interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in the profit or loss. Any
gains or losses previously recognised in other comprehensive income are also reclassified proportionately to the profit or
loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities.
Investments in associates are measured in the Company’s statement of financial position at cost less any impairment
losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs.
(vi)
Joint arrangements
Joint arrangements are arrangements of which the Group has joint control, established by contracts requiring
unanimous consent for decisions about the activities that significantly affect the arrangements’ returns.
Joint arrangements are classified and accounted for as follows:
•
A joint arrangement is classified as “joint operation” when the Group or the Company has rights to the assets and
obligations for the liabilities relating to an arrangement. The Group account for each of its share of the assets,
liabilities and transactions, including its share of those held or incurred jointly with the other investors, in relation
to the joint operation.
•
A joint arrangement is classified as “joint venture” when the Group has rights only to the net assets of the
arrangements. The Group accounts for its interest in the joint venture using the equity method.
(vii)
Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly
or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position
and statement of changes in equity within equity, separately from equity attributable to the owners of the Company.
Non-controlling interests in the results of the Group is presented in the consolidated statement of profit or loss and
other comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between
non-controlling interests and owners of the Company.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if
doing so causes the non-controlling interests to have a deficit balance.
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2.
(a) Basis of consolidation (continued)
(viii)Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements.
Unrealised gains arising from transactions with equity-accounted associates and joint ventures are eliminated against
the investment to the extent of the Group’s interest in the investees. Unrealised losses are eliminated in the same way
as unrealised gains, but only to the extent that there is no evidence of impairment.
(b) Foreign currency
(i)
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange
rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to
the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting
date, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at
the date that the fair value was determined.
Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the
retranslation of available-for-sale equity instruments or a financial instrument designated as a hedge of currency risk,
which are recognised in other comprehensive income.
(ii) Operations denominated in functional currencies other than Ringgit Malaysia (“RM”)
The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and
fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period.
The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are
translated to RM at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency
translation reserve (“FCTR”) in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant
proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation
is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the FCTR related
to that foreign operation is reclassified to profit or loss as part of the profit or loss on disposal.
When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant
proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part
of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence
or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.
In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign
operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such
a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other
comprehensive income, and are presented in the FCTR in equity.
2.
(c) Financial instruments
(i)
Initial recognition and measurement
A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the
Group or the Company becomes a party to the contractual provisions of the instrument.
A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair
value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial
instrument.
An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only
if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not
categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised
separately, is accounted for in accordance with policy applicable to the nature of the host contract.
(ii) Financial instrument categories and subsequent measurement
The Group and the Company categorise financial instruments as follows:
Financial assets
(a) Financial assets at fair value through profit or loss
Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives
(except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or
financial assets that are specifically designated into this category upon initial recognition.
Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values
cannot be reliably measured are measured at cost.
Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values
with the gain or loss recognised in profit or loss.
(b)
Loans and receivables
Loans and receivables category comprises debt instruments that are not quoted in an active market.
Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the
effective interest method.
All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment
(see Note 2(j)(i)).
Financial liabilities
All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through
profit or loss.
Fair value through profit or loss category comprises financial liabilities that are derivatives or financial liabilities that are
specifically designated into this category upon initial recognition.
Derivatives that are linked to and must be settled by delivery of equity instruments that do not have a quoted price in an
active market for identical instruments whose fair values otherwise cannot be reliably measured are measured at cost.
Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values
with the gain or loss recognised in profit or loss.
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2.
(c) Financial instruments (continued)
(iii) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original
or modified terms of a debt instrument.
Fair value arising from financial guarantee contracts are classified as deferred income and are amortised to profit or loss
using a straight-line method over the contractual period or, when there is no specified contractual period, recognised
in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable,
an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the
obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.
(iv) Regular way purchase or sale of financial assets
A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery
of the asset within the time frame established generally by regulation or convention in the marketplace concerned.
A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date
accounting. Trade date accounting refers to:
(a) the recognition of an asset to be received and the liability to pay for it on the trade date, and
(b) the derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a
receivable from the buyer for payment on the trade date.
(v)
Hedge accounting
Fair value hedge
A fair value hedge is a hedge of the exposure to changes in fair value of a recognised asset or liability or an unrecognised
firm commitment, or an identified portion of such an asset, liability or firm commitment, that is attributable to a
particular risk and could affect the profit or loss.
In a fair value hedge, the gain or loss from remeasuring the hedging instrument at fair value or the foreign currency
component of its carrying amount translated at the exchange rate prevailing at the end of the reporting period is
recognised in profit or loss. The gain or loss on the hedged item, except for hedge item categorised as available-for-sale,
attributable to the hedged risk is adjusted to the carrying amount of the hedged item and recognised in profit or loss.
For a hedge item categorised as available-for-sale, the fair value gain or loss attributable to the hedge risk is recognised
in profit or loss.
Fair value hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated
or exercised, the hedge is no longer highly effective or the hedge designation is revoked.
Cash flow hedge
A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated
with a recognised asset or liability or a highly probable forecast transaction and could affect the profit or loss. In a cash
flow hedge, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is
recognised in other comprehensive income and the ineffective portion is recognised in profit or loss.
Subsequently, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into
profit or loss in the same period or periods during which the hedged forecast cash flows affect profit or loss. If the hedge
item is a non-financial asset or liability, the associated gain or loss recognised in other comprehensive income is removed
from equity and included in the initial amount of the asset or liability. However, loss recognised in other comprehensive
income that will not be recovered in one or more future periods is reclassified from equity into profit or loss.
2.
(c) Financial instruments (continued)
(v) Hedge accounting (continued)
Cash flow hedge (continued)
Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated
or exercised, the hedge is no longer highly effective, the forecast transaction is no longer expected to occur or the
hedge designation is revoked. If the hedge is for a forecast transaction, the cumulative gain or loss on the hedging
instrument remains in equity until the forecast transaction occurs. When the forecast transaction is no longer expected
to occur, any related cumulative gain or loss recognised in other comprehensive income on the hedging instrument is
reclassified from equity into profit or loss.
(vi)
Derecognition
A financial asset or a part of it is derecognised when, and only when the contractual rights to the cash flows from the
financial asset expire or the financial asset is transferred to another party without retaining control or substantially
all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount
and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any
cumulative gain or loss that had been recognised in equity is recognised in profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is
discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount
of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash
assets transferred or liabilities assumed, is recognised in profit or loss.
(d) Property, plant and equipment
(i)
Recognition and measurement
Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated
impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly
attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing
the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost
of materials and direct labour. Cost also may include transfers from equity of any gain or loss on qualifying cash flow
hedges of foreign currency purchases of property, plant and equipment.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at
acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between
knowledgeable willing parties in an arm’s length transaction after proper marketing wherein the parties had each acted
knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on
the quoted market prices for similar items when available and replacement cost when appropriate.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for
as separate items (major components) of property, plant and equipment.
The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds
from disposal with the carrying amount of property, plant and equipment and is recognised net within “other income”
and “other expenses” respectively in profit or loss.
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2.
(d) Property, plant and equipment (continued)
(ii)
Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of
the item if it is probable that the future economic benefits embodied within the component will flow to the Group or
the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised
to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss
as incurred.
(iii)
Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are
assessed, and if a component has a useful life that is different from the remainder of that asset, then that component
is depreciated separately.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component
of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold
land is not depreciated. Capital work-in-progress are not depreciated until the assets are ready for their intended use.
The estimated useful lives for the current and comparative periods are as follows:
•
•
•
•
•
•
•
Freehold buildings
Leasehold buildings
Marine vessels
Rental equipment
Non-rental equipment
Motor vehicles
Renovation, fittings and office equipment
2 - 20%
2 - 33 1/3%
4%
8 1/3 – 33 1/3%
8 1/3 – 33 1/3%
15 - 33 1/3%
10 - 33 1/3%
Depreciation methods, useful lives and residual values are reviewed at the end of the reporting period, and adjusted
as appropriate.
(e) Leased assets
(i)
Finance leases
Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are
classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower
of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is
accounted for in accordance with the accounting policy applicable to that asset.
Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction
of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a
constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for
by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.
(ii)
Operating leases
Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are
classified as operating leases and, the leased assets are not recognised on the statement of financial position.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.
Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of
the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.
2.
(f)
Intangible assets
(i)
Goodwill
Goodwill arises on business combinations is measured at cost less any accumulated impairment losses. In respect of
equity-accounted associates, the carrying amount of goodwill is included in the carrying amount of the investment
and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the
carrying amount of the equity-accounted associates.
(ii) Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and
understanding, is recognised in profit or loss as incurred.
Expenditure on development activities, whereby the application of research findings are applied to a plan or design
for the production of new or substantially improved products and processes, is capitalised only if development costs
can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are
probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset.
The expenditure capitalised includes the cost of materials, direct labour and overheads costs that are directly attributable
to preparing the asset for its intended use. For qualifying assets, borrowing costs are capitalised in accordance with the
accounting policy on borrowing costs. Other development expenditure is recognised in profit or loss as incurred.
Capitalised development expenditure is measured at cost less any accumulated amortisation and any accumulated
impairment losses.
(iii) Other intangible assets
Intangible assets, other than goodwill, that are acquired by the Group, which have finite useful lives, are measured at
cost less any accumulated amortisation and any accumulated impairment losses.
(iv)
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific
asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is
recognised in profit or loss as incurred.
(v)
Amortisation
Amortisation is based on the cost of an asset less its residual value.
Goodwill and intangible assets with indefinite useful lives are not amortised but are tested for impairment annually and
whenever there is an indication that they may be impaired.
Other intangible assets are amortised from the date that they are available for use.
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets
from the date that they are available for use.
The remaining estimated useful lives for the current and comparative periods are as follows:
•
patent rights
•
capitalised development costs
2014
4 years
13 years
2013
5 years
14 years
Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted,
if appropriate.
Development costs work-in-progress are not amortised.
p95
p96
2.
(g) Investment properties
(i)
Investment properties carried at cost
Investment properties are properties which are owned to earn rental income or for capital appreciation or for both, but
not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative
purposes. These include land held for a currently undetermined future use. Properties that are occupied by the
companies in the Group are accounted for as owner-occupied rather than as investment properties.
Investment properties are stated at cost less any accumulated depreciation and any accumulated impairment losses,
consistent with the accounting policy for property, plant and equipment as stated in accounting policy Note 2(d).
Depreciation is charged to the profit or loss on a straight-line basis over the estimated useful lives of 20 to 50 years for
buildings. Freehold land is not depreciated.
An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no future
economic benefits are expected from its disposal. The difference between the net disposal proceeds and the carrying
amount is recognised in profit or loss in the period in which the item is derecognised.
(ii) Reclassification to/from investment property
When an item of property, plant and equipment is transferred to investment property following a change in its use, any
difference arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its
fair value is recognised directly in equity as a revaluation of property, plant and equipment. However, if a fair value gain
reverses a previous impairment loss, the gain is recognised in profit or loss. Upon disposal of an investment property,
any surplus previously recorded in equity is transferred to retained earnings; the transfer is not made through profit or
loss.
When the use of a property changes such that it is reclassified as property, plant and equipment or inventories, its fair
value at the date of reclassification becomes its cost for subsequent accounting.
(iii) Determination of fair value
The fair values are based on market values, being the estimated amount for which a property could be exchanged
on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper
marketing wherein the parties had each acted knowledgeably.
In the absence of current prices in an active market, the valuations are prepared by considering the aggregate of the
estimated cash flows expected to be received from renting out the property. A yield that reflects the specific risks
inherent in the net cash flows is then applied to the net annual cash flows to arrive at the property valuation.
(h)Inventories
Inventories are measured at the lower of cost and net realisable value.
The cost of inventories is measured based on weighted average cost formula, and includes expenditure incurred in acquiring
the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and
condition. In the case of work-in-progress and finished goods, cost includes an appropriate share of production overheads
based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion
and the estimated costs necessary to make the sale.
2.
(i)
Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which
have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group
and the Company in the management of their short term commitments. For the purpose of the statement of cash flows,
cash and cash equivalents are presented net of bank overdrafts and pledged deposits, if any.
(j)Impairment
(i)
Financial assets
All financial assets (except for financial assets categorised as fair value through profit or loss, investments in subsidiaries
and investments in associates and joint ventures) are assessed at each reporting date whether there is any objective
evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of
the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment
in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of
impairment. If any such objective evidence exists, then the impairment loss of the financial asset is estimated.
An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s
original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and
is measured as the difference between the financial asset’s carrying amount and the present value of estimated future
cash flows discounted at the current market rate of return for a similar financial asset.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an
event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent
that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment
not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.
(ii)
Other assets
The carrying amounts of other assets (except for inventories and deferred tax assets) are reviewed at the end of each
reporting period to determine whether there is any indication of impairment. If any such indication exists, then the
asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are
not yet available for use, the recoverable amount is estimated each period at the same time.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates
cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating
units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating
units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed
reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a
business combination, for the purpose of impairment testing, is allocated to group of cash-generating units that are
expected to benefit from the synergies of the combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs
of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset
or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its
estimated recoverable amount.
p 97
p98
2.
(j)
Impairment (continued)
(ii) Other assets (continued)
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cashgenerating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (groups of
cash-generating units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised
in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or
no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent
that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to
profit or loss in the financial year in which the reversals are recognised.
(k) Equity instruments
Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.
(i)
Issue expenses
Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction from equity.
(ii)
Ordinary shares
Ordinary shares are classified as equity.
(iii) Repurchase, disposal and reissue of share capital (treasury shares)
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly
attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares that are not
subsequently cancelled are classified as treasury shares in the statement of changes in equity.
Where treasury shares are sold or reissued subsequently, the difference between the sales consideration net of directly
attributable costs and the carrying amount of the treasury shares is recognised in equity.
(l)
Compound financial instruments
A compound financial instrument is a non-derivative financial instrument that contains both a liability and an equity
component.
Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at
the option of the holder, when the number of shares to be issued does not vary with changes in their fair value.
The liability component of a compound financial instrument is recognised initially at fair value of a similar liability that does
not have an equity conversion option. The equity component is recognised initially at the difference between the fair value
of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable
transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised
cost using the effective interest method. The equity component of a compound financial instrument is not remeasured
subsequent to initial recognition.
Interest and losses and gains relating to the financial liability are recognised in profit or loss. On conversion, the financial
liability is reclassified to equity; no gain or loss is recognised on conversion.
2.
(m) Employee benefits
(i)
Short-term employee benefits
Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are
measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if
the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
(ii)
State plans
The Group’s contributions to statutory pension funds are charged to profit or loss in the financial year to which they
relate. Once the contributions have been paid, the Group has no further payment obligations.
(iii) Defined benefit plans
The Group’s obligation in respect of defined benefit plans is calculated separately for each plan by estimating the
amount of future benefit that employees have earned in the current and prior periods, discounting that amount.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit
credit method. When the calculation results in a potential asset to the Group, the recognised asset is limited to the
present value of economic benefits available in the form of any future refunds from the plan or reductions in future
contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable
minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, are recognised
immediately in other comprehensive income. The Group determines the net interest expense or income on the net
defined liability or asset for the period by applying the discount rate used to measure the defined benefit obligation at
the beginning of the annual period to the then net defined benefit liability or asset, taking into account any changes in
the net defined benefit liability or asset during the period as a result of contributions and benefit payments.
Net interest expense and other expenses relating to defined benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past
service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gain and
losses on the settlement of a defined benefit plan when the settlement occurs.
(iv) Share-based payment transactions
The grant date fair value of share-based payment granted to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards.
The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and nonmarket vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based
on the number of awards that meet the related service and non-market performance conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is
measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
The fair value of employee share options is measured using a binomial lattice model. Measurement inputs include
share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average
historic volatility adjusted for changes expected due to publicly available information), weighted average expected life
of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the
risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the
transactions are not taken into account in determining fair value.
p99
p10 0
2.
(m) Employee benefits (continued)
(v)
Termination benefits
Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits
and when the Group recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12
months of the end of the reporting period, then they are discounted.
(n)Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions
are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
(o) Revenue and other income
(i)
Goods sold
Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration
received or receivable, net of returns and allowances, trade discount and volume rebates. Revenue is recognised when
persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards
of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs
and possible return of goods can be estimated reliably, and there is no continuing management involvement with the
goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the
amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.
(ii)
Services
Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion of the transaction
at the end of the reporting period. The stage of completion is assessed by reference to surveys of work performed.
(iii)
Rental income
Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease.
Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Rental
income from subleased property is recognised as other income.
(iv)
Interest income
Interest income is recognised as it accrues using the effective interest method in profit or loss except for interest
income arising from temporary investment of borrowings taken specifically for the purpose of obtaining a qualifying
asset which is accounted for in accordance with the accounting policy on borrowing costs.
(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.
(vi) 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.
2.
(p) Borrowing costs
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are
recognised in profit or loss using the effective interest method.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of
those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is
being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use
or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary
to prepare the qualifying asset for its intended use or sale are interrupted or completed.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for capitalisation.
(q) Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except
to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or
substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial
years.
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of
assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following
temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is
not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the
tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been
enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they
intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the
temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced
to the extent that it is no longer probable that the related tax benefit will be realised.
(r) Earnings per ordinary share
The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”).
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during the period, adjusted for own shares held.
Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding adjusted for own shares held, for the effects of all dilutive potential ordinary shares,
which comprise convertible notes and share options granted to employees.
p101
p102
2.
(s) Operating segments
An operating segment is a component of the Group that engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components.
All operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in this case is
the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and to assess its
performance, and for which discrete financial information is available.
(t)Contingencies
(i)
Contingent liabilities
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated
reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability,
unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be
confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities
unless the probability of outflow of economic benefits is remote.
(ii)
Contingent assets
Where it is not probable that there is an inflow of economic benefits, or the amount cannot be estimated reliably,
the asset is not recognised in the statements of financial position and is disclosed as a contingent asset, unless the
probability of inflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by
the occurrence or non-occurrence of one or more future events, are also disclosed as contingent assets unless the
probability of inflow of economic benefits is remote.
(u) Fair value measurements
Fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either
in the principal market or in the absence of a principal market, in the most advantageous market.
For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset
in its highest and best use.
In accordance with the transitional provision of MFRS 13, the Group applied the new fair value measurement guidance
prospectively, and has not provided any comparative fair value information for new disclosures. The adoption of MFRS 13 has
not significantly affected the measurements of the Group’s assets or liabilities other than the additional disclosures.
3.
Renovation,
fittings,
Capital
Freehold Freehold Leasehold
Marine
Rental Non-rental
Motor and office work-in-
land buildings buildings vesselsequipmentequipment vehiclesequipment progress
Total
Group
RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Cost
At 1 January 2012
1,328
2,902
14,899
776,086
342,706
11,735
6,115
43,104
2,059 1,200,934
-
- 1,28028,71354,720 537 550 1,728 7,26694,794
Additions
Disposals
(89) (159)(1,398)(71,740)(9,218)(1,037) (465)(1,551)
-(85,657)
---
2,0136--(6)
(2,013)Reclassification
Effect of movements
in exchange rates
(25)
(54)
(58)
(14,615)
1,731
(202)
29
(249)
(19)
(13,462)
At 31 March 2013/
1 April 2013
Additions
Transfer to investment
properties
Disposals
Reclassification
Effect of movements
in exchange rates
At 31 March 2014
1,214
-
2,689
14,723
720,457
389,945
11,033
6,229
43,026
7,293
1,196,609
- 54717,93451,741 1,462 3,186 2,37920,59297,841
(1,365)--------
(1,365)
-
- (327)(29,421)(5,451)
- (355)(1,226)
-(36,780)
-(1,021) - 5,034(1,180)1,845 180 176(5,034) 180
180
181
48,173
17,748
789
922
(875)
1,160
68,458
29 1,84815,124762,177452,80315,12910,16243,48024,011
1,324,763
Accumulated depreciation
At 1 January 2012
104
2,607
11,575
310,364
183,989
8,352
4,356
22,828
-
544,175
Charge for the period
-
115
821
45,467
34,245
1,126
659
6,440
-
88,873
Disposals
- (207)(1,324)(34,088)(6,407) (602) (452)(1,313)
-(44,393)
Effect of movements
in exchange rates
4
(48)
(33)
(7,549)
(888)
(162)
(64)
(345)
-
(9,085)
At 31 March 2013/
1 April 2013
Charge for the year
Transfer to investment
properties
Disposals
Effect of movements
in exchange rates
At 31 March 2014
108
-
2,467
53
11,039
1,105
314,194
37,629
210,939
36,028
8,714
816
4,499
970
27,610
4,919
-
-
579,570
81,520
(108)--------
(108)
- -(327)
(21,576)
(1,700) -(226)(672) -
(24,501)
-
(816)
(20)
27,457
10,256
708
319
(151)
- 1,704 11,797357,704255,523 10,238 5,562 31,706
-
37,753
-674,234
p10 3
p10 4
3.
Property, plant and equipment (continued)
Renovation,
fittings,
Capital
Freehold Freehold Leasehold
Marine
Rental Non-rental
Motor and office work-in-
land buildings buildings vesselsequipmentequipment vehiclesequipment progress
Total
Group
RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Accumulated
impairment loss
At 1 January 2012 ---
95,219-----
95,219
Charge for the period --
500
4,176
2,308----
6,984
---
(13,215)-----
(13,215)
Disposals
Reversal of impairment
loss
----
(216)----
(216)
At 31 March 2013/
1 April 2013/
31 March 2014
-
-
500
86,180
2,092
-
-
-
-
88,772
Carrying amounts
At 31 March 2013/
1 April 2013
1,106
222
3,184
320,083
176,914
2,319
1,730
15,416
7,293
528,267
At 31 March 2014
29
144 2,827318,293195,188 4,891 4,600 11,774 24,011561,757
Renovation
and office Motor
equipment vehicles
Total
RM’000RM’000RM’000
Company
Cost
At 1 January 2012/31 March 2013/
1 April 2013/31 March 2014
998
200
1,198
At 1 January 2012
321
137
458
Charge for the period
198
49
247
At 31 March 2013/1 April 2013
Charge for the year
519
156
186
14
705
170
At 31 March 2014
675200875
Carrying amounts
At 31 March 2013/1 April 2013
479
14
493
At 31 March 2014
323
-323
3.
Property, plant and equipment (continued)
(a) Impairment loss
In the previous period, management performed an impairment assessment on certain vessels to assess the carrying
amounts of these vessels due to loss of a major customer in the Marine Services segment. Arising from this assessment,
the Group recognised an impairment charge of RM4,176,000, 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 of disposal and value in use
calculation, with all tug 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 of disposal, which is the
indicative values of the vessels on a willing buyer willing seller basis.
In the current year, no impairment loss has been recognised. The recoverable amounts of the vessels were determined
based on value in use calculation. Key assumptions used in the value in use calculation are as disclosed in Note 4(b)(i).
(b) Leased plant and equipment
The net carrying amounts of motor vehicles of the Group and of the Company acquired under finance lease arrangements
at the end of the reporting period were RM394,000 (2013: Nil) and Nil (2013: RM14,000) respectively.
(c)Security
The carrying amount of property, plant and equipment of the Group charged as security for banking facilities granted to the
Group (Note 16) is as follows:
Group
20142013
RM’000RM’000
Marine vessels147,046152,860
-
1,216
Freehold land and buildings
147,046
154,076
p10 5
p10 6
4.
Intangible assets
Capitalised
Development
development
cost work-in
cost -progress
Patents
and other
Drilling
EMS
intangible
wasteengineering
Goodwill
assetsequipment package
Total
NoteRM’000RM’000RM’000RM’000RM’000
Group
Cost
At 1 January 2012
401,925
493
-
-
402,418
- 4662,8172,4845,767
Additions
Effect of movements in
exchange rates
(44)
(50)
11
9
(74)
At 31 March 2013
/1 April 2013
exchange rates
At 31 March 2014
401,881
909
2,828
2,493
408,111
198
60
358
-
616
402,079 9693,1862,493
408,727
Accumulated amortisation
At 1 January 2012
293,347
391
-
-
Amortisation for the period
(a)
-
72
359
-
exchange rates
-
(49)
-
-
At 31 March 2013
/1 April 2013
Amortisation for the year
(a)
exchange rates
At 31 March 2014
(49)
293,347
-
414
50
359
166
-
-
294,120
216
-
29
30
-
59
293,347493555
-
294,395
Carrying amounts
A1 31 March 2013
/1 April 2013
108,534
495
2,469
2,493
At 31 March 2014
293,738
431
113,991
108,732 4762,6312,493
114,332
(a) Amortisation
The amortisation of patents and capitalised development costs is allocated to the cost of inventory and is recognised in cost
of sales as inventory is sold.
The remaining useful lives of the patents and capitalised development costs are 4 years and 13 years respectively (2013: 5
years and 14 years respectively).
4.
Intangible assets (continued)
(b)Impairment
(i)
Goodwill
The carrying amounts of goodwill allocated to the Group’s cash-generating units (“CGUs”) are as follows:
Group
20142013
RM’000RM’000
Marine Services - Indonesia
Oilfield Services
7,0147,014
101,718101,520
108,732
108,534
Goodwill allocated to Marine Services - Indonesia
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 year, the cash-generating units with the allocated goodwill was reviewed for impairment using the value
in use calculations. The value in use calculations use pre-tax cash flow projections for each vessel based on financial
budgets approved by the Board covering a five-year period. Based on the calculations, no impairment has been
recognised in the current year.
The value in use calculations use pre-tax cash flow projections based on financial budgets approved by the Board
covering a five-year period. The key assumptions used in the value in use calculation in the current year is as follows:
20142013
%%
Revenue growth rates in the first 5 years
(1.9)-18.1Discount rate
16.4Terminal growth rate
1.0The projections over these periods were based on an approved business plan and reflect the expectation of usage,
revenue, growth, operating costs and margins based on past experience and 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 the Marine Services industry in Indonesia. The terminal growth rate is based on long term growth rate of the Marine
Services industry.
p107
p10 8
4.
Intangible assets (continued)
(b) Impairment (continued)
(i)
Goodwill (continued)
Goodwill allocated to Oilfield Services
During the year, the cash-generating units with the allocated goodwill was reviewed for impairment using the value
in use calculations. The value in use calculations use pre-tax cash flow projections for each country based on financial
budgets approved by the Board covering a five-year period. Based on the calculations, no impairment has been
recognised in the current year.
The value in use calculations use pre-tax cash flow projections based on financial budgets approved by the Board
covering a five-year period. The key assumptions used in the value in use calculations are as follows:
20142013
%%
Revenue growth rates in the first 5 years
Discount rates
Terminal growth rates
5.0 – 55.0
9.0 – 20.0
1.0
6.0 – 30.0
9.0 – 23.0
3.0 – 8.0
The projections over these periods were based on an approved business plan and reflect the expectation of usage,
revenue, growth, operating costs and margins based on past experience and 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 in which the Group operates. The terminal growth rate is based on long term growth rates
relating to the individual countries.
(ii)
Capitalised development costs work-in-progress
The capitalised development costs work-in-progress was tested for impairment based on the following assumptions:
20142013
%%
Revenue growth rate in the first 5 years
Discount rates
Terminal growth rate
Zero growth
Zero growth
30.0
9.0 – 23.0
NilNil
The projections over these periods reflect the expectation of usage, revenue, growth, operating costs and margins
based on current assessment of anticipated 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.
5.
p10 9
Investment properties
Group
20142013
NoteRM’000RM’000
Freehold land and buildings
At cost
3,8353,832
At 1 April 2013/1 January 2012
Transfer from property, plant and equipment
1,257Effect of movements in exchange rates
-3
At 31 March
5,0923,835
1,9981,818
161182
Charge for the year/period
Effect of movements in exchange rates
(38)(2)
At 31 March
2,1211,998
Accumulated impairment losses
At 1 April 2013/1 January 2012/31 March
455455
Carrying amounts
1,3821,559
At 31 March
2,5161,382
At fair value
6,4723,790
(a)
The following amounts have been recognised in profit or loss:
Group
Year ended
1.1.2012 to
31.3.201431.3.2013
RM’000RM’000
Rental income
171246
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.
p110
5.
Investment properties (continued)
(a) Fair value information
Fair value of investment properties are categorised as follows:
2014
Group
Level 1
Level 2
Level 3
Total
RM’000RM’000RM’000RM’000
Freehold land
Freehold land and building
-3,282
-3,190
-3,282
-3,190
-6,472
-6,472
Level 1 fair value
Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical investment properties that the
entity can access at the measurement date.
Level 2 fair value
Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the
investment property, either directly or indirectly.
Level 2 fair values of land and buildings is determined by external, independent property valuers. The fair values of land
and buildings have been generally derived using the comparison method. In this approach, sales and listing of comparable
properties recorded within the same location are compiled. Sales price of comparable properties in close proximity are
adjusted for differences in attributes to arrive at a comparison.
Level 3 fair value
Level 3 fair value is estimated using unobservable inputs for the investment properties.
6.
p111
Investments in subsidiaries
Company
20142013
NoteRM’000RM’000
Additions during the year/period
(a)
Repayment of capital (b)
1,270,678453,444
-948,080
-(131,231)
1,270,6781,270,293
Reversal of impairment loss
(c)
-385
At 31 March
1,270,6781,270,678
Unquoted equity shares, at cost
11,01611,016
1,569,5911,569,591
Deemed investment – capital contribution
1,580,6071,580,607
Less: Accumulated impairment losses (309,929)(309,929)
1,270,6781,270,678
(a) Additions during the year/period
Additional investments in subsidiaries during the year/period comprised the following:Company
Year ended
1.1.2012 to
31.3.201431.3.2013
RM’000RM’000
Scomi Oilfield Limited
Scomi Sosma Sdn. Bhd.
Scomi KMC Sdn. Bhd.
-940,600
-6,710
-770
-948,080
(b) Repayment of capital
Repayment of capital represents the proceeds received from disposal of subsidiary during the previous period.
(c) Impairment assessments of investments in subsidiaries
Investments in subsidiaries are assessed at each reporting period for an indication that the investment may be impaired.
Where such an indication exists, the recoverable amount of the identified cost of investment is determined based on the
higher of value in use calculations and fair value less costs of disposal.
During the previous period, the Company’s investment in Scomi Marine Services Pte. Ltd. (“SMS”) was reviewed for reversal
of impairment using fair value less costs of disposal as certain vessels were disposed of at a gain. Arising from the above
assessment, the Company recognised a reversal of impairment loss of RM385,000 for the period ended 31 March 2013. There
was no impairment recognised or reversal of impairment in the current year.
p112
6.
Investments in subsidiaries (continued)
(d) Details of the significant subsidiaries are as follows:
Principal
place of Effective
business/
ownership
Country of
interest
incorporation
2014
2013
Name of entity
% %
Direct subsidiaries
Scomi Oilfield Limited
Malaysia/
Investment holding
100100
Bermuda
Investment holding
100100
Trans Advantage Sdn. Bhd.
Malaysia
Ship chartering and ship
management
100100
Scomi KMC Sdn. Bhd.
Malaysia
(including 4% held by
Scomi Oiltools Sdn. Bhd.)
Provision of oilfield equipment, supplies and services
5252
Scomi Marine Services
Pte. Ltd. (“SMS”)
Singapore
Malaysia
Distribution of chemical products
100100
and services
Significant subsidiaries
of Scomi Oilfield Limited
Scomi Oiltools Sdn. Bhd.
Malaysia
Provision of oilfield equipment, 100100
supplies and provision of
management services
Scomi Oiltools (Cayman)
Qatar & United
Arab Emirates/
supplies and services to Qatar and
Ltd*
Cayman
United Arab Emirates
Islands
Scomi Oiltools Ltd
Pakistan & Provision of oilfield equipments, 100100
Myanmar/
supplies and service in Pakistan
Cayman and Myanmar
Islands
Scomi Oiltools (Africa)
Congo & Nigeria/
Cayman
Limited
Island
Scomi Oiltools (Thailand) Thailand
Ltd*
Scomi Oiltools Egypt
Egypt
SAE*~
Investment holding and provision of
100100
oilfield equipment, supplies and
services to Congo and Nigeria
Provision of oilfield quipment, supplies and services
100100
100100
6.
p113
(d) Details of the significant subsidiaries are as follows: (continued)
Principal
place of Effective
business/
ownership
Country of
interest
Name of entity
incorporation
2014
2013
% %
of Scomi Oilfield Limited
(continued)
KMCOB Capital Berhad
Malaysia
Undertake the issuance of private 100100
debt securities in such classes, series,
form or denomination and to secure
the redemption thereof and the
utilisation of proceeds from such issuance
and to undertake any refinancing
exercise in respect of such private debt
securities
Scomi Oiltools (S) Pte. Ltd.#
Singapore
supplies and services
Scomi Oiltools Oman
Oman
LLC*
KMC Oiltools BV@
Netherlands
Intellectual property holder and 100100
co-ordinator
Scomi Oiltools Pty Ltd*
Australia
Significant subsidiary
of Scomi Marine Services
Pte. Ltd.
PT Rig Tenders
Indonesia
Ship owning and chartering
80.5480.54
Indonesia, Tbk*+
Significant subsidiary of
Scomi Anticor S.A.#
France
Design and field deployment of various
100100
oil and gas production chemicals
of Scomi Oiltools (Africa)
Limited
WASCO Oil Services
Nigeria
Provision of oilfield equipment,
6060
Company Nigeria Limited
p114
6.
(d) Details of the significant subsidiaries are as follows: (continued)
Principal
place of Effective
business/
ownership
Country of
interest
Name of entity
incorporation
2014
2013
% %
of Scomi Oiltools (S) Pte. Ltd.
PT Scomi Oiltools*
Indonesia
Scomi Oiltools (RUS)
Russia
Limited Liability
Company*
100100
of PT Rig Tenders
Indonesia, Tbk
Rig Tenders Marine Singapore
Ship chartering
80.5480.54
Pte. Ltd.*
CH Logistic Pte. Ltd.*
Singapore
Investment holding
80.5480.54
CH Ship Management
Singapore
Provision of management
80.5480.54
Pte. Ltd.*
services
Grundtvig Marine Pte. Ltd.*
Singapore
Investment holding
80.5480.54
of Grundtvig Marine
Pte. Ltd.
PT. Batuah Abadi Lines*
Indonesia
76.5176.51
*
+
#
~
@
Audited by other member firms of KPMG International.
Listed on the Indonesian Stock Exchange.
Not audited by member firms of KPMG International.
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 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.
Not required to be audited.
6.
(e) Non-controlling interests in subsidiaries
The Group’s subsidiaries that have material non-controlling interests (“NCI”) are Scomi KMC Sdn. Bhd. and PT Rig Tenders
Indonesia, Tbk, and their aggregated results with other subsidiaries with immaterial NCI are as follows:
2014
Other
Subsidiaries subsidiaries
withwith
materialimmaterial
NCINCI
Total
RM’000RM’000RM’000
Carrying amount of NCI
Loss allocated to NCI
64,351 4,13268,483
(838)(106)(944)
Summarised financial information before
intra-group elimination
As at 31 March
Non-current assets
373,094
Current assets
209,330
(118,322)
Current liabilities
Net assets
464,102
Year ended 31 March
Revenue
522,429
Loss for the year
(7,414)
Total comprehensive loss for the year
(7,414)
41,076
Cash flows used in investing activities
(44,742)
Cash flows used in financing activities
(46,660)
Net decrease in cash and cash equivalents
(50,326)
Dividends paid to NCI
(922)
p115
p116
6.
(e) Non-controlling interests in subsidiaries (continued)
2013
Other
Subsidiaries subsidiaries
withwith
materialimmaterial
NCINCI
Total
RM’000RM’000RM’000
Carrying amount of NCI
65,917
4,432
70,349
Profit/(Loss) allocated to NCI
8,171
(1,175)
6,996
Summarised financial information
before intra-group elimination
As at 31 March
Non-current assets
358,483
Current assets
262,075
Current liabilities
(161,721)
Net assets
458,837
Year ended 31 March
Revenue792,290
Profit for the period
20,979
Total comprehensive income for the period
20,979
136,635
Cash flows used in investing activities
(13,059)
Cash flows used in financing activities
(111,877)
Net increase in cash and cash equivalents
11,699
Dividends paid to NCI
-
7.
p117
GroupCompany
2014201320142013
Unquoted shares, at cost
- outside Malaysia
2,6461,6152,0421,050
Share of post-acquisition reserves
23,34917,348
-Deemed investment –
capital contribution
(a)
28,61132,76115,389
18,282
Deemed investment –
financial guarantee liabilities
329-
329331
54,93551,72417,76019,663
(a) Deemed investment – capital contribution
The deemed investment – capital contribution relates to advances provided to certain joint ventures that are contractually
not receivable until the external borrowings of the joint ventures have been repaid.
(b) Details of the joint ventures are as follows:
Principal
place of Effective
business/
ownership
Country of
Nature of the
interest
Name of entity
incorporation
relationship
2014
2013
% %
Held by the Company
Rig Tenders Offshore
Singapore
7070
Pte. Ltd.*
Marineco Limited*
Malaysia
Ship chartering
5151
Gemini Sprint Sdn. Bhd.*
Malaysia
Ship chartering and management
5151
Transenergy Shipping
Pte. Ltd.
Malaysia
Ship chartering
5050
Transenergy Shipping
Malaysia
5050
Malaysia Sdn. Bhd.
Held by Scomi Oilfield
Limited
Vibratherm Limited
England
Development of microwave thermal 5050
treatment equipment
*
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 agreement.
p118
7.
Investments in joint ventures (continued)
As at the date of the financial statements, Vibratherm Limited remained inactive, therefore no share of results was recorded.
Summarised financial information in respect of the Group’s joint ventures are set out below:
Year ended
1.1.2012 to
31.3.201431.3.2013
RM’000RM’000
Revenue
18,99422,921
Profit after tax
5,3436,539
Group’s share of results for the year/period
5,3106,568
Total assets
64,18766,383
Total liabilities
(26,159)(35,925)
8.
Net assets
Capital contribution
38,02830,458
15,71818,612
Group’s share of jointly-controlled entities’ net assets
53,74649,070
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Unquoted shares, at cost
- outside Malaysia
16,85716,85716,85716,857
Less: Impairment loss
(16,733)
(16,477)
(16,632)(16,632)
124380225225
8.
Investments in associates (continued)
(a) Details of the associates are as follows:
p119
Principal
place of Effective
business/
ownership
Country of
Nature of the
interest
Name of entity
incorporation
relationship
2014
2013
% %
Held by the Company
Southern Petroleum
Vietnam
Owner and operator of tankers
2020
Transporation Joint Stock
Company
Emerald Logistics Sdn. Bhd.
Malaysia
4949
Held by Scomi Marine
Services Pte. Ltd.
King Bridge Enterprises Ltd
British
Investment holding
4949
Virgin Islands
The Group’s share of revenue, loss after tax, assets and liabilities of associates are as follows:
Year ended
1.1.2012 to
31.3.201431.3.2013
RM’000RM’000
Revenue
18,59021,708
Loss after tax
(445)(5,244)
Group’s share of results for the financial year/period
(247)133
Group
Share of net assets of associates
124380
Total assets
13,83143,942
Total liabilities
(13,586)(43,152)
Net assets
245790
(b) Impairment assessments of investments in associates
Investments in associates are assessed at each reporting period for indication that the investment may be impaired. Where
such indication exists, the recoverable amount of the identified cost of investment is determined based on the higher of
value in use calculations and fair value less costs of disposal.
p12 0
9.
Deferred tax assets/(liabilities)
Recognised deferred tax assets/(liabilities)
Deferred tax assets and liabilities are attributable to the following:
Group
AssetsLiabilities Net
201420132014201320142013
RM’000RM’000RM’000RM’000RM’000RM’000
3,61312,366
--
3,61312,366
1,5071,412
--1,5071,412
--
(2,268)(1,147)(2,268)(1,147)
Tax losses and capital allowances
Provisions
Deductible/(Taxable) temporary
differences
4,0374,781
(3,150)(1,747) 8873,034
Tax assets/(liabilities)
Set off of tax
9,15718,559(5,418)(2,894)3,739
15,665
-(57) -57 --
Net tax assets/(liabilities)
9,15718,502(5,418)(2,837)3,73915,665
Movements in temporary differences during the year/period are as follows:
Recognised
Effect of Recognised
Effect of
in profit movements
At
in profit movements
At
or loss Recognised in exchange
31.3.2013/
or loss in exchange
At
1.1.2012
(Note 24)
in equity
rates
1.4.2013
(Note 24)
rates
31.3.2014
Group
RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
Tax losses and
28,716
(16,356)
capital allowances
Provisions
1481,262
Property, plant and
equipment
(584)
(552)
Deductible/(Taxable)
temporary differences 1,371
659
29,651(14,987)
-
-
6
12,366
(8,750)
(3)
3,613
21,412 - 951,507
(6)
(5)
(1,147)
1,015
(2,136)
(2,268)
-
1,004
3,034
1,226
(3,373)
887
(6)1,00715,665(6,509)(5,417)3,739
Unrecognised deferred tax assets
T he amount of deductible temporary differences for which no deferred tax assets are recognised in the statement of financial
position are as follows:
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Deductible temporary differences (net)
17,64817,270 4,8854,200
Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be
available against which the Group and the Company can utilise the benefits there from.
p121
10. Trade and other receivables
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Non-current
Other receivables
141262 -
Current
Trade receivables
389,128355,904
-Less: Allowance for impairment
(33,110)(29,584)
-Trade receivable – net
356,018326,320
--
Other receivables
83,97256,436 486Deposits
38,07515,937
-48
Prepayments
27,72411,534
4739
Insurance recoverable
-1,540
-Less: Allowance for impairment
(1,228)(8,702)
-
148,54376,745 53387
Amount due from ultimate holding company 2,121--669
Amount due from related companies
1,3181,281
10,719921
Amount due from subsidiaries
--2,12219,706
Amount due from associate
-12,167
-12,167
Amount due from joint ventures
-
21
-21
Less: Allowance for impairment on amounts
due from associate and subsidiary -(12,139)
-(22,452)
3,4391,330
12,84111,032
508,000404,39513,37411,119
508,141404,65713,37411,119
Group
Credit terms for trade receivables range from 30 to 90 days (2013: 30 to 90 days). No interest is charged on outstanding trade
receivables within the stipulated credit period from the due date of invoice. Thereafter, interest is charged at 1.5% to 2.0% (2013:
1.5% to 2.0%) per annum on the outstanding balance.
Group and Company
Amounts due from ultimate holding company, related companies, subsidiaries, associate and joint ventures are unsecured,
interest-free and are repayable on demand.
p12 2
11.Inventories
Group
20142013
RM’000RM’000
Raw materials
19,24317,535
Work-in-progress-71
Finished goods
177,712169,509
Consumables
17,78416,368
214,739203,483
The cost of inventories recognised as expense and included in cost of sales amounted to RM698.2 million (2013: RM474.6 million).
12. Cash and cash equivalents
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Cash and bank balances
Short term deposits placed with licensed banks
113,64689,216 669 5,059
70,79763,455 2,649-
184,443152,671 3,3185,059
The effective interest rates for short term deposits placed with licensed banks of the Group and of the Company at the end of
the reporting period range from 0.05% to 6.50% (2013: 0.05% to 6.50%) per annum. Short term deposits of the Group and of the
Company have maturity periods ranging from 1 day to 365 days (2013: 1 day to 365 days).
Included in the Group’s and the Company’s deposits placed with licensed banks is RM56,535,000 (2013: RM12,682,000) and
RM2,649,000 (2013: Nil) pledged for banking facilities granted to the Group and the Company.
13. Share capital
Group and Company
Number Number
Amount
of shares
Amount
of shares
2014201420132013
RM’000’000
RM’000’000
Authorised:
Ordinary shares of RM0.45/RM1 each
At 1 April/1 January
1,800,0004,000,000 998,000998,000
Created during the year/period
--
1,350,9003,002,000
Capital reduction
--
(548,900)At 31 March
1,800,0004,000,000
1,800,0004,000,000
Redeemable Convertible Cumulative
Preference Shares of RM0.01 each
2,000200,000 2,000200,000
p12 3
13. Share capital (continued)
Group and Company
Number Number
Amount
of shares
Amount
of shares
2014201420132013
RM’000’000
RM’000’000
Issued and fully paid:
Ordinary shares of RM0.45/RM1 each
1,005,5352,341,775733,009733,009
Issued during the year/period
-- 675,6811,608,766
Capital reduction --(403,155)
At 31 March
1,005,5352,341,7751,005,5352,341,775
In the previous financial period, the creation of the new shares were pursuant to the acquisition of Eastern Hemisphere Entities of
the Oilfield Services Segment of Scomi Group Bhd. The new ordinary shares issued during the financial period ranked pari passu
in all respects with the existing ordinary shares of the Company.
Ordinary shares
The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per
share at meetings of the Company and rank equally with preference shareholders with regard to the Company’s residual assets.
In respect of the Company’s treasury shares that are held by the Group (see Note 14), all rights are suspended until those shares
are reissued.
14. Treasury shares
Group and Company
Number Number
Amount
of shares
Amount
of shares
2014201420132013
RM’000’000
RM’000’000
Purchased during the year/period
48145 47143
--12
At 31 March
48145 48145
There was no repurchase of the Company’s shares during the year. For the period ended 31 March 2013, the Company
repurchased 2,000 of its issued share capital from the open market on Bursa Malaysia for RM846. The repurchase transactions were
financed by internally generated funds. The shares repurchased are held as treasury shares as allowed under Section 67A of the
Companies Act, 1965. The Company has the rights to reissue these shares at a later date. 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 2014.
p124
14. Treasury shares (continued)
At the end of the reporting period, 145,000 (2013: 145,000) ordinary shares are held as treasury shares at a carrying value of
RM48,000 (2013: RM48,000) and the number of outstanding shares in issue after setting off against treasury shares is 2,341,630,000
(2013: 2,341,630,000 shares).
The shareholders of the Company, by an ordinary resolution passed in an Annual General Meeting held on 28 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.
15.Reserves
GroupCompany
2014201320142013
Translation reserve
(a)
Hedging reserve
(b)
Merger reserve
(c)
Capital reserve
(d)
Retained earnings
Share option reserve
(e)
(211,176)(244,277)
-(16,559)(10,220)
-(443,323)(443,323)
-26,88126,88126,88126,881
312,052219,918 (3,129)62
-10,259
--
(332,125)(440,762) 23,75226,943
(a) Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements
of foreign operations, as well as from the translation of liabilities that hedge the Company’s net investment in a foreign
operation.
(b) Hedging reserve
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Reclassification to other
comprehensive income
- finance costs
Transfer to profit or loss
(10,220)(3,448)
At 31 March (16,559)(10,220)--
(6,339)(9,673)
-2,901
--
---
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedges
related to hedged transactions that have not yet occurred.
15. Reserves (continued)
(c) Merger reserve
The movement in merger reserve is as follows:
Group
Year ended
1.1.2012 to
31.3.201431.3.2013
RM’000RM’000
At 1 April/1 January *
(443,323)48,606
Movement of reorganisation reserve
- movement in the inter-company balances
-22,129
- adjustment for acquisition of SOLE, SSSB and SKMC
-(514,058)
-(491,929)
At 31 March *
*
(443,323)(443,323)
This represents the net equity comprising the carrying amount of assets and liabilities of Scomi Oilfield Limited
(Bermuda) Eastern (“SOLE”), Scomi Sosma Sdn. Bhd. (“SSSB”) and Scomi KMC Sdn. Bhd. (“SKMC”) as at 1 January 2011
from the consolidated financial statements of Scomi Group Bhd after elimination of amount due from Scomi Oiltools
Bermuda Limited, which represents a 76.08% equity interest.
(d) Capital reserve
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Capital reduction At 31 March
26,881-
26,881-26,881
-26,881
26,88126,88126,88126,881
(e) Share option reserve
The share option reserve comprises the cumulative value of employee services received for the issue of share options. When
the option is exercised, the amount in the share option reserve is transferred to share premium. When the share options
expire, the amount in the share option reserve is transferred to retained earnings.
The Company implemented an Employees’ Share Option Scheme (“ESOS”) on 18 October 2005 for a period of 10 years for
the benefit of eligible employees and Directors of the Company and the Group. The ESOS is governed by the By-Laws which
were approved by the shareholders on 26 September 2005.
p12 5
p12 6
15. Reserves (continued)
(e) Share option reserve (continued)
The ESOS was early terminated on 26 June 2012.
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Recognised in profit or loss (Note 23)
Value of options lapsed
At 31 March
10,25914,300
-1,235
(10,259)
(5,276)
-10,259
-4,879
-397
-(5,276)
--
(f) Share premium
Share premium comprises the premium paid on subscription of shares in the Company over and above the par value of the
shares.
16. Loans and borrowings
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Non-current
Bank loans - secured
16,69619,554
-Finance leases
234--Guaranteed Serial Bonds/
Sukuk Murabahah - secured
206,530257,258
-
223,460276,812
--
Current
114,066125,088
-Finance leases
9614 -14
Revolving credit - secured
40,93815,485
-Guaranteed Serial Bonds/
88,51750,243
-2,473697 -Bank overdrafts - secured
246,090191,527
-14
469,550468,339
-14
16. Loans and borrowings (continued)
(a)
Bank loans and revolving credit are secured by:
(i)
Legal charge over certain landed properties and vessels of certain subsidiaries; and
(ii)
Corporate Guarantees of the Company.
(b) Finance lease liabilities
Finance lease liabilities are payable as follows:
Present
Present
Future
value of
Future
value of
minimumminimumminimumminimum
leaseleaseleaselease
payments Interestpaymentspayments Interest payments
201420142014201320132013
Group
Less than one year
Between one and five years
113(17)9614 -14
256 (22)234---
369 (39)33014 -14
Company
Less than one year
-
---
14-
14
-
-
14
-
14
The finance leases are secured against the respective assets acquired.
(c) RM300.00 million Guaranteed Serial Bonds/RM342.55 million Sukuk Murabahah.
On 6 December 2013, KMCOB Capital has issued Guaranteed Serial Bonds (“the Bonds”) of RM300 million in nominal value
with the tenure ranging from 1 to 5 years and profit rates ranging from 3.90% to 4.30% per annum. The proceeds raised from
the Bonds was utilised to, amongst others, refinance the outstanding amount under the existing Sukuk Murabahah. The
existing Sukuk Murabahah was fully paid and redeemed on 6 December 2013.
The Bonds are secured by an irrevocable and unconditional financial guaranteed insurance policy issued by Danajamin
Nasional Berhad pursuant to a financial guarantee insurance facility of an aggregate principal amount of RM300 million and
such amount equivalent to 1 coupon payment obligation of the Bonds.
In the previous period, a subsidiary company did not fulfil one of its covenants in relation to its bank 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 previous reporting period, the carrying value of RM9.9 million has been included within
borrowings under current liabilities. Subsequent to the end of the previous reporting period, approval for a waiver from the
bank in respect of the covenant was received.
p127
p12 8
17. Provision for retirement benefits
The Group operates an unfunded defined benefit plan for qualifying employees and vessel crew of its subsidiaries in Indonesia.
Under the plan, the employees and vessel crew are entitled to retirement benefits as defined in Indonesian Labour Laws and
government regulations regarding maritime.
The amounts recognised in the statement of financial position are determined as follows:
Group
2014
RM’000
2013
RM’000
Present value of unfunded obligations
Unrecognised actuarial loss
6,0727,513
(120)(769)
5,9526,744
The amounts recognised in the statement of comprehensive income are as follows:
Group
Year ended
1.1.2012 to
31.3.201431.3.2013
RM’000RM’000
Current service costs
7701,332
Interest cost
200397
Others
(132)(417)
8381,312
Amortisation of actuarial gain/(loss)
38(195)
Total expense included in staff costs
8761,117
The movements in the retirement benefit liability recognised in the statement of financial position are as follows:
Group
Year ended
1.1.2012 to
31.3.201431.3.2013
RM’000RM’000
Total expense charged to statement of comprehensive income
Benefit payments made during the year/period
Currency translation differences
6,7446,957
8761,117
(1,774)(837)
106(493)
At 31 March
5,9526,744
p12 9
17. Provision for retirement benefits (continued)
The principal actuarial assumptions used were as follows:
2014
Discount rates (per annum) (%)
Expected rates of salary increases (per annum) (%)
Normal retirement age (years)
7.8 – 9.0
0.0 – 8.0
45 - 55
2013
4.0 – 11.0
5.0 – 10.0
45 - 60
T he most recent actuarial valuation was carried out as at 10 June 2014 by independent professional actuaries using the projected
unit credit method.
18. Trade and other payables
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Non-current
Amount payable to ultimate holding
company
-18,583
-2,6761,1922,676Other payables
2,67619,775 2,676-
Current
Trade payables
213,205193,708
-Other payables
Accruals
8423,6381,7052,248
143,308117,353
-1,302
144,150120,991 1,7053,550
Amount payable to associates
Amount payable to subsidiaries
Amount payable to ultimate holding company
Amount payable to related companies
Amount payable to joint ventures
229496 ---
272,058271,009
32,92216,109
-612,577
-177
----
33,21219,182
272,058271,186
390,567333,881273,763274,736
393,243353,656276,439274,736
p13 0
18. Trade and other payables (continued)
Group
Credit terms granted by suppliers to the Group range from cash terms to 90 days (2013: cash terms to 90 days).
Included in accruals is an amount of RM3.0 million (2013: RM3.0 million) for certain legal claims brought against a subsidiary of the
Group arising from the ordinary course of business. Management is uncertain of the expected utilisation of the balance provided
as at 31 March 2014, but are of the view that the outcome of these legal claims will not give rise to any significant loss beyond
the amounts provided at 31 March 2014.
Included in amount due to ultimate holding company is an amount of USD6 million for the purchase consideration due to
ultimate holding company arising from the acquisition of Scomi Sosma Sdn. Bhd. in the prior period. The amount is payable in
full over 2 years, which has therefore been discounted at a rate of 5.5% per annum. The effect of discounting of RM1.6 million has
been recorded in other operating income in the previous financial period.
Group and Company
The amounts payable to associates, subsidiaries, ultimate holding company, related companies and joint ventures are unsecured,
interest-free and repayable on demand.
Company
Trade and other payables consist of amount due to subsidiary, Scomi Oilfield Limited (SOL) for purchase consideration on Western
hemisphere restructuring in the previous financial year. The amount is payable on demand and SOL has the rights to call on the
loan. However, SOL is a wholly-owned subsidiary of the Company and can offset the payables balance by paying dividend to the
Company.
19. Derivative financial liabilities
Group
20142013
RM’000
RM’000
Derivative financial liabilities
Cross currency interest rate swaps
(29,093)(6,640)
Currency forward contracts
-(15)
(29,093)(6,655)
Non-current liabilities
(23,715)(6,166)
Current liabilities
(5,378)(474)
-(15)
(5,378)(489)
19. Derivative financial liabilities (continued)
There was no ineffectiveness to be recorded from the cash flow hedges.
(a)
At the date of the statement of financial position, the total notional amount of outstanding currency forward contracts of
the Group was Nil (2013: RM2.5 million).
(b) Cross currency interest rate swaps (“CCIRSs”)
The notional principal amounts of the outstanding CCIRSs at 31 March 2014 were RM270.0 million (2013: RM199.5 million).
The Group had entered into CCIRSs during 2012 and 2013, that were designated as cash flow hedges to hedge the Group’s
exposure to foreign exchange risk on its Guaranteed Serial Bonds. These contracts entitle the Group to receive principal and
fixed interest amounts in RM and oblige the Group to pay principal and fixed interest amounts in USD and the CCIRSs reflect
the timing of these cash flows. These CCIRSs contracts have maturities of up to 4 years from 31 March 2014. Subsequently,
the Group issued Guaranteed Serial Bonds to fully repay and redeem the Sukuk Murabahah. The Group has assessed and
continued to apply the same cashflow hedges to hedge the newly issued Guaranteed Serial Bonds.
As at 31 March 2014, the Group had hedged approximately 90% of the RM denominated Guaranteed Serial Bonds. The USD
interest rates on the CCIRSs contracts designated as hedging instruments in the cash flow hedges ranged from 3.68% to
7.62% per annum (2013: 6.16% to 7.82% per annum) and the interest rates in RM ranged from 4.10% to 7.20% per annum
(2013: 6.25% to 7.20% per annum). Gains and losses recognised in the hedging reserve in equity on the CCIRSs as of 31 March
2014 will be continuously released to the profit or loss within finance cost until the full repayment of the Guaranteed Serial
Bonds.
20. Financial guarantee liabilities
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Notional values
8,67024,690
420,830100,028
Financial guarantee liabilities at fair value
- current
-57 -57
The Group provided corporate guarantee to a bank in respect of a RM46.8 million loan facilities granted to a joint venture.
p131
p132
21.Revenue
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Sales of goods
Rendering of services
Rental/Charter hire income
Management and agency fees
753,818629,658
-254,583161,742
-406,874678,34718,578719
1,946-1,415,9941,471,693 18,578-
22. Finance costs
GroupCompany
Year ended
1.1.2012 to
Year ended
1.1.2012 to
31.3.201431.3.201331.3.201431.3.2013
RM’000RM’000RM’000RM’000
Interest expense on:
- bank loans and other
8,1259,415
-3
18,36429,222
-- Guaranteed Serial Bonds/Sukuk Murabahah
- Effect of interest on CCIRSs
1,880898 -
Amortisation of loan arrangement
Discounting of amount due to subsidiary
28,36939,535
-3
5,0671,821
----1,575
33,43641,356
-1,578
p133
23. Profit/(Loss) before tax
GroupCompany
Year ended
1.1.2012 to
Year ended
1.1.2012 to
31.3.201431.3.201331.3.201431.3.2013
RM’000RM’000RM’000RM’000
Profit/(Loss) before tax is stated after
(crediting)/charging:
Auditors’ remuneration:
KPMG Malaysia
Statutory audit
- current year
1,1931,197 75160
Non-audit fees
- current year
501,581
5750
Overseas affiliates of KPMG Malaysia
Statutory audit
- current year
1,3601,664
- - overprovision in prior year
(237)(176) -
Non-audit fees
- underprovision in prior year
-22 - Other auditors
Statutory audit
- current year
6060 - - (over)/under provision in prior year
-102 -
Non-audit fees
- current year
-89 -Depreciation:
81,52088,873 170247
161182 -Amortisation of patents rights and
development costs
216431 -Amortisation of loan arrangements
-1,795
-Impairment loss:
-6,984
-- Receivables
5,7084,101
-Reversal of impairment loss:
-(216) -- Receivables
(3,972)(6,496)
-- Investment in subsidiary
---(385)
- Insurance recoverable
-(9,467)
-- Other recoverable
(7,474)(3,811)
-- Associates and subsidiaries
-(5,265)
-(8,369)
(31)(33,245)
-Management fee
License fees
-10,725
-Net loss/(gain) on foreign exchange
- Realised
116(17,471) (68)1,134
(10,123)23,437
(17)4
- Unrealised
Rental of premises
5,4534,375 254372
Rental of equipment
39,38313,804
1462
Loss from disposal of property,
plant and equipment
5,6773,220
-4,2721,638
-Allowance for inventories
Interest income
(1,409)(18,140) (569)(460)
Share option expense
-
1,235
-397
p13 4
23. Profit/(Loss) before tax (continued)
GroupCompany
Year ended
1.1.2012 to
Year ended
1.1.2012 to
31.3.201431.3.201331.3.201431.3.2013
RM’000RM’000RM’000RM’000
Personnel expenses (including key
management personnel):
- Contributions to defined benefits plans
- Expenses related to defined benefit plans
- Wages, salaries and others
- Termination benefits
- Contribution to state plans
- Other employee benefits
3,9725,211 - *466
8761,117
-180,169163,406 1,0112,895
-1,258
43,7524,923 25722,51711,771 330851
* Denotes amount less than RM1,000
24. Tax expense
Recognised in profit or loss
GroupCompany
Year ended
1.1.2012 to
Year ended
1.1.2012 to
31.3.201431.3.201331.3.201431.3.2013
RM’000RM’000RM’000RM’000
Current tax
- Malaysian income tax
4,8305,985
- - Foreign income tax
35,64916,639
-
Deferred tax (Note 9)
40,47922,624
6,50914,987
---
Total income tax expense
46,98837,611
--
Reconciliation of tax expense
Profit/(Loss) for the year/period
80,93197,092(3,191)(4,823)
Total income tax expense
46,98837,611
-Profit/(Loss) before tax
127,919134,703 (3,191)(4,823)
24. Tax expense (continued)
GroupCompany
Year ended
1.1.2012 to
Year ended
1.1.2012 to
31.3.201431.3.201331.3.201431.3.2013
Tax calculated at the Malaysian
tax rate of 25% (2013: 25%)
31,98033,676 (798)(1,206)
Tax effects of:
- different tax rates in other countries
(1,298)(17,509)
-- expenses not deductible for tax purposes
18,62319,841 113784
- income not subject to tax
(4,994)(954) -(2,189)
- utilisation of previously unrecognised tax
losses and capital allowances
(2,273)- -- share of tax of associates
-33 -- share of tax of joint ventures
-(1,747)
-- deferred tax assets not recognised
2,6516966852,611
- deferred tax – under/(over) provision in prior
189(1,595)
-period/year
- current tax - under provision in prior
period/year
2,1105,167
-- others
-3 -Total income tax expense
46,98837,611
--
25. Earnings per share
Basic earnings per ordinary share
The calculation of basic earnings per ordinary share at 31 March 2014 was based on the profit attributable to ordinary shareholders
and a weighted average number of ordinary shares outstanding, calculated as follows:
Profit attributable to owners of the Company (RM’000)
Weighted average number of ordinary shares of RM0.45 each in issue (’000)
Basic earnings per share (sen)
Group
Year ended
1.1.2012 to
31.3.201431.3.2013
81,87590,096
2,341,6302,341,630
3.503.85
Diluted earnings per share are not presented as there were no dilutive potential ordinary shares as at the end of the reporting
period.
There have been no other transactions involving ordinary shares between the reporting date and the date of completion of these
financial statements.
p135
p13 6
26. Segment information
Segmental reporting
Management has determined the operating segments based on reports reviewed by the Chief Operating Decision Maker
(“CODM”) which are used for allocating resources and assessing performance of the operating segments.
The Chief Operating Decision Maker considers the business from the industry perspective and the service rendered. The following
reportable segments have been identified:
(i)
(ii)
Marine Services - provision of transportation of bulk aggregates for the coal industry.
Oilfield Services - s upply and manufacturing of equipment, supply of a wide range of specialised chemicals and provision
of services.
Unallocated costs represent corporate expenses. Segment assets consist of property, plant and equipment, intangible assets,
inventories, receivables and cash and cash equivalents, and mainly excludes investments, deferred tax assets and tax recoverable.
Segment liabilities comprise payables and exclude taxation and deferred tax liabilities.
Capital expenditure comprises additions to property, plant and equipment and intangible assets.
2014
Marine
Oilfield
services
services
Total
RM’000RM’000RM’000
Revenue External sales
179,4471,236,5471,415,994
Total revenue
179,4471,236,5471,415,994
Results
(2,866)142,011 139,145
Finance costs
(3,446)(29,990)(33,436)
2,33214,81517,147
Other income
(247) -(247)
Share of loss of equity-accounted associates, net of tax
Share of profit of equity-accounted joint ventures, net of tax
5,310
-5,310
Profit before tax
Tax expense
1,083126,836127,919
(4,867)(42,121)(46,988)
(Loss)/Profit for the year
(3,784)84,715 80,931
Other information
Depreciation and amortisation
38,61043,28781,897
Interest income
(250)(1,159)(1,409)
p137
26. Segment information (continued)
Segmental reporting (continued)
2013
Marine
Oilfield
services
services
Total
RM’000RM’000RM’000
Revenue External sales
318,2991,153,3941,471,693
Total revenue
318,2991,153,3941,471,693
Results
31,346
116,773
148,119
Finance costs
(3,388)(37,968)(41,356)
Other income
1,80419,43521,239
Share of profit of equity-accounted associates, net of tax
133
-
133
Share of profit of equity-accounted joint ventures, net of tax
6,568
-
6,568
Profit before tax
Tax expense
36,463
98,240
134,703
(5,853)(31,758)(37,611)
Profit for the period
30,610
66,482
97,092
Other information
Depreciation and amortisation
46,538
42,948
89,486
Interest income
86017,28018,140
Impairment of property, plant and equipment
4,176
2,808
6,984
2014
Assets Assets employed in the segment
493,6311,092,2971,585,928
124 -124
54,909
2654,935
Unallocated corporate assets:
Current tax assets
11,952
Deferred tax assets
9,157
Total assets
1,662,096
Liabilities
Liabilities in segment
73,807794,938868,745
Unallocated corporate liabilities:
16,995
Deferred tax liabilities
5,418
Derivatives financial liabilities
29,093
Total liabilities
920,251
Net assets
741,845
p13 8
26. Segment information (continued)
Segmental reporting (continued)
2013
Marine
Oilfield
services
services
Total
RM’000RM’000RM’000
Assets
Assets employed in the segment
516,439
380
51,701
888,012
-
23
1,404,451
380
51,724
Unallocated corporate assets:
Current tax assets
16,006
18,502
Deferred tax assets
Total assets
1,491,063
Liabilities
Liabilities in segment
375,695
453,101
828,796
Unallocated corporate liabilities:
17,701
Deferred tax liabilities
2,837
Derivatives financial liabilities
6,655
Total liabilities
855,989
Net assets
635,074
Assets employed in segment consist of property, plant and equipment, receivables and cash and cash equivalents, and mainly
exclude deferred tax assets and current tax assets. Liabilities in segment comprise payables and exclude current tax liabilties and
deferred tax liabilities.
p139
27. Financial instruments
(a) Categories of financial instruments
The table below provides an analysis of financial instruments categorised as follows:
(a) Loans and receivables (“L&R”);
(b) Fair value through profit or loss (“FVTPL”) - Held for trading (“HFT”), and
(c) Financial liabilities measured at amortised cost (“FL”).
31 March 2014
Carrying
amount
RM’000
L&R/
(FL)
RM’000
FVTPL
-HFT
RM’000
Group
Financial assets
480,417480,417
184,443184,443
-
664,860664,860
-
(469,550)(469,550)
(393,243)(393,243)
(29,093)
-(29,093)
(891,886)(862,793) (29,093)
Company
Financial assets
13,32713,327
3,3183,318
-
16,64516,645
-
(276,439)(276,439)
-
p14 0
27. Financial instruments (continued)
(a) Categories of financial instruments (continued)
31 March 2013
Carrying
amount
RM’000
L&R/
(FL)
RM’000
FVTPL
-HFT
RM’000
Group
Financial assets
Trade and other receivables 393,123
393,123
152,671
152,671
-
545,794
545,794
-
(468,339)
(353,656)
(6,655)
(468,339)
(353,656)
(250)
(6,405)
(828,650)
(822,245)
(6,405)
Company
Financial assets
11,080
5,059
11,080
5,059
-
16,139
16,139
-
Financial guarantee liabilities
(14)
(274,736)
(57)
(14)
(274,736)
(57)
-
(274,807)
(274,807)
-
(b) Net gains and losses arising from financial instruments
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Net (losses)/gains on:
Fair value through profit or loss:
- Held for trading
Loans and receivables
Financial liabilities measured at
amortised cost
(1,879)(848)-10,333(3,052) (487)(24)
(31,556)(40,458)
--
(23,102)(44,358) (487)(24)
(c) Financial risk management
The Group has exposure to the following risks from its use of financial instruments:
•
Credit risk
•
Liquidity risk
•
Market risk
(d) Credit risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers and
balances and deposits placed with licensed banks.
The Company’s exposure to credit risk arises principally from its advances to related companies, subsidiaries and associates.
Receivables
Risk management objectives, policies and processes for managing the risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.
The Group adopts the policy of dealing only with customers of appropriate credit history to mitigate credit risk. For other
financial assets, the Group adopts the policy of dealing with financial institutions and other counterparties that are regulated
and with sound credit rating.
Exposure to credit risk, credit quality and collateral
The Group and the Company do not hold any collateral from their customers.
Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their
realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group.
The Group uses ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances
past due more than 365 days, which are deemed to have higher credit risk, are monitored individually.
(i)
Trade receivables that are neither past due nor impaired
T he credit quality of trade receivables that are neither past due nor impaired can be assessed by reference to external
credit ratings (if available) or to historical information about counterparty default rates:
Group 1 – new customers (less than 6 months)
Group 2 – existing customers (more than 6 months) with no defaults in the past
Group 3 – existing customers (more than 6 months) with some defaults/delays in the past. All were fully recovered.
None of the trade receivables that are fully performing has been renegotiated during the financial year. The historical
information of the financial assets that are neither past due nor impaired are as follows:
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Group 1
Group 2
Group 3
5,3988,891
-167,207178,986
-----
172,605187,877
--
p141
p142
(d) Credit risk (continued)
Receivables (continued)
Exposure to credit risk, credit quality and collateral (continued)
(ii)
Trade receivables that are past due but not impaired
The ageing analysis of trade receivables past due but not impaired is as follows:
Group
20142013
RM’000RM’000
Neither past due nor impaired
172,605187,877
Past due but not impaired:
1 to 30 days
76,33560,453
48,87338,705
31 to 60 days
61 to 90 days
16,05912,718
91 to 120 days
15,68912,425
More than 120 days
26,45714,142
Past due and impaired
33,11029,584
389,128355,904
(iii) The movements of the allowance for impairment losses of receivables are as follows:
Group
20142013
RM’000RM’000
Impairment loss recognised
Impairment loss reversed
Effect of movements in exchange rates
29,58433,720
5,7084,101
(3,972)(6,496)
1,790(1,741)
At 31 March
33,11029,584
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.
Financial guarantees
The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain
subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the
subsidiaries.
(d) Credit risk (continued)
Financial guarantees (continued)
As the Group and the Company do not hold any collateral, the maximum exposure to credit risk for each class of financial
instruments is the carrying amount of that class of financial instruments presented on the statement of financial position,
except as follows:
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Corporate guarantees provided to a bank
- notional values
8,67024,690
420,830100,028
Fair value of financial guarantee liabilities
-57 -57
As at the end of the reporting period, there was no indication that any subsidiary would default on repayment.
Inter company advances
The Company provides unsecured advances to related companies, subsidiaries and associates. The Company monitors the
results of the related companies, subsidiaries and associates regularly. The Company relies on its subsidiaries for funding to
fulfil its obligations when fall due.
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.
Impairment losses
As at the end of the reporting period, there was no indication that the advances to related companies, subsidiaries and
associates are not recoverable. The Company does not specifically monitor the ageing of current advances to the related
companies, subsidiaries and associates.
The amount due from subsidiary and associate are neither past due nor impaired, other than an impairment of Nil (2013:
RM22,452,000) in respect of certain balances.
p143
p14 4
(e) Liquidity risk
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 maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to
ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly
different amounts.
Maturity analysis
The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the
reporting period based on undiscounted contractual payments:
Group
31 March 2014
Non-derivative financial
liabilities
Finance leases
Guaranteed Serial Bonds/
Bank overdraft - secured
Carrying
Contractual Contractual
Under 1
1 - 2
2 – 5
amount
interest rate/
cash flows
year
years
years
RM’000 coupon
RM’000RM’000RM’000RM’000
130,762
1.50% to 7.00%
134,126
105,433
28,649
44
330
2.32% to 4.70%
330102100128
40,938
2.80% to 5.20%
40,938
40,938
-
295,047
3.90% to 7.62%
369,097
97,147
63,891
208,059
2,473
6.70%
2,473
2,473-393,243 -
393,243
393,243--
Interest rate swaps:
- Outflow
- Inflow
862,793
940,207639,336 92,640208,231
891,886
956,327644,011 96,536215,780
29,093
-
3.68% to 7.82%
4.10% to 7.20%
Company
31 March 2014
Non-derivative financial liabilities
324,890
(308,770)
74,247
(69,572)
69,944
(66,048)
180,699
(173,150)
CarryingContractualContractual
Under 1
amount
interest rate/
cash flows
year
RM’000couponRM’000RM’000
273,763
-273,763273,763
p14 5
(e) Liquidity risk (continued)
Maturity analysis (continued)
The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the
reporting period based on undiscounted contractual payments (continued):
Group
31 March 2013
Non-derivative financial
liabilities
Finance leases
Bank overdraft - secured
Carrying
Contractual Contractual
Under 1
1 - 2
2 – 5
More than
amount
interest rate/ cash flows
year
years
years
5 years
RM’000
couponRM’000RM’000 RM’000 RM’000 RM’000
144,642
14
15,485
307,501
697
353,656
1.98% to 7.50%
8.30%
2.21% to 2.52%
6.48% to 7.50%
6.70%
-
134,062
14
15,485
65,830
697
353,656
Net-settled – Forward foreign
exchange contract
Interest rate swaps:
- Outflow
- Inflow
821,995847,556569,744
828,415845,001570,003
5,686
-
-
62,635
-
-
6,369
-
-
106,963
-
-
68,321 113,332
96,159
96,159
15
-
15
15
-
-
-
6,405
-
6.16% to 7.82%
6.25% to 7.20%
230,483
(233,053)
57,450
(57,206)
53,847
(54,069)
119,186
(121,778)
-
Company
31 March 2013
(f)
146,117
14
15,485
331,587
697
353,656
68,099 110,740
96,159
CarryingContractualContractual
Under 1
amount
interest rate/
cash flows
year
RM’000couponRM’000RM’000
Finance leases
Trade and other payables Financial guarantee liabilities
14
274,736
57
274,807274,807274,807
8.30%
-
-
14
274,736
57
14
274,736
57
Market risk
Market risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market
prices such as foreign exchange rates and interest rates. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters while optimising the return on risk.
The Group uses financial instruments such as currency forwards and cross currency interest rate swaps (“CCIRSs”) to manage
against financial risk exposures.
p14 6
(f)
Market risk (continued)
(i)
Currency risk
The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency
other than the respective functional currencies of Group entities. The currencies giving rise to this risk are primarily U.S.
Dollar (USD), Singapore Dollar (SGD), Indonesia Rupiah (IDR), and Nigerian Naira (NGN).
The Group does not have a fixed policy to hedge its sales and purchases via forward contracts. These exposures are
managed primarily by using natural hedges that arise from offsetting assets and liabilities that are denominated in
foreign currencies wherever possible and close monitoring of the currency exposures by management.
Exposure to foreign currency risk
The Group’s exposure to foreign currency (a currency which is other than the functional currency of the Group entities)
risk, based on carrying amounts as at the end of the reporting period was:
Functional currency
USD
RMOthers Total
Group
RM’000RM’000RM’000RM’000
2014
Financial assets
- Ringgit Malaysia
53,278 8,468
-61,746
- US Dollar
74,36315,026 4,17293,561
- Others
20,675
- 8,46129,136
- Ringgit Malaysia
21,84477,150
-98,994
306,494 6,344 34,766347,604
- US Dollar
- Others
21,706
-12,11333,819
498,360106,988 59,512664,860
- Ringgit Malaysia
295,047 2,691
-297,738
46,561116,794
-163,355
- US Dollar
- Others
7,953
- 5048,457
- Ringgit Malaysia
9,10065,108
-74,208
- US Dollar
202,710 33,047 6,806242,563
- Others
64,920 64210,91076,472
626,291218,282 18,220862,793
Net financial (liabilities)/assets
Net financial liabilities denominated in
respective entities’ functional currency
(127,931)(111,294) 41,292 (197,933)
Net (liabilities)/assets
(259,517)(129,113) 32,132 (356,498)
(131,586) (17,819)
(9,160)(158,565)
(f)
(i)
Currency risk (continued)
Functional currency
USD
RMOthers Total
RM’000RM’000RM’000RM’000
Group
2013
Financial assets
7,134
13,942
-
21,076
- Ringgit Malaysia
- US Dollar
22,823
85,110
1,570
109,503
11,1529,0451,89522,092
- Others
- Ringgit Malaysia
-
58,675
-
58,675
- US Dollar
165,772
92,622
26,956
285,350
- Others
22,11720,155 6,82649,098
228,998279,549 37,247545,794
- Ringgit Malaysia
307,501
25,149
-
332,650
- US Dollar
31,679
94,074
-
125,753
- Others
9,936--
9,936
- Ringgit Malaysia
3,910
76,210
-
80,120
- US Dollar
89,872
94,842
12,460
197,174
- Others
40,23830,091 6,03376,362
483,136320,366 18,493821,995
denominated in respective entities’
functional currency
(254,138)
(40,817)
18,754
(276,201)
(67,044)
28,742
(2,688)
(40,990)
Net (liabilities)/assets
(321,182) (12,075)
16,066
(317,191)
T he Company’s financial assets and liabilities are significantly denominated in Malaysian Ringgit (“RM”), which is its
functional currency. The Company is not significantly exposed to foreign currency risk.
A 5% (2013: 5%) strengthening/weakening of USD against RM at the end of the reporting period would have
(increased)/decreased equity and post-tax profit or loss by the amounts shown below. This analysis is based on foreign
currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting
period. This analysis assumes that all other variables, in particular interest rates, remained constant and ignores any
impact of forecasted sales and purchases.
p147
p14 8
(f)
(i)
Currency risk (continued)
Equity/
Profit or loss
(Increase)/Decrease
20142013
RM’000RM’000
Group
USD against RM
- strengthened
(6,424)(559)
- weakened
6,424559
(ii) 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.
Investments in equity securities and short term receivables and payables are not significantly exposed to interest rate
risk.
The Group manages its interest rate exposure by obtaining financing at competitive rates, which is a mix of fixed and
floating interest rates borrowing instruments. The Group reviews its debt portfolio, taking into account the investment
holding period and nature of its assets.
Exposure to interest rate risk
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 as follows:
Group
31.03.201431.03.2013
RM’000RM’000
Fixed rate instruments
Financial assets
56,53512,682
(324,140)(313,921)
(267,605)(301,239)
Floating rate instruments
(174,143)(160,824)
(f)
(ii) Interest rate risk (continued)
Interest rate risk sensitivity analysis
(a) Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and
the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model.
Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.
(b) Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points (“bp”) in interest rates at the end of the reporting period would have increased/
(decreased) equity and post-tax profit or loss by the amounts shown below. This analysis assumes that all other
variables, in particular foreign currency rates, remained constant.
Equity
Profit or loss
100 bp
100 bp
100 bp
100 bp
increasedecrease increasedecrease
Group
RM’000RM’000RM’000RM’000
2014
-
-(1,741)1,741
2013
-
-
(1,608)
1,608
(g) Hedging activities
Cash flow hedge
The Group has entered into an interest rate swap to hedge the cash flow risk in relation to the fixed interest rate of
Guaranteed Serial Bonds of RM295,048,000 (2013: RM307,502,000). The interest rate swap has the same nominal value of
RM270,000,000 (2013: RM199,500,000) and is settled every six monthly, consistent with the interest repayment schedule of
the Bonds.
During the financial year, a loss of RM15,084,000 (2013: RM6,615,000) was recognised in other comprehensive income and
RM8,745,000 (2013: RM3,058,000) was reclassified from equity to profit or loss as finance income.
Ineffective loss amounting to RM52,000 was recognised in profit or loss during the year in respect of the hedge.
(h) Fair value of financial instruments
The carrying amounts of cash and cash equivalents, short term receivables and payables and short term borrowings
approximate fair values due to the relatively short term nature of these financial instruments.
It was not practicable to estimate the fair value of the Group’s investment in unquoted shares due to the lack of comparable
quoted market prices and the inability to estimate fair value without incurring excessive costs.
p14 9
p15 0
(h) Fair value of financial instruments (continued)
The fair values of other financial assets and liabilities, together with the carrying amounts shown in the statement of financial
position, are as follows:
Group
2014
Fair value of financial instruments not carried at fair value
Total
fair value
Carrying
amount
Level 1
Level 2
Level 3
Total
RM’000RM’000RM’000RM’000RM’000RM’000
Bank loans
-
-130,762130,762130,762130,762
Finance leases - -330330330330
Guaranteed Serial Bonds
-
-295,047295,047297,384295,047
Fair value of financial instruments not carried at fair value*
Total
fair value
Carrying
amount
Total
RM’000
RM’000 RM’000
2013
Bank loans
144,642
144,642
144,642
Sukuk Murabahah
307,501
307,501
307,501
Fair value of interest rate swaps liabilities of RM29,093,000 (2013: RM6,405,000) is classified as Level 2 (2013: Level 2).
*
Comparative figures have not been analysed by levels, by virtue of transitional provision given in Appendix C2 of MFRS
13.
Policy on transfer between levels
The fair value of an asset to be transferred between levels is determined as of the date of the event or change in
circumstances that caused the transfer.
Level 1 fair value
Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical financial assets or liabilities that
the entity can access at the measurement date.
Level 2 fair value
Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the
financial assets or liabilities, either directly or indirectly.
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest at the end of the reporting period. For finance lease liabilities,
the market rate of interest is determined by reference to similar borrowing arrangements.
(h) Fair value of financial instruments (continued)
Transfers between Level 1 and Level 2 fair values
There has been no transfer between Level 1 and 2 fair values during the financial year. (2013: no transfer in either directions)
Level 3
Level 3 fair value is estimated using unobservable inputs for the financial assets and liabilities.
Fair values of finance lease liabilities, borrowings, payables and amount due to ultimate holding company have been
generally derived using discounted cash flow approach.
28. Capital management
The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue
as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business.
The Directors monitor and are determined to maintain an optimal debt-to-equity ratio that complies with debt covenants and
regulatory requirements.
The debt-to-equity ratios at 31 March 2014 and 31 March 2013 were as follows:
Total loans and borrowings (Note 16)
Less: Cash and cash equivalents (Note 12)
Net debt
Debt-to-equity ratio
Group
20142013
RM’000
RM’000
469,550468,339
(184,443)(152,671)
285,107315,668
0.420.56
There was no change in the Group’s approach to capital management during the financial year.
Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated
shareholders’ equity equal to or not less than the 25 percent of the issued and paid-up capital (excluding treasury shares) and such
shareholders’ equity is not less than RM40 million. The Company has complied with this requirement.
p151
p152
29. Operating leases
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
Group
20142013
RM’000
RM’000
Less than one year
Between one and five years
More than five years
3,26613,204
4,7227,029
1,153-
9,14120,233
The Group and the Company lease under operating leases. The leases typically run for a period of 5 years, with an option to renew
the lease after that date. Lease payments are increased every year to reflect market rentals. None of the leases includes contingent
rentals.
30. Capital and other commitments
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Authorised capital expenditure not
recognised in the financial statements:
- contract for
93,60420,236-98,242234,844
-- not contracted for
31. Contingent liabilities (unsecured)
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Taxation
1,600774--
The Directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future
sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
32. Related parties
Identity of related parties
For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company
has the ability, directly or indirectly, to control or jointly control the party or exercise significant influence over the party in making
financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control.
Related parties may be individuals or other entities.
32. Related parties (continued)
Identity of related parties (continued)
Related parties also include key management personnel defined as those persons having authority and responsibility for planning,
directing and controlling the activities of the Group either directly or indirectly. Key management personnel includes all the
Directors of the Group, and certain members of senior management of the Group.
The Group has related party relationship with its holding companies, significant investors, subsidiaries, associates and key
management personnel.
Significant related party transactions
Related party transactions have been entered into in the normal course of business under negotiated terms. The significant related
party transactions of the Group and the Company are shown below. The balances related to the below transactions are shown in
Notes 10, 16 and 18.
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
A.
Rental expense
Advances (provided)/received
Training fees
Utilities
B.
C.
Related companies
Management fees (expense)/income
SAP maintenance fee expense
License fee expense
Interest income
Rental expense
Consultancy fee for monorail project
Training fee
Docking services
Airline ticketing services - Lintas
Rental income - Suria
Joint ventures:
Recharter fee
D.Associates:
Recharge of (expense paid)/received on behalf
E.
(700)(509) (63)-(17,583) 1,574(17,583)
--
(157)--
(2)-
(151)29,028
--(4,088)(192)(89)
-(10,734)
--16,547
-(442)(1,059) (151)(352)
-(2,000)
-(420)(250) -(512)- -(1,375)(1,755) (162)171246 --
(96)(9,989)
--
(258)339(258)339
Key management personnel
Directors and other key management
personnel
- Remuneration
2,9401,1311,6561,016
Total short-term employee benefits
Salaries and short-term employee benefits
Defined contribution plan
Share-based payments
8,7159,3321,163605
89950818594
-386 -48
9,61410,226
1,348747
p153
p15 4
32. Related parties (continued)
Significant related party transactions (continued)
E.
Key management personnel (continued)
Note: Suria Business Solutions Sdn. Bhd. (“Suria”) and Lintas Travel & Tours Sdn. Bhd. (“Lintas”) are companies connected to
certain Directors.
Other key management personnel comprise persons other than the Directors of Group entities, having authority and
responsibility for planning, directing and controlling the activities of the Group entities either directly or indirectly.
The estimated monetary value of Directors’ benefit-in-kind is RM63,000.
Eligible employees also participate in the Group’s share option programme (see Note 13).
Certain executive officers are subject to mutual term of notice of 12 months. Upon resignation at the Group’s request, they
are entitled to terminate benefits up to 24 months gross salary.
33. Significant events during the financial year
On 6 December 2013, KMCOB Capital has issued Guaranteed Serial Bonds (the Bonds) of RM300 million in nominal value with the
tenure ranging from 1 to 5 years and profit rates ranging from 3.90% to 4.30% per annum. The proceeds raised from the Bonds was
utilised to, amongst others, refinance the existing Sukuk Murabahah. The existing Sukuk Murabahah was fully paid and redeemed
on 6 December 2013.
The Bonds are secured by an irrevocable and unconditional financial guaranteed insurance policy issued by Danajamin Nasional
Berhad pursuant to a financial guarantee insurance facility of an aggregate principal amount of RM300 million and such amount
equivalent to 1 coupon payment obligation of the Bonds.
34. Subsequent events after the financial year
On 11 June 2014, Ophir Production Sdn. Bhd. (“OPSB”), being a joint venture company in which the Company has, through it’s
wholly-owned subsidiary, Scomi D & P Sdn. Bhd. (“SDP”), a 30% interest, signed a seven (7) year Small Field Risk Service Contract
(“SFRSC”) with Petroliam Nasional Berhad (“PETRONAS”) to develop and produce petroleum from the Ophir field, offshore Malaysia.
OPSB shall be responsible to implement the approved Field Development Plan (“FDP”) with planned development activities which
includes amongst others, the drilling of wells, the installation of a production platform and export and storage of oil via a floating
storage facility. The development phase is estimated to cost USD135 million and is expected to be produced in 18 months.
The shareholders of OPSB are Octanex NL (Australia) (50%), SDP (30%) and Vestigo Petroleum Sdn. Bhd. (20%). The shareholders of
OPSB had entered into a Shareholders Agreement on 25 March 2014 for the purposes of carrying out the obligations of the SFRSC
and to regulate their respective rights and participation in OPSB.
35. Comparative figures
The comparatives for the statements of profit or loss and other comprehensive income, changes in equity and cash flows as well
as the comparatives in the notes to the financial statements relating to the statement of profit or loss and other comprehensive
income are for the previous fifteen months ended 31 March 2013 are hence not comparable to that for the current twelve months
ended 31 March 2014.
p155
36. Supplementary financial information on the breakdown of realised and unrealised profits or losses
The breakdown of the retained earnings of the Group and of the Company as at 31 March, into realised and unrealised profits,
pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows:
GroupCompany
2014201320142013
RM’000RM’000RM’000RM’000
Total retained earnings of the Company and
its subsidiaries:
- realised
1,200,4521,067,940 (21,628)767
- unrealised
(310,915)(318,978) 18,499 (705)
889,537748,962 (3,129)
62
Total share of (accumulated losses)/
retained earnings of associate:
- realised
(16,733)
40,031
-
- unrealised
-
-- Total share of retained earnings of
joint ventures:
- realised
23,348
17,348
-- unrealised
---
Less: Consolidation adjustments
Total retained earnings
896,152
(584,100)
806,341
(3,129)62
(586,423)-
-
312,052219,918 (3,129) 62
The determination of realised and unrealised profits is based on the Guidance of Special Matter No. 1, Determination of Realised
and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements,
issued by the Malaysian Institute of Accountants on 20 December 2010.
p15 6
Statem ent by D irec to r s
p ur suan t to S e c tio n 169(15) of the Com pa ni es Ac t, 1965
In the opinion of the Directors, the financial statements set out on pages 74 to 154 are drawn up in accordance with Malaysian Financial
Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so
as to give a true and fair view of the financial position of the Group and of the Company as of 31 March 2014 and of their financial
performance and cash flows for the financial year then ended.
In the opinion of the Directors, the information set out in Note 36 on page 155 to the financial statements has been compiled in
accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of
Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and
presented based on the format prescribed by Bursa Malaysia Securities Berhad.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Tan Sri Nik Mohamed bin Nik Yaacob
Petaling Jaya
25 July 2014
Statu to r y Dec larat ion
p ur suan t to S e c tio n 169(16) of the Com pa ni es Ac t, 1965
I, Mukhnizam Bin Mahmud, the officer primarily responsible for the financial management of Scomi Energy Services Bhd, do solemnly
and sincerely declare that the financial statements set out on pages 74 to 155 are, to the best of my knowledge and belief, correct and I
make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations
Act, 1960.
Subscribed and solemnly declared by the above named in Petaling Jaya, Selangor Darul Ehsan on 25 July 2014.
Mukhnizam Bin Mahmud
Before me:
Commission for Oaths
p157
p15 8
In depen d ent Auditor s’ Repo r t
to th e me mb ers of S c om i Energy S er v i c es Bhd
Report on the Financial Statements
We have audited the financial statements of Scomi Energy Services Bhd, which comprise the statements of financial position as at 31
March 2014 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, changes in equity
and cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other
explanatory information, as set out on pages 74 to 154.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance
with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies
Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with
approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The
procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of
financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31
March 2014 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting
Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
Report on Other Legal and Regulatory Requirements
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its
subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
(b) We have considered the accounts and auditors’ reports of all the subsidiaries of which we have not acted as auditors, which is
indicated in Note 6 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.
(d) The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under
Section 174 (3) of the Act.
I n de p e n de nt Audi to r s’ R ep o r t
Other Reporting Responsibilities
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set out in Note
36 on page 155 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities Berhad
Listing Requirements and is not required by the Malaysian Financial Reporting Standards or International Financial Reporting Standards.
We have extended our audit procedures to report on the process of compilation of such information. In our opinion, the information
has been properly compiled, in all material aspects, in accordance with the Guidance on Special Matter No. 1, Determination of Realised
and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued
by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.
Other Matters
The financial statements of the Group and of the Company as at and for the year ended 31 March 2013 were audited by another auditor
who expressed an unmodified opinion on those statements on 31 July 2013.
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.
KPMG Firm Number: AF 0758
Chartered Accountants
Petaling Jaya,
Date: 25 July 2014
Muhammad Azman bin Che Ani
Approval Number: 2922/04/16 (J)
Chartered Accountant
p159
p16 0
An alysis of Shareho ldings
a s a t 31 July 2014
Share Capital
Authorised Share Capital
:
RM1,802,000,000.00 divided into 4,000,000,000 ordinary shares of RM0.45 each and 200,000,000
redeemable convertible cumulative preference shares (“RCCPS”) of RM0.01 each
Issued and Paid -Up Capital
:
RM1,053,798,945.75 divided into 2,341,775,435 ordinary shares of RM0.45 each. This included
145,000 ordinary shares purchased by the Company under share buy-back scheme and retained as
treasury shares
Types of Shares
:
Ordinary shares of RM0.45 each and RCCPS of RM0.01 each
Voting Rights
:
One vote per ordinary share
Distribution of Shareholdings
ShareholdersShareholdings
Size of Shareholdings
No. of Holders
% of Holders
No. of Shares
% of Shares
33
575
3,328
1,377
247
2
0.59
10.34
59.83
24.76
4.44
0.04
738
456,962
18,162,400
46,458,800
739,558,823
1,536,992,712
0.00
0.02
0.78
1.98
31.58
65.64
Less than 100
100 to 1,000
1001 to 10,000
10,001 to 100,000
100,001 to less than 5% of issued shares
5% and above of issued shares
Total
5,562100.00
2,341,630,435100.00
Thirty Largest Registered Shareholders
No.
Name of shareholders
No. of Shares
%
1.
Scomi Group Bhd
1,223,949,234
52.27
2.
Malaysian Trustees Berhad
Scomi Group Bhd
313,043,478
13.37
3.
UOBM Nominees (Asing) Sdn Bhd
TAEL One Partners Ltd for Petroworld Investments Inc 110,000,000
4.70
4.
Lembaga Tabung Haji
87,447,500
3.73
5.
Maybank Nominees (Asing) Sdn Bhd
Pledged Securities Account for Caprice Capital International Ltd
82,860,000
3.54
6.
HSBC Nominess (Asing) Sdn Bhd
Exempt An For JPMorgan Chase Bank, National Association (Norges BK)
67,220,162
2.87
7.
Assets Nominees (Asing) Sdn Bhd
Guoline Capital Limited 60,000,000
2.56
8.
Citigroup Nominees (Asing) Sdn Bhd
UBS AG for Broad Peak Master Fund Ltd (Fujiinv)
48,696,761
2.08
An alysis o f Sh a reho l d i ng s
Thirty Largest Registered Shareholders
No.
Name of shareholders
No. of Shares
%
9.
RHB Capital Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Meer Sadik Bin Habib Mohamed (HHSB761007)
38,600,000
1.65
10.
HDM Nominees (Asing) Sdn Bhd
UOB Kay Hian Pte Ltd for TAEL One Partners Ltd
34,792,000
1.49
11.
RHB Capital Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Poh Yang Hong (CEB)
25,000,000
1.07
12.
HLIB Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Quek Kon Sean (CCTS)
20,000,000
0.85
13.
HSBC Nominees (Tempatan) Sdn Bhd
HSBC (M) Trustee Bhd for RHB-OSK Kidsave Trust (3621)
11,896,500
0.51
14.
Ambank (M) Berhad
Pledged Securities Account for Ali Bin Abdul Kadir (SMART)
10,380,000
0.44
15.
Maybank Nominees (Tempatan) Sdn Bhd
Maybank Trustees Berhad for Public Aggressive Growth Fund (N14011940110)
9,150,200
0.39
16.
Amanahraya Trustees Berhad
Public Islamic Sector Select Fund
7,714,200
0.33
17.
Public Strategic Smallcap Fund
6,077,000
0.26
18.
HSBC Nominees (Tempatan) Sdn Bhd
HSBC (M) Trustee Bhd for MAAKL Al-Faid (4389)
5,876,000
0.25
19.
Meer Sadik Bin Habib Mohamed 4,183,996
0.18
20.
CBNY for Emerging Market Core Equity Portfolio DFA Investment Dimensions Group Inc
4,155,100
0.18
21.
Hemant Hiralal Kothari
4,059,500
0.17
22.
CBNY for DFA Emerging Markets Small Cap Series 3,524,700
0.15
23.
Public Islamic Treasures Growth Fund
3,512,400
0.15
24.
Exempt an for OCBC Securities Private Limited (Client A/C-NR)
3,325,000
0.14
25.
SNG Beng Hock Michael 2,500,000
0.11
26.
Ng Chai Go
2,206,000
0.09
27.
Maybank Nominees (Tempatan) Sdn Bhd
Maybank Trustees Berhad for MAAKL Balanced Fund (910170)
2,132,800
0.09
28.
Maybank Securities Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Shah Hakim @ Shahzanim Bin Zain (Margin)
2,108,000
0.09
29.
Public Select Alpha – 30 Fund
2,077,000
0.09
30.
HSBC Nominees (Asing) Sdn Bhd
BBH and Co Boston for First Trust Emerging Markets Small Capalphadex Fund
1,882,000
0.08
Total
2,198,369,531
93.88
p161
p16 2
An alysis o f Sh a reho l d i ng s
Substantial Shareholders
Direct Shareholding
Name of substantial shareholders
No. of Shares
Scomi Group Bhd
1,536,992,712(1)
Deemed interested
shareholding
% of Shares
No. of Shares
% of Shares
65.64350,000(2)0.01
Notes:
(1) 313,043,478 shares held through Malaysian Trustees Berhad.
(2) Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 (“the Act”) through its shareholding in Scomi Energy Sdn Bhd, which in turn is interested in
the Company.
Directors Shareholdings
Name of substantial shareholders
Dato’ Jamelah Binti Jamaluddin Ravinder Singh Grewal A/L Sarbjit S
Liew Willip Lee Chun Fai
Loong Chun Nee Direct Interest
No. of Shares
% of Shares
Indirect Interest
No. of Shares
% of Shares
-
-
42,783,996(1)
1.83547,404(2)0.02
-
-
-
-
-
-
------2,108,000(3) 0.0956,900(4)*
70,000
*
-
-
Notes:
*Negligible.
(1) 38,600,000 shares held through RHB Capital Nominees (Tempatan) Sdn Bhd.
(2) Deemed interested by virtue of Section 134(12)(c) of the Companies Act, 1965 through his spouse, Datin Zarida Binti Noordin’s shareholding in the Company.
(3) Held through Maybank Securities Nominees (Tempatan) Sdn Bhd
(4) Deemed interested by virtue of Section 6A(4) of the Act through his shareholdings in Rentak Rimbun Sdn Bhd which in turn is interested in the Company. KAF
Nominees (Tempatan) Sdn Bhd pledged securities Account for Rentak Rimbun Sdn Bhd (RE001).
p16 3
Li st of Pro per t ies
a s a t 31 M a rc h 2014
No Registered Description / Existing Owner location address use of Tenure of land: freehold or leasehold Approximate (years)/date Land area/ age of acquisition Built-up area building Audited
net book
value as at
31.03.2014
RM ‘000
1
PT Rig Tenders Indonesia, Tbk Office building Office building Freehold/ Wisma Rig Tenders 29.07.1993 Jl. Dr Saharjo No.129 Jakarta 12860
Land area: n/a
Built- up area:
512 m2
14 years 13.48
2
PT Rig Tenders Indonesia, Land Tbk Jl. Dr Saharjo No.129 Jakarta 12860
Land for the Freehold/ building as 01.01.1997
mentioned in item 1 Land area: 490 m2
Built- up area:
n/a
n/a –
3
PT Rig Tenders Indonesia, Tbk Single storey house Staff Freehold
Simpang Gatot accommodation 01.10.1995 Subroto VIII Jl. Garuda no.8 Banjarmasin 70236
Land area: n/a
Built-up area:
371 m2
16 years
–
4
PT 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:
n/a
Built-up area:
388 m2
17 years
3.38
5
PT Rig Tenders Indonesia, Tbk Land Jl Belitung Darat no. 88 Banjarmasin 70116 Land for Freehold the building 09.01.2003 as mentioned in item 6
Land area:
190 sq metres
Built-up area:
n/a
n/a
–
PT Rig Tenders Office building
Office building Freehold 6
Indonesia, Tbk
Jl Belitung Darat no.88 06.05.1997
Banjarmasin 70116
Land area:
n/a
Built-up area:
972 sq metres
19 years
25.14
7
PT Rig Tenders Indonesia, Tbk Land area : n/a
Built-up area:
200 sq metres
21 years
25.86
Single storey house Staff Freehold Persada Mas Bumi accommodation 31.10.2000 Asri Barat Jl Ahmad Yani no. 8 Banjarmasin
p16 4
List o f Pro p er t i es
No Registered Description / Existing Owner location address use of 8
Scomi Oiltools
Sdn. Bhd.
Tenure of land: freehold or leasehold Approximate (years)/date Land area/ age of acquisition Built-up area building Master: Land held under Five storey
Freehold
Built up area
17 years
Geran 46494, Lot 42410
shop office
31.10.1999
11,755 sq ft
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)
9
Scomi Oiltools
Kemaman Warehouse
Sdn. Bhd.
No. 24, Kemaman
Supply Base,
24007 Kemaman,
Terengganu, Malaysia
Warehouse
Not applicable
Built-up areas:
23 years
for office use,
15.11.1991
19,200 sq ft
laboratory,
milling and
storage
activities
Audited
net book
value as at
31.03.2014
RM ‘000
Land &
building: 746
Building: Nil
10 Scomi Sosma
Land held under
Land
Freehold
Land area:
n/a
176.00
Sdn. Bhd.
Geran 250133,
7.4.2011
0.7412 hectares
Lot 7627,
Mukim of Sepang,
Land held under
Land
Freehold
Land area:
n/a
148.00
Geran 250134,
7.4.2011
0.6229 hectares
Lot 7628,
Mukim of Sepang,
Land held under
Land
Freehold
Land area:
n/a
166.00
Geran 250135,
7.4.2011
0.6993 hectare
Lot 7629,
Mukim of Sepang,
Selangor Darull Ehsan
11 PT Inti Jatam
Jl. Raya Duri-Dumai, Office and
Pura
KM. 131 Duri, Riau 28884 workshop
Indonesia
Leasehold
24.03.1992-
24.03.2012 (21 years)
Land area:
24 years
Nil
23,865m2
Building area: 207.5m2
p16 5
Corpo rate D irec tor y
CORPORATE
Scomi Energy Services Bhd
Bandar Utama
47800 Petaling Jaya
Malaysia
Tel: +603 7717 3000
Fax: +603 7725 9082
Bandar Utama
47800 Petaling Jaya
Malaysia
Tel: +603 7717 3000
Fax: +603 7728 5202
Scomi KMC Sdn. Bhd.
Bandar Utama
47800 Petaling Jaya
Malaysia
Tel: +603 7717 3000
Fax: +603 7728 5202
Bandar Utama
47800 Petaling Jaya
Malaysia
Tel: +603 7717 3000
Fax: +603 7728 5202
Operating Locations
America (Texas)
Scomi Equipment Inc
6818 N. Sam Houston
Parkway West
Houston, Texas
77064 USA
Australia (Perth)
Scomi Oiltools Pty Ltd
15, Boulder Road
Malaga, Western Australia
6090 Australia
China (Beijing)
Scomi Oiltools (S) Pte Ltd
Rm 1507, Tower B, Eagle Plaza
No. 26, Xiao Yun Road
Chaoyang District
Beijing 100027
P.R. China
China (Shekou)
Rm 23C Tower A
Neptunus Building
No. 2221, Nanhai Rd
Nanshan District
518054 Shenzhen
Guangdong Prov
P.R. China
China (Tanggu)
A1-704, Teda New Skyline
No. 12, Nan Hai Road
Teda Tianjin, 300457
P.R. China
Congo (Pointe Noir)
Scomi Oiltools Africa Limited
Zone Industrielle de la foire
Pointe-Noire, Congo
Egypt (Cairo)
Scomi Oiltools Egypt S A E
Km 10, Ain Sukhna Road
Kattamia, Oilfield Services Complex
Cairo, Egypt
France
Scomi Anticor S A S
6 Avenue des Amandiers
Z.A. du Mardaric
04310 Peyruis
France
Gabon
Oiltools (Africa) Limited
BP 1493
Boulevard Leon Mba
Port-Gentil
Gabon Republic
India (Mumbai)
KMC Oiltools India Private Ltd
912-A, Building No. 9
Solitaire Corporate Park
Andheri-Ghatkopar Link Road
Chakala, Andheri (East)
Mumbai, 400093
India
Indonesia (Balikpapan)
PT Scomi Oiltools
Jl. Mulawarman Rt 45
No. 2, Manggar
Balikpapan 76116
East Kalimantan, Indonesia
Indonesia (Banjarmasin)
PT Batuah Abadi Lines
Jl. Belitung Darat No. 88
Rt. 19 Banjarmasin
Kalimantan Selatan
Indonesia
Indonesia (Duri)
PT Scomi Oiltools
Jl. Raya Duri Dumai Km 131
Duri, Pekanbaru
Sumatera 28884
Indonesia
Indonesia (Jakarta)
PT Scomi Oiltools
Gedung Tetra Pak
Suite 101/104/103
Jl. Buncit Raya Kav 100
Indonesia
PT Rig Tenders Indonesia Tbk
Gedung Philips
Jl. Buncit Raya Kav. 100
Indonesia
Malaysia (Kemaman)
Warehouse 24, Letterbox No. 72
Kemaman Supply Base
24007 Kemaman
Terengganu Darul Iman
Malaysia
p16 6
Co rp o rate D i rec to r y
Malaysia (Labuan)
Labuan Integrated Base
Lot 205331935, Jalan Kinabenua
Letter 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
Malaysia (Miri)
Lot 2164, 1st Floor
Saberkas Commercial Centre
Jalan Pujut-Lutong
98000 Miri
Sarawak, Malaysia
Lot 7985
Senadin Enterprise Park (Phase 9)
Desa Senadin
Jalan Lutong-Kuala Baram
98000 Miri
Sarawak, Malaysia
Malaysia (Selangor)
Global Research & Technology Centre
No. 9, Jalan Astaka U8/83
Seksyen U8
40150 Shah Alam
Malaysia
Myanmar
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
Nigeria (Onne)
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
Oman (Azaiba)
Scomi Oiltools Oman LLC
Building No. 272, Way No. 44803
Office No. 1104 (2nd Floor)
Azaiba
Sultanate of Oman
Thailand (Lankrabue)
163, Moo 6 Tumbol Lankrabue
Amphur Lankrabue
Kamphaengphet
62170 Thailand
Pakistan (Islamabad)
Scomi Oiltools Ltd (Pakistan Branch)
Plot No. 212, Service Road
Industrial Area, I-10/3
Islamabad
Pakistan
Thailand (Songkhla)
424/9 Moo 2
Songkhla – Koh Yor Road
Amphur Muang, Songkhla
90100 Thailand
Pakistan (Karachi)
Scomi Oiltools Ltd (Pakistan Branch)
B-31, Moghal Tobaco
Godown No 19-20
SITE, Karachi
Pakistan
Turkmenistan (Ashgabat)
Scomi Oiltools Ltd
(Turkmenistan Branch)
Yimpash Business Centre
Office 101(A) Turkmenbashy Street
54 Ashgabat
Turkmenistan 744013
Qatar
Scomi Oiltools (Cayman) Limited
940 Al-Khalidia Street, Zone No.26
Najma, Doha, Qatar
P.O. Box 2471
Russia (Moscow)
Scomi Oiltools (Rus) LLC
3rd floor, bld.1 24/2, Sretenka Str
107045 Moscow
Russia
Russia (Western Siberia)
Scomi Oiltools (Rus) LLC
16 bld. 7, Industrialnaya Str
628616 Nizhnevartovsk
Tyumen Region
Russia
Saudi Arabia
Saudi Arabia (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
Thailand (Bangkok)
21st Floor, CTI Tower
191/77, Ratchadapisek Road
Kwaeng Klongtoey, Khet Klongtoey
Bangkok
10110 Thailand
Turkmenistan (Balkanabat)
Scomi Oiltools Ltd
Jebel Base #2, Jebel v. Balkanabat
Turkmenistan
Turkmenistan (Hazar)
Scomi Oiltools Ltd
High Road 9 kilometer
Hazar
Turkmenistan 745030
Turkmenistan (Turkmenbashy)
Scomi Oiltools Ltd Turkmenistan
Shagadam Street 8, Turkmenbashy City
Turkmenistan, 745000
U.A.E. (Abu Dhabi)
Scomi Oiltools (Cayman) Ltd
Liwa Street/Liwa Tower
Mezzanine Floor, M02
P.O. Box 45333
Abu Dhabi
U.A.E. (Dubai)
Scomi Oiltools (Cayman) Ltd
Oilfield Supply Centre
Building B-10, Jebel Ali
Free Zone, Dubai
Vietnam
Scomi Oiltools Ltd
(Vietnam Branch)
c/o PTSC Supply Base
65A, 30/4 Road, Thang Nhat Ward
Vung Tau City
S R Vietnam
p167
N oti ce O f Annual G eneral Meet ing
NOTICE IS HEREBY GIVEN that the 18th Annual General Meeting of SCOMI ENERGY SERVICES BHD
(“the Company”) will be held at Ballroom 1, First Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1,
60000 Kuala Lumpur on Tuesday, 23 September 2014 at 2.30 p.m. to transact for the following business:
As Ordinary Business:
To consider and, if thought fit, to pass the following:
1.
To receive the Financial Statements for the financial year ended 31 March 2014 and the Reports of the
Directors and Auditors thereon.
2.
To re-elect the following Directors who retire in accordance with Article 86 of the Company’s Articles of
Association and being eligible, offer themselves for re-election:(i) Encik Shah Hakim @ Shahzanim Bin Zain
(ii) Mr Liew Willip
(Ordinary Resolution 1)
To re-elect the following Directors who retire in accordance with Article 93 of the Company’s Articles of
Association and being eligible, offer themselves for re-election:
(i) Dato’ Jamelah Binti Jamaluddin
(ii) Mr Ravinder Singh Grewal A/L Sarbjit S
3.
4.
To approve the payment of Directors’ fees amounting to RM307,660.20 for Non-Executive Directors in
respect of the financial year ended 31 March 2014.
5.
To re-appoint Messrs KPMG as Auditors of the Company for the financial year ending 31 March 2015 and
to authorise the Directors to fix their remuneration.
As Special Business:
To consider and, if thought fit, to pass the following:
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 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 Companies Act, 1965, 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 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 the
Directors be and are hereby further authorised to obtain approval for the listing of and quotation for the
additional shares so issued on Bursa Malaysia Securities Berhad.
p16 8
No t ice o f An n ual G e n era l Meet i ng
THAT such authority shall commence upon the passing of this resolution and shall continue to be in
force until:
i.
the conclusion of the next Annual General Meeting at which time the authority will lapse, unless
the authority is renewed by an ordinary resolution passed at the next Annual General Meeting;
ii.
the expiration of the period within which the next Annual General Meeting after that date is
required by law to be held; or
iii.
revoked or varied by an ordinary resolution passed by the Company’s shareholders in a general
meeting,
whichever occurs first.”
7.
Proposed Renewal of Authority for the Purchase by the Company of its ordinary shares of up to 10% of
the issued and paid-up share capital (“Share Buy-back”)
“THAT subject to the Companies Act, 1965 (as may be amended, modified or re-enacted from time
to time), the Articles of Association of the Company, the requirements of the Bursa Malaysia Securities
Berhad (“Bursa Securities”) and the approvals of the relevant governmental and/or regulatory authorities,
where necessary, approval be and is hereby given for the Company to purchase such number of ordinary
shares of RM0.45 each in the Company of up to ten percent (10%) of its issued and paid up share capital
(“SES Shares”) from the market of Bursa Securities, from time to time, as may be determined by the
Directors of the Company, in the manner set out in the Share Buy-Back Statement to the Company’s
shareholders dated 29 August 2014 (“the Share Buy-Back Statement”);
THAT such authority shall commence upon the passing of this resolution and shall continue to be in
force until:
i.
the conclusion of the next Annual General Meeting at which time the authority will lapse, unless
the authority is renewed by an ordinary resolution passed at the next Annual General Meeting;
ii.
the expiration of the period within which the next Annual General Meeting after that date is
required by law to be held; or
iii.
revoked or varied by an ordinary resolution passed by the Company’s shareholders in a general
meeting,
whichever occurs first, but not so as to prejudice the completion of any purchase of SES Shares by the
Company prior to the lapse or expiration or revocation or variation of the authority as aforesaid.
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 Share Buy-Back Statement, and that following completion of the Share Buy-Back, the
power to cancel or retain as treasury shares, any or all of the SES 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.”
8.
To transact any other business of the Company for which due notice shall have been given.
By Order of the Board
CHONG MEI YAN (MAICSA 7047707)
ONG WEI LENG (MAICSA 7053539)
Company Secretaries
Petaling Jaya
Date: 29 August 2014
No t ice o f An n ual G e n era l Meet i ng
Note 1 : Appointment of Proxy
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Other than an exempt authorised nominee, 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.
Where a member or an exempt authorised nominee appoints more than one proxy, the appointments shall be invalid unless
he/she specifies the proportion of his/her holding to be represented by each proxy.
Where a member is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991,
who holds ordinary shares in the Company for multiple beneficial owners in one securities account (“ominibus account”),
there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each ominibus
account it holds with ordinary shares standing to the credit of the said ominibus account.
The instrument appointing 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.
The instrument appointing a proxy, with the power of attorney or other authority (if any) under which it is signed or a
notarially certified or office copy of such power or authority, 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, not less than forty-eight (48) hours before the time appointed for
holding the Annual General Meeting or any adjournment thereof and in default the instrument of proxy shall not be treated
as valid.
For the purpose of determining a member who shall be entitled to attend the forthcoming 18th Annual General Meeting, the
Company shall be requesting Bursa Malaysia Depository Sdn Bhd in accordance with Articles 54 of the Company’s Articles of
Association and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991 to issue a General Meeting Record of
Depositors as at 17 September 2014. Only depositor whose name appears on the General Meeting Record of Depositors as
at 17 September 2014 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote on his/her behalf.
Note 2 : Financial Statements for the financial year ended 31 March 2014 and the Reports of the directors and
Auditors thereon
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.
Note 3 : Explanatory Note on Item 6 of the Agenda (Ordinary Resolution 7)
The ordinary resolution under Item 6 above is proposed pursuant to Section 132D of the Companies Act, 1965, and if passed, will
give the Directors of the Company authority from the date of the forthcoming 18th Annual General Meeting of the Company, to
issue and allot shares in the Company at any time up to an aggregate amount not exceeding 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”). 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 or the expiry of the period within which the next Annual General Meeting of the Company is required by law
to be held. With this Share Mandate, the Company will be able to raise capital from the equity market in a shorter period of time
compared to a situation without the Share Mandate. In addition, the costs involved will also be lower as the need to have an
extraordinary general meeting of the Company (“EGM”) will be dispensed with if the proposed issuance of shares is within the
10% threshold. The Company will have to seek shareholders’ approval at an EGM to be convened in the event that the proposed
issuance of shares exceeds the 10% threshold allowed by the Share Mandate.
The proposed resolution is to seek a renewal of the Share Mandate which was approved by the shareholders at the 17th Annual
General Meeting of the Company held on 25 September 2013. As the date of this notice, no new shares in the Company were
issued and allotted pursuant to the Share Mandate, which will lapse at the conclusion of the forthcoming 18th Annual General
Meeting to be held on 23 September 2014.
Note 4 : Explanatory Note on Item 7 of the Agenda (Ordinary Resolution 8)
The ordinary resolution under Item 7 above, if passed, will empower the Directors to purchase the shares of up to ten percent
(10%) of the issued and paid-up share capital of the Company by utilising funds not exceeding the retained profits and 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 of the Company is required by law to be held.
The details relating to Ordinary Resolution 8 are set out in the Statement for Share Buy-Back dated 29 August 2014.
p16 9
This page is intentionally left blank
For m of Prox y
SCOMI ENERGY SERVICES BHD
CDS Account No
(Company No. 397979-A)
(Incorporated in Malaysia under the Companies Act, 1965)
No. of Ordinary Shares Held
Registered Office: Level 17, 1 First Avenue, Bandar Utama
47800 Petaling Jaya, Selangor Darul Ehsan, Malaysia
I/We* .............................................................................................................................................. NRIC No / Passport No .....................................................................
(Full name)
of ..............................................................................................................................................................................................................................................................................
(Full address)
being a *member/members of Scomi Energy Services Bhd, hereby appoint ............................................................................................................
(Full name)
............................................................................................................................................................ NRIC No / Passport No ....................................................................
of ..............................................................................................................................................................................................................................................................................
(Full address)
or failing him/her ..................................................................................................................... NRIC No / Passport No .....................................................................
(Full name)
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 Annual General
Meeting of the Company to be held at the Ballroom 1, First Floor, Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, 60000
Kuala Lumpur on Tuesday, 23 September 2014 at 2.30 p.m. or any adjournment thereof.
Ordinary Business
For
Against
For
Against
Ordinary To re-elect the following Directors who retire in accordance with Article 86 of the
Resolution 1 Company’s Articles of Association and being eligible, offer themselves for reelection:
(i) Encik Shah Hakim @ Shahzanim Bin Zain
(ii) Mr Liew Willip
Ordinary Resolution 2
Ordinary To re-elect the following Directors who retire in accordance with Article 93 of the
Resolution 3 Company’s Articles of Association and being eligible, offer themselves for
re-election:
(i) Dato’ Jamelah Binti Jamaluddin
Ordinary (ii) Mr Ravinder Singh Grewal A/L Sarbjit S
Resolution 4
Ordinary To approve the payment of Directors’ fees amounting to RM307,660.20 for
Resolution 5 Non-Executive Directors in respect of the financial year ended 31 March 2014.
Ordinary To re-appoint Messrs KPMG as Auditors of the Company for the financial year
Resolution 6 ending 31 March 2015 and to authorise the Directors to fix their remuneration.
Special Business
Authority to Issue and Allot Shares Pursuant to Section 132D of the Companies
Ordinary Resolution 7 Act, 1965
Ordinary Proposed Renewal of Authority for the Purchase by the Company of its ordinary
Resolution 8 shares of up to 10% of the issued and paid-up share capital (Share Buy-back)
Please indicate with a tick mark (“3”) in the space provided to show how you wish your vote to be casted. If no specific direction
as to voting is given, the proxy will vote or abstain at his/her discretion.
Dated this ................. day of ...................................2014
Signature/Seal ...................................................................................
Fold this flap for sealing
Notes:
(i)
Other than an exempt authorised nominee, 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 or an exempt authorised nominee appoints more than one proxy, 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 exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, who holds ordinary shares in the Company for multiple
beneficial owners in one securities account (“ominibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each ominibus
account it holds with ordinary shares standing to the credit of the said ominibus account.
(iv) The instrument appointing 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 appointing a proxy, with the power of attorney or other authority (if any) under which it is signed or a notarially certified or office copy of such power or authority, 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, not less than forty-eight (48) hours before the time appointed for holding the Annual General Meeting or any adjournment thereof and in default
the instrument of proxy shall not be treated as valid.
(vi) For the purpose of determining a member who shall be entitled to attend the forthcoming 18th Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn
Bhd in accordance with Articles 54 of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991 to issue a General Meeting Record of
Depositors as at 17 September 2014. Only depositor whose name appears on the General Meeting Record of Depositors as at 17 September 2014 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 Energy Services Bhd
Symphony Share Registrars Sdn Bhd
Level 6, Symphony House
Pusat Dagangan Dana 1
Jalan PJU 1A/46, 47301 Petaling Jaya
1st fold here
Scomi Energy Services Bhd (397979-A)
Bandar Utama
47800 Petaling Jaya
Malaysia
Tel: +603 7717 3000
Fax: +603 7725 9028
www.scomienergy.com.my

Key Financial Highlights

Transcription

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