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MTD ACPI Engineering Berhad
(258836-V)
Corporate Profile
MTD ACPI Engineering Berhad (MTDACPI or the Group)
is an investment holding company with an extensive
record of accomplishment in the construction of mountain
roads, highways, bridges, building geotechnical works,
erosion control and highway maintenance. The Group is
also involved in the manufacturing of precast concrete
products for infrastructure and buildings as well as employs
the Industrialised Building System (IBS) methodology.
Previously known as ACP Industries Berhad and initially
listed on the Main Board of Bursa Malaysia Securities
Berhad on 3 January 1995, MTDACPI adopted its current
name on 8 May 2007.
The Group’s Construction and Engineering segment has
extensive experience in the development of mountain
roads, highways, bridges, building geotechnical
works, erosion control and highway maintenance. The
Group has successfully completed, among others, the
36-kilometre South Luzon Expressway in the Philippines,
as well as the Kuala Lumpur-Karak Highway and the
East Coast Expressway (Phases 1 and 2) in Malaysia. It
also completed a four-floor multi-storey car park project
for the Putra Light Rail Transit Terminal using the IBS
methodology.
MTDACPI’s Manufacturing segment, which offers a full
range of precast concrete products, is able to undertake
various infrastructure projects across the Asian region.
The manufacturing operation, which specialises in the IBS
methodology, offers all types of bridge crossings, tunnel
linings, railway sleepers, earthwork retaining structures,
drains and other non-custom designs.
The Group made its maiden foray into the Middle East
by undertaking improvements to the six-storey Jamarat
Bridge and its surrounding areas in Mina, Saudi Arabia.
This involved undertaking casting and installation of
over 5,000 precast concrete segmental box girders
totalling 15 kilometres, as well as carrying out posttensioning works. The precast segmental box girders
were manufactured at our factory in Bahra, Jeddah to
ensure maximum efficiency.
In the United Arab Emirates (UAE), MTDACPI is
undertaking a project to enhance Abu Dhabi’s Sewerage
System that stretches 16 kilometres. A manufacturing
facility was set up in Abu Dhabi and thereafter mass
production kicked off to supply the 10,688 tunnel segment
rings required for this project.
The Group also produced and supplied precast reinforced
concrete tunnel linings for the Dubai Metro Project – a key
effort to ease traffic congestion and improve efficiency in
the fast growing emirate. A production facility was set up
to produce and supply 110,000 cubic metres of concrete
products for the underground portions of the metro
system.
In India, MTDACPI was involved in the Delhi Metro
Project by way of undertaking design and construction
works on an elevated viaduct that was 4.8 kilometres
long, as well as structural works for four elevated stations
on the Inderlok-Mundka Corridor of Phase II of the Delhi
MRT project.
Closer to home, the Group has also taken part in the
Singapore MRT System project as well as undertaken
works on the Singapore-Malaysia Bridge. It also
successfully completed the works for the Kuala Lumpur
SMART Tunnel, which is the longest storm water
tunnel in South East Asia and the second longest in
Asia. MTDACPI was also part of the consortium that
completed the Penang Bridge, the longest in South East
Asia. Following this project, it was awarded a contract to
cast precast segmental box girders for the Penang 2nd
Bridge Crossing.
More recently, MTDACPI was awarded a package for the
MRT System project for Greater Kuala Lumpur, and a
contract for the Fourth Lane Widening for the Sg Buloh to
Rawang stretch of the North South Expressway.
Being part of the AlloyMtd Group, MTDACPI is one of
Malaysia’s foremost infrastructure companies involved
in privatised infrastructure development, construction
and engineering, property development as well as other
construction related activities.
Contents
2
Corporate Information
3
Corporate Structure
4
Board of Directors’ Profile
8
Group 5-Year Financial Highlights
9
Chairman’s Statement
14 Statement on Corporate Governance
25 Additional Compliance Statement
26
Report of the Audit Committee
31 Statement on Risk Management and
Internal Control
34
Nomination Committee Terms of Reference
40 Remuneration Committee Terms of Referenece
43 Statement on Group Corporate Social Responsibility
46 Analysis of Shareholdings
49 Directors’ Report and
Audited Financial Statements
140 List of Properties
142 Notice of Annual General Meeting
146 Statement Accompanying
Notice of Annual General Meeting
•
Form of Proxy
MTD ACPI ENGINEERING BERHAD
1
Corporate Information
BOARD OF DIRECTORS
Dato’ Ir. A. Rashid bin Omar
Chairman/ Independent Non-Executive Director
Dato’ Dr. Azmil Khalili bin Dato’ Khalid
President & Chief Executive Officer/
Non-Independent Executive Director
Datin Nik Fuziah binti Tan Sri Nik Hussein
Deputy President & Chief Operating Officer/
Non-Independent Executive Director
Dato’ Ir. Kalid bin Alias
Senior Independent Non-Executive Director
Nik Din bin Nik Sulaiman
Independent Non-Executive Director
Lee Leong Yow
Non-Independent Non-Executive Director
Keith George Cowling
Non-Independent Executive Director
Md. Shukor bin Mohamed
Non-Independent Executive Director
AUDIT COMMITTEE
SHARE REGISTRAR
Nik Din bin Nik Sulaiman, Chairman
Dato’ Ir. Kalid bin Alias
Dato’ Ir. A. Rashid bin Omar
Mega Corporate Services Sdn Bhd
Level 15-2, Faber Imperial Court
Jalan Sultan Ismail
50250 Kuala Lumpur
NOMINATION COMMITTEE
Tel
Fax
Dato’ Ir. Kalid bin Alias, Chairman
Nik Din bin Nik Sulaiman
Lee Leong Yow
:03-2692 4271
:03-2732 5388
AUDITORS
Dato’ Ir. Kalid bin Alias, Chairman
Dato’ Ir. A. Rashid bin Omar
Datin Nik Fuziah binti Tan Sri Nik Hussein
Ernst & Young
Chartered Accountants
Level 23A, Menara Milenium
Jalan Damanlela
Pusat Bandar Damansara
50490 Kuala Lumpur
COMPANY SECRETARIES
SOLICITORS
Chan Bee Kuan
Lee Poh Yean
Lee Hishammuddin Allen & Gledhill
REMUNERATION COMMITTEE
PRINCIPAL BANKERS
REGISTERED OFFICE
1, Jalan Batu Caves
68100 Batu Caves
Selangor Darul Ehsan
Tel
: 03-6195 1111
Fax
: 03-6188 0101
Website: www.alloymtd.com
CIMB Bank Berhad
Malayan Banking Berhad
AmBank (M) Berhad
RHB Bank Berhad
STOCK EXCHANGE LISTING
Main Market, Bursa Malaysia Securities Berhad
Stock Name
Stock Code
2
ANNUAL REPORT 2014
: MTDACPI
: 5924
Corporate Structure
as at 31 July 2014
*
CONSTRUCTION
MANUFACTURING
PROPERTY
DEVELOPMENT
100%
100%
100%
MTD Construction Sdn Bhd
MTD ACP Precast Sdn Bhd
Gandaan Unik Sdn Bhd
60%
49%
49%
MTD Construction (Philippines), Inc
MTD ACP Precast LLC
Modal Ehsan Sdn Bhd
40%
100%
Intraxis Engineering Sdn Bhd
ACP (Tracks) Sdn Bhd
100%
100%
ACP-DMT Sdn Bhd
ASC Tiles Sdn Bhd
100%
100%
ACP Technologies Sdn Bhd
Associated Concrete
Products (Malaysia) Sdn Bhd
100%
ASC Engineering Sdn Bhd
100%
ACPI Holding Limited
100%
ACP Marketing Sdn Bhd
100%
Precast Solutions Sdn Bhd
100%
ASCE Construction Limited
100%
ASC Engineering Sdn Bhd Ltd
100%
ACPI Engineering Sdn Bhd
100%
Persys Sdn Bhd
* Listed on Main Market, Bursa Malaysia Securities Berhad
• Operating companies only
• Shareholding percentage is based on ordinary share capital only
MTD ACPI ENGINEERING BERHAD
3
Board of Directors’ Profile
DATO’ IR. A. RASHID BIN OMAR
Chairman / Independent Non-Executive Director
DATO’ DR. AZMIL KHALILI BIN DATO’ KHALID
President & Chief Executive Officer /
Non-Independent Executive Director
Dato’ Ir. A. Rashid bin Omar, a Malaysian, aged 65, was
appointed to the Board of MTDACPI on 15 August 2006
as an Independent Non-Executive Director. Dato’ Ir. A.
Rashid was redesignated as Senior Independent NonExecutive Director on 3 June 2008 and subsequently, as
Chairman, Independent Non-Executive Director on 25
October 2013. Dato’ Ir. A. Rashid is also the Member of
the Audit Committee and Remuneration Committee.
Dato’ Dr. Azmil Khalili bin Dato’ Khalid, a Malaysian, aged
54, was appointed to the Board of MTDACPI on 31 October
2003 as Director. Dato’ Dr. Azmil was redesignated as
Executive Vice Chairman and Group Managing Director
on 30 January 2004 and 15 August 2006 respectively and
subsequently, as President & Chief Executive Officer on
1 June 2009. Dato’ Dr. Azmil is also the Chairman of the
Management Committee.
Dato’ Ir. A. Rashid holds a Bachelor in Civil Engineering
from the University of Glasgow, Scotland and has a
Diploma from University Technology Malaysia (then
known as the National Institute Technology). A Registered
Professional Engineer with the Board of Engineers
Malaysia, he is a Fellow of The Institution of Engineers,
Malaysia and a Life Member of the Road Engineering
Association of Malaysia.
Dato’ Dr. Azmil graduated with a Bachelors Degree in Civil
Engineering and subsequently with a Master in Business
Administration. He began his career with a United
Kingdom company, Tarmac National Construction and
upon his return to Malaysia worked for Trust International
Insurance and Citibank NA.
Starting his career as a civil engineer of the East-West
Highway Project in Grik, Perak, Dato’ Ir. A. Rashid then
served with the Public Works Department (PWD) Malaysia
in several positions including District Engineer Kerian,
PWD Perak (1975-1977), Senior Executive Engineer,
Highway Planning Unit, Ministry of Works Malaysia
(1977-1978), Deputy Director of Infrastructure and Public
Utilities Section, Implementation Coordination Unit,
Prime Minister’s Department (1983-1989), Director PWD
Malacca (1989-1995), Construction General Manager
KLIA (1995-1999), Director PWD Johor (1999-2000) and
Director Management Corporate Branch PWD Malaysia
(2000-2005). Dato’ Ir. A. Rashid also sits on the board of
several private limited companies.
4
ANNUAL REPORT 2014
Dato’ Dr. Azmil is the President & Chief Executive Officer
of AlloyMtd Group where he held the position of General
Manager, Corporate Planning on joining MTD Capital
Bhd in 1993 and assumed the helm as Group Managing
Director in 1996. On 1 June 2009, he was redesignated
as President & Chief Executive Officer. Dato’ Dr. Azmil is
the Chairman of MTD Walkers PLC, a foreign subsidiary
of MTD Capital Bhd listed on the Colombo Stock
Exchange in the Republic of Sri Lanka. Dato’ Dr. Azmil
holds directorships in other public companies namely,
MTD InfraPerdana Bhd and Metacorp Berhad, both are
subsidiaries of MTD Capital Bhd. Apart from AlloyMtd
Group, Dato’ Dr. Azmil is the Chairman and Independent
Non-Executive Director of Daya Materials Berhad and
a Director of ANIH Berhad, a toll concession company.
Dato’ Dr. Azmil is a director of Environment Idaman Sdn
Bhd, a solid waste concession company; a Trustee of the
Perdana Leadership Foundation; and Chairman of the
Malaysian-Philippines Business Council. Dato’ Dr. Azmil
also sits on the board of several private limited companies.
DATIN NIK FUZIAH BINTI TAN SRI NIK HUSSEIN
Deputy President & Chief Operating Officer /
Non-Independent Executive Director
DATO’ IR. KALID BIN ALIAS
Senior Independent Non-Executive Director
Datin Nik Fuziah binti Tan Sri Nik Hussein, a Malaysian,
aged 52, was appointed as a Deputy President & Chief
Operating Officer of MTD ACPI Engineering Berhad on
1 November 2013. Datin Fuziah is also a member of the
Remuneration Committee and Management Committee.
Dato’ Ir. Kalid bin Alias, a Malaysian, aged 66, was
appointed as an Independent Non-Executive Director
of MTDACPI on 15 August 2006 and was redesignated
as Senior Independent Non-Executive Director on 18
November 2013. Dato’ Ir. Kalid is also the Chairman of
the Nomination Committee and Remuneration Committee
and a member of the Audit Committee.
Datin Fuziah graduated with a Bachelor of Business
Administration (Hons) majoring in Finance. She started
her career with Petronas Gas Sdn Bhd before joining
Alloy Consolidated Sdn Bhd in 1997 as an Executive
Director. In 2001, Datin Fuziah assumed the helm as
Group Managing Director of Alloy Group and following the
rationalization exercise between Alloy Consolidated Sdn
Bhd and its subsidiary, MTD Capital Bhd in April 2011,
Datin Fuziah concurrently holds the position of Deputy
President & Chief Operating Officer of AlloyMtd Group.
Datin Fuziah is also a Director and Deputy President &
Chief Operating Officer of ANIH Berhad, a toll concession
company and sits on the board of several other private
limited companies.
Dato’ Ir. Kalid holds a Bachelor in Civil Engineering from
the University of Glasgow, Scotland, United Kingdom and
a Master in Public Health Engineering from the University
of Strathclyde, Glasgow, Scotland, United Kingdom.
A Registered Professional Engineer with the Board of
Engineers Malaysia, he is a Fellow of The Institution
of Engineers, Malaysia and a Life Member of the Road
Engineering Association of Malaysia.
Dato’ Ir. Kalid joined the Public Works Department
(PWD) in 1975 where he served in various capacities
including District Engineer, Assistant Director (Roads)
PWD Selangor, Deputy Director of PWD Terengganu and
Jabatan Pembangunan Persekutuan Kelantan, Director
of PWD Negeri Sembilan and PWD Pahang, which was
his last posting before retiring in November 2004. Dato’ Ir.
Kalid also sits on the board of a private limited company.
MTD ACPI ENGINEERING BERHAD
5
Board of Directors’ Profile (Cont’d)
NIK DIN BIN NIK SULAIMAN
Independent Non-Executive Director
LEE LEONG YOW
Non-Independent Non-Executive Director
Encik Nik Din bin Nik Sulaiman, a Malaysian, aged
66, was appointed as an Independent Non-Executive
Director of MTDACPI on 31 October 2008. He is also the
Chairman of the Audit Committee and a member of the
Nomination Committee.
Mr. Lee Leong Yow, a Malaysian, aged 58, was appointed
as an Executive Director of MTDACPI on 10 January
2005 and was redesignated as Non-Executive Director,
upon his retirement on 29 July 2011.
Encik Nik Din is a Fellow member of the Association of
Chartered Certified Accountants (FCCA) and a member
of the Malaysian Institute of Accountants (MIA), CA(M).
He has extensive experience in accounting, auditing and
finance. He served in Sime Darby Group from 1992 to
2004, where he held positions as Group Chief Internal
Audit Manager and Finance Director. He also worked
for Promet Berhad from 1982 to 1992 as Financial
Controller and later as Finance Director. Encik Nik Din is
the Independent Non-Executive Director of MTD Capital
Bhd, APFT Berhad, Reach Energy Berhad and AngloEastern Plantations Plc, which is listed on the London
Stock Exchange. He is also a director of several private
limited companies. Formerly, he was the Independent
Non-Executive Director of MTD InfraPerdana Bhd and
Metacorp Berhad, both are subsidiaries of MTD Capital
Bhd.
Mr. Lee holds a Master in Business Administration
(Finance) from University of Leicester, United Kingdom,
and is a member of the Association of International
Accountants, United Kingdom. He joined AlloyMtd Group
as Finance Manager of MTD Prime Sdn Bhd in August
1994 and was promoted to Group Financial Controller of
MTD Capital Bhd in August 1997. He was appointed as
General Manager, Head of Operations of AlloyMtd Group
in October 2001, Executive Vice President, Head, Finance
& Treasury Division in April 2009 till his retirement on 29
July 2011. In September 2011, he served as Executive
Director, Special Projects of MTD Project Management
Services Sdn Bhd under a two (2) year contract. Prior
to joining AlloyMtd Group, he was with Citibank N.A.,
as Financial Controller, Bank Cards business and with
Exxon group of companies in Malaysia heading various
accounting sections in Controllers Department.
Mr. Lee is the Non-Independent Non-Executive Director
of MTD Capital Bhd and holds directorship in a foreign
subsidiary of MTD Capital Bhd namely, MTD Walkers
PLC, a company listed on the Colombo Stock Exchange
in the Republic of Sri Lanka. Mr. Lee is also a director of
Touch ‘n Go Sdn Bhd, an electronic toll collection operator.
6
ANNUAL REPORT 2014
KEITH GEORGE COWLING
Non-Independent Executive Director
MD. SHUKOR BIN MOHAMED
Non-Independent Executive Director
Mr. Keith George Cowling, a British citizen with Malaysian
Permanent Resident status, aged 64, was appointed
as an Executive Director of MTDACPI on 15 August
2006. Mr. Cowling is also a member of the Management
Committee.
Encik Md. Shukor bin Mohamed, a Malaysian, aged 53,
was appointed as an Executive Director of MTDACPI on
15 August 2006. He is also a member of the Management
Committee.
Mr. Cowling is a Chartered Engineer and holds a Bachelor
in Civil Engineering from Dundee University, Scotland and
is a member of the Institution of Civil Engineers, United
Kingdom and a Fellow of the Institution of Engineers,
Malaysia, where he served on committees including
being the Chairman of the Tunnelling and Underground
Space Technical Division. His experiences include
service with the City of Dundee District Council (19721976) in Dundee, Scotland, Mason Pittendrigh & Partners
(1976-1977) in Edinburgh, Scotland, Auscon Consultants
(1979) and Petroleum Development Oman (1980-1981),
in the Sultanate of Oman, and Maunsell Consultants Asia
(1980-1984) in Hong Kong.
Mr. Cowling joined AlloyMtd Group since 1984 serving
in various capacities; from Engineer to Chief Engineer,
General Manager, Head of Business Development,
Executive Vice President, Head, Business Development
& Manufacturing Division and his current position as
Executive Vice President, Head, Manufacturing Division.
Mr. Cowling holds directorship in a foreign subsidiary of
MTD Capital Bhd namely, MTD Walkers PLC, a company
listed on the Colombo Stock Exchange in the Republic of
Sri Lanka and he also sits on the board of several private
limited companies.
Notes:
Family relationship with Director and/or major shareholders
Datin Nik Fuziah binti Tan Sri Nik Hussein is the spouse of Dato’ Dr. Azmil
Khalili bin Dato’ Khalid. Datin Nik Fuziah binti Tan Sri Nik Hussein and
Dato’ Dr. Azmil Khalili bin Dato’ Khalid are major shareholders of the
Company and their interests in the securities of the Company are set out
in the Analysis of Shareholdings of this Annual Report.
Saved as disclosed herein, none of the other Directors have any family
relationship with any Director and/or substantial shareholder of the
Company.
Encik Md. Shukor holds a Bachelor of Science in Civil
Engineering from University of Strathclyde, Scotland
and a Master of Science in Transport Planning and
Engineering from Leeds University, United Kingdom. He
is a corporate member of the Institution of Engineers,
Malaysia, a registered and professional engineer with
the Board of Engineers, Malaysia and corporate member
of the Institution of Highways and Transportation, United
Kingdom.
Encik Md. Shukor spent 22 years with the Malaysian
Highway Authority (MHA) serving in various capacities;
from engineer to Assistant Regional Director, Senior
Project and Maintenance Engineer, Assistant Director of
Operations, Director of Special Projects and Director of
Professional Services and Technical Co-operation, which
was his last position prior to joining MTD Construction
Sdn Bhd as General Manager in February 2006. In April
2009, Encik Md. Shukor was appointed as Executive
Vice President, Head, Construction & Contract Division
of AlloyMtd Group and currently, he holds the position
of Executive Vice President, Head, Construction and
Maintenance Division. Encik Md. Shukor also sits on the
board of several private limited companies.
None of the other Directors have any interest in the securities of the
Company as at 31 July 2014.
Conflict of interest
None of the Directors have any conflict of interest with the Company.
Convicted of offences
None of the Directors have been convicted of any offence within the past
ten (10) years other than traffic offences.
MTD ACPI ENGINEERING BERHAD
7
Group 5-Years Financial Highlights
Revenue
(RM million)
Pre-Tax Profit/(Loss)
(RM million)
1000
28.96
30
20
10
800
0
-10
650.82
-20
600
541.53
(10.66)
(14.34)
-30
(25.92)
-40
-50
400
328.19
325.69
270.00
-60
-70
-80
200
-90
-100
0
-110
2010
2011
2012
2013
2014
6
2012
2013
2014
1.0
5
0.87
0
0.83
0.8
-5
-10
2011
Net Assets Per Share
(RM)
Earning/(Loss) Per Share
(Sen)
10
(100.97)
2010
(8)
0.72
0.75
(7)
-15
0.6
(14)
-20
-25
0.4
-30
0.38
-35
0.2
-40
(41)
-45
2010
2011
2012
2013
2014
0.0
2010
Shareholder’s Fund
(RM million)
250
200
193.71
183.71
155.08
161.88
150
100
75.99
50
0
2010
8
2011
2012
ANNUAL REPORT 2014
2013
2014
2011
2012
2013
2014
Chairman’s Statement
Dear valued shareholders,
On behalf of the Board of Directors (Board), I am
pleased to present to you the Annual Report of
MTD ACPI Engineering Berhad (MTDACPI) for the
financial year ended 31 March 2014.
Para pemegang saham yang
dihargai sekalian,
Bagi pihak Lembaga Pengarah (Lembaga), saya
dengan sukacitanya mengemukakan kepada
anda Laporan Tahunan MTD ACPI Engingeering
Berhad (MTDACPI) bagi tahun kewangan berakhir
31 Mac 2014.
Dato’ Ir. A. Rashid bin Omar
Chairman/Pengerusi
Financial Highlights
Sorotan Kewangan
MTDACPI’s revenue rose 21.6% to RM328.2 million
compared with RM270.0 million registered in the previous
year, driven by higher contribution from the Construction
& Engineering segment.
Pendapatan yang diperolehi oleh MTDACPI menyaksikan
peningkatan sebanyak 21.6% kepada RM328.2 juta
berbanding RM270.0 juta yang dicatatkan pada tahun
sebelumnya, hasil sumbangan yang lebih tinggi daripada
segmen Pembinaan & Kejuruteraan.
Nevertheless, the Group registered a pre-tax loss of
RM101.0 million versus previous year’s pre-tax profit of
RM29.0 million mainly attributed by one-off impairment
of Goodwill and Property, Plant and Equipment. Although
management is actively bidding for new infrastructure
construction jobs and overseas manufacturing jobs
between now and the expected completion of existing
projects, there is uncertainty of securing new jobs to
replenish the balance of order book. Therefore, the
Management had made an assessment on the goodwill
carrying value in accordance with the MFRS 136 on
impairment of assets and decided to take a prudent
view by making a full impairment to the goodwill value at
RM62.7 million for both Construction & Engineering; and
Manufacturing segments.
Walau bagaimanapun, Kumpulan telah mencatatkan
kerugian sebelum cukai berjumlah RM101.0 juta yang
berlawanan daripada untung sebelum cukai yang
diraih pada tahun terdahulu sebanyak RM29.0 juta, di
mana sebahagian besarnya adalah disebabkan oleh
penjejasan sekali sahaja terhadap Muhibah dan Harta,
Loji dan Peralatan. Sungguhpun pihak pengurusan
aktif melakukan bidaan bagi mendapatkan kerja-kerja
pembinaan infrastruktur dan kerja-kerja pembuatan di luar
negara antara tempoh masa kini dan jangkaan siapnya
projek-projek sedia ada, namun wujud ketidakpastian
dalam mendapatkan kerja-kerja baharu bagi menambah
baki buku pesanan. Justeru itu, pihak Pengurusan telah
melakukan taksiran terhadap nilai bawaan muhibah
mengikut MFRS 136 berkenaan penjejasan aset dan telah
memutuskan untuk mengambil pendekatan berhemat
dengan membuat penjejasan sepenuhnya terhadap nilai
muhibah sebanyak RM62.7 juta bagi kedua-dua segmen
Pembinaan & Kejuruteraan serta Pembuatan.
MTD ACPI ENGINEERING BERHAD
9
Chairman’s Statement (Cont’d)
Dividend
Dividen
The Board has decided not to propose any dividend for
the financial period under review (2013: First and final
dividend of 1 sen per share less 25% taxation).
Lembaga membuat keputusan untuk tidak mencadangkan
sebarang dividen bagi tempoh kewangan di bawah
tinjauan (2013: Dividen pertama dan terakhir sebanyak 1
sen sesaham ditolak cukai 25%).
OPERATIONAL PERFORMANCE
PRESTASI OPERASI
Construction & Engineering Segment
Segmen Pembinaan & Kejuruteraan
The Construction & Engineering segment continues to
be the key driver of the Group’s earnings. During the
financial year, the segment achieved gross revenue of
RM257.0 million (2013: RM162.0 million) due to higher
billing realised as the construction and infrastructure
projects accelerated in terms of physical progress.
The Management had adopted the prudent view after
careful assessment to impair the goodwill of RM52.9
million, which led to a loss of RM40.8 million compared
to a profit of RM36.8 million in the preceding year. This
goodwill impairment is a one-off item and the segment is
expected to return to profitability next year.
During the period under review, the Group has gained
momentum on the construction works of its viaduct
guideway and other associated works between Bandar
Tun Hussein Onn and Taman Mesra in Kajang, which
forms the Package V7 of the Klang Valley Mass Rapid
Transit (KVMRT) project. The Group’s subsidiary, MTD
Construction Sdn Bhd (MTDC), which was awarded the
RM500.0 million contract in May 2012, is expected to
complete the main guideway works by end of 2014 and
its station works the following year.
Segmen Pembinaan & Kejuruteraan terus menjadi
pemacu utama perolehan bagi Kumpulan. Sepanjang
tahun kewangan, segmen ini memperoleh pendapatan
kasar berjumlah RM257.0 juta (2013: RM162.0 juta)
disebabkan oleh pengebilan lebih tinggi yang berjaya
direalisasi memandangkan tahap kemajuan fizikal projek
pembinaan dan infrastruktur dapat dipercepatkan.
Pihak Pengurusan telah mengambil pendekatan yang
berhati-hati setelah melakukan taksiran secara teliti
dengan menetapkan kejejasan muhibah sebanyak
RM52.9 juta, lantas mengakibatkan kerugian berjumlah
RM40.8 juta berbanding catatan keuntungan sebanyak
RM36.8 juta pada tahun sebelumnya. Kejejasan muhibah
ini merupakan perkara yang berlaku sekali sahaja dan
segmen ini dijangka akan kembali menjana keuntungan
pada tahun hadapan.
Semasa tempoh di bawah tinjauan, momentum Kumpulan
kian meningkat dalam kerja-kerja pembinaan laluan
pandu jejambat serta kerja-kerja lain yang berkaitan di
antara Bandar Hussein Onn dan Taman Mesra di Kajang
yang membentuk Pakej V7 projek Transit Laju Massa
Lembah Klang (KVMRT). Subsidiari Kumpulan, MTD
Construction Sdn Bhd (MTDC), yang telah diberikan
kontrak bernilai RM500.0 juta pada Mei 2012, dijangka
dapat menyiapkan kerja pembinaan jejambat utama
menjelang penghujung tahun 2014 dan kerja pembinaan
stesen akan disempurnakan pada tahun berikutnya.
Klang Valley MRT Project Package V7 - Bandar Tun Hussein Onn and Taman Mesra in Kajang.
10
ANNUAL REPORT 2014
It is important to note that MTDC has been continuously
ranked on top of the Contractors’ Performance
Assessment System (CONPAS) scoring, a monthly
evaluation system conducted by KVMRT’s project delivery
partner, MMC-Gamuda Joint Venture Sdn Bhd. Its leading
position is a reflection of MTDC’s commitment and ability
to meet expectations in terms of delivering project quality
within the stipulated deadline.
In addition, the Group has also achieved significant
milestones in the construction works of the RM303.2
million PLUS Fourth Lane Widening project, Package
C for UEMB-MRCB JV Sdn Bhd, which is the stretch
from Sungai Buloh to Rawang Interchange. The project
is expected to be completed and delivered to the client
within the expected timeframe.
Penting untuk dimaklumi bahawa MTDC telah terusmenerus menduduki tempat teratas dalam pemarkahan
Sistem Penilaian Prestasi Kontraktor (CONPAS), suatu
sistem penilaian bulanan yang dikendalikan oleh rakan
niaga penyerahan projek KVMRT, iaitu MMC-Gamuda
Joint Venture Sdn Bhd. Kedudukannya sebagai peneraju
mencerminkan iltizam MTDC dan keupayaannya dalam
memenuhi jangkaan dari segi kualiti projek yang dapat
disiapkan dalam tempoh masa yang telah ditetapkan.
Di samping itu, Kumpulan juga telah meraih pencapaian
penting dalam kerja-kerja pembinaan bagi projek
Pelebaran Lorong Keempat PLUS, Pakej C yang bernilai
RM303.2 juta, untuk UEMB-MRCB JV Sdn Bhd, yakni
laluan dari Sungai Buloh ke Persimpangan Bertingkat
Rawang. Projek ini dijangka dapat diserahkan dalam
jangka masa yang dikehendaki.
Manufacturing Segment
Segmen Pembuatan
The Manufacturing segment registered lower gross
revenue of RM121.5 million compared with RM131.5
million a year ago due to a competitive operating
environment. It posted a higher loss of RM9.0 million from
RM2.3 million loss in the preceding year mainly due to
one-off impairment of goodwill and property, plant and
equipment amounting to RM11.7 million.
Besides aggressively improving innovation and quality
of its precast concrete products, the Manufacturing
segment remains prudent in its cost controls by adhering
to strict measures to reduce wastage, as well as striving
to achieve higher efficiency in production and operations.
The segment still has an order book of RM117.6 million
that includes railway related precast products and tunnel
segments in Singapore and Malaysia, plus RM40.1 million
worth of infrastructure projects in the Middle East under
its joint venture with a local partner in Qatar to supply
precast products.
Klang Valley MRT Project Package V7 - Bandar Tun Hussein
Onn and Taman Mesra in Kajang.
Segmen Pembuatan mencatatkan pendapatan kasar
yang lebih rendah berjumlah RM121.5 juta berbanding
RM131.5 juta yang diperolehi setahun yang lalu
disebabkan oleh persekitaran operasi yang lebih
berdaya saing. Ia mencatatkan kerugian yang lebih tinggi
sebanyak RM9.0 juta berbanding catatan kerugian RM2.3
juta pada tahun sebelumnya, di mana punca utamanya
adalah kerana kejejasan sekali sahaja terhadap muhibah
dan harta, loji dan peralatan yang berjumlah RM11.7 juta.
Selain giat melakukan penambahbaikan dalam inovasi
dan kualiti produk konkrit pratuang, segmen Pembuatan
terus mengamalkan sikap berhemat dalam kawalan
kosnya dengan mematuhi langkah yang ketat bagi
mengurangkan pembaziran, di samping berusaha
mencapai tahap kecekapan yang lebih tinggi dalam
pengeluaran dan operasi. Segmen ini masih mempunyai
buku pesanan bernilai RM117.6 juta yang meliputi
produk pratuang berkaitan rel serta segmen terowong di
Singapura dan Malaysia, di samping projek infrastruktur
bernilai RM40.1 juta di Timur Tengah di bawah usaha
sama dengan sebuah rakan niaga tempatan di Qatar bagi
membekalkan produk pratuang.
The Fourth Lane Widening Project - Sungai Buloh and Rawang.
MTD ACPI ENGINEERING BERHAD
11
Chairman’s Statement (Cont’d)
Group Prospects
Prospek Kumpulan
The global economy remains fragile as growth momentum
in China is expected to continue to slow down while
the United States and Europe have yet to fully recover
from the 2008/09 crisis. Nevertheless, the oil-rich region
of the Middle East is still in demand for infrastructure
development, which would augur well for the Group given
its existing presence there.
Ekonomi global dilihat masih rapuh memandangkan
momentum pertumbuhan dijangka akan terus perlahan
di China, manakala Amerika Syarikat dan Eropah masih
belum pulih sepenuhnya daripada krisis 2008/09. Walau
bagaimanapun, rantau yang kaya dengan minyak di Timur
Tengah masih lagi mempunyai permintaan yang tinggi
untuk pembangunan infrastruktur, dan ini merupakan
suatu petanda baik untuk Kumpulan memandangkan
kehadirannya yang sedia ada di sana.
In the domestic market, meanwhile, Malaysia is
anticipated to achieve 5% GDP growth for 2014 backed
by high domestic savings, strong foreign reserves and
robust investments. To further ensure that the country’s
fundamentals remain strong, Bank Negara has recently
announced a hike in interest rates, the first time since
2011, in an attempt to control household debts, which
has spiked up in the last year. Given the Malaysian
Government’s commitment towards the Economic
Transformation Programme coupled with the country’s
continuous development, the Group is optimistic that
there would be opportunities that it can tap into.
Going forward, despite the challenging operating
environment, the Group expects to gradually improve
its financial performance, anchored by its order book of
RM1.1 billion for both the Construction & Engineering;
and Manufacturing segments. The Management would
continue to seek for infrastructure projects both in
Malaysia and abroad, leveraging on the strength of its
parent company, AlloyMtd Group, which has presence
across Asia and the Middle East. The Management of
MTDACPI will remain vigilant in monitoring and controlling
cost to ensure profitability of existing projects. Barring any
unforeseen circumstances, the Group expects a modest
recovery ahead.
Production of tunnel linings in Qatar.
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ANNUAL REPORT 2014
Sementara itu, di pasaran tempatan, KDNK Malaysia
dijangka mencapai pertumbuhan 5% pada 2014 dengan
disokong oleh tahap simpanan domestik yang tinggi,
kemantapan rizab asing serta pelaburan yang teguh. Demi
memastikan asas negara kekal kukuh, baru-baru ini Bank
Negara telah mengumumkan kenaikan kadar faedah,
iaitu yang pertama sejak tahun 2011 dalam usahanya
untuk mengawal hutang isi rumah yang melonjak naik
dalam tempoh setahun yang lalu. Bersandarkan iltizam
Kerajaan Malaysia terhadap Program Transformasi
Ekonomi serta pembangunan negara yang berterusan,
Kumpulan optimistik bahawa akan wujud peluang yang
dapat diterokainya.
Dalam melangkah ke hadapan, biarpun persekitaran
operasi kekal mencabar, namun Kumpulan menjangkakan
bahawa prestasi kewangannya akan bertambah
baik secara beransur-ansur dengan ditunjangi buku
pesanan bernilai RM1.1 bilion bagi kedua-dua segmen
Pembinaan & Kejuruteraan serta Pembuatan. Pihak
Pengurusan akan terus berusaha mendapatkan projek
infrastruktur di Malaysia dan di luar negara dengan
memanfaatkan kekuatan syarikat induknya, Kumpulan
AlloyMtd yang wujud di serata Asia dan Timur Tengah.
Pihak Pengurusan MTDACPI terus bersikap berhati-hati
dalam memantau dan mengawal kos bagi memastikan
keuntungan untuk projek sedia ada. Sekiranya tiada aral
melintang, Kumpulan menjangkakan tahap pemulihan
yang sederhana di masa hadapan.
Appreciation
Penghargaan
On behalf of the Board, I would like to extend our deepest
gratitude to Tan Sri Dr. Nik Hussain bin Abdul Rahman,
who retired end of September last year as Chairman of
the Group after serving the Board for more than a decade.
As a founder of the business, Tan Sri Dr. Nik Hussain has
played a crucial role in the growth of the Group over the
years, and he will continue to share his invaluable years
of experience and wealth of knowledge in an advisory
role.
Bagi pihak Lembaga, saya ingin menyampaikan setinggitinggi penghargaan kepada Tan Sri Dr. Nik Hussain bin
Abdul Rahman yang telah bersara sebagai Pengerusi
Kumpulan pada September tahun lalu setelah berkhidmat
selama lebih sedekad
dalam Lembaga Pengarah.
Sebagai pengasas perniagaan, Tan Sri Dr. Nik Hussain
telah memainkan peranan yang amat penting dalam
pertumbuhan Kumpulan selama bertahun-tahun, dan
beliau akan terus berkongsi pengalamannya yang tidak
ternilai dan kekayaan ilmu pengetahuannya dengan
memainkan peranan sebagai penasihat.
I would also like to express appreciation to our loyal
shareholders for their long-term confidence and trust
towards the Group.
My appreciation also goes to the Management team and
staff of MTDACPI for dedicating themselves towards
achieving the goals of the Group regardless of the
challenges that they faced during the financial year.
Saya juga ingin memberikan sekalung penghargaan
kepada para pemegang saham yang setia kerana
keyakinan dan kepercayaan mereka sejak sekian lama
terhadap Kumpulan.
Last but not least, I would like to thank my fellow Board
members for their wise guidance and counsel during the
year under review.
Penghargaan turut diberikan kepada pasukan Pengurusan
serta kakitangan MTDACPI kerana dedikasi yang telah
mereka tampilkan ke arah mencapai matlamat Kumpulan
tanpa mengira cabaran yang terpaksa diharungi pada
tahun kewangan ini.
We look forward towards the continued support from our
stakeholders as we strive to overcome the challenges in
the coming year while capitalizing on the opportunities
that would enhance the prospects of the Company.
Akhir kata, saya ingin mengucapkan terima kasih kepada
rakan anggota Lembaga Pengarah di atas kebijaksanaan
mereka dalam memberikan panduan serta nasihat
sepanjang tahun di bawah tinjauan.
Thank you.
Kami amat mengalu-alukan sokongan yang berterusan
daripada para pemegang kepentingan sambil kami
terus berusaha mengatasi segala cabaran pada tahun
mendatang, di samping memanfaatkan peluang yang
akan meningkatkan lagi prospek Syarikat.
DATO’ IR. A. RASHID BIN OMAR
Chairman
Terima kasih.
DATO’ IR. A. RASHID BIN OMAR
Pengerusi
MTD ACPI ENGINEERING BERHAD
13
Statement on Corporate Governance
The Board of Directors (“Board”) of MTD ACPI Engineering Berhad (“MTDACPI” or “Company”) recognizes the value of
good corporate governance in sustaining value for shareholders and stakeholders of the Company, and ensuring long
term success of the business of MTDACPI and its subsidiaries (“MTDACPI Group” or “Group”). The Board is committed
towards instilling high standard of corporate governance throughout MTDACPI Group, a fundamental governance role in
discharging its responsibilities in the best interests of all shareholders and stakeholders.
The Board has embedded appropriate corporate governance framework in MTDACPI Group to guide the Group towards
good corporate governance practices, in line with the Malaysian Code on Corporate Governance 2012 [“Code”] and Bursa
Malaysia Securities Berhad Main Market Listing Requirements (“Listing Requirements”). The framework provides direction
for MTDACPI Group and enables the Board to balance their oversight responsibilities in regulating the business activities,
resources, practices and internal control processes in MTDACPI Group, and to address the governance needs. The
framework also provides a combination of self-assessment to give assurance that the management structure and function
of the business remain on course to achieve MTDACPI Group’s objectives of maximizing revenue, controlling cost and
improving profitability to enhance shareholders’ value and also to promote transparency and corporate accountability.
The Board is pleased to present the following statement, which describes the manner in which MTDACPI Group has
applied the principles and the extent of compliance with the recommendations of the Code, throughout the financial year
ended 31 March 2014.
A.DIRECTORS
A1. The Board
The Board is fully responsible to protect, preserve and safeguard the assets of the Group, to enhance the long
term value of MTDACPI Group for the benefit of the shareholders and stakeholders. The Board in discharging its
responsibilities, continuously provides strategic direction, implements policies and procedures, risk management
frameworks and internal audit functions, to ensure the achievement of corporate objectives and goals, to promote
sustainable growth and protect the assets of MTDACPI Group.
The Board’s principal functions and responsibilities, inter-alia, are the following:
a) Review and approve strategies, business plans, policies and annual operating budgets which are integral
part of MTDACPI Group management information system (“MIS”), to serve as a guide for the management
to operate and manage the businesses of MTDACPI Group;
b)
Oversee and regularly evaluate the conduct of MTDACPI Group’s businesses to ensure it is being properly
managed by those entrusted with the management;
c) Continuously assess and review the adequacy and integrity of a sound system of internal control and
MIS within MTDACPI Group to optimize the effectiveness of the processes in place, to properly manage
MTDACPI Group’s exposure to risks and uncertainties, which could have a material adverse effect on
MTDACPI Group’s business prospects, earning and/or financial position;
d)
Evaluate the viability of business propositions or corporate proposals, management succession, changes to
the corporate structure, management and control procedures within MTDACPI Group;
e)
Decide on a formal schedule of matters reserved to itself which includes, overall MTDACPI Group strategy
and direction, acquisition and investment policy, approval of major capital expenditure for projects and
significant financial matters;
f) Regularly review the Code of Ethics to ensure ethical values and ethical business conduct standards, and
compliance system are relevant and appropriate, including whistle blowing policy that facilitates employees
to report misconduct or wrongdoings, and make certain that the Code of Ethics is effectively communicated
and implemented throughout MTDACPI Group;
f) Communicate with its shareholders, the market, institutional investors, stakeholders and analyst, if required;
and
g)
Keep abreast of social trends and changes in the environment to continuously consider possible need for
protective measures and corporate social responsibility.
The Board delegates specific responsibilities and functions to various committees namely, Audit Committee,
Nomination Committee, Remuneration Committee and Management Committee (collectively referred to as
“Board Committees”). The function, roles and responsibilities of the Board Committees as well as, the authorities
delegated by the Board are clearly defined in the respective Terms of Reference, which are reviewed and/or
updated annually or as and when required. The Board receives regular status reports, updates and briefing
pertaining to activities and recommendations from the Board Committees. The Board Committees are either
empowered to act independently or under delegated authority from the Board, as set out in the respective Terms
of Reference.
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ANNUAL REPORT 2014
The Board has separated management oversight and operational executive functions in the Company. The
operational executive functions are delegated to the Management Committee, which includes, amongst others,
development and implementation of business strategies, policies and decision making on important matters
regarding day-to-day business. The Management Committee on an ongoing basis, reviews the achievement of
Business Divisions/Units against targets and budgets approved by the Board, to ensure the business remains
on course to achieve Group’s strategic objectives. The Management Committee led by the President & Chief
Executive Officer (“CEO”), is supported by a management team with the requisite experience and skills.
The Management Committee through the Risk Management Committee identifies potential critical risks that could
potentially impact the ability of MTDACPI Group to realise its objectives and evaluates the controls in place on an
ongoing basis, to ensure the key risks of the Group are properly managed and mitigated. The Audit Committee
reviews the implementation status of the key risk actions plans relating to the critical risks of MTDACPI Group
on a half-yearly basis and risk assessment reports are presented to the Board for understanding the trends in
uncertainty and oversight responsibilities.
Succession planning is in place to ensure orderly management transition for upward or lateral movement and
strategic continuity for every critical position in the Group. Training and development programs have been
planned and implemented for developing potential successors for identified senior management positions.
The compensation and benefit policies of the Group are aimed to attract and retain high quality employees as
potential successors.
A2. Board Charter
The Board has in place a Board Charter to serve as a reference point for Board’s activities. It provides guidance
to Directors on their fiduciary duties and responsibilities on the Board and Board Committees. The Board Charter
was updated in accordance with the practices of the Company and relevant recommendations of the Code and
uploaded to the Company’s website at www.alloymtd.com.
A3. Code of Ethics for Directors
A Code of Ethics for Directors has been established by the Board to provide guidance to the directors of MTDACPI
Group on the standard of ethical, business and personal behaviour required at all times in the exercise of his
powers to discharge his duties as a director of MTDACPI Group. The Code of Ethics of Directors is available at
the Company’s website at www.alloymtd.com.
A4. Business Sustainability
The Group continuously undertake various social and environmental programs to assist in enriching the lives of
its communities, and corporate social responsibility (“CSR”) budgets have been allocated under the respective
business units.
The Company has established CSR policy and framework (also termed as Sustainability Report) encompassing
the four (4) element guidelines of CSR namely Community, Workplace, Marketplace and Environment. The CSR
policy and framework is available on the Company’s website at www.alloymtd.com.
A detailed report on sustainability activities is disclosed in the Statement on Group Corporate Social Responsibility
of this annual report.
A5. Board Composition and Balance
The Board comprise persons of high calibre, who are professional in their respective field. Together, the Board
members bring a wide range of business and financial/technical experience, skills and expertise that are vital to
the Board, for successful stewardship of MTDACPI Group.
The Board currently has eight (8) members, in compliance to Articles 84 of the Company which provides the
number of Directors (disregarding alternate directors) shall not be less than two (2) nor more than fifteen (15).
Four (4) of the Directors are Non-Independent Executive Directors, three (3) Independent Non-Executive
Directors and one (1) Non-Independent Non-Executive Directors. The profile of each director of the Company
(“Director”) is set out in the Board of Directors’ Profile.
The Independent Directors represent 37.5% of the Board composition which is in compliance with Paragraph
15.02 of the Listing Requirements.
The Non-Executive Directors on the Board bring strong independent view and judgement; participate objectively
in the decision making process of the Board; and provides effective check and balance for the Board. The
Non-Executive Directors possess an appropriate range of skill and experience including, industry knowledge,
accounting, financial, technical, management and business acumen to deal with the diverse businesses of
MTDACPI Group.
MTD ACPI ENGINEERING BERHAD
15
Statement on Corporate Governance (Cont’d)
The Board members are of the opinion that the structure of the Board is well-balanced and satisfactorily reflects
the interest of the shareholders and representation of minority shareholders through the Independent Directors.
Dato’ Ir. Kalid bin Alias is the Senior Independent Non-Executive Director to whom concerns of the shareholders,
relating to the Company may be conveyed. The key roles of the Senior Independent Non-Executive Director are
as follows:
(a) Serve as the point of contact between the Independent Directors and the Chairman on sensitive issues; and
(b) Act as a designated contact to whom shareholders’ concerns or queries, relating to the Company may be
raised, as an alternative to the formal channel of communication with shareholders.
Tan Sri Dr. Nik Hussain bin Abdul Rahman, Chairman, Non-Independent Non-Executive Director of the Company
retired at the conclusion of Twentieth AGM held on 26 September 2013. Subsequent thereto, on 25 October 2013,
Dato’ Ir. A. Rashid bin Omar, Independent Non-Executive Director has been re-designated as the Chairman of
the Board.
There is a distinct and clear division of responsibilities between the Chairman and the CEO, to ensure a balance
of power and authority. The roles of the Chairman and the CEO are separated and clearly defined in the Board
Charter. The Chairman in his Independent Non-Executive Director capacity provides a check and balance to the
influence of the CEO.
The Chairman is primarily responsible for the following:
i)
Providing the overall leadership, managing the effective running of the Board, and ensuring that the Board
as a whole plays a full and constructive part in the development and determination of MTDACPI Group’s
strategy and overall business objectives;
ii) Promoting the highest standard of integrity and entrenchment of good corporate governance practices
throughout MTDACPI Group;
iii) Ensuring effective communication between shareholders/investors and the Board including, the CEO and
other executive management;
iv) Establishing meeting agendas and ensuring meetings are organised and efficiently conducted; and
v)
Ensuring a balance of power and authority, such that no one individual has unfettered power of decision.
The CEO is primarily responsible for the following:
i)
Implementing the decision of the Board, Board Committees and principal subsidiaries with the support of
the Management team;
ii)
Directing and supervising management effectively and responsibly, to ensure smooth operation and running
of business;
iii) Ensuring effective implementation of the Company’s strategic business plans and policies approved by the
Board;
iv) Ensuring adequacy of risk management and internal controls, and compliance with legal requirements as
well as matters affecting the industry and Group in general;
v) Reporting to the Board on all matters materially affecting the Group and its performance including, any
potentially strategic or politically significant development prospect, any underperforming businesses/
activities of the Group with solutions, and all material matters that affect or could affect shareholders/
stakeholders and the markets in which the shareholders’ interests are traded; and
vi) Leading the communication programme with shareholders and maintaining dialogue with the Chairman
on important and strategic issues facing MTDACPI Group, in ensuring that the Chairman is alerted to
forthcoming complex, contentious or sensitive issues.
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ANNUAL REPORT 2014
A6. Boardroom Diversity
The Board is supportive of boardroom diversity and endeavours to ensure women candidates are sought as part
of recruitment exercise of MTDACPI Group.
A woman Director has been appointed to the Board during the financial year ended 31 March 2014. The Board
will consider establishing a policy formalizing its approach to boardroom diversity and taking necessary steps
to ensure more women candidates are appointed to the Board to be in line with the Government Policy of 30%
women directors at the decision-making level in corporate sectors by 2016.
A7. Reinforce Independence
The Board through the Nomination Committee reviews the independence of Independent Non-Executive
Directors to comply with the recommendations of the Code and regulatory provisions. All the Independent
Directors fulfil the criteria of independence as set out in the definition of “Independent Director” under Paragraph
1.01 (Definitions) of the Listing Requirements and the Code, utilising Independent Director Self-Assessment
Checklist as per Exhibit 8 in the Corporate Governance Guide.
The Board has adopted the recommendation from the Code that the tenure of an independent director shall not
exceed a consecutive service of nine (9) years or a cumulative term of nine (9) years with intervals. In the event
of any retention, it will be as follows:
-
in the capacity of a non-independent director; or
-
independent director is subject to shareholders’ approval at every annual general meeting with strong
justification.
As at the date of this statement, none of the Independent Directors of the Company has serve a cumulative term
of more than nine (9) years.
The Board has conducted a formal assessment of the independence of Independent Director annually including,
assessment for retention of independent directors who served a consecutive service of nine (9) years or a
cumulative term of nine (9) years with intervals.
A8. Time commitment
The Directors are fully aware of their responsibilities and dedicate sufficient time to carry out such responsibilities.
The Board Meeting dates are planned ahead of schedule with commitment of Directors. The Board will obtain
commitment from new Director at the time of appointment and also commitment from the Directors before they
accept any new directorship of other company, on their resources and time contributions to focus on the affairs
of MTDACPI Group, and discharge their duties effectively.
All Directors have complied with the restrictions on the number of directorships in public listed company as
prescribed under the Listing Requirements.
A9. Re-Election or Re-Appointment of Directors
The Board recommends directors for re-election and/or re-appointment by shareholders at every annual general
meeting (“AGM”) pursuant to MTDACPI’s Articles of Association and the Companies Act, 1965.
a)
All Directors are subject to retirement by rotation and in ascertaining the number of directors to retire, the
Company shall ensure all Directors shall retire from office at least once in every three (3) years but shall be
eligible for re-election.
b)
One-third (1/3) of the Directors or the number nearest to one-third (1/3) shall retire from office at every AGM
and if eligible, may offer themselves for re-election.
c)
Directors who are appointed by the Board to fill a casual vacancy shall hold office only until the next
following AGM and shall then be eligible for re-election but shall not be taken into account in determining
the Directors who are to retire by rotation at the meeting.
d)
The CEO shall retire from office at least once in every three (3) years, but such re-election shall be subject
always to the provision stated in item (b) above.
e) Directors over seventy (70) years of age are required to submit themselves for re-appointment as Directors
annually by way of a resolution in accordance with Section 129(6) of the Companies Act, 1965.
The details of Directors standing for re-election and/or re-appointment at the forthcoming AGM are set out in the
Notice of AGM.
MTD ACPI ENGINEERING BERHAD
17
Statement on Corporate Governance (Cont’d)
A10.Directors’ Training
All the Directors have attended the Mandatory Accreditation Program to equip themselves with a broad knowledge
and understanding of various provisions, rules and regulations in order to discharge their duties and obligations
effectively.
Directors are encouraged to attend seminars and training programmes to keep abreast with current development
in the business environment as well as, to further their knowledge and strengthen their skill for discharging their
duties as directors effectively.
During the financial year ended 31 March 2014, the Board approved the training entitled ‘Management Anti-fraud
Programmes and Control – Guidance to help prevent and deter fraud’ which was attended by all Directors. Below
are the additional trainings attended by the respective Director, relevant to their duties and activities:
Training Program
Director
Mandatory Accreditation Program
Datin Nik Fuziah binti Tan Sri Nik Hussein
Advocacy Session on Corporate Disclosure for Directors
Dato’ Ir. A. Rashid bin Omar
CIDB Green Card Programme Dato’ Dr. Azmil Khalili bin Dato’ Khalid
Dato’ Ir. Kalid bin Alias
Nik Din bin Nik Sulaiman
Keith George Cowling
Performance Management & Key Performance Indicators
Md. Shukor bin Mohamed
The Company has included a Director’s Training Programme in its 2014/2015 Annual Training Plan.
A11.Board Meetings
The Board, at the beginning of each year, will establish and approve the annual schedule of corporate meeting
dates and convene additional meetings, as and when necessary. During the financial year ended 31 March 2014,
the Board held five (5) Board meetings.
The record of attendance of each Director during the financial year ended 31 March 2014 is set out below:
Name of Director
18
Attendance
Tan Sri Dr. Nik Hussain bin Abdul Rahman
(Non-Independent Non-Executive Director)
(Retired on 26 September 2013)
2/3
Dato’ Ir. A. Rashid bin Omar
(Independent Non-Executive Director)
5/5
Dato’ Azmil Khalili bin Dato’ Khalid
(Non-Independent Executive Director)
4/5
Datin Nik Fuziah binti Tan Sri Nik Hussein
(Non-Independent Executive Director)
(Appointed on 1 November 2013)
2/2
Dato’ Ir. Kalid bin Alias
(Senior Independent Non-Executive Director)
5/5
Nik Din bin Nik Sulaiman
(Independent Non-Executive Director)
5/5
Lee Leong Yow
(Non-Independent Non-Executive Director)
4/5
Keith George Cowling
(Non-Independent Executive Director)
4/5
Md. Shukor bin Mohamed
(Non-Independent Executive Director)
5/5
ANNUAL REPORT 2014
All Directors have complied with the minimum attendance requirements of more than 50% of the total board of
directors’ meetings held during the financial year.
All Directors are provided with meeting materials including business proposition, financial and operational
information, to assist them in discharging their duties. The information is circulated in time to allow Directors to
be properly briefed in advance of meetings.
The matters for discussion and decision making by the Board are formalised and the proceedings and
resolutions passed at each Board meeting are recorded in the minutes, which are confirmed by the Board in
the next succeeding meeting and signed by the Chairman of the meeting as a correct record of the proceedings
thereat. Directors would request further clarification or raise comments on the minutes prior to confirmation of
the same at the meeting. The Board also exercises control on matters that require Board’s approval by way of
circulation of Directors’ Resolutions in writing. The interested Directors will declare their interests and abstain
from deliberations and decisions in the matters in which they are interested and also abstain from voting in
respect of their shareholdings in MTDACPI, on the resolutions pertaining to corporate proposals undertaken by
MTDACPI Group.
The Board members may consult and share expertise and experience among themselves in discharging their
duties.
A12.Supply of Information
The Board has complete and unimpeded access to information relating to MTDACPI Group in discharging their
duties.
All Directors regularly receive comprehensive management reports or periodic updates on major investments,
operations or projects and financial reports or information of MTDACPI Group, for their perusal and monitoring of
the business and operation of MTDACPI Group. The Chairman of the respective Board Committees would report
to the Board at Board meetings, of any pertinent matters for information or decision making and/or reports would
be appended to the agenda of the Board meetings for Directors’ notation.
For the purpose of informed decision making by the Board, Board papers on any proposal together with supporting
documents are attached to Directors’ Circular Resolutions as required, if necessary.
All the Directors have unrestricted access to the management staff, to seek explanation or clarification on any
operational issues in relation to MTDACPI Group. The Directors and the Board Committees members have the
right to seek independent professional advice from external experts and/or advisors in discharging their duties,
at the expense of the Company.
All Directors and the Board Committees members also have unrestricted access to the advice and services of
the Company Secretaries in the discharge of their duties. The Directors are regularly updated by the Company
Secretaries of new statutory and regulatory requirements.
A13.Company Secretary
The Board is assisted by the Company Secretaries whose appointment or removal is determined by the Board.
The Company Secretaries carry out the instructions of the Board and Board Committees, advise the Board, Board
Committees, individual Director and officers of MTDACPI Group on relevant statutory and regulatory compliance
obligation, recommend to the Company’s institution, policies and procedures and compliance with the relevant
regulatory requirements, Code and legislations, and promoting a high standard of corporate governance.
The Company Secretaries issue the notice, agenda and relevant papers to the Board and Board Committees
ahead of each meeting and also ensure that deliberations and discussion of meetings are accurately minuted
and kept in the minutes books.
A14.Whistle Blowing Policy
The Board has established a whistle blowing policy in line with its commitment to promote transparency, effective
and honest communication throughout MTDACPI Group. The whistle blowing policy provides employees and
other parties dealing with MTDACPI Group, an avenue to raise serious concerns about any aspect of the business
and operation of MTDACPI Group, which they might genuinely and in good faith consider to be potentially illegal,
improper or unethical rather than overlooking a problem or ‘blowing the whistle’ outside.
MTD ACPI ENGINEERING BERHAD
19
Statement on Corporate Governance (Cont’d)
The whistle blowing mechanism provides reasonable steps to protect whistle blowers’ anonymity and protect
against adverse employment actions (i.e. dismissal, demotion, suspension, harassment or other forms of
discrimination), for raising allegations of business misconduct. The malicious use of the whistle blowing policy will
result in disciplinary action being taken against a whistle blower. All reports/disclosure are treated as confidential
and every effort will be made not to reveal whistle blower’s identity.
B. Nomination Committee
B1.Membership
The Nomination Committee was established on 27 September 2001. Its members comprise exclusively of NonExecutive Directors with the majority being Independent Directors and are as follows:
MemberDesignation
Dato’ Ir. Kalid bin Alias
Chairman
Senior Independent Non-Executive Director
Nik Din bin Nik Sulaiman
Independent Non-Executive Director
Lee Leong Yow
(Appointed on 1 August 2014)
Non-Independent Non-Executive Director
B2. Nomination Policies
The Board is committed to establishing nomination policies and structure in accordance with all requirements
that is equitable, competitive and consistent to assure the Nomination Committee could advise on the suitability
of potential candidates for directorship and membership of Board committees for achievement of the goals and
objectives of MTDACPI Group.
Nomination policies have been approved by the Board, to define the strategic objectives of MTDACPI Nomination
Committee, as follows:
1.
The Nomination Committee is guided by its Terms of Reference approved by the Board;
2.
Ensure the Board has a sufficient size with the appropriate balance of skill and experience to meet MTDACPI
Group’s present and future needs;
3. Ensure the composition of the Board and Board committees at all times adhere to the standards of
independence promulgated by Main Market Listing Requirement of Bursa Malaysia Securities Berhad;
4. Ensure MTDACPI Group has established a clear and appropriate selection criteria of candidate for
membership of the Board;
5. Ensure continued improvement on directors and senior management’s performance through effective
trainings in areas that the Board, Board committees, individual director or senior management could improve
on;
6.
Ensure succession planning is in place for the Board Chairman, President & Chief Executive Officer and
senior management, and constant evaluation of potential successors with the Board for continuation of
operation;
7.
Ensure no individual may be involved in determining his performance assessment and the evaluation results
to be conveyed and explained to the directors and senior management for improvement;
8.
Ensure directors perform such other duties as may be assigned by the Board from time to time or as may
be required by applicable regulatory, authorities and legislation;
9. Ensure appropriate disclosure to shareholders and all statutory and regulatory obligation are met by
MTDACPI Group;
10. A Member of the Nomination Committee must not participate in any review / assessment of his own
performance; and
20
ANNUAL REPORT 2014
11. The Board is the final authority in carrying out policies and procedures as specified in this Policy and
Terms of Reference of the Nomination Committee. It is the responsibility of the Board to ensure appropriate
procedures are followed in revising the Policy and Terms of Reference of the Nomination Committee.
B2. Terms of Reference
The framework on the function of the Nomination Committee in dealing with its responsibilities and scope of
authorities, for the effective functioning of the Board is detailed in the Terms of Reference as set out in this annual
report and the Company’s website at www.alloymtd.com.
B3. Key Activities Undertaken
The Nomination Committee met once during the financial year ended 31 March 2014, with full attendance of the
Committee’s members. The key activities undertaken by the Nomination Committee during the financial year
were as follows:
(i)
Annual evaluation of individual Directors based on professional ethics, integrity, commitment, competencies
to meet the challenges faced by the Company and for effective governance of the Company;
(ii) Annual assessment of the Board and Board Committees as a whole, mainly focusing on composition,
competencies, effectiveness, boardroom diversity, independence of Independent Directors;
(iii) Recommend action plans for improvement based on evaluation of the Board and Board Committees
including but not limited to the following;
•
Appointment of Dato’ Ir. A. Rashid bin Omar as Chairman of the Board and member of Audit Committee;
•
Appointment of Tuan Haji Nik Din bin Nik Sulaiman as Chairman of the Audit Committee and member
of Nomination Committee;
•
Appointment of Dato’ Ir. Kalid bin Alias as Senior Independent Non-Executive Director and Chairman
of Nomination Committee and Remuneration Committee;
•
Appointment of Datin Nik Fuziah binti Tan Sri Nik Hussein as Director and member of Remuneration
Committee;
(iv) Recommend re-nomination of Nomination Committee members;
(v) Assessment on re-election of Directors who are subject to retirement at the forthcoming annual general
meeting in accordance to the provisions of the Articles of Association of the Company;
(vi) Review and update the terms of reference of the Nomination Committee;
(vii) Assessment of the independence of Independent Directors; and
(viii) Review attendance of Directors at Board Committees/Board, to ensure compliance to minimum attendance
requirement of Board meetings of not less than fifty percent (50%) of the total meetings held during the
financial year.
C. Remuneration Committee
C1.Membership
The Remuneration Committee was established on 27 September 2001. Its members comprise mainly of
Independent Non-Executive Directors and are as follows:
MemberDesignation
Dato’ Ir. Kalid bin Alias
Chairman
Senior Independent Non-Executive Director
Haji Nik Din bin Nik Sulaiman
Independent Non-Executive Director
Datin Nik Fuziah binti Tan Sri Nik Hussein
(Appointed on 18 February 2014)
Non-Independent Executive Director
MTD ACPI ENGINEERING BERHAD
21
Statement on Corporate Governance (Cont’d)
C2. Remuneration Policies
The Board is committed to establishing remuneration policies and structure that is equitable, competitive and
consistent to assure the recruitment and retention of executive directors and senior management with the
requisite capability, competency and experience necessary for achievement of the goals and objectives of
MTDACPI Group.
Remuneration policies have been approved by the Board, to define the strategic objectives of MTDACPI
Remuneration Committee, as follows:
1.
The Remuneration Committee is guided by its Terms of Reference approved by the Board;
2.
Ensure MTDACPI Group is able to attract and retain executive directors and senior management of requisite
quality to increase its productivity and profitability in the long run;
3.
Motivate and create incentives for executive directors and senior management to perform at their best and
focus attention on the achievement of MTDACPI Group’s desired goals and objectives;
4. Ensure the interests of executive directors and senior management are closely aligned with those
of shareholders by linking remuneration to individual and group performance, market conditions and
benchmarked against remuneration of similar industry or market capitalization;
5.
Ensure no individual may be involved in determining his / her remuneration;
6.
Ensure remuneration disclosure to shareholders includes benefits paid and all regulatory obligation are met
by MTDACPI Group; and
7.
Ensure remuneration packages for non-executive directors shall be a matter for the Board as a whole and
non-executive directors shall not receive any remuneration or benefits designed for executive directors.
C3. Terms of Reference
The purpose, objectives, composition, duties and responsibilities of Remuneration Committee are defined in the
Remuneration Committee Terms of Reference as set out in this annual report and the Company’s website at
www.alloymtd.com.
C4. Directors’ Remuneration
The Remuneration Committee met once during the financial year ended 31 March 2014 with full attendance of
the Committee’s members.
The Board makes changes to Directors’ remuneration packages upon the recommendation of the Remuneration
Committee, following discussion and approval by a majority of the Board. The remuneration strategy for Executive
Directors and Senior Management is linked to the overall business strategies of the Company and based on pay
for performance culture. The framework ensure internal equity as well as, alignment with industry and market
practices.
The determination of the remuneration packages for Non-Executive Directors is a matter to be decided by the
Board as a whole. None of the Directors participate in any way in determining their individual remuneration
package. The remuneration packages are benchmarked against market practices of comparable public listed
corporations to be competitive. The Company reimburses expenses incurred by Directors in the course of their
duties as Directors.
The fees payable to the Directors are determined by the Board and are subject to the approval of the shareholders
of the Company at the AGM.
22
ANNUAL REPORT 2014
1.
The aggregate remuneration of the Directors categorised into appropriate components during the financial
year ended 31 March 2014 is as follows:
Description
2.
ExecutiveNon-Executive
Directors
Directors
TotalPercentage
RM (‘000)
RM (‘000)
RM (‘000)
(%)
Salaries and other emoluments
Fees
Benefits-in-kind
678
118
13
36
714
74
126244 25
–
13
1
Total
809
162971 100
The number of Directors whose total remuneration from MTDACPI Group falls within the following bands
are as follows:
Remuneration Band
Below RM50,000
RM50,001 to RM100,000
RM250,001 to RM300,000
RM400,001 to RM450,000
Number of Directors
ExecutiveNon-Executive
2
–
1
1
Total
3
1
–
–
5
1
1
1
D. RELATIONSHIP WITH SHAREHOLDERS/INVESTORS
D1. Dialogue with the Shareholders/Investors
The AGM and extraordinary general meetings remains the principal forum for open and clear dialogue with
shareholders concerning matters affecting the value of shareholders’ investment in the Company and also to
understand the shareholders’ perspective and respond to their feedback. The AGM of the Company was held on
26 September 2013. The Board recognises that prompt and appropriate disclosure of company information to
investors is essential for investment decisions and ensures the Company is committed to continuous disclosure
of information in compliance with the provision of the Listing Requirements. In addition, media are invited to
briefings by the Chairman and CEO for the purpose of releasing new information and highlighting any upcoming
events. The Board values dialogues with institutional investors, to optimize their understanding in terms of
strategy, business model, competitive position and financial.
The Company maintains a dedicated website at www.alloymtd.com which provides access to MTDACPI Group’s
operating businesses, latest developments, announcements to Bursa Securities and other corporate information.
In addition, investors may raise queries regarding MTDACPI Group via email to enquiries@alloymtd.com or signup for MTDACPI email alert to receive notification whenever MTDACPI releases any corporate announcement.
D2. Poll Voting
At the AGM of the Company held on 26 September 2013, the shareholders did not propose poll voting although
shareholders were informed by the Chairman of their right to demand a poll at the commencement of the general
meetings, to safeguard interests of minority shareholders.
E.
ACCOUNTABILITY AND AUDIT
E1. Financial Reporting
The Board, in presenting the annual financial statements and quarterly financial results, is committed to adopt
appropriate accounting policies and standards, and consistently applied prudent judgements supported by
reasonable estimates so that the financial statements represent a true and fair assessment of MTDACPI and
MTDACPI Group’s financial position. The Board vested responsibilities on the Audit Committee to ensure that
MTDACPI Group maintains proper accounting records, review and assess the accuracy and adequacy of all the
information to be disclosed and ensure that the financial statements are in compliance with the provisions of the
Companies Act, 1965, the Listing Requirements and the applicable approved accounting standards in Malaysia.
A statement by the Directors of their responsibilities for the financial statements is incorporated within the
Directors’ Report and Statement by Directors.
MTD ACPI ENGINEERING BERHAD
23
Statement on Corporate Governance (Cont’d)
E2. Internal Control
The Board is committed in maintaining and strengthening a sound System of Risk Management and Internal
Control within MTDACPI Group to safeguard shareholders’ investment and the Group’s assets.
In establishing and reviewing the System of Risk Management and Internal Control, the Directors recognise that
the System of Risk Management and Internal Control can only provide reasonable but not absolute assurance
against the risk of material misstatement or loss or fraud.
The state of internal control within MTDACPI Group is set out in the Statement on Risk Management and Internal
Control.
E3. Relationship with Auditors
The Company maintains a formal and transparent relationship with its external auditors, Messrs. Ernst & Young,
in seeking professional advice and ensuring compliance with the accounting standards of Malaysia. Matters
that require the Board’s attention are highlighted by the external auditors to the Audit Committee and the Board,
through the issuance of management papers and reports. The Audit Committee and external auditors exchange
information and advice, for achieving mutual understanding regarding important audit issues, risk evaluations
relating to internal control audits and other matters.
The role of the Audit Committee in relation to the external auditors is set out in the Report of the Audit Committee.
E4. Independence of Auditors
The Board recognizes the importance of the independence and capability of external auditors to bear on the
reliability and quality to the annual financial statements prepared for the stakeholders.
The Audit Committee annually reviews the appointment (resignation and dismissal, if any) of external auditors
and the audit fee; and recommends the same to the Board for consideration and approval.
On annual basis prior to the commencement of the audit engagement, through the Audit Planning Memorandum,
external auditors confirms to the Audit Committee on their independence in relation to the audit works to be
performed and their commitment to communicate to the Audit Committee on their independence status on
ongoing manner.
The Company will consider to formalise the policies and procedures to assess the suitability and independence
of external auditors in accordance to the Code.
E5. Audit Committee
The Audit Committee meets with the external auditors at least twice a year without the presence of the Executive
Directors and senior management staff. This encourages free and honest exchange of view and opinion between
both parties.
The engagement of external auditors for non-audit services is subject to the approval of the Audit Committee.
The Audit Committee will ensure effective orientation programs to support engagement of new Audit Committee
members.
The composition, terms of reference and a summary of activities of the Audit Committee are set out in the Report
of the Audit Committee.
This statement is made in accordance with a resolution of the Board dated 27 August 2014.
24
ANNUAL REPORT 2014
Additional Compliance Statement
Utilisation of Proceeds
During the financial year under review, there were no proceeds raised from any corporate proposal.
Share Buy-Back
During the financial year under review, the Company did not enter into any share buy-back transactions. As at 31 March
2014, the Company held a total of 637,000 treasury shares and none of the treasury shares were sold or cancelled.
Options, Warrants or Convertible Securities
During the financial year under review, the Company did not issue any options, warrants or convertible securities.
American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) Programme
During the financial year under review, the Company did not sponsor any ADR or GDR programme.
Imposition of Sanctions and/or Penalties
There were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by the
relevant regulatory bodies during the financial year under review.
Non-Audit Fees
The amount of non-audit fees paid and payable to the external auditors by the Group for the financial year ended 31 March
2014 is RM148,000.
Variation in Results
There were no material variation between the audited financial results for the financial year ended 31 March 2014 and the
unaudited financial results for the quarter and financial year ended 31 March 2014 released on 30 May 2014.
Profit Guarantees
The Company did not provide any profit guarantee nor is there any profit guarantee given to the Company during the
financial year under review.
Material Contracts
There were no material contracts (not being contracts entered into in the ordinary course of business), which have been
entered into by the Company and/or its subsidiaries involving Directors’ and major shareholders’ interests during the
financial year ended 31 March 2014.
Recurrent Related Party Transactions (“RRPT”)
The information on RRPT for the financial year ended 31 March 2014 is set out in the audited financial statements.
DIRECTORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
The Board is responsible for ensuring that the annual audited financial statements of the Company and the Group have
been properly drawn up in accordance with the provisions of the Companies Act 1965, applicable Financial Reporting
Standards in Malaysia and the Bursa Malaysia Securities Berhad Main Market Listing Requirements so as to give a true
and fair view of the state of affairs and of the results and cash flows of the Company and the Group, for the financial year
ended 31 March 2014.
In presenting the audited financial statements, the Directors have:
•
adopted appropriate accounting policies, consistently applied and supported by reasonable prudent judgement and
estimates and prepared on going concern basis; and
•
ensured that the Company and the Group have complied with applicable Financial Reporting Standards.
The Board has overall responsibility for taking such steps as are reasonably open to them to safeguard the assets of the
Company and the Group and to prevent and detect fraud and other irregularities.
MTD ACPI ENGINEERING BERHAD
25
Report of the Audit Committee
1.
MEMBERSHIP AND MEETINGS
The Audit Committee (“AC”) comprises the following members and details of attendance of each member at meetings
held during the financial year ended 31 March 2014 are as follows:
MemberNumber of Meetings
Held Attendance
Nik Din bin Nik Sulaiman
Chairman / Senior Independent Non-Executive Director
(Redesignated on 18 November 2013)
55
Dato’ Ir. Kalid bin Alias
Member / Independent Non-Executive Director
55
Dato’ Ir. A. Rashid bin Omar
Member / Independent Non-Executive Director
4*4
* Reflects the number of meetings held during the time the director held office
Dato’ Ir. A. Rashid bin Omar relinquished the position of Chairman of Audit Committee on 25 October 2013, and
subsequently reappointed as member of the Audit Committee on 18 February 2014.
2.COMPOSITION
2.1Composition
The AC shall be appointed by the Board of Directors of the Company (“Board”) from among the Board members
and shall comprise not fewer than three (3) members, all of whom shall be non-executive directors. The majority
of the AC shall be independent directors.
At least one (1) member of the AC shall be: a.
a member of the Malaysian Institute of Accountants (“MIA”); or
b.
if he is not a member of the MIA, he must have at least three (3) years of working experience and:
i.
ii.
c.
he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act
1967; or
he must be a member of one of the associations of accountants specified in Part II of the First Schedule
of the Accountants Act 1967; or
fulfils such other requirements* as prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa
Securities”).
The members of the AC shall elect a Chairman from amongst themselves who is an Independent Director. No
alternate Director of the Board shall be appointed as a member of the AC.
In the event of any vacancy in the AC resulting in non-compliance of Bursa Securities Main Market Listing
Requirements (“Listing Requirements”), the Board shall ensure that the vacancy is filled within three (3) months.
The Board shall review the term of office and performance of an AC and each of its members at least once every
three (3) years.
* (a)
(b)
26
a degree/masters/doctorate in accounting or finance and at least three (3) years’ post qualification experience in accounting or finance; or
at least seven (7) years’ experience being a chief financial officer of a corporation or having the function of being primarily responsible for the
management of the financial affairs of a corporation.
ANNUAL REPORT 2014
3.
TERMS OF REFERENCE
3.1Meetings
The AC shall meet at least four (4) times a year. In addition, the Chairman may call for additional meetings at
any time at the Chairman’s discretion. The AC may also invite any officer or employee of the Group to be in
attendance to assist in its deliberations. The AC shall meet with the external auditors without any executive board
member and management present at least twice a year and whenever deemed necessary.
3.2Quorum
The meetings shall have a quorum of two (2) members who are independent directors.
3.3Secretary
The Secretary of the AC shall be the Company Secretary.
The Secretary shall be responsible for drawing up the notice and agenda of meetings in consultation with the
Chairman and circulating it, supported by explanatory documentation to members of the AC prior to each meeting.
The Secretary shall also prepare the written minutes of the AC meetings and distribute to each members for
confirmation. The minutes of AC meetings shall be kept under the custody of the Secretary.
3.4Authority
The AC shall, in accordance with a procedure to be determined by the Board and at the expense of the Company,
a.
be authorised to investigate any activity within its terms of reference;
b.
have direct communication channels with both the external and internal auditors as well as employees of
the Group;
c.
have full and unrestricted access to any information pertaining to the Company or the Group;
d.
obtain outside legal or other independent professional advice and secure the attendance of outsiders with
relevant experience and expertise if it deems necessary;
e. be able to convene meetings with the external auditors, the internal auditors or both, excluding the
attendance of other directors and management, if necessary; and
f.
be able to make relevant reports when necessary to the relevant authorities if a breach of the Listing
Requirements occurs.
3.5 Duties and Responsibilities
a.Risk Management & Internal Control
•
to review the adequacy and effectiveness of the risk management, Group’s internal control system
and management information system;
•
to review the extent of compliance with established internal policies, standards, plans, procedures,
laws and regulations;
•
to recommend to the Board steps to improve the system of internal control derived from the findings of
the internal and external auditors and as recommended by the AC itself;
MTD ACPI ENGINEERING BERHAD
27
Report of the Audit Committee (Cont’d)
b.
Financial Reporting Review
To review the quarterly and annual financial statements prior to the approval by the Board, focusing
particularly on:
•
any changes in or implementation of new accounting policies and practices;
•
significant adjustments arising from the audits;
•
compliance with the applicable approved accounting standards, other statutory and legal requirements;
and
•
the going concern assumption;
c.External Audit
•
to review with the external auditors the nature and scope of the audit plan;
•
to assess the performance and effectiveness of the external auditors and make recommendations to
the Board on their appointment and removal;
•
to review the independence and objectivity of the external auditors and their services, including nonaudit services;
•
to review external auditors’ findings arising from audits, particularly any comments and responses
in management letters as well as the assistance given by the employees of the Group in order to be
satisfied that appropriate action is being taken;
•
to review with the external auditors the Statement on Risk Management and Internal Control of the
Group for inclusion in the annual report;
d.Internal Audit
28
•
to review with the internal auditors the nature and scope of the audit plan;
•
to review the competency and resources of the internal audit function, and that it has the necessary
authority to carry out its work;
•
to review and evaluate factors related to the independence of internal auditors and assist them in
preserving their independence;
•
to review internal audit programmes and findings arising from audits;
•
to review the performance of the internal audit function and report to the Board when necessary;
ANNUAL REPORT 2014
e.Audit Reports
•
to review the internal and external audit reports to ensure that appropriate and adequate remedial
actions are taken by management on significant lapses in controls and procedures that are identified;
f.Related Party Transactions
To review any related party transaction and conflict of interest situation that may arise within the Group
including any transaction, procedure or course of conduct that raises questions of management integrity;
g.Other Matters
4.
•
to prepare the annual AC report to the Board which includes the composition of the AC, its terms of
reference, number of meetings held, a summary of its activities and the existence of an internal audit
function and a summary of the activities of internal audit function for inclusion in the annual report; and
•
to carry out any other function that may be assigned by the Board when deemed necessary and
appropriate.
SUMMARY OF ACTIVITIES
During the financial year under review, the AC carried out its duties as set out in the terms of reference and the
activities are summarised as follows:
•
Reviewed the external auditors’ scope of work, their audit plans and strategies for the year presented by
representatives from the external auditors prior to the audit;
•
Reviewed with the external auditors on the results of their audit, the audited financial statements and the
management letter;
•
Assessed the independence and objectivity of the external auditors during the year, the AC also received from
the external auditors their written confirmation regarding their independence and the measures used to control
the quality of their work;
•
Evaluated the performance and effectiveness of the external auditors and made recommendations to the Board
on their appointment and remuneration;
•
Reviewed the quarterly financial statements and the year end financial statements of the Group before
recommending to the Board for approval;
•
In the review of the annual audited financial statements, the AC discussed with management and the external
auditors the accounting principles and standards that were applied and their judgement of the items that may
affect the financial statements;
•
Reviewed and approved the annual internal audit plan;
•
Reviewed and deliberated the internal audit reports tabled during the year, the audit recommendations and
management’s response to the recommendations;
MTD ACPI ENGINEERING BERHAD
29
Report of the Audit Committee (Cont’d)
5.
•
Monitored the corrective actions on audit findings identified by the Group IAD until all issues are resolved;
•
Reviewed the audit report on Information System Security of the Group Information Technology Environment;
•
Reviewed the Enterprise Risk Management report on Risk Action Implementation Process and Key Action Plans;
•
Reviewed the AC Report and Statement on Risk Management and Internal Control and made recommendations
to the Board for inclusion in the Annual Report; and
•
Reviewed related party transactions and recurrent related party transactions of the Company and of the Group.
INTERNAL AUDIT FUNCTION
The Internal Audit Function is carried out by Group Internal Audit Department (“Group IAD”) of AlloyMtd Group. Group
IAD assists the AC in discharging its duties and responsibilities, and is independent of the activities they audit.
During the period, the Group IAD had carried out audits according to the internal audit plan which had been approved
by the AC. Internal audits were carried out to provide assurance that internal controls are established and operating as
intended to achieve effective and efficient operations and adherence to applicable policies, guidelines and procedures.
In performing such reviews, recommendations for improvements and enhancements to the existing Internal Control
System and work processes are made.
Internal audit reports, incorporating audit recommendations and management’s responses were issued to the AC and
the management of the respective operations. The Management is responsible for ensuring that corrective actions are
taken within the required time frame. All findings identified by Group IAD are tracked and followed up on a quarterly
basis and the status of the implementation is reported to the AC accordingly.
The total cost incurred for the internal audit function of the Group in respect of the financial year ended 31 March 2014
amounted to RM89,500.00.
30
ANNUAL REPORT 2014
Statement on Risk Management and Internal Control
The Board of Directors of the Company (“Board”) is committed in maintaining a sound system of internal control and
is pleased to provide the following statement on the scope and nature of risk management and internal control for the
Company and its subsidiaries (“Group”) for the financial year ended 31 March 2014.
BOARD RESPONSIBILITY
The Board acknowledges that it is responsible for the Group’s Risk Management and Internal Control system (“Group
RMIC System”) to safeguard shareholder’s investments and the Group’s assets and for reviewing the adequacy and
integrity of the system. The Group RMIC System is for the purpose of managing the risk of the Group but does not eliminate
the risk of failure to achieve business objectives. It provides only reasonable but not absolute assurance against material
misstatement, loss or fraud.
The Board has implemented an ongoing process, for identifying, evaluating, monitoring and managing the significant
risks affecting the achievement of its business objectives throughout the period. The process is regularly reviewed by the
Board and accords with the Statement on Risk Management & Internal Control: Guidelines for Directors of Public Listed
Companies.
Management assists the Board in the implementation of the Board’s policies and procedures on risk and control by
identifying and assessing the risks faced, and in the design, operation and monitoring of suitable internal controls to
mitigate and control these risks.
The Board has received assurance from the President & Chief Executive Officer (“CEO”) and the Senior Vice President,
Finance & Treasury Division that the Group’s risk management and internal control system is operating adequately and
effectively, in all material aspects, based on the risk management and internal control system of the Group.
The Board is of the view that the risk management and internal control system in place for the year under review and up to
the date of issuance of the financial statements is adequate and effective to safeguard the shareholders’ investment, the
interest of customers, employees and other stakeholders, and the Group’s assets.
KEY RISK MANAGEMENT AND INTERNAL CONTROL PROCESSES
Risk Management
The Group has established an enterprise risk management (“ERM”) framework to proactively identify, evaluate and
manage key risks to an optimal level. In line with the Group’s commitment to deliver sustainable value, this framework
aims to provide an integrated and organised approach entity-wide. It outlines the ERM methodology which is in line with
the ISO31000, mainly promoting the risk ownership and continuous monitoring of key risks identified.
MTD ACPI Engineering Berhad (“MTDACPI”) has implemented and enhanced its ERM framework and processes which
has been adopted for implementation throughout the Group. This was conducted in line with the Principles and Guidelines
of ISO31000: Risk Management. The enhanced ERM framework has incorporated a well-structured systematic process to
identify, analyse and manage risks to an acceptable level for the achievement of MTDACPI’s strategic objectives.
Briefings on ERM are conducted for Senior Management as part of the Group’s efforts to instil a proactive risk management
culture and implement a proper ERM framework in the Group.
The context within which the Group manages the risks and key focus of accountability is as follows:
Strategic risks are risks primarily caused by events that are external to the Group, but have a significant impact on its
strategic decisions or activities. Accountability for managing strategic risks therefore rests with the Board and President
& CEO. The benefit of effectively managing strategic risks is that the Group can better forecast and quickly adapt to the
changing demands that are placed upon the Group. It also means that the Group is less likely to be affected by some
external event that calls for significant change.
MTD ACPI ENGINEERING BERHAD
31
Statement on Risk Management and Internal Control (Cont’d)
Operational risks are inherent in the ongoing activities within the different Divisions of the Group. Typically, some of the
risks cover costing management, credit, competency, quality, etc. Senior management needs ongoing assurance that
operational risks are identified and managed. Accountability for managing operational risks rests specifically with the
Heads of Divisions.
In this context, ERM aligns MTDACPI’s strategy, processes, people, technology and knowledge with the purpose of
evaluating and managing the risks that the Group faces as it creates value.
The Management Committee of MTDACPI has assumed the role of the Risk Management Committee (“RMC”). The
principal responsibilities of the RMC include the following:
•
Communicate requirements of the ERM Policy and ensure continuous enhancement of ERM;
•
Formulate and implement ERM mechanism to accomplish requirements of the ERM Policy;
•
Articulate and challenge risk ratings, control effectiveness, risk treatment options and risk action plans identified by
Risk Owners; and
•
Ensure that the ERM reports prepared are submitted to the Board in a timely manner, and flash reports are submitted
in the event of any risk(s) that require urgent attention.
The RMC is assisted by the Head of the Risk Management Division who facilitates the risk assessment process, by
performing independent enquiry on risk identification and risk ratings determination by the respective process owners (line
managers). The Head of the Risk Management Department also assists in the facilitation process for the development of
action plans to address key risks of the Group. Heads of Divisions are responsible for identifying, analysing and evaluating
risks, as well as developing, implementing and monitoring risk action plans and reporting all major risks to the RMC.
During the year, the status of key risk action plans of the Group and the respective Divisions were presented to the Board
on a half-yearly basis. The Board has assumed the oversight and strategic role for ERM.
Audit Committee
The Audit Committee (“AC”), which is chaired by a Senior Independent Non-Executive Director deliberates on findings and
recommendations for improvement proposed by the internal and external auditors. The AC also evaluates the adequacy
and effectiveness of the Group’s risk management and system of internal control. Apart from reviewing the annual audit
plan, the AC assesses the scope and quality of audit performed.
Further details on the AC are set out in the AC Report.
Internal Audit Function
The Internal Audit Function is carried out by the Group Internal Audit Department (“Group IAD”) of AlloyMtd Group. Group
IAD independently carries out its function and provides the AC and the Board with the assurance on the adequacy and
integrity of the system of internal control.
Group IAD reviews the internal control systems and procedures of the Group’s businesses based on the annual audit
plan. The annual audit plan is reviewed and approved by the AC and the findings of the audits are submitted to the AC for
review at their periodic meetings. Group IAD adopts a risk-based approach when establishing its audit plan and strategy.
Responses from Management and action plans are regularly reviewed and followed up by Group IAD and the AC.
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ANNUAL REPORT 2014
Other Key Elements of Internal Control
Apart from the above, the other key elements of the Group RMIC include:
•
Limits of authority are established to govern the management of financial and non financial approval limits;
•
Formal operating structure in place with clearly defined lines of responsibility and accountability;
•
Board Committees have been established to assist the Board in discharging its duties. The committee are:
-
-
-
-
Audit Committee
Nomination Committee
Remuneration Committee
Management Committee
•
Board Committees meet regularly to oversee the day-to-day operation and business affairs of the Group as well as
guiding, directing and monitoring the activities to achieve the corporate objectives and goals of the Group;
•
Policies and procedures for key processes are documented to provide guidance to all levels of staff. The policies and
procedures are reviewed and regularly updated when necessary;
•
Where appropriate, certain companies have the ISO accreditation for their operational processes;
•
Comprehensive operation and financial reviews by the Board vide the quarterly financial reports;
•
Strategic Business Plan and Annual Operating Budget for business review of current financial year performance
compared to the budget and previous financial year results, and projected three (3) years Strategic Business Plan
and Annual Operating Budget of AlloyMtd Group are presented to the Board and Management Committee annually,
for review, approval and adoption;
•
Provisions of regular and comprehensive information to management and employees;
•
Key Performance Indicators (“KPIs”) are used to measure staff performance annually;
•
Proper guidelines for hiring and termination of staff, and annual performance appraisal system are in place;
•
Training and development programmes are identified for employees to acquire the necessary knowledge and
competency to meet their performance and job expectations;
•
Whistle blowing policy is established to provide an avenue and a structured mechanism for employees to raise or
report concerns on any suspected wrongful activities or wrongdoing and to protect the value of integrity, transparency
and accountability in where the Group conducts its business and affairs;
•
Adequate insurance coverage protects against any material loss or damage of assets and resources of the Group
insured; and
•
Regular visits to operating units by senior management and internal auditors.
The Board is of the view that the system of risk management and internal control instituted throughout the Group is sound
and sufficient. All internal control weaknesses identified during the financial year under review have been or are being
addressed. Notwithstanding this, reviews of all control procedures will be continuously carried out to ensure the ongoing
effectiveness and adequacy of the system of risk management and internal control, so as to safeguard shareholders’
investment and the Group’s assets.
REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS
The external auditors have reviewed this Statement on Risk Management and Internal Control for inclusion in the annual
report for financial year ended 31 March 2014 and reported to the Board that no material issue has come to their attention
that causes them to believe that the statement is inconsistent with their understanding of the process adopted by the Board
in reviewing the adequacy and integrity of the system of internal control.
MTD ACPI ENGINEERING BERHAD
33
Nomination Committee Terms of Reference
1.0PURPOSE
1.1 This Terms of Reference defines the scope of responsibilities, duties and authority of the Nomination Committee,
established by the board of directors of MTD ACPI Engineering Berhad (“MTDACPI” or “Company”) [“Board”]. It
provides the framework on the functions of the Nomination Committee in dealing with its responsibilities, duties
and authority for the effective functioning of the Board of MTDACPI. This Terms of Reference is guided by
the best practices in the Malaysian Code on Corporate Governance 2012 [“Code”], Bursa Malaysia Securities
Berhad Main Market Listing Requirements (“Listing Requirements”) and statutory and regulatory requirements.
The role of the Nomination Committee is non-executive.
2.0OBJECTIVES
2.1 The Nomination Committee shall assist the Board to achieve its objectives of ensuring MTDACPI has a Board of
effective size, composition and commitment, to adequately discharge its responsibilities and duties.
3.0COMPOSITION
3.1 The Board shall elect the Nomination Committee members (“Members”) from amongst themselves, composed
exclusively of non-executive directors, a majority of whom must be independent. The term of office of the
Members shall be three (3) years and may be re-nominated and appointed by the Board from time to time.
4.0CHAIRMAN
4.1 The Chairman of the Nomination Committee (“NC Chairman”) should be the senior independent director identified
by the Board.
4.2 The role of the NC Chairman is to:
(a) ensure there is a vetting process to identify the best available candidate to be elected as member of the
Board and Board committees;
(b) lead governance issues, particularly the annual review of Board effectiveness, ensuring that the performance
of individual directors is independently assessed;
(c) determine the agenda for meetings of the Nomination Committee in conjunction with the secretary of the
Nomination Committee;
(d) chair meetings of the Nomination Committee and take reasonable steps for the proper functioning of the
Nomination Committee including the proper conduct of meetings and an appropriate level of discussion;
(e) take reasonable steps regarding the adequate flow of relevant information to the Nomination Committee;
(f) take reasonable steps to advise the Board on the Nomination Committee’s recommendations on matters
falling within the scope of the Nomination Committee’s responsibilities;
(g) review the minutes of meetings of the Nomination Committee for circulation to and approval of Nomination
Committee and sign the approved minutes for record; and
(h) act under delegation of the Nomination Committee.
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ANNUAL REPORT 2014
5.0SECRETARY
5.1 The company secretary of the Company (“Company Secretary”) shall be the secretary of the Nomination
Committee.
5.2 The Nomination Committee has access to the services of the Company Secretary on all Nomination Committee
matters.
5.3 The Company Secretary shall assist the NC Chairman of the Nomination Committee in planning the tasks of
the Nomination Committee including drawing up meeting agendas, maintenance of minutes, collection and
distribution of information and provision of any necessary practical support.
5.4 The Company Secretary must ensure that all decisions made on the appointment or re-appointment of directors,
evaluation of the performance of directors and senior management be properly recorded, minuted and kept in the
minutes book, both for the Company’s own records and for the purpose of meeting statutory obligations, as well
as obligations arising from the Listing Requirements or other statutory and regulatory requirements, if required.
6.0MEETINGS
6.1 The Nomination Committee will meet together for the despatch of business, adjourn and otherwise regulate their
meetings, at least twice a year or more frequently as deemed necessary.
6.2 The Company Secretary shall on the requisition of the members of the Nomination Committee summon a
meeting of the Nomination Committee. Reasonable notice of every Nomination Committee meeting shall be
given in writing except in the case of an emergency.
6.3 In the absence of the NC Chairman, the Members may elect from amongst themselves the chairman for the
Meeting who shall be an independent director.
6.4 The Nomination Committee may invite the President & Chief Executive Officer (“CEO”) and relevant employees,
such as the Head of Human Capital Division, to attend meetings, especially when matters such as succession
planning of senior executives, determining competency framework and identify gaps in competencies of directors
are discussed.
6.5 The meetings of the Nominating Committee shall be transparent, with all proceedings recorded and decisions
documented. The Board shall be kept aware of the committee’s activities by way of the committee minutes and/
or committee papers, being circulated.
7.0QUORUM
7.1 A quorum of Nomination Committee’s Meetings shall consist of two (2) Members, one of whom shall be an
independent director.
MTD ACPI ENGINEERING BERHAD
35
Nomination Committee Terms of Reference (Cont’d)
8.0RESPONSIBILITIES
8.1 The responsibilities of the Nomination Committee are to:
(a) review the suitability of potential candidates for directorship and senior management staff as well as,
membership of Board committees, and advise the Board on suitability for appointment as stated in this
Terms of Reference;
(b) review and assess the independence of the potential candidates for the position of independent directors
in terms of background, economic, family and work relationships, to bring independent and objective
judgements to the Board;
(c) regularly identify the skills and experience and other qualities including core competencies, which nonexecutive directors should bring to the Board;
(d) annually assess the effectiveness of the Board as a whole, the Board committees and the contribution of
each individual director, including CEO and senior management. Financial performance indicators may also
be used to assess the Board performance in view the Board is ultimately responsible for the performance
of the Company;
(e) assess the appropriate structure of the Board and Board committees from time to time or on an annual
basis, by considering:(i) the appropriate composition in terms of size, right mix of skill and experience with in depth industry
knowledge, for effective functioning of the Board and Board committees;
(ii) the number of directors who would represent shareholders other than the significant shareholders and
possible representation of interested groups of the Company;
(iii) the composition of independent directors and in compliance to Listing Requirements, Paragraph 15.02
(one third of the Board should comprised independent directors); and
(iv) the Board room diversity (nationality, age, culture, socio-economic background including gender
diversity) and steps are taken to ensure women candidates are sought as part of the recruitment
process.
(f) annually assess the independence of the independent directors, including the review of Independent
Directors Self-Assessment Form, to ensure:
(i)
they bring independent and objective judgement to Board deliberation;
(ii) there is no potential areas of conflict that may impair independence of the independent directors; and
(iii) the retention of independent directors in the Board beyond nine (9) years cumulative service, are
recommended for approval by shareholders at every annual general meeting with strong justification
otherwise, recommend to the Board the re-designation as non-independent directors;
(g) recommend a senior independent non-executive director to whom concerns of the independent nonexecutive directors and minority shareholders may be conveyed;
(h) recommend suitable candidates for nomination as members of the Board;
(i)
periodically review on succession planning for the Chairman of the Company, CEO and senior management
and work with the Board to evaluate potential successors;
(j)
recommend to the Board on re-election / re-appointment of directors who are subject to retirement by
rotation / re-appointment in the annual general meetings or on election of new directors to fill vacancies in
accordance with the statutory requirements as well as the Listing Requirements;
(k) facilitate Board induction and training programmes;
(l)
36
assure compliance to the Code, Listing Requirements, statutory and regulatory requirements; and disclosure
requirements are duly satisfied;
ANNUAL REPORT 2014
(m) ensure every director and alternate director attend the Mandatory Accreditation Programme;
(n) review, evaluate and determine the training needs of each director, and recommend suitable training
programmes for the directors to enhance his/her performance, to facilitate their discharge of duties;
(o) ensure there is relevant framework i.e. key performance indicators, to monitor executive directors and
senior management’s performance;
(p) review and make recommendations on any other matters related to nomination of directors and senior
management referred by the Board from time to time; and
(q) act in line with the directions of the Board.
9.0 NOMINATION OF DIRECTORS
9.1 Selection Criteria for New Directors
The Nomination Committee will identify individuals qualified to fill vacant positions based on the following criteria:
(a) Candidates must possess competencies, integrity and leadership skills required to direct and oversee the
Company’s management in the best interests of its shareholders, customers, employees, communities it
serves and other stakeholders;
(b) The suitability of the candidates would be based on the current needs of the Company and the Board,
including but not limited to specific business and financial expertise, to enhance the quality of decision
making. Experience as a director of public companies would be an added advantage;
(c) The gender, nationality, age, culture and socio-economic background of candidates to achieve boardroom
diversity and consequently, better decisions and performance of the Board;
(d) Candidates should be enthusiastic and excited about their service on the Board, willing to regularly attend
Board and Board committees meetings, participate in Board’s development programs, develop a strong
understanding of the Company, its businesses and requirements, contribute their time and knowledge to the
Company and be prepared to exercise their duties with skill and care to create value for the shareholders
and stakeholders;
(e) Candidates should declare their number of directorships held in other listed companies and/or external
appointments, and indicate their willingness to allocate sufficient time and commitment to the Company;
and
(f) Independent directors should be free of any relationship with the Company or its management that may
impair, or appear to impair, the director’s ability to make independent and objective judgments. Independent
directors must satisfy the definition and criteria for independence established by the Code and Listing
Requirements. No individual or group of individuals should dominate the Board, to ensure the interests of
minority shareholders are safeguarded.
9.2 Selection Process
Nomination Committee shall follow the following selection process for new directors:
(a) Candidates for election to the Board will be solicited by the Nomination Committee from sources deemed
reasonable by the Nomination Committee or nomination by shareholders;
(b) Potentially qualified candidates will be interviewed to determine their interest and capability to serve on the
Board; and
(c) The Nomination Committee will make a formal recommendation of the successful candidate to the Board
for consideration and approval.
MTD ACPI ENGINEERING BERHAD
37
Nomination Committee Terms of Reference (Cont’d)
9.3 Evaluation Criteria for Existing Directors
The Nomination Committee will continuously and on an annual basis evaluate the existing directors based on
the following criteria:
a.
Understanding the Company’s values, mission, and strategic and business plans, and reflect this
understanding on key issues throughout the year;
b. Possess integrity, commitment and ethics to behave honestly in all dealings and act honourably at all times;
c. Ability to ensure Company’s performance and conformance to the Code, Listing Requirements and
other statutory and regulatory requirements, vis a vis; understanding the application of the principles for
good governance and the role of the director; and add value to the organisation, within the context of the
stakeholders’ interests;
d. Ability to understand the potential impact on the organisation of trends, opportunities, issues and events,
manage priorities, and develop the optimum response consistent with the strategic capabilities of the
business;
e. Proven business acumen and ability to contribute to the organisation, to create significant shareholders’
value and increase shareholders’ wealth;
f. Ability to understand situations or key information to identify principal issues, use experience and sound
judgement to make appropriate decisions;
g. Be a team player and interacts well with fellow Board members and the management team, and actively
participate in the activities of the Board;
h. Express oneself clearly and effectively, both in written and oral communications, with ability to listen and
absorb information, express ideas and opinions in a way that ensures the message gets across effectively
and is appropriate to the audience, the situation and medium;
i. Ability to inspire commitment to the organisation’s vision and values, through the provision of consistent and
clear message to all stakeholders;
j. Must at least fulfil the minimum attendance at Board Meetings requirement set by the Listing Requirements;
k. Must not hold more than five (5) directorships in listed issuers pursuant to the Listing Requirements;
l.
Ability to devote/allocate sufficient time and commitment to the Company for performance of duties
effectively;
m. Ability to keep abreast of changes and future developments in the global economy, current development
in business environment and devote sufficient time for attendance of appropriate training programmes
annually;
n.
Ability of independent directors in contributing independent and objective judgements to the Board;
o. The tenure of an independent director should not exceed a consecutive service of nine (9) years or a
cumulative term of nine (9) years with intervals. In the event of any retention, it will be as follows:
38
•
in the capacity of a non-independent director; or
•
independent director is subject to shareholders’ approval at every annual general meeting with strong
justification; and
ANNUAL REPORT 2014
p. The positions of Chairman of the Company and CEO should be held by different individuals, and the
Chairman of the Company:
•
must be a non-executive and independent director of the Company; or
•
the Board must comprise a majority of independent directors where the Chairman of the Company is
not an independent director.
The Nomination Committee adopted the following forms for evaluation:
(i) Director Evaluation Form; and
(ii) Board/Board Committees Evaluation Form.
10.0RESOURCES AND AUTHORITY
10.1The Nomination Committee shall have the resources and authority appropriate to discharge its duties and
responsibilities detailed in this Terms of Reference without seeking approval of the Board or management.
Delegation of Authority
To the extent permitted by applicable law and the Listing Requirements, the Nomination Committee may at
its discretion, establish sub-committees consisting of one or more of its Members, and/or other directors and
management to carry out such duties as the Nomination Committee may delegate.
Resources
The Nomination Committee has the authority to engage such outside advisors, including legal counsel or other
experts, as it deems appropriate, and to approve the fees and expenses of such advisors.
11.0REVIEW AND REVISION OF THE TERMS OF REFERENCE
11.1This Terms of Reference shall be reviewed annually by the Nomination Committee and recommendation be
made to the Board for approval.
11.2The review of the Terms of Reference is to reflect changes to the Company’s circumstances and any changes to
the current and best practices of the Code, Listing Requirements and statutory requirements.
11.3Any revision to this Terms of Reference as proposed by the Nomination Committee and approved by the Board
shall form part of this Terms of Reference and this Terms of Reference shall be considered duly revised or
amended.
12.0APPROVAL AND ADOPTED
12.1This Terms of Reference was approved and adopted by the Board on 27 August 2014.
ENDORSED FOR AND ON BEHALF OF THE BOARD,
DATO’ IR. A. RASHID BIN OMAR
Chairman
MTD ACPI ENGINEERING BERHAD
27 August 2014
MTD ACPI ENGINEERING BERHAD
39
Remuneration Committee Terms of Reference
1.0PURPOSE
1.1 The Terms of Reference defines the scope of responsibilities and duties of the Remuneration Committee of the
Board of Directors of MTD ACPI Engineering Berhad (“MTDACPI” or “Company”) [“Board”] and serves as a
guidance to the Remuneration Committee in discharging their responsibilities pertaining to plans, policies and
practices in relation to remuneration and compensation of executive directors and senior management, within
the authority delegated by the Board.
2.0OBJECTIVES
2.1 The Remuneration Committee shall advise the Board on the appropriate compensation and benefit packages or
any other related issues, for the executive directors and senior management of MTDACPI to ensure:
(a) conformance to the best practices in the Malaysian Code on Corporate Governance 2012 [“Code”] and the
Remuneration policies;
(b) there is an appropriate remuneration framework to attract, retain and motivate the executive directors and
senior management of the Company, to enhance the Company’s long term profitability and value; and
(c) that the Company formulates remuneration policies that are aligned with the business strategy and long
term objectives of the Company, as determined by the Board.
3.0COMPOSITION
3.1 The Board shall elect the Remuneration Committee members (“Members”) from amongst themselves, composed
exclusively or a majority of non-executive directors. The term of office of the Members shall be three (3) years
and may be re-nominated and appointed by the Board from time to time.
3.2 The Board through the Nomination Committee, evaluates the performance of the Remuneration Committee and
its Members.
4.0CHAIRMAN
4.1 The Chairman of the Remuneration Committee must be an independent director approved by the Board.
4.2 The role of the Chairman of the Remuneration Committee is to:
(a) report formally to the Board on its proceedings after each meeting on all matters within its duties and
responsibilities;
(b) determine the agenda for meetings of the Remuneration Committee in conjunction with the Secretary of the
Remuneration Committee;
(c) chair meetings of the Remuneration Committee and take reasonable steps for the proper functioning of the
Remuneration Committee including the proper conduct of meetings and an appropriate level of discussion;
(d) take reasonable steps in ensuring adequate flow of relevant information to the Remuneration Committee;
(e) take reasonable steps to advise the Board on the Remuneration Committee’s recommendations on matters
falling within the scope of the Remuneration Committee’s responsibilities;
(f) review the minutes of meetings of the Remuneration Committee for circulation to and approval of
Remuneration Committee, and sign the approved minutes; and
(g) act under delegation of the Remuneration Committee.
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ANNUAL REPORT 2014
5.0SECRETARY
5.1 The Company Secretary of the Company shall be the Secretary of the Remuneration Committee.
5.2 The Remuneration Committee has access to the services of the Secretary on all Remuneration Committee
matters. The Secretary shall assist the Chairman of the Remuneration Committee in planning the task of the
Remuneration Committee including drawing up meeting agendas, maintenance of minutes, collection and
distribution of information and provision of any necessary practical support.
5.3 The Secretary must ensure that all decisions made on the remuneration packages of the executive directors and
senior management be properly recorded, minuted and kept in the minutes book for record.
6.0MEETINGS
6.1 The Remuneration Committee will meet together for the despatch of business, adjourn and otherwise regulate
their meetings, at least once a year or more frequently as deemed necessary.
6.2 The Secretary shall on the requisition of the Members summon a meeting of the Remuneration Committee.
Reasonable notice of every Remuneration Committee meeting shall be given in writing except in the case of an
emergency.
6.3 In the absence of the Chairman, the Members may elect from amongst themselves the chairman for the meeting
who shall be an independent director.
7.0QUORUM
7.1 A quorum of Remuneration Committee’s meetings shall consist of two (2) members, the majority shall be
independent Directors.
8.0RESPONSIBILITIES
8.1 The responsibilities of the Remuneration Committee are to:
(a) assist the Board to structure the component parts of remuneration, to ensure the executive directors
and senior management are fairly rewarded for their individual commitment and contribution towards the
Company, in line with the business strategies and objectives of the Company in enhancing its long term
profitability and value;
(b) assist the Board in its responsibilities to review the remuneration packages of the executive directors and
senior management including, benefits and stock option scheme (if any), with or without independent
professional advice, so as to be able to attract and retain the best with appropriate rewards based on their
achievement of corporate and business results;
(c) recommend to the Board the remuneration packages of the executive directors and senior management
which commensurate with the level of executive responsibilities in enhancing the performance of the
Company;
(d) review and make recommendations on any other matters related to remuneration referred by the Board
from time to time;
(e) assure compliance to the Code, statutory and regulatory requirements; and disclosure requirements are
duly satisfied; and
(f) act in line with the directions of the Board.
MTD ACPI ENGINEERING BERHAD
41
Remuneration Committee Terms of Reference (Cont’d)
9.0 RESOURCES AND AUTHORITY
9.1 The Remuneration Committee is authorised by the Board to:
(a) seek any information it requires from the management of the Company; and
(b) obtain at the Company’s expense, any outside independent advice including, legal or other professional
advice in carrying out its duties, as it deems appropriate.
10.0REVIEW AND REVISION OF THE TERMS OF REFERENCE
10.1The Terms of Reference shall be reviewed annually or as and when required by the Remuneration Committee
and recommendation be made to the Board for approval.
10.2The review of the Terms of Reference is to reflect changes to the Company’s circumstances and any changes to
the current and best practices of the Code.
10.3Any revision to this Terms of Reference as proposed by the Remuneration Committee and approved by the
Board shall form part of this Terms of Reference and this Terms of Reference shall be considered duly revised or
amended.
11.0APPROVAL AND ADOPTED
11.1This Terms of Reference was approved and adopted by the Board on 23 November 2013.
ENDORSED FOR AND ON BEHALF OF THE BOARD,
DATO’ IR. A. RASHID BIN OMAR
Chairman
MTD ACPI ENGINEERING BERHAD
23 November 2013
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ANNUAL REPORT 2014
Statement on Group Corporate Social Responsibility
As a multinational company based in
Malaysia, the AlloyMtd Group in which
MTDACPI is a member remains socially
mindful of its role as a corporate citizen
and continues to play its part in the
community that it operates in.
In the financial year 2014, we have taken a
conscious effort in our corporate social
responsibility (CSR) programmes to make
an impact to the workplace, marketplace,
community and environment.
SERVING THE COMMUNITY
We have a greater role to play and with the resources in place, we have the capacity to make a meaningful contribution
to the Malaysian society. The Group continues to be committed to serving the community and have implemented CSR
initiatives that are targeted at meeting the needs of the people.
Festive Goodies & Toll Discounts for Highway Users
It has been our annual tradition that we look forward to,
as we take the opportunity in conjunction with the festive
celebrations to give out goodies to the less fortunate.
During Chinese New Year this year, we celebrated with
the less fortunate by organising a get-together in Bentong
for PDK Ceria and PDK Harapan Kg. Perting. Meanwhile,
in the fasting month, we organised a breaking of fast
session with Tahfiz students as well as all our agencies
involved in operations.
As festive seasons are usually peak periods for highway
usage, we also offered toll discounts on our highways to
help ease the financial burden of our users. In conjunction
with Hari Merdeka, we gave out flags to highway users to
share the pride of independence. Also to instil the Merdeka
spirit among the young, we organised an educational trip
for school children to watch the Tanda Putera movie. It
was a huge success as the kids enjoyed the film, while
gaining a better understanding of our country’s history.
Safety Campaigns for Highway Users
As a responsible infrastructure conglomerate, safety is
one of our utmost priorities and we take the necessary
measures to organise safety campaigns, especially during
the festive seasons when the highway usage is at one of
its peak moments. In financial year 2014, we organised
safety campaign drives with authorities to engage with
highway users, cautioning them to be careful on the road
and staying alert while driving. Our Travel Time Advisory
(TTA) was used to educate them to plan their journey.
MTD ACPI ENGINEERING BERHAD
43
Statement on Group Corporate Social Responsibility (Cont’d)
ENHANCING WORKPLACE PRACTICES
The success of the business falls on the competencies of our people and it is the role of the company to
provide a conducive environment for growth and to ensure staff is progressing in terms of skill sets. As such,
we continue to organise relevant training programmes and engagement activities as the platform for their
growth as well as to build teamwork.
Training and Workshop for Skills Enhancement
To increase the level of professionalism and capabilities of our employees, there is a variety of training
programmes available throughout the year. Beginning with induction programme to targeted trainings, these
sessions are aimed to propel them to become important assets to the Group.
Engaging Employees for Unity
Through our social unit, Kelab Sukan AlloyMtd, we engage with our employees in various sports activities
that are aimed at building and strengthening relationships among colleagues. It was also a platform for
employees to engage with the community as they could organise various charity efforts to contribute back
to the society.
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ANNUAL REPORT 2014
BUILDING A REPUTATION IN THE MARKETPLACE
During the financial year, we have taken tangible initiatives to build and strengthen
our corporate reputation in the marketplace. In addition to adhering to ISO standards
and risk management best practices, we have engaged with our stakeholders to
build rapport and enhance understanding of the business. We also organised several
media engagements to inform the public on the Group’s activities.
Our reputation in the marketplace is further endorsed by our top position on the
Contractors’ Performance Assessment System (CONPAS) scoring, which is a monthly
evaluation system by MMC-Gamuda Joint Venture Sdn Bhd, the Project Delivery
Partner of the Klang Valley MRT. We have remained on the leader board and it’s an
acknowledgement from our client of our ability to deliver our job scope in a timely
manner.
GUARDING OUR ENVIRONMENT
Safeguarding the environment is a role that everyone must play and more so for an
infrastructure player like MTDACPI, as we work with the environment on a daily basis.
The sustainability of the environment ensures the long-term prospects of the business,
and in this regard, we have ensured that scrap metal is well disposed of following the
completion of projects. In addition, we also undertook measures to monitor the levels
of noise and water pollution before any project executions.
The Group is also mindful of slope stabilisation in every project and have taken
measures to mitigate the risk of landslide due to slopes instability. We enforced proper
scheduled monitoring and maintenance, as it is one of the most important tasks in
slope and structure management. Adequate monitoring and maintenance of natural
and undisturbed terrain is crucial to avoid deterioration that leads to unforeseen
circumstances and reduce the probability of slope instability. By doing so, it ensures
that the affected slopes remain stable.
Going forward, the Group will strengthen its CSR policy further and enforce its
implementation so to build stronger level of sustainability in the areas of community,
workplace, marketplace and the environment.
MTD ACPI ENGINEERING BERHAD
45
Analysis of Shareholdings
As at 31 July 2014
Authorised Share Capital : RM500,000,000.00
Issued and Fully Paid-up Share Capital : RM231,632,798.00
No. of Treasury Shares held : 637,000
Class of Shares : Ordinary Shares of RM1.00 each
Voting Rights : One vote per shareholder on a show of hands
or one vote per ordinary share on a poll
No. of Shareholders : 5,262
ANALYSIS BY SIZE OF SHAREHOLDINGS
Category No. of Holders Malaysian Foreign No. of Shares Malaysian Foreign Percentage (%)
Malaysian Foreign
Less than 100 shares 100 to 1,000 shares 1,001 to 10,000 shares 10,001 to 100,000 shares 100,001 to less than 5% of issued shares 5% and above of issued shares 259
2,117
1,902
798
104
3
2
21
39
14
3
–
8,455
85
981,788
10,390
8,654,660 161,000
26,127,450 502,600
38,958,361 1,040,400
154,550,609
–
0.004
0.425
3.747
11.311
16.865
66.906
*
0.004
0.070
0.218
0.450
–
TOTAL 5,183 79 229,281,323 1,714,475 99.258
0.742
* Negligible
DIRECTORS’ SHAREHOLDINGS
Directors Dato’ Dr. Azmil Khalili bin Dato’ Khalid Datin Nik Fuziah binti Tan Sri Nik Hussein
Direct No. of Percentage Shares (%) –
–
–
–
Notes:
(1) Deemed interested by virtue of his spouse’s substantial interest in Alloy Consolidated Sdn Bhd.
(2) Deemed interested by virtue of her substantial interest in Alloy Consolidated Sdn Bhd.
46
ANNUAL REPORT 2014
Indirect
No. of Percentage
Shares (%)
156,565,409(1) 156,565,409(2) 67.78
67.78
SUBSTANTIAL SHAREHOLDERS (EXCLUDING BARE TRUSTEES)
Shareholders DirectIndirect
No. of
Percentage
No. of
Percentage
Shares
(%)
Shares
(%)
MTD Equity Sdn Bhd (MTD Equity)
Metacorp Berhad (Metacorp)
Alloy Capital Sdn Bhd (ACSB)
Lambang Simfoni Sdn Bhd (Lambang Simfoni)
MTD Capital Bhd (MTD)
Nikvest Sdn Bhd (Nikvest)
Alloy Consolidated Sdn Bhd (Alloy)
Tan Sri Dr. Nik Hussain bin Abdul Rahman
Dato’ Dr. Azmil Khalili bin Dato’ Khalid
Haji Nik Fauzi bin Tan Sri Nik Hussein
Nik Faizul bin Tan Sri Nik Hussain
Datin Nik Fuziah binti Tan Sri Nik Hussein
Ruslan Sulaiman
88,000,000
27,254,610
39,295,999
– 2,014,800 – – – – – – – – 38.10
11.80
17.01
– 0.87 – – – – – – – – – –
– –
117,269,410(1)50.77
27,254,610(2)11.80
115,254,610(3)49.89
117,269,410(4)50.77
156,565,409(5)67.78
156,565,409(6)67.78
156,565,409(7)67.78
117,269,410(8)50.77
117,278,660(9)50.77
156,565,409(10)67.78
156,565,409(10)67.78
Notes:
(1) Deemed interested by virtue of its major shareholding in MTD.
(2) Deemed interested by virtue of its major shareholding in Metacorp.
(3) Deemed interested by virtue of the interests of its wholly-owned subsidiaries namely MTD Equity and Metacorp.
(4) Deemed interested by virtue of its major shareholding in MTD.
(5)
Deemed interested by virtue of the interests of its subsidiaries namely, MTD and ACSB. Alloy has direct shareholding of 26.01% and
indirect shareholding of 51.18% in MTD through its wholly-owned subsidiaries, ACSB (47.78%) and Alloy Concrete Engineering Sdn
Bhd (3.40%).
(6) Deemed interested by virtue of his interests in MTD through his children’s major shareholdings in Nikvest and his daughter’s
substantial interest in Alloy.
(7) Deemed interested by virtue of his spouse’s substantial interest in Alloy.
(8) Deemed interested by virtue of his major shareholding in Nikvest.
(9) Deemed interested by virtue of his spouse’s shareholding in MTD ACPI Engineering Berhad and his major shareholding in Nikvest.
(10) Deemed interested by virtue of their major shareholdings in Alloy.
THIRTY LARGEST SHAREHOLDERS
(without aggregating the securities from different securities accounts belonging to the same person)
No.
Shareholders
No. of Shares
Percentage (%)
1.
MTD Equity Sdn Bhd
88,000,000 2.
Alloy Capital Sdn Bhd
39,295,999 3.
Metacorp Berhad
27,254,610 4.
Alliancegroup Nominees (Tempatan) Sdn Bhd
2,946,700 17.01
11.80
1.28
Pledged Securities Account for Tan Kian Chuan (8059299)
5.
MTD Capital Bhd
2,014,800 6.
HSBC Nominees (Tempatan) Sdn Bhd
1,978,400 38.10
0.87
0.86
HSBC (M) Trustee Bhd for Pertubuhan Keselamatan Sosial (Pacific6939-407)
7.
Chua Hock Chin
1,513,911 8.
Tan Eng Hai
1,301,800 0.66
0.56
MTD ACPI ENGINEERING BERHAD
47
Analysis of Shareholdings (Cont’d)
As at 31 July 2014
No.
Shareholders
9.
BI Nominees (Tempatan) Sdn Bhd
No. of Shares
Percentage (%)
1,275,750 0.55
Langkah Taat (M) Sdn Bhd
10. Koh Kwee Hooi
1,160,800 11. Alliancegroup Nominees (Tempatan) Sdn Bhd
1,128,100 0.49
Pledged Securities Account for Tan Kian Aik (8058967)
12. TA Nominees (Tempatan) Sdn Bhd
1,000,000 0.43
Pledged Securities Account for Chong Khong Shoong 13. Tan Saw Gnoh
839,800 14. Choong Yean Yaw
774,100 15.Zuraida binti Md Adib
750,000 16. Lembaga Tabung Haji
732,500 17. Chua Hock Chin
657,800 18. Tiang Wan Chiong
595,100 19. HSBC Nominees (Asing) Sdn Bhd
590,400 0.36
0.34
0.32
0.32
0.28
0.26
0.26
Exempt An for Credit Suisse (SG Br-TST-Asing)
20. Amsec Nominees (Asing) Sdn Bhd
578,100 0.25
Amtrustee Berhad for Pacific Pearl Fund (UT-PM-PPF)
21. Teh Shiou Cherng
576,000 22. Mayban Nominees (Tempatan) Sdn Bhd
555,000 0.25
0.24
Pledged Securities Account for Chung Chit Min
23. Jeyapalan A/L Muthuthamby
531,600 24. Kenanga Nominees (Tempatan) Sdn Bhd
530,000 0.23
0.23
Pledged Securities Account for Low Sook Fun (009)
25. Mayban Nominees (Tempatan) Sdn Bhd
524,700 0.23
Tan Kian Ling
26. Lai Siew Khim
497,500 27. Soon Khiat Voon
496,000 28. Cimsec Nominees (Tempatan) Sdn Bhd
466,600 0.22
0.21
0.20
Pledged Securities Account for Chan Thye Thian (J Dedap-CL)
29. Ten Thye Kian
440,900 30. Citigroup Nominees (Tempatan) Sdn Bhd
387,700 0.19
0.17
Pledged Securities Account for Tan Kian Aik (740028152)
TOTAL
179,394,670 Notes:
The analysis of shareholdings is based on the Record of Depositors as at 31 July 2013, net of 637,000 treasury shares held.
48
0.50
ANNUAL REPORT 2014
77.66
Director’s Report and
Audited Financial Statements
50
Directors’ Report
54
Statement by Directors
54
Statutory Declaration
55
Independent Auditors’ Report
57
Statements of Comprehensive Income
58
Consolidated Statements of Financial Position
60
Statements of Financial Position
61
Consolidated Statement of Changes in Equity
62
Statement of Changes in Equity
63
Consolidated Statement of Cash Flows
65
Company Statement of Cash Flows
66
Notes to the Financial Statements
MTD ACPI ENGINEERING BERHAD
49
Directors’ Report
Directors’ report
The directors hereby present their report together with the audited financial statements of the Group and of the Company
for the financial year ended 31 March 2014.
Principal activities
The principal activities of the Company are investment holding and project management.
The principal activities of the subsidiaries are shown in Note 17 to financial statements.
There have been no significant changes in the nature of the principal activities of the subsidiaries during the financial year
other than as disclosed in Note 17 to the financial statements.
Results
Group RM’000 Loss net of tax (95,575)
(291,336)
Loss attributable to:
Owners of the parent
Non-controlling interests
(95,509)
(66)
(291,336)
–
(95,575)
(291,336)
Company
RM’000
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the
financial statements.
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were
not substantially affected by any item, transaction or event of a material and unusual nature other than disclosed in the
financial statements.
Dividends
The amount of dividends paid by the Company since 31 March 2013 were as follows:
RM’000
In respect of the financial year ended 31 March 2013 as reported in the
directors’ report of that year:
First and final dividend of 1 sen per share less 25% taxation, on 231,632,798
ordinary shares of RM1 each, less 637,000 treasury shares, approved
on 26 September 2013 and paid on 31 October 2013.
The directors do not recommend the payment of any dividend in respect of the current financial year.
50
ANNUAL REPORT 2014
1,732
Directors
The names of the directors of the Company in office since the date of the last report and at the date of this report are:
Dato’ Ir. A. Rashid bin Omar
Dato’ Dr. Azmil Khalili bin Dato’ Khalid
Datin Nik Fuziah binti Tan Sri Nik Hussein
Dato’ Ir. Kalid bin Alias
Nik Din bin Nik Sulaiman
Lee Leong Yow
Keith George Cowling
Md. Shukor bin Mohamed
Tan Sri Dr. Nik Hussain bin Abdul Rahman
(Appointed on 1 November 2013)
(Retired on 26 September 2013)
Directors’ benefits
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the
Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures
of the Company or any other body corporate.
Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than
benefits included in the aggregate amount of emoluments received or due and receivable by the directors as shown in Note
10 to the financial statements or the fixed salary of full time employees of the Company and related corporations) by reason
of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or
with a company in which he has a substantial financial interest, except as disclosed in Note 39 to the financial statements.
Directors’ interests
According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in
shares in the Company and its related corporations during the financial year were as follows:
Number of ordinary shares of RM1 each
1 April 2013/ Date of Appointment Acquired Sold 31 March
2014
The Company
Indirect interest
Dato’ Dr. Azmil Khalili bin Dato’ Khalid (1)
Datin Nik Fuziah binti Tan Sri Nik Hussein (2)
156,565,409 156,565,409 –
–
–
–
156,565,409
156,565,409
191,059,728 191,059,728 –
–
–
–
191,059,728
191,059,728
Direct interest
Datin Nik Fuziah binti Tan Sri Nik Hussein (5)
16,020,000 –
–
16,020,000
Indirect interest
Dato’ Dr. Azmil Khalili bin Dato’ Khalid (6)
16,020,000 –
–
16,020,000
Immediate holding company - MTD Capital Bhd
Indirect interest
Dato’ Dr. Azmil Khalili bin Dato’ Khalid (3)
Datin Nik Fuziah binti Tan Sri Nik Hussein (4)
Ultimate holding company
- Alloy Consolidated Sdn. Bhd.
MTD ACPI ENGINEERING BERHAD
51
Directors’ Report (Cont’d)
Directors’ interests (CONT’d)
(1)
Deemed interested by virtue of his spouse’s substantial interest in the Company through Alloy Consolidated
Sdn. Bhd..
(2)
Deemed interested by virtue of her substantial interest in the Company through Alloy Consolidated Sdn. Bhd..
(3)
Deemed interested by virtue of his spouse’s substantial interest in MTD Capital Bhd. through Alloy Consolidated
Sdn. Bhd..
(4)
Deemed interested by virtue of her substantial interest in MTD Capital Bhd. through Alloy Consolidated Sdn. Bhd..
(5)
By virtue of her direct substantial interest in Alloy Consolidated Sdn. Bhd..
(6)
Deemed interested by virtue of his spouse’s substantial interest in Alloy Consolidated Sdn. Bhd..
By virtue of Dato’ Dr. Azmil Khalili bin Dato’ Khalid and Datin Nik Fuziah binti Tan Sri Nik Hussein deemed interests in
shares in the Company, they are deemed to have interests in the shares of all subsidiaries of the Company to the extent
the Company has an interest.
None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related
corporations during the financial year.
Other statutory information
(a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company
were made out, the directors took reasonable steps:
(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of
provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that
adequate provision had been made for doubtful debts; and
(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in
the ordinary course of business had been written down to an amount which they might be expected so to realise.
(b) At the date of this report, the directors are not aware of any circumstances which would render:
(i)
the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements
of the Group and of the Company inadequate to any substantial extent; and
(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.
52
ANNUAL REPORT 2014
Other statutory information (CONT’D)
(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render
adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or
inappropriate.
(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report
or financial statements of the Group and of the Company which would render any amount stated in the financial
statements misleading.
(e) At the date of this report, there does not exist:
(i)
any charge on the assets of the Group or of the Company which has arisen since the end of the financial year
which secures the liabilities of any other person; or
(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.
(f) In the opinion of the directors:
(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period
of twelve months after the financial end of the year which will or may affect the ability of the Group or of the
Company to meet their obligations when they fall due; and
(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the
financial year and the date of this report which is likely to affect substantially the results of the operations of the
Group or of the Company for the financial year in which this report is made.
Significant events
Details of significant events are disclosed in Note 17(a), Note 19(a), and Note 44 to the financial statements.
Signed on behalf of the Board in accordance with a resolution of the directors dated 31 July 2014.
Dato’ Dr. Azmil Khalili bin Dato’ Khalid
Md. Shukor bin Mohamed
MTD ACPI ENGINEERING BERHAD
53
Statement by Directors
Pursuant to Section 169(15) of the Companies Act, 1965
We, Dato’ Dr. Azmil Khalili bin Dato’ Khalid and Md. Shukor bin Mohamed, being two of the directors of MTD ACPI
Engineering Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out
on pages 57 to 139 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial
Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position
of the Group and of the Company as at 31 March 2014 and of their financial performance and cash flows for the year then
ended.
The information set out in Note 45 on page 139 to the financial statements have been prepared in accordance with the
Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure
Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
Signed on behalf of the Board in accordance with a resolution of the directors dated 31 July 2014.
Dato’ Dr. Azmil Khalili bin Dato’ Khalid
Md. Shukor bin Mohamed
Statutory Declaration
Pursuant to Section 169(16) of the Companies Act, 1965
I, Dato’ Dr. Azmil Khalili bin Dato’ Khalid, being the director primarily responsible for the financial management of MTD ACPI
Engineering Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 57
to 139 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by
virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the
abovenamed Dato’ Dr. Azmil Khalili bin Dato’ Khalid
at Kuala Lumpur
on 31 July 2014
Before me,
54
ANNUAL REPORT 2014
Dato’ Dr. Azmil Khalili bin Dato’ Khalid
Independent Auditors’ Report
To the Members of MTD ACPI Engineering Berhad (Incorporated in Malaysia)
Report on the financial statements
We have audited the financial statements of MTD ACPI Engineering Berhad, which comprise the statements of financial
position as at 31 March 2014 of the Group and of the Company, and the statements of comprehensive income, statements
of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a
summary of significant accounting policies and other explanatory notes, as set out on pages 57 to 139.
Directors’ responsibility for the financial statements
The directors of the Company are responsible for the preparation of financial statements that give a true and fair view
in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the
requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the
directors determine is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement
of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company
as at 31 March 2014 and their financial performance and cash flows for the year then ended in accordance with Malaysian
Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 in Malaysia.
MTD ACPI ENGINEERING BERHAD
55
Independent Auditors’ Report (Cont’d)
To the Members of MTD ACPI Engineering Berhad (Incorporated 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 financial statements and the auditors’ reports of all the subsidiaries of which we have not
acted as auditors, which are indicated in Note 17 to the financial statements, being financial statements that have
been included in the consolidated financial statements.
(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial
statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the
consolidated financial statements and we have received satisfactory information and explanations required by us for
those purposes.
(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not
include any comment required to be made under Section 174(3) of the Act.
Other reporting responsibilities
The supplementary information set out in Note 45 on page 139 is disclosed to meet the requirement of Bursa Malaysia
Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with
Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure
Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants
(“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is
prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
Other matters
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies
Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of
this report.
Ernst & YoungNik Rahmat Kamarulzaman bin Nik Ab. Rahman
AF: 0039No. 1759/02/16(J)
Chartered AccountantsChartered Accountant
Kuala Lumpur, Malaysia
31 July 2014
56
ANNUAL REPORT 2014
Statements of Comprehensive Income
For the Financial Year ended 31 March 2014
Note
Revenue
Cost of sales
Group Company
2014 2013 2014 2013
RM’000 RM’000 RM’000
RM’000
4 328,185 5
(318,415)
270,003 (225,788)
5,000 –
5,000
–
Gross profit
9,770 44,215 5,000 5,000
Other income
6
13,535 25,243 5,983 6,043
Selling and marketing expenses
(8,470)
(10,426)
–
–
Administrative and other expenses
(106,689)
(33,953)
(296,070)
(21,900)
Finance costs
7
(4,330) (9,137) (5,215)
(7,009)
Share of results of associates
18
(2,611)
6,940 –
–
Share of results of joint ventures
19
(2,176)
6,075 –
–
(Loss)/profit before tax
Income tax expense
8 (100,971)
11
5,396 28,957 (13,884)
(290,302)
(1,034)
(17,866)
(542)
(Loss)/profit net of tax (95,575)
15,073 (291,336)
(18,408)
8,883 (6,365)
–
–
2,839 –
40 –
Total other comprehensive income/
(loss) for the year, net of tax 11,722 (6,365)
40 –
Total comprehensive (loss)/
income for the year, net of tax (83,853)
8,708 (291,296)
(18,408)
(95,509)
(66)
14,888 185 (291,336)
–
(18,408)
–
(95,575)
15,073 (291,336)
(18,408)
(84,163)
310 8,523 185 (291,296)
–
(18,408)
–
(83,853)
8,708 (291,296)
(18,408)
Other comprehensive income/(loss) to be
reclassified to profit or loss in subsequent periods:
Foreign currency translation
Other comprehensive income/(loss) not to be
reclassified to profit or loss in subsequent periods:
Actuarial gain on retirement benefit plan
(Loss)/profit attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive (loss)/profit attributable to:
Owners of the parent
Non-controlling interests
(Loss)/profit per share attributable
to equity holders of the Company (sen)
Basic
12
(41)
6
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
MTD ACPI ENGINEERING BERHAD
57
Consolidated Statements of Financial Position
As at 31 March 2014
Note
2014 RM’000 2013
RM’000
97,956 257 –
19,709 8,245 226 13,218 479 94,749
–
62,700
22,012
17,375
249
1,672
418
140,090 199,175
Current assets
Inventories25
38,539 Trade and other receivables
21
199,101 Gross amount due from customers for contracts
23
24,612 Other investments
20
89 Other current assets
22
1,466 Income tax recoverable
3,359 Cash and bank balances
26
34,023 47,067
170,605
23,745
88
3,090
1,448
56,576
301,189 Non-current asset held for sale
27
–
302,619
275
301,189 302,894
Total assets
441,279 502,069
Assets
Non-current assets
Property, plant and equipment
Investment property
Goodwill
Investments in associates
Investment in joint ventures
Other investments
Trade receivables
Deferred tax assets
58
ANNUAL REPORT 2014
14
15
16
18
19
20
21
24
Note
2014 RM’000 2013
RM’000
Current liabilities
Defined benefit plan
30
1,397 Loans and borrowings
31
52,979 Trade and other payables
33
252,920 Gross amount due to customers for contract
23
19,326 Provisions
34 1,138 Income tax payable
52 238
57,566
223,252
20,608
815
6,894
327,812 309,373
Equity and liabilities
Net current liabilities
(26,623)
(6,479)
Non-current liabilities
Defined benefit plan
Loans and borrowings
Deferred tax liabilities
Trade payables
10,056 –
137 16,032 13,595
177
1,831
4,266
26,225 19,869
Total liabilities
354,037 329,242
Net assets
87,242 172,827
30
31
24
33
Equity attributable to equity holders of the Company
Share capital
28
231,633 Treasury shares
28
(1,905)
Reserves29
(153,740)
231,633
(1,905)
(67,845)
75,988 161,883
Non-controlling interests 11,254 10,944
Total equity
87,242 172,827
Total equity and liabilities
441,279 502,069
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
MTD ACPI ENGINEERING BERHAD
59
Statements of Financial Position
As at 31 March 2014
Note
2014 RM’000 2013
RM’000
1,487 70,180 197 1,550
141,118
221
71,864 142,889
Current assets
Other receivables
21
Other current assets
22
Income tax recoverable
Cash and bank balances
26
153,828 14 1,083 2,967 379,686
32
1,208
1,117
157,892 382,043
Total assets
229,756 524,932
Company
Assets
Non-current assets
Property, plant and equipment
Investments in subsidiaries
Other investments
14
17
20
Equity and liabilities
Current liabilities
Loans and borrowings
Other payables
Defined benefit plan
4,403 152,137 84 4,400
154,207
–
156,624 158,607
Net current assets
1,268
223,436
Non-current liabilities
Defined benefit plan
Deferred tax liabilities
31
33
30
204 102 303
168
306 471
Total liabilities
156,930 159,078
Net assets
72,826 365,854
Equity attributable to equity holders of the Company
Share capital
Treasury shares
Reserves
231,633
(1,905)
136,126
30
24
28
231,633 28
(1,905)
29 (156,902)
Total equity
72,826
365,854
Total equity and liabilities
229,756 524,932
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
60
ANNUAL REPORT 2014
Consolidated Statement of Changes in Equity
For the Financial Year ended 31 March 2014
Attributable to equity holders of the parent
Non–distributable reserves
Foreign
Capital currency Non–
Share Treasury Share redemption translation Other Accumulated controllingTotal
capital shares premium reserve reserve reserves lossesTotal interests
equity
(Note 28) (Note 28) (Note 28(a)) (Note 28(b)) (Note 28(c)) (Note 28(d))
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Opening balance
at 1 April 2012
231,633 (1,905)
108,138 90 4,849 29,258 (216,985)
155,078 10,759 165,837
–
–
–
–
(6,365)
–
14,888 8,523 185 8,708
–
–
–
–
–
14 –
14 –
14
–
–
–
–
–
–
(1,732)
(1,732)
–
(1,732)
–
–
–
–
–
14 (1,732)
(1,718)
–
(1,718)
Closing balance
at 31 March 2013
231,633 (1,905)
108,138 90 (1,516)
29,272 (203,829)
161,883 10,944 172,827
Opening balance
at 1 April 2013
231,633 (1,905)
108,138 90 (1,516)
29,272 (203,829)
161,883 10,944 172,827
–
–
–
–
8,922 –
(93,085)
(84,163)
310 (83,853)
Total comprehensive
income
Transactions with
owners
Share of associate’s
capital reserve
Dividends on ordinary
shares (Note 13)
Total transactions
with owners Total comprehensive
income
Transactions
with owners
Share of associate’s
capital reserve
Dividends on ordinary
shares (Note 13)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,732)
(1,732)
–
(1,732)
Total transactions
with owners –
–
–
–
–
–
(1,732)
(1,732)
–
(1,732)
231,633 (1,905)
108,138 90 7,406 29,272 (298,646)
75,988 11,254 87,242
Closing balance
at 31 March 2014
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
MTD ACPI ENGINEERING BERHAD
61
Statement of Changes in Equity
For the Financial Year ended 31 March 2014
Attributable to equity holders of the parent
Non-distributable reserves
Retained
Capitalearnings/
Share Treasury Share redemption (AccumulatedTotal
capital shares premium reserve losses)
equity
(Note 28) (Note 28) (Note 28(a)) (Note 28(b)) (Note 28(e))
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Company
Opening balance at 1 April 2012
Total comprehensive loss
Dividends on ordinary shares (Note 13)
231,633 –
–
(1,905)
–
–
108,138 –
–
90 –
–
48,038 (18,408)
(1,732)
385,994
(18,408)
(1,732)
Closing balance at 31 March 2013
231,633 (1,905)
108,138 90 27,898 365,854
Opening balance at 1 April 2013
Total comprehensive loss
Dividends on ordinary shares (Note 13)
231,633 –
–
(1,905)
–
–
108,138 –
–
90 –
–
27,898 (291,296)
(1,732)
365,854
(291,296)
(1,732)
Closing balance at 31 March 2014
231,633 (1,905)
108,138 90 (265,130)
72,826
The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
62
ANNUAL REPORT 2014
Consolidated Statement of Cash Flows
For the Financial Year ended 31 March 2014
2014
2013
NoteRM’000
RM’000
Operating activities
(Loss)/profit before tax
Adjustments for:
Interest income
6
Impairment losses on plant and equipment
8
Impairment losses on goodwill
8
Depreciation of property, plant and equipment
8
Depreciation capitalised in construction costs
14 Depreciation of investment properties
8
Property, plant and equipment written off
8
Loss on disposals of property, plant and equipment
8
Loss on disposals of asset held for sale
8
Net impairment losses on financial assets
8
Net reversal of allowance for impairment loss of
- Property, plant and equipment
6
Bad debts written off
8
Provision for diminution in investments
8
Fair value gain on other investments
6
Inventories written off
8
Net reversal of allowance for impairment loss of
- Non-current trade receivables
6
Fair value adjustments on trade payables
6
Provisions
8
Reversal of provisions
Interest expense
7
Net unrealised foreign exchange gain
6
Gain on disposal of plant and equipments
6
Net unrealised foreign exchange loss
Increase in liability for retirement benefit obligations
9
Share of results of associates
Share of results of joint ventures
(100,971)
28,957
(514)
1,921 62,700 6,668 70 18 35 –
–
10,240 (786)
–
216
8,170
141
–
794
573
1,477
1,763
–
8,756 24 (2)
2,170 (130)
383
40
–
4,998
(507)
(2,815)
323 –
4,534 (465)
(528)
4,727 1,076 2,611 2,176 (93)
–
394
(34,799)
10,702
–
–
167
964
(6,940)
(6,075)
Total adjustments
103,218 (18,041)
Operating cash flows before changes in working capital
2,247 10,916
MTD ACPI ENGINEERING BERHAD
63
Consolidated Statement of Cash Flows (Cont’d)
For the Financial Year ended 31 March 2014
2014
2013
NoteRM’000
RM’000
Operating cash flows before changes in working capital (cont’d)
2,247 Changes in working capital
Inventories
6,358 Trade and other receivables
(57,861)
Other current assets
1,624 Trade and other payables
18,293 Amount due from/(to) customers for contract
(2,149)
10,916
1,295
(27,008)
(1,846)
58,426
(10,693)
Total changes in working capital
(33,735)
20,174
Cash flows from operations
Retirement benefits paid
30 Net tax received/(paid)
(31,488)
(617)
(5,128)
31,090
(305)
1,720
Net cash flows (used in)/generated from operating activities
(37,233)
32,505
Investing activities
Interest received
310 Purchase of property, plant and equipment
14 (11,962)
Proceeds from disposals of property, plant and equipment
585 Proceed from disposal of non-current asset held held for sale
–
Recoupment from investment in joint venture
2,873 Capital injection in joint venture
(1,920)
Dividends received from joint venture
6,000 786
(3,723)
1,342
12,453
–
–
–
Net cash flows (used in)/generated from investing activities
(4,114)
10,858
Financing activities
Dividends paid on ordinary shares
(1,732)
Interest paid
(3,805)
Repayment of obligations under finance leases
(251)
Net repayment of revolving credits
(5,294)
Repayment of term loan
(697)
Repayment of banker’s acceptance
–
Advances from immediate holding company
20,500 (1,732)
(6,487)
(236)
(9,132)
(2,435)
(5,396)
–
Net cash flows generated from/(used in) financing activities
8,721 (25,418)
Net (decrease)/increase in cash and cash equivalents
(32,626)
17,945
Effects of exchange rate changes 8,595 Cash and cash equivalents at 1 April
52,459 (8,342)
42,856
Cash and cash equivalents at 31 March
52,459
26 28,428 The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
64
ANNUAL REPORT 2014
Company Statement of Cash Flows
For the Financial Year ended 31 March 2014
2014
2013
NoteRM’000
RM’000
Operating activities
Loss before tax
Adjustments for:
Dividend income
Depreciation of property, plant and equipment
Increase in liability for retirement benefit obligations
Interest expense
Interest income
Impairment of amount due from subsidiaries
Impairment of investment in subsidiaries
Provision for diminution in investments
4
8
9
7
6
8
8
8
(290,302)
(17,866)
(5,000)
66 25 5,215 (85)
218,997 70,938 24 (5,000)
70
15
7,009
(49)
15,911
–
40
Total adjustments
290,180 17,996
Operating cash flows before changes in working capital
(122)
130
Changes in working capital
Trade and other receivables
Other current assets
Trade and other payables
6,871 18 (2,070)
7,038
2
(2,003)
Total changes in working capital
4,819 5,037
Cash flows from operations
4,697 Tax paid
(1,480)
Tax refund
506 5,167
(1,442)
–
Net cash flows generated from operating activities
3,723 3,725
Investing activities
Dividend received from subsidiaries
5,000 Interest received
74 Purchase of property, plant and equipment
14 (3)
5,000
49
(3)
Net cash flows generated from investing activities
5,071 5,046
Financing activities
Dividends paid on ordinary shares
(1,732)
Advances from immediate holding company
20,500 Repayment of advances from subsidiary
(20,500)
Interest paid
(5,215)
Net cash flows used in financing activities
(1,732)
–
–
(7,009)
(6,947)(8,741)
Net increase in cash and cash equivalents
1,847 Cash and cash equivalents at 1 April
(1,783)
30
(1,813)
Cash and cash equivalents at 31 March (1,783)
26 64 The accompanying accounting policies and explanatory notes form an integral part of the financial statements.
MTD ACPI ENGINEERING BERHAD
65
Notes to the Financial Statements
31 March 2014
1.Corporate information
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main
Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at 1, Jalan Batu Caves,
68100 Batu Caves, Selangor Darul Ehsan.
The principal activities of the Company are investment holding and project management. The principal activities of the
subsidiaries are as set out in Note 17. There have been no significant changes in the nature of the principal activities
during the year other than as disclosed in Note 17 to the financial statements.
The immediate and ultimate holding company of the Company is MTD Capital Bhd. and Alloy Consolidated Sdn.
Bhd., both of which are incorporated and domiciled in Malaysia. Related corporations are companies within the Alloy
Consolidated Sdn. Bhd. Group.
The financial statements, which are presented in Ringgit Malaysia, were authorised for issue by the Board of Directors
in accordance with a resolution of the directors on 31 July 2014.
2.Summary of significant accounting policies
2.1Basis of preparation
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian
Financial Reporting Standards (“MFRS”) as issued by Malaysia Accounting Standards Board (“MASB”),
International Financial Reporting Standards (“IFRS”) and the requirements of the Companies Act, 1965
in Malaysia.
The financial statements of the Group and of the Company have been prepared on the historical cost basis
unless otherwise indicated in the accounting policies below and are presented in Ringgit Malaysia (RM).
Whilst the Group’s current liabilities exceeded their current assets by RM26,623,000 as at 31 March 2014, the
Directors are of the view that no material uncertainty relating to these conditions exists that may cast significant
doubt on the Group’s ability to continue as a going concern. The Directors believe that the Group is able to
realize their assets and discharge their liabilities in the normal course of business and that the financial position
will improve through future operating profits and cash flows. The ultimate holding company and the immediate
holding company have also given an irrevocable undertaking to continue to provide adequate funding to the
Group as and when required for at least the next twelve months from the reporting date so as to enable the
Group to meet their obligations as and when they fall due. In addition, these holding companies have agreed
not to demand repayment of the amounts owing to them by the Group within the next twelve months from
reporting date.
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ANNUAL REPORT 2014
2.Summary of significant accounting policies (CONT’D)
2.2Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year except as follows:
On 1 April 2013, the Group and the Company adopted the following new and amended MFRSs and IC
Interpretations mandatory for their annual financial periods beginning on or after 1 April 2013.
Effective for annual
periods beginning
Description
on or after
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Amendments to MFRS 101: Presentation of Items of Other Comprehensive Income
MFRS 3 Business Combinations
MFRS 127 Consolidated and Separate Financial Statements
MFRS 10: Consolidated Financial Statements
MFRS 11: Joint Arrangements
MFRS 12: Disclosure of Interests in Other Entities
MFRS 13: Fair Value Measurement
MFRS 119: Employee Benefits
MFRS 127: Separate Financial Statements
MFRS 128: Investments in Associates and Joint Ventures
Amendments to MFRS 7: Disclosures - Offsetting Financial Assets
and Financial Liabilities
Amendments to MFRS 10: Consolidated Financial Statements: Transition Guidance
Amendments to MFRS 11: Joint Arrangements: Transition Guidance
Amendments to MFRS 12: Disclosure of Interests in Other Entities: Transition Guidance
1 July 2012
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
Adoption of the above standards and interpretations did not have any effect on the financial performance or
position of the Group and the Company except for those described below:
MFRS 10 Consolidated Financial Statements
MFRS 10 replaces part of MFRS 127 Consolidated and Separate Financial Statements that deals with
consolidated financial statements and IC Interpretation 112 Consolidation – Special Purpose Entities.
Under MFRS 10, an investor controls an investee when (a) the investor has power over an investee, (b) the
investor has exposure, or rights, to variable returns from its investment with the investee, and (c) the investor
has ability to use its power over the investee to affect the amount of the investor’s returns. Under MFRS 127
Consolidated and Separate Financial Statements, control was defined as the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
MFRS 10 includes detailed guidance to explain when an investor that owns less than 50 per cent of the voting
shares in an investee has control over the investee. MFRS 10 requires the investor to take into account all
relevant facts and circumstances, particularly the size of the investor’s holding of voting rights relative to the size
and dispersion of holdings of the other vote holders. The application of MFRS 10 has no impact on the Group’s
accounting for its investees.
MFRS 11: Joint Arrangements
MFRS 11 replaces MFRS 131: Interests in Joint Ventures and IC Interpretation 113: Jointly-Controlled Entities Non-monetary Contributions by Ventures.
The classification of joint arrangements under MFRS 11 is determined based on the rights and obligations of
the parties to the joint arrangements by considering the structure, the legal form, the contractual terms agreed
by the parties to the arrangement and when relevant, other facts and circumstances. Under MFRS 11, joint
arrangements are classified as either joint operations or joint ventures.
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights
to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement
whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.
MTD ACPI ENGINEERING BERHAD
67
Notes to the Financial Statements (Cont’d)
31 March 2014
2.Summary of significant accounting policies (CONT’D)
2.2Changes in accounting policies (Cont’d)
MFRS 11: Joint Arrangements (Cont’d)
MFRS 11 removes the option to account for jointly controlled entities (“JCE”) using proportionate consolidation.
Instead, JCE that meet the definition of a joint venture must be accounted for using the equity method.
The application of this new standard has no significant impact the financial position of the Group as the Group
has adopted equity accounting.
MFRS 12 Disclosures of Interests in Other Entities
MFRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and
structured entities. A number of new disclosures are required. This standard affects disclosures only and has no
impact on the Group’s financial position or performance.
MFRS 13 Fair Value Measurement
MFRS 13 establishes a single source of guidance under MFRS for all fair value measurements. MFRS 13 does
not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value
under MFRS. MFRS 13 defines fair value as an exit price. As a result of the guidance in MFRS 13, the Group
re-assessed its policies for measuring fair values, in particular, its valuation inputs such as non-performance risk
for fair value measurement of liabilities. MFRS 13 also requires additional disclosures.
Application of MFRS 13 has not materiality impacted the fair value measurement of the Group. Additional
disclosures where required, are provided in the individual notes relating to the assets and liabilities whose fair
values were determined.
Amendments to MFRS 101: Presentation of Items of Other Comprehensive Income
The amendments to MFRS 101 introduce a grouping of items presented in other comprehensive income. Items
that will be reclassified (“recycled”) to profit or loss at a future point in time (eg. net loss or gain on available-forsale financial assets) have to be presented separately from items that will not be reclassified (eg. revaluation
of land and buildings). The amendments affect presentation only and have no impact on the Group’s financial
position or performance.
MFRS 119: Employee Benefits
The most significant change relates to the accounting for changes in defined benefit obligations and plan assets.
The amendments require the recognition of changes in defined benefit obligations and in fair value of plan assets
when they occur, and hence eliminate the “corridor approach” as permitted under the previous version of MFRS
119 and accelerate the recognition of past service costs. The amendments require all actuarial gains and losses
to be recognised immediately through other comprehensive income in order for the net pension asset or liability
recognised in the consolidated statement of financial position to reflect the full value of the plan deficit or surplus.
The amendments to MFRS 119 require retrospective application with certain exceptions. The application of the
amendments did not have any material impact on the financial position of the Group
MFRS 127: Separate Financial Statements
As a consequence of the new MFRS 10 and MFRS 12, MFRS 127 is limited to accounting for subsidiaries, jointly
controlled entities and associates in separate financial statements.
MFRS 128: Investments in Associates and Joint Ventures
As a consequence of the new MFRS 11 and MFRS 12, MFRS 128 is renamed as MFRS 128: Investments in
Associates and Joint Ventures. This new standard describes the application of the equity method to investments
in joint ventures in addition to associates.
68
ANNUAL REPORT 2014
2.Summary of significant accounting policies (CONT’D)
2.3Standards and interpretations issued but not yet effective
The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group’s
and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these
standards, if applicable, when they become effective.
Effective for annual
periods beginning
Description
on or after
•
•
•
•
•
•
•
•
•
•
•
Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities
1 January 2014
Amendments to MFRS 10, MFRS 12 and MFRS 127: Investment Entities 1 January 2014
Amendments to MFRS 136: Recoverable Amount Disclosures for Non-Financial Assets 1 January 2014
Amendments to MFRS 139: Novation of Derivatives and
Continuation of Hedge Accounting
1 January 2014
IC Interpretation 21: Levies
1 January 2014
Amendments to MFRS 119: Defined Benefit Plans: Employee Contributions
1 July 2014
Annual Improvements to MFRSs 2010- 2012 Cycle
1 July 2014
Annual Improvements to MFRSs 2011- 2013 Cycle
1 July 2014
MFRS 9: Financial Instruments (IFRS 9 issued by IASB in November 2009)
To be announced
MFRS 9: Financial Instruments (IFRS 9 issued by IASB in October 2010)
To be announced
MFRS 9: Financial Instruments: Hedge Accounting and
amendments to MFRS 9, MFRS 7 and MFRS 139
To be announced
The Board of Directors is currently assessing the impact on the financial statements in the period of initial
application arising from the adoption of the above standards and interpretations.
MFRS 9: Financial Instruments
MFRS 9 reflects the first phase of work on the replacement of MFRS 139 and applies to classification and
measurement of financial assets and financial liabilities as defined in MFRS 139. The standard was initially
effective for annual periods beginning on or after 1 January 2013, but the Amendments to MFRS 9: Mandatory
Effective Date of MFRS 9 and Transition Disclosures, issued in March 2012, moved the mandatory effective
date to 1 January 2015. Subsequently, on 14 February 2014, it was announced that the new effective date
will be decided when the project is closer to completion. The adoption of this first phase of MFRS 9 will have
an effect on the classification and measurement of the Group’s financial assets but will potentially have no
impact on classification and measurements of the Group’s financial liabilities. The Group will quantify the effect
in conjunction with other phases, when the final standard including all phases is issued.
2.4Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries
as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated
financial statements are prepared for the same reporting date as the Company. Consistent accounting policies
are applied to like transactions and events in similar circumstances.
The Group controls an investee if and only if the Group has all the following:
(i)
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of
the investee);
(ii) Exposure, or rights, to variable returns from its investment with the investee; and
(iii) The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting rights of an investee, the Group considers the following in
assessing whether or not the Group’s voting rights in an investee are sufficient to give it power over the investee:
MTD ACPI ENGINEERING BERHAD
69
Notes to the Financial Statements (Cont’d)
31 March 2014
2.Summary of significant accounting policies (CONT’D)
2.4Basis of consolidation (Cont’d)
(i)
The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other
vote holders;
(ii) Potential voting rights held by the Company, other vote holders or other parties;
(iii) Rights arising from other contractual arrangements; and
(iv) Any additional facts and circumstances that indicate that the Company has, or does not have, the current
ability to direct the relevant activities at the time that decisions need to be made, including voting patterns
at previous shareholders’ meetings.
Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains
and losses resulting from intra-group transactions are eliminated in full.
Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance. Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the
subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting
difference is recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate
of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous
carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised
in profit or loss. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive
income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to
retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is
regarded as the cost on initial recognition of the investment.
Business combinations
Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the
amount of any non-controlling interests in the acquiree. The Group elects on a transaction-by-transaction basis
whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate share
of the acquiree’s identifiable net assets. Transaction costs incurred are expensed and included in administrative
expenses.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition
date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset
or liability, will be recognised in accordance with MFRS 139 either in profit or loss or as a change to other
comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured.
Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not
fall within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for apprpriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by
the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held
equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the
amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If
this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised
in profit or loss. The accounting policy for goodwill is set out in Note 2.9.
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ANNUAL REPORT 2014
2.Summary of significant accounting policies (CONT’D)
2.5Transaction with non-controlling interests
Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to the owners
of the Company, and is presented separately in the consolidated statement of comprehensive income and within
equity in the consolidated statement of financial position, separately from equity attributable to owners of the
Company.
Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are
accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference
between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid
or received is recognised directly in equity and attributed to owners of the parent.
Total comprehensive income within a subsidiary is attributable to the non-controlling interest even if it results in
a deficit balance.
2.6Foreign currency
(a)Functional and presentation currency
The individual financial statements of each entity in the Group are measured using the currency of the
primary economic environment in which the entity operates (“the functional currency”). The consolidated
financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional
currency.
(b)Foreign currency transactions
Transactions in foreign currencies are measured in the respective functional currencies of the Company
and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates
approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign
currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated
in foreign currencies that are measured at historical cost are translated using the exchange rates as at the
dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair
value are translated using the exchange rates at the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items or on translating monetary items at the
reporting date are recognised in profit or loss except for exchange differences arising on monetary items
that form part of the Group’s net investment in foreign operations, which are recognised initially in other
comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign
currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the
foreign operation.
Exchange differences arising on the translation of non-monetary items carried at fair value are included in
profit or loss for the period except for the differences arising on the translation of non-monetary items in
respect of which gains and losses are recognised directly in equity. Exchange differences arising from such
non-monetary items are also recognised directly in equity.
(c)Foreign operations
The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the
reporting date and income and expenses are translated at exchange rates at the dates of the transactions.
The exchange differences arising on the translation are taken directly to other comprehensive income. On
disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and
accumulated in equity under foreign currency translation reserve relating to that particular foreign operation
is recognised in the profit or loss.
Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets
and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations
and translated at the closing rate at the reporting date.
MTD ACPI ENGINEERING BERHAD
71
Notes to the Financial Statements (Cont’d)
31 March 2014
2.Summary of significant accounting policies (CONT’D)
2.7Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and
equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can be measured reliably.
Subsequent to recognition, plant and equipment and furniture and fixtures are measured at cost less accumulated
depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are
required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful
lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the
carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other
repair and maintenance costs are recognised in profit or loss as incurred.
Freehold land has an unlimited useful life and therefore is not depreciated. Capital work in progress is stated at
cost and is not depreciated as these assets are not available for use. Depreciation is computed on a straight-line
basis over the estimated useful lives of the assets as follows:
Buildings
Leasehold land
Plant and machinery
Equipment, furniture and fittings
Motor vehicles
1.6% - 2.5%
1.7% - 2.0%
10% - 20%
15% - 40%
20%
The carrying values of property, plant and equipment are reviewed for impairment when events or changes
in circumstances indicate that the carrying value may not be recoverable. The residual value, useful life and
depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss
in the year the asset is derecognised.
2.8Investment properties
Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition,
investment properties are measured at cost model which is to measure investment properties at cost less
accumulated depreciation and accumulated impairment losses.
The depreciation on investment properties is provided on a straight-line basis to write off the cost of each asset
to its residual values over its estimated useful life at the annual rates of 2% to 2.5%.
Investment properties are derecognised when either they have been disposed of or when the investment property
is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss
on the retirement or disposal of an investment property is recognised in profit or loss in the year of retirement or
disposal.
Transfers are made to or from investment property only when there is a change in use. For transfers between
investment property, owner-occupied property and inventories, such transfers do not change the carrying amount
of the property transferred and they do not change the cost of that property for measurement or disclosure
purposes.
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ANNUAL REPORT 2014
2.Summary of significant accounting policies (CONT’D)
2.9Goodwill
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the
amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed.
If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the gain is
recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of
impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of
the Group’s cash-generating units that are expected to benefit from the combination, irrespective of
whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed
of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when
determining the gain or loss on disposal. Goodwill disposed in these circumstance is measured based on the
relative values of the disposed operation and the portion of the cash-generating unit retained.
2.10Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any
such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an
estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For
the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units (“CGU”)).
In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable
amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU
or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or
groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a
pro-rata basis.
Impairment losses are recognised in profit or loss except for assets that are previously revalued where the
revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other
comprehensive income up to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is
reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount
since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased
to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined,
net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit
or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation
increase. Impairment loss on goodwill is not reversed in a subsequent period.
MTD ACPI ENGINEERING BERHAD
73
Notes to the Financial Statements (Cont’d)
31 March 2014
2.Summary of significant accounting policies (CONT’D)
2.11Subsidiaries
A subsidiary is an entity over which the Group has all the following:
(i)
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of
the investee);
(ii) Exposure, or rights, to variable returns from its investment with the investee; and
(iii) The ability to use its power over the investee to affect its returns.
In the Company’s separate financial statements, investment in subsidiaries is accounted for at cost less
impairment losses. On disposal of such investments, the difference between net disposal proceeds and their
carrying amounts is included in profit or loss.
2.12Investments in associates and joint ventures
An associate is an entity in which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but is not control or joint control over
those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights
to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require the unanimous consent of
the parties sharing control.
On acquisition of an investment in associate or joint venture, any excess of the cost of investment over the
Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as
goodwill and included in the carrying amount of the investment. Any excess of the Group’s share of the net fair
value of the identifiable assets and liabilities of the investee over the cost of investment is excluded from the
carrying amount of the investment and is instead included as income in the determination of the Group’s share
of the associate’s or joint venture’s profit or loss for the period in which the investment is acquired.
An associate or a joint venture is equity accounted for from the date on which the investee becomes an associate
or a joint venture.
Under the equity method, on initial recognition the investment in an associate or a joint venture is recognised at
cost, and the carrying amount is increased or decreased to recognise the Group’s share of the profit or loss and
other comprehensive income of the associate or joint venture after the date of acquisition. When the Group’s
share of losses in an associate or a joint venture equal or exceeds its interest in the associate or joint venture,
the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made
payments on behalf of the associate or joint venture.
Profits and losses resulting from upstream and downstream transactions between the Group and its associate or
joint venture are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests
in the associate or joint venture. Unrealised losses are eliminated unless the transaction provides evidence of
an impairment of the asset transferred.
The financial statements of the associates and joint ventures are prepared as of the same reporting date as
the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of
the Group.
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ANNUAL REPORT 2014
2.Summary of significant accounting policies (CONT’D)
2.13Financial assets
Financial assets are recognised in the statements of financial position when, and only when, the Group and the
Company become a party to the contractual provisions of the financial instrument.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial
assets not at fair value through profit or loss, directly attributable transaction costs.
The Group and the Company determine the classification of their financial assets at initial recognition, and the
categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity
investments and available-for-sale financial assets.
(a) Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss if they are held for
trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives
(including separated embedded derivatives) or financial assets acquired principally for the purpose of
selling in the near term.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair
value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net
losses on financial assets at fair value through profit or loss do not include exchange differences, interest
and dividend income. Exchange differences, interest and dividend income on financial assets at fair value
through profit or loss are recognised separately in profit or loss as part of other losses or other income.
Financial assets at fair value through profit or loss could be presented as current or non-current. Financial
assets that is held primarily for trading purposes are presented as current whereas financial assets
that is not held primarily for trading purposes are presented as current or non-current based on the
settlement date.
(b)Loans and receivables
Financial assets with fixed or determinable payments that are not quoted in an active market are classified
as loans and receivables.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective
interest method. Gains and losses are recognised in profit or loss when the loans and receivables are
derecognised or impaired, and through the amortisation process.
Loans and receivables are classified as current assets, except for those having maturity dates later than 12
months after the reporting date which are classified as non-current.
MTD ACPI ENGINEERING BERHAD
75
Notes to the Financial Statements (Cont’d)
31 March 2014
2.Summary of significant accounting policies (CONT’D)
2.13Financial assets (Cont’d)
(c) Available-for-sale financial assets
Available-for-sale financial assets are financial assets that are designated as available for sale or are not
classified in any of the three preceding categories.
After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses
from changes in fair value of the financial assets are recognised in other comprehensive income, except
that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated
using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously
recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification
adjustment when the financial asset is derecognised. Interest income calculated using the effective interest
method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised
in profit or loss when the Group and the Company’s right to receive payment is established.
Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less
impairment loss.
Available-for-sale financial assets are classified as non-current assets unless they are expected to be
realised within 12 months after the reporting date.
A financial asset is derecognised when the contractual right to receive cash flows from the asset has
expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and
the sum of the consideration received and any cumulative gain or loss that had been recognised in other
comprehensive income is recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets
within the period generally established by regulation or convention in the marketplace concerned. All regular
way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date
that the Group and the Company commit to purchase or sell the asset.
2.14Impairment of financial assets
The Group and the Company assess at each reporting date whether there is any objective evidence that a
financial asset is impaired.
(a) Trade and other receivables and other financial assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets has been
incurred, the Group and the Company consider factors such as the probability of insolvency or significant
financial difficulties of the debtor and default or significant delay in payments. For certain categories of
financial assets, such as trade receivables, assets that are assessed not to be impaired individually are
subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective
evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past
experience of collecting payments, an increase in the number of delayed payments in the portfolio past the
average credit period and observable changes in national or local economic conditions that correlate with
default on receivables.
If any such evidence exists, the amount of impairment loss is measured as the difference between the
asset’s carrying amount and the present value of estimated future cash flows discounted at the financial
asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial
assets with the exception of trade receivables, where the carrying amount is reduced through the use
of an allowance account. When a trade receivable becomes uncollectible, it is written off against the
allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the previously recognised impairment
loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the
reversal date. The amount of reversal is recognised in profit or loss.
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ANNUAL REPORT 2014
2.Summary of significant accounting policies (CONT’D)
2.14Impairment of financial assets (Cont’d)
(b)Unquoted equity securities carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where the
issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment
loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the
difference between the asset’s carrying amount and the present value of estimated future cash flows
discounted at the current market rate of return for a similar financial asset. Such impairment losses are not
reversed in subsequent periods.
(c) Available-for-sale financial assets
Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or
obligor, and the disappearance of an active trading market are considerations to determine whether there is
objective evidence that investment securities classified as available-for-sale financial assets are impaired.
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net
of any principal payment and amortisation) and its current fair value, less any impairment loss previously
recognised in profit or loss, is transferred from equity to profit or loss.
Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent
periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive
income. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or
loss if an increase in the fair value of the investment can be objectively related to an event occurring after
the recognition of the impairment loss in profit or loss.
2.15Construction contracts
Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs
are recognised as revenue and expenses respectively by using the stage of completion method. The stage of
completion is measured by reference to the proportion of contract costs incurred for work performed to date to
the estimated total contract costs.
Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the
extent of contract costs incurred that are likely to be recoverable. Contract costs are recognised as expense in
the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised
as an expense immediately.
Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract
work, claims and incentive payments to the extent that it is probable that they will result in revenue and they are
capable of being reliably measured.
When the total of costs incurred on construction contracts plus recognised profits (less recognised losses)
exceeds progress billings, the balance is classified as amount due from customers on contracts. When progress
billings exceed costs incurred plus, recognised profits (less recognised losses), the balance is classified as
amount due to customers on contracts.
MTD ACPI ENGINEERING BERHAD
77
Notes to the Financial Statements (Cont’d)
31 March 2014
2.Summary of significant accounting policies (CONT’D)
2.16Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid
investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of
changes in value. These also include bank overdrafts that form an integral part of the Group’s cash management.
2.17Non-current assets held for sale
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying
amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale
if their carrying amounts will be recovered principally through a sale transaction rather than through continuing
use. this condition is regarded as met only when the sale is highly probable and the asset or disposal group is
available for immediate sale in its present condition. Management must be committed to the sale, which should
be expected to qualify for recognition as a completed sale within one year from the date of classification.
In the consolidated statement of comprehensive income of the reporting period, and of the comparable period of
the previous year, income and expenses from discontinued operations are reported separately from income and
expenses from continuing operations, down to the level of profit after taxes, even when the Group retains a noncontrolling interest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reported separately
in the statement of comprehensive income.
Property and equipment are not depreciated or amortised once classified as held for sale.
2.18Inventories
Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to
their present location and condition are accounted for as follows:
-
Raw materials: purchase costs using the weighted average method. -
Finished goods and work-in-progress: costs of direct materials and labour and a proportion of manufacturing
overheads based on normal operating capacity. These costs are determined using the weighted average
method.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of
completion and the estimated costs necessary to make the sale.
2.19Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount
of the obligation can be estimated reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no
longer probable that an outflow of economic resources will be required to settle the obligation, the provision is
reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax
rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in
the provision due to the passage of time is recognised as a finance cost.
2.20Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into and
the definitions of a financial liability.
Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and
only when, the Group and the Company become a party to the contractual provisions of the financial instrument.
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial
liabilities.
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ANNUAL REPORT 2014
2.Summary of significant accounting policies (CONT’D)
2.20Financial liabilities (Cont’d)
(a) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities held for trading include derivatives entered into by the Group and the Company that
do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and
subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains
or losses on derivatives include exchange differences.
The Group and the Company have not designated any financial liabilities at fair value through profit or loss.
(b) Other financial liabilities
The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans
and borrowings.
Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and
subsequently measured at amortised cost using the effective interest method.
Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and
subsequently measured at amortised cost using the effective interest method. Borrowings are classified as
current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12
months after the reporting date.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are
derecognised, and through the amortisation process.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of
the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is
recognised in profit or loss.
2.21Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payment when due.
Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs.
Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over
the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when
it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is
measured at the higher of the best estimate of the expenditure required to settle the present obligation at the
reporting date and the amount initially recognised less cumulative amortisation.
2.22Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the
acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the
activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing
costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended
use or sale.
All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist
of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.
MTD ACPI ENGINEERING BERHAD
79
Notes to the Financial Statements (Cont’d)
31 March 2014
2.Summary of significant accounting policies (CONT’D)
2.23Leases
(a)As lessee
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership
of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if
lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the
amount capitalised. Lease payments are apportioned between the finance charges and reduction of the
lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance
charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in
which they are incurred.
Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable
certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the
shorter of the estimated useful life and the lease term.
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the
lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental
expense over the lease term on a straight-line basis.
2.24Income taxes
(a) Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the
taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the reporting date.
Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised
outside profit or loss, either in other comprehensive income or directly in equity.
(b) Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting date between
the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, except:
-
where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in
a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
-
in respect of taxable temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, where the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax
credits and unused tax losses, to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward of unused tax credits and unused tax
losses can be utilised except:
80
-
where the deferred tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss; and
-
in respect of deductible temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and taxable profit will be available
against which the temporary differences can be utilised.
ANNUAL REPORT 2014
2.Summary of significant accounting policies (CONT’D)
2.24Income taxes (Cont’d)
(b) Deferred tax (Cont’d)
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are
recognised to the extent that it has become probable that future taxable profit will allow the deferred tax
assets to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or
substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred
tax items are recognised in correlation to the underlying transaction either in other comprehensive income
or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on
acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the
same taxation authority.
2.25Employee benefits
(a) Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in
which the associated services are rendered by employees. Short term accumulating compensated absences
such as paid annual leave are recognised when services are rendered by employees that increase their
entitlement to future compensated absences. Short term non-accumulating compensated absences such
as sick leave are recognised when the absences occur.
(b) Defined contribution plans
The Group participates in the national pension schemes as defined by the laws of the countries in which
it has operations. The Malaysian companies in the Group make contributions to the Employee Provident
Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension
schemes are recognised as an expense in the period in which the related service is performed.
(c) Defined benefit plan
The Group operates an unfunded, defined benefit Retirement Benefit Scheme (“the Scheme”) for its eligible
employees. The costs of providing benefits under defined benefit plans are determined separately for each
plan using the projected unit credit actuarial valuation method.
Re-measurements, comprising of actuarial gains and losses are recognised immediately in the statement of
financial position with a corresponding debit or credit to retained earnings through OCI in the period in which
they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognised in profit or loss on the earlier of the date of the plan amendment or
curtailment and the date that the Group recognises restructuring-related costs.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Group
recognises the following changes in the net defined benefit obligation under ‘cost of sales’ ‘administration
expenses’ and ‘selling and distribution expenses’ in consolidated statement of profit or loss:
-
Service costs comprising current service costs, past-service costs, gains and losses on curtailment
and non-routine settlements
-
Net interest expenses or income
MTD ACPI ENGINEERING BERHAD
81
Notes to the Financial Statements (Cont’d)
31 March 2014
2.Summary of significant accounting policies (CONT’D)
2.25Employee benefits (Cont’d)
(d) Termination benefits
Termination benefits are payable when employment is terminated before the conclusion of the employment
contract. The Group recognises termination benefits when it is demonstratably committed to terminate the
employment of current employees according to a detailed plan without possibility of withdrawal.
2.26Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the
revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.
(a)Construction contracts
Revenue from construction contracts is accounted for by the stage of completion method as described in
Note 2.15.
(b)Sale of goods
Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of
the goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties
regarding recovery of the consideration due, associated costs or the possible return of goods.
(c)Interest income
Interest income is recognised using the effective interest method.
(d) Management fees
Management fees are recognised when services are rendered.
(e) Dividend income
Dividend income is recognised when the Company’s right to receive dividend is established.
(f) Rental income
Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of
incentives provided to lessees are recognised as a reduction of rental income over the lease term on a
straight-line basis.
2.27Related companies
Related companies refer to immediate and ultimate holding company of the Company and also companies within
the ultimate holding company.
2.28Segment reporting
For management purposes, the Group is organised into operating segments based on their products and services
which are independently managed by the respective segment managers responsible for the performance of
the respective segments under their charge. The segment managers report directly to the management of the
Company who regularly review the segment results in order to allocate resources to the segments and to assess
the segment performance. Additional disclosures on each of these segments are shown in Note 43, including the
factors used to identify the reportable segments and the measurement basis of segment information.
82
ANNUAL REPORT 2014
2.Summary of significant accounting policies (CONT’D)
2.29Share capital and share issuance expenses
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company
after deducting all of its liabilities. Ordinary shares are equity instruments.
Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs.
Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in
which they are declared.
2.30Treasury shares
When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount
of consideration paid is recognised directly in equity. Reacquired shares are classified as treasury shares and
presented as a reduction from total equity. No gain or loss is recognised in profit or loss on the purchase, sale,
issue or cancellation of treasury shares.
When treasury shares are reissued by resale, the difference between the sales consideration and the carrying
amount is recognised in equity.
2.31Contingencies
A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence
will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the
control of the Group.
Contingent liabilities and assets are not recognised in the statements of financial position of the Group.
3.Significant accounting judgements and estimates
The preparation of the Group’s financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in
outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.
3.1 Judgements made in applying accounting policies
In the process of applying the Group’s accounting policies, management has made the following judgements,
apart from those involving estimations, which have the most significant effect on the amounts recognised in the
financial statements:
(a)Critical accounting estimates and judgements
There are no significant critical judgements made by management in the process of applying the Group’s
accounting policies that have significant effect on the amounts recognised in the financial statements.
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
(a)Construction contracts
The Group recognises construction contracts revenue and costs in the statement of comprehensive income
by using the stage of completion method. The stage of completion is determined by the proportion that
construction costs incurred for work performed to date bear to the estimated total construction costs.
MTD ACPI ENGINEERING BERHAD
83
Notes to the Financial Statements (Cont’d)
31 March 2014
3.Significant accounting judgements and estimates (CONT’D)
3.2 Key sources of estimation uncertainty (Cont’d)
(a)Construction contracts (Cont’d)
Significant judgement is required in determining the stage of completion, the extent of the construction costs
incurred, the estimated total construction revenue and costs, as well as the recoverability of the construction
projects. In making the judgement, the Group evaluates based on past experience and by relying on the
work of specialists.
The carrying amount of assets and liabilities of the Group arising from construction contract activities are
disclosed in Note 23.
(b) Income taxes
Significant estimation is involved in determining the provision for income taxes. There are certain
transactions and computations for which the ultimate tax determination is uncertain during the ordinary
course of business. The Group recognises liabilities for expected tax issues based on estimates of whether
additional taxes will be due. Where the final tax outcome of these matters is different from the amounts
that were initially recognised, such differences will impact the income tax and deferred tax provisions in the
period in which such determination is made.
(c)Useful lives of plant and machinery
The Group estimates the useful lives of plant and machinery based on the period over which the assets
are expected to be available for use. The estimated useful lives of plant and machinery are reviewed
periodically and are updated if expectations differ from previous estimates due to physical wear and tear,
technical or commercial obsolescence and legal or other limits on the use of the relevant assets. In addition,
the estimation of the useful lives of plant and machinery are based on the internal technical evaluation and
experience with similar assets. It is possible, however, that future results of operations could be materially
affected by changes in the estimates brought about by changes in factors mentioned above. The amounts
and timings of recorded expenses for any period would be affected by changes in these factors and
circumstances. The carrying amount of the Group’s plant and machinery at the reporting date is disclosed
in Note 14.
(d) Impairment assessment on non-financial assets
The Group assesses whether there are any indicators of impairment of all non-financial assets at each
reporting date. This includes property, plant and equipment, investment properties and investments.
Goodwill is tested for impairment annually and at other times when such indicators exist.
During the current financial year, the Group recognised impairment losses totalling to RM62,700,000 (2013:
RM216,000) as disclosed in Note 8. Of the impairment loss recognised, RM52,860,000 (2013: RM216,000)
were in respect of goodwill attributable to the construction segment and RM9,840,000 (2013: RM Nil)
were for the manufacturing segment. Other impairment losses were a result of assessing the recoverable
amounts of assets which have indications of impairment.
Further details of key assumptions applied in the impairment assessment of goodwill and the sensitivity
analysis to changes in key assumptions are given in Note 16.
(e)Impairment of loans and receivables
The Group assesses at each reporting date whether there is any objective evidence that the recoverable
amount of a financial asset is impaired. To determine whether there is objective evidence of doubtful amount,
the Group considers factors such as the probability of insolvency or significant financial difficulties of the
debtor and default or significant delay in payments and records allowance for doubtful receivables based
on historical collection pattern.
Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated
based on historical loss experience for the financial assets with similar credit risk characteristics. The
carrying amount of the Group’s trade and other receivables at the reporting date is disclosed in Note 21.
84
ANNUAL REPORT 2014
3.Significant accounting judgements and estimates (CONT’D)
3.2 Key sources of estimation uncertainty (Cont’d)
(f) Deferred tax assets
Deferred tax assets are recognised for all unused tax losses, unabsorbed capital allowances and unutilised
reinvestment allowances to the extent that it is probable that taxable profit will be available against which
the losses and allowances can be utilised. Significant management judgement is required to determine
the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future
taxable profits together with future tax planning strategies.
The total carrying value of unrecognised tax losses, capital allowances and reinvestment allowances of
the Group are RM167,313,000 (2013: RM146,977,000).These losses related to subsidiaries that have a
history of losses do not expire and may not be used to offset taxable income elsewhere in the Group. The
subsidiaries either have any taxable temporary difference nor any tax planning opportunities available that
could partly support the recognition of these losses as deferred tax assets, profit and equity would have
increased by RM7,095,000 (2013: RM4,394,000). Further details on taxes are disclosed in Note 24.
(g) Retirement benefits obligations
The cost of defined benefit pension plans and the present value of the pension obligation are determined
using actuarial valuations. The actuarial valuation involves making assumptions about discount rates,
expected rates of return of assets, future salary increases, mortality rates and future pension increases.
These assumptions are reviewed at each reporting date and are determined based on a triennial actuarial
valuation performed by an independent actuary.
The net employee liability of the Group as at 31 March 2014 is RM 11,453,000 (2013: RM13,833,000).
Further details are given in Note 30.
In determining the appropriate discount rate, management has derived the applicable interest rates reflecting
prevailing bond yields, whilst the mortality rate is based on Malaysia ordinary insured 1999-2003 (M9903)
tables for males and females with age ranges from 20 to 55.
Further details about the assumptions used are given in Note 30.
(h)Provision for liquidated ascertained damages
The provision for liquidated ascertained damages is recognised for expected liquidated damages claims
based on the terms of the contracts.
Significant judgement is required in determining the expected date of hand over of the properties. In
making the estimation, the Group evaluates by relying on the work of the engineers, quantity surveyors and
architects.
(i)Impairment of investment in subsidiaries
The company reviews its investments in subsidiaries when there are indicators of impairment. Impairment
is measured by comparing the carrying amount of an investment with its recoverable amount. Significant
judgement is required in determining the recoverable amount. The company evaluates the recoverable
amounts based on market performance, economic and political situation of the country in which the
subsidiaries operate. During the financial year, the Company recognised impairment loss of investments in
subsidiaries amounting to RM70,938,000 (2013: RM Nil). The carrying amount of investments in subsidiaries
as at 31 March 2014 is RM70,180,000 (2013: RM141,118,000). Further details are disclosed in Note 17.
MTD ACPI ENGINEERING BERHAD
85
Notes to the Financial Statements (Cont’d)
31 March 2014
4.Revenue
Group 2014 2013 RM’000 RM’000 Company
2014
2013
RM’000 RM’000
Dividend income
Construction revenue
Sale of goods
–
203,049 125,136 –
160,040 109,963 5,000 –
–
5,000
–
–
328,185 270,003 5,000 5,000
5.Cost of sales
2014
RM’000 Group
2013
RM’000
Construction contract costs *
Cost of inventories sold 207,913 110,502 119,788
106,000
318,415 225,788
* Included in prior year construction contract costs is the write back of provision for liquidated ascertained damages, amounting to RM34,799,000.
6.Other income
Included in other income are:
Interest income on:
- Deposits with licensed banks
- Trade receivables
Net reversal of allowance for impairment loss on:
- Non-current trade receivables
- Current trade receivables (Note 21)
- Other receivables (Note 21)
- Property, plant and equipment (Note 14)
Fair value gain on other investments
Rental income from:
- Investment properties
- Motor vehicles
Management fees from subsidiaries
Adjustment on trade and other payables
Net unrealised foreign exchange gain
Net realised foreign exchange gain
Gain on disposal of plant and equipment
Bad debt recovered
86
ANNUAL REPORT 2014
Group 2014 2013 RM’000 RM’000 Company
2014 2013
RM’000 RM’000
514 786 85 49
310 204 758 28 85 –
49
–
507 4,325 30 –
2
93 4,807 –
130 – –
–
70 –
–
–
–
39
–
–
5
85 –
2,815 465 114 528 2,740 29 459 –
–
–
6,145 –
5,000 –
–
5,824 –
–
–
–
–
–
–
5,946
–
–
–
–
–
7.Finance costs
Interest expense on:
- Advances granted by subsidiaries
- Revolving credits
- Term loans
- Bank overdrafts
- Obligations under finance leases
- Bank guarantees
- Others
Company
2014 2013
RM’000 RM’000
–
2,607 10 510 16 615 47 –
5,405 158 441 28 –
455 4,899 78 –
230 –
–
8
6,628
153
–
202
–
–
26
3,805 6,487 5,215 7,009
(204)
(1,565)
–
–
Total interest expenses 3,601 Unwinding of discount
729 4,922 4,215 5,215 –
7,009
–
Total finance costs
9,137 5,215 7,009
Less: Interest expense included in cost of sales
8.
Group 2014 2013 RM’000 RM’000 4,330 (Loss)/profit before tax
The following items have been included in arriving at (loss)/profit before tax:
Group 2014 2013 RM’000 RM’000 Company
2014 2013
RM’000 RM’000
Employee benefits expense (Note 9)
Non-executive directors’ remuneration (Note 10)
Auditors’ remuneration:
- Statutory audit:
- Current
- Other services
Operating leases, minimum lease payments for:
- Buildings
- Equipment, plant and machineries
34,215 162 31,852 190 1,946 162 2,002
190
473 148 327 54 30 148 30
54
2,824 953 2,759 686 2,466 65 2,466
76
Impairment losses on non-financial assets:
64,621 216 –
–
- Goodwill (Note 16)
- Property, plant and equipment (Note 14)
62,700 1,921 216 –
–
–
–
–
Depreciation charge of:
- Property, plant and equipment (Note 14)
- Investment properties (Note 15)
Property, plant and equipment written off
Provisions (Note 34)
Inventories writte off (Note 25)
Bad debts written off
Net impairment losses on financial assets:
6,668 18 35 323 2,170 8,756 10,240 8,170 –
794 394 4,998 383 1,763 66 –
–
–
–
–
218,997 70
–
–
–
–
–
15,911
3,400 1,974 4,866 –
1,656 107 –
–
218,997 –
–
15,911
- Non-current trade receivables
- Current trade receivables
- Other receivables (Note 21)
MTD ACPI ENGINEERING BERHAD
87
Notes to the Financial Statements (Cont’d)
31 March 2014
8.
(Loss)/profit before tax (CONT’D)
The following items have been included in arriving at (loss)/profit before tax: (Cont’d)
Net impairment losses on
- Investment in subsidiaries - Other investment (Note 20)
Net loss on disposals of property, plant and equipment
Loss on disposals of asset held for sale
Net unrealised foreign exchange loss
9.Employee benefits expense
Group 2014 2013 RM’000 RM’000 –
24 –
–
4,727 –
40 573 1,477 167 Group 2014 2013 RM’000 RM’000 Company
2014 2013
RM’000 RM’000
70,938 24 –
–
–
–
40
–
–
–
Company
2014 2013
RM’000 RM’000
27,831 1,076 26,303 964 1,696 25 1,392
15
2,946 1,283 1,079 3,080 –
1,505 225 –
–
227
–
368
Total employee benefits expense 34,215 31,852 1,946 2,002
Wages and salaries
Increase in liability for defined benefit plan (Note 30)
Contributions to defined contribution plan and social
security contributions
Staff retrenchment
Other benefits
Included in employee benefits expense of the Group and of the Company are executive directors’ remuneration
excluding benefits-in-kind, amounting to RM796,000 (2013: RM2,134,000) and RM164,000 (2013: RM421,000)
respectively as disclosed in Note 10.
88
ANNUAL REPORT 2014
10. Directors’ remuneration
The details of remuneration receivable by directors of the Company during the financial year are as follows:
Group 2014 2013 RM’000 RM’000 Company
2014 2013
RM’000 RM’000
Executive:
Fees
Allowances and other emoluments
118 678 136 1,998 82 82 72
349
Total executive directors’ remuneration
(excluding benefits-in-kind) (Note 9)
Estimated money value of benefits-in-kind
796 13 2,134 49 164 –
421
–
Total executive directors’ remuneration (including benefits-in-kind)
809 2,183 164 421
Non-executive:
Fees 126 Allowances 36 140 50 126 36 140
50
Total non-executive directors’ remuneration (Note 8)
162 190 162
190
Total directors’ remuneration 971 2,373 326 611
The number of directors of the Company whose total remuneration during the financial year fell within the following
bands is analysed below:
Number of directors
2014 2013
Executive directors:
RM1 - RM50,000 RM250,001 - RM300,000
RM350,001 - RM400,000
RM400,001 - RM450,000
RM450,001 - RM500,000
2
1
–
1
–
1
–
1
–
1
Non-executive directors:
RM1 - RM50,000
RM50,001 - RM100,000
3
1
3
2
11.Income tax expense
Major components of income tax expense
The major components of income tax expense for the years ended 31 March 2014 and 31 March 2013 are:
Group 2014 2013 RM’000 RM’000 Company
2014 2013
RM’000 RM’000
Statement of comprehensive income:
Current income tax:
- Malaysian income tax
- Foreign tax
- (Over)/underprovision in respect of previous years
621 873 (5,119)
8,025 25 (36)
1,099 936
– –
1
(378)
(3,625)
8,014 1,100 558
MTD ACPI ENGINEERING BERHAD
89
Notes to the Financial Statements (Cont’d)
31 March 2014
11.Income tax expense (CONT’D)
Group 2014 2013 RM’000 RM’000 Company
2014 2013
RM’000 RM’000
Statement of comprehensive income: (cont’d)
Deferred income tax (Note 24):
- Origination and reversal of temporary differences - Under/(over)provision in respect of previous years
(4,218)
2,447 1,025 4,845 (62)
(4)
(17)
1
(1,771)
5,870 (66)
(16)
Income tax expense recognised in profit or loss
(5,396)
13,884 1,034 542
Reconciliation between tax expense and accounting profit/(loss)
The reconciliation between tax expense and the product of accounting (loss)/profit multiplied by the applicable
corporate tax rate for the years ended 31 March 2014 and 2013 are as follows:
2014 RM’000
2013
RM’000
(Loss)/profit before tax
(100,971)
28,957
Tax at Malaysian statutory tax rate of 25% (2013: 25%)
Different tax rates in other countries
Adjustments:
Non-deductible expenses
Income not subject to taxation
Benefits from previously unrecognised tax losses and unabsorbed capital
allowances and other deductible temporary differences
Deferred tax assets not recognised
Share of results of associates
Share of results of unincorporated joint venture
Overprovision of income tax in respect of previous years
Underprovision of deferred income tax in respect of of previous years
(25,243)
27 7,239
1,532
14,554 –
6,447
(9,225)
843 7,095 –
–
(5,119)
2,447 –
4,394
(178)
(1,134)
(36)
4,845
Income tax expense
(5,396)
13,884
Group
Company
90
Loss before tax
(290,302)
(17,866)
Tax at Malaysian statutory tax rate of 25% (2013: 25%)
Adjustments:
Income not subject to tax
Non-deductible expenses
Under/(over)provision of income tax in respect of previous years
(Over)/underprovision of deferred income tax in respect of previous years
(72,576)
(4,467)
–
73,613 1
(4)
(495)
5,881
(378)
1
Income tax expense 1,034 542
ANNUAL REPORT 2014
11.Income tax expense (CONT’D)
Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2013: 25%) of the estimated assessable
(loss)/profit for the year.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The above
reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.
12.Earnings per share
Basic earnings per share amounts are calculated by dividing earnings for the year, net of tax, attributable to owners
of the parent by the weighted average number of ordinary shares outstanding during the financial year, excluding
treasury shares held by the Company.
The following reflect the earnings and share data used in the computation of basic (loss)/profit per share for the years
ended 31 March:
Group
2014 2013
(Loss)/profit net of tax attributable to owners of the parent (RM’000)
(95,509)
14,888
Weighted average number of ordinary shares, excluding treasury shares (‘000)
230,996 230,996
(Loss)/basic earnings per share (sen)
(41)
6
13.Dividends
Group and Company
2014 2013
RM’000 RM’000
Recognised during the financial year:
Dividend on ordinary shares:
- First and final dividend for 2012:
1 sen per share less 25% taxation on 231,632,798 ordinary shares of RM1
each less 637,000 treasury shares (0.75 sen per ordinary share)
–
1,732
- First and final dividend for 2013:
1 sen per share less 25% taxation on 231,632,798 ordinary shares of RM1
each less 637,000 treasury shares (0.75 sen per ordinary share)
1,732 –
1,732 1,732
Proposed but not recognised as a liability as at 31 March:
Dividends on ordinary shares, subject to shareholders’ approval at the AGM:
- First and final dividend for 2013:
1 sen per share less 25% taxation on 231,632,798 ordinary shares of RM1
each less 637,000 treasury shares (0.75 sen per ordinary share)
–
1,732
–
1,732
The directors do not recommend the payment of any dividend in respect of the current financial year.
MTD ACPI ENGINEERING BERHAD
91
Notes to the Financial Statements (Cont’d)
31 March 2014
14.Property, plant and equipment
Equipment,
furniture Capital
Land and Leasehold Plant and and Motor work-in
buildings land machinery fittings vehicles progress Total
GroupRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cost:
At 1 April 2012
Additions
Disposals
Written off
Reclassification
Exchange differences
98,314 243 (2,671)
(426)
–
120 7,404 –
–
–
–
–
193,232 2,671 (16,119)
(2,725)
403 2,554 8,784 88 (633)
(56)
397 160 12,432 159 (1,621)
–
367 48 605 562 –
–
(1,167)
–
At 31 March 2013
95,580 7,404 180,016 8,740 11,385 –
At 1 April 2013
Additions
Disposals
Written off
Exchange differences
95,580 295 –
–
105 7,404 –
–
–
–
180,016 7,488 (5,385)
(8)
(131)
8,740 116 (300)
(31)
(10)
11,385 194 (434)
(95)
17 –
3,869 –
–
–
303,125
11,962
(6,119)
(134)
(19)
At 31 March 2014
95,980 7,404 181,980 8,515 11,067 3,869 308,815
35,605 907 2,387 133 163,448 6,574 8,136 193 11,257 504 –
–
220,833
8,311
320,771
3,723
(21,044)
(3,207)
–
2,882
303,125
Accumulated depreciation
and impairment loss:
At 1 April 2012
Depreciation charge for the year
- Recognised in profit or loss (Note 8)
907 133 6,572 178 380 –
8,170
- Capitalised in construction
costs (Note 23)
–
–
2
15 124 –
141
Disposals
(2,158)
–
(14,856)
(523)
(1,593)
–
Written off
(178)
–
(2,179)
(56)
–
–
Reversal of impairment
loss for the year (Note 6)
–
–
(130)
–
–
–
Reclassification
–
–
(402)
36 366 –
Exchange differences
120 –
729 13 43 –
At 31 March 2013
92
ANNUAL REPORT 2014
34,296 2,520 153,184 7,799 10,577 –
(19,130)
(2,413)
(130)
–
905
208,376
14.Property, plant and equipment (cont’d)
Equipment,
furniture Capital
Land and Leasehold Plant and and Motor work-in
buildings land machinery fittings vehicles progress Total
Group (cont’d)RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Accumulated depreciation
and impairment loss: (cont’d)
At 1 April 2013
Depreciation charge for the year
34,296 782 2,520 104 153,184 5,230 7,799 259 10,577 363 –
–
208,376
6,738
782 82 5,230 246 328 –
6,668
–
22 –
13 35 –
70
–
–
–
105 –
–
–
–
(5,366)
(8)
1,921 (131)
(285)
(6)
–
(8)
(411)
(85)
–
19 –
–
–
–
35,183 2,624 154,830 7,759 10,463 –
210,859
At 31 March 2013
61,284 4,884 26,832 941 808 –
94,749
At 31 March 2014
60,797 4,780 27,150 756 604 3,869 97,956
- Recognised in
profit or loss (Note 8)
- Capitalised in construction
costs (Note 23)
Disposals
Written off
Impairment loss (Note 8)
Exchange differences
At 31 March 2014
(6,062)
(99)
1,921
(15)
Net carrying amount:
Equipment,
furniture Freehold and Motor
land fittings vehicles Total
CompanyRM’000 RM’000 RM’000 RM’000
Cost:
At 1 April 2012
Addition
Written off
1,414 –
–
836 3
(56)
147 –
–
2,397
3
(56)
At 31 March 2013/ 1 April 2013
Addition
1,414 –
783 3
147 –
2,344
3
At 31 March 2014
1,414 786 147 2,347
Accumulated depreciation:
At 1 April 2012
Depreciation charge for the year (Note 8)
Written off
–
–
–
633 70 (56)
147 –
–
780
70
(56)
At 31 March 2013/ 1 April 2013
Depreciation charge for the year (Note 8)
–
–
647 66 147 –
794
66
At 31 March 2014 – 713 147 860
Net carrying amount:
As at 31 March 2013
1,414 136 –
1,550
As at 31 March 2014
1,414 73 –
1,487
MTD ACPI ENGINEERING BERHAD
93
Notes to the Financial Statements (Cont’d)
31 March 2014
14.Property, plant and equipment (cont’d)
(a) During the financial year, the Group acquired property, plant and equipment with an aggregate cost of
RM11,962,000 (2013: RM3,723,000) by way of cash. The Company acquired property, plant and equipment with
an aggregate cost of RM3,000 (2013: RM3,000).
The net carrying amounts of property, plant and equipment held under hire purchase and finance lease
arrangements of the Group at the reporting date were RM15,885 (2013: RM420,328).
Details of the terms and conditions of the hire purchase and finance lease arrangements are disclosed in Note
32.
(b) During the year, a subsidiary within the manufacturing segment, Associated Concrete Products (Malaysia)
Sdn. Bhd. had carried out a review of the impairment review of its property, plant and equipment because two
factories had permanently ceased its manufacturing operations. Consequently, an impairment loss on plant and
machineries of RM1,921,000 was recognised for the financial year ended 31 March 2014.
15.Investment property
Group
2014 2013
RM’000
RM’000
Group
Cost:
At 1 April 2013/ 2012
Reclassified from held for sale
355 –
At 31 March
355 –
Accumulated Depreciation:
At 1 April 2013/ 2012– Reclassified from held for sale
80 Depreciation charge for the year (Note 8)
18 –
–
–
At 31 March 98 –
As at 31 March
257 –
Fair value
472 –
The investment property relates to a commercial property.
The fair value of the investment property has been arrived at based on the directors’ best estimate, taking into account
the prevailing market conditions. The fair value of the investment property as at 31 March 2014 was based on the
current prices in an active market for similar properties within the area in which the investment property is located.
Investment property is categorised within fair value hierarchy 3.
16.Goodwill
Group
2014 2013
RM’000
RM’000
Cost
At 1 April 2012/ 31 March 2013/ 1 April 2013/ 31 March 2014
80,343 80,343
Accumulated impairment
At 1 April 2013/2012
Impairment loss for the year (Note 8)
17,643 62,700 17,427
216
At 31 March
80,343 17,643
Net carrying amount–
62,700
94
ANNUAL REPORT 2014
16. Goodwill (cont’d)
Impairment testing for goodwill
oodwill is tested for impairment on an annual basis by comparing the carrying amount with the recoverable amount,
G
which is based on market price or value in use. The value in use is determined by discounting future cash flows over
a five-year period. The future cash flows are based on management’s five year business plan, which is a reasonable
estimate of future performance.
he ability to achieve the business plan targets is a key assumption in determining the recoverable amount for each
T
cash-generating unit. There remains a risk that due to unforeseen changes in the respective economies in which the
cash-generating units operate and/or global economic conditions, that the ability to achieve management’s business
plan will be adversely affected. In calculating the value in use for each cash-generating unit, management has applied
the following assumptions:
Gross margin 2014 2013
Construction contracts
Manufacturing sector
8%
5%
4%
5%
Discount rate
2014
2013
15%
13%
10%
10%
Carrying value of goodwill allocated to cash-generating units
Goodwill is allocated and monitored by management across the following cash generating units:
2014 2013
RM’000RM’000
–
–
52,900
9,800
–
62,700
Construction contracts
Manufacturing sector
Construction contracts
Key assumptions used in the calculations
-
Net profit margin. The margin is based on average values achieved in the two years preceding the start of the
budget period. An average rate of 8% (2013: 8%) was applied for the business unit for the first five-year period,
and an average rate of 8% (2013: 8%) for subsequent years.
-
Growth rate used to extrapolate cash flows beyond the budget period. Growth rate for the period beyond three
years of 8% (2013: 4%) has been used and is based on published industry research for each business.
-
Pre-tax discount rate. In calculating the value in use for each business, management has applied a pre-tax
discount rate of 15% (2013: 10%). This reflected the managements’ best estimate of return on capital employed
required in the Group.
Manufacturing sector
Key assumptions used in the calculations
-
Net profit margin. The margin is based on average values achieved in the two years preceding the start of the
budget period. An average rate of 8% (2013:8%) was applied for the business unit for the first five-year period,
and an average rate of 8% (2013:8%) for subsequent years.
-
Growth rate used to extrapolate cash flows beyond the budget period. Growth rate for the period beyond three
years of 5% (2013: 5%) has been used and is based on published industry research for each business.
-
Pre-tax discount rate. In calculating the value in use for each business, management has applied a pre-tax
discount rate of 13% (2013: 10%). This reflected the managements’ best estimate of return on capital employed
required in the Group.
MTD ACPI ENGINEERING BERHAD
95
Notes to the Financial Statements (Cont’d)
31 March 2014
16. Goodwill (cont’d)
The recoverable amount of the Constructions CGU as at 31 March 2014, has been determined based on a value
in used calculation using cash flow projections from financial budgets approved by the Board of Directors covering
a five-year period. The projected cash flows have been updated to reflect the balance of existing job order book to
completion which are not able to generate adequate cash earnings to justify the carrying value of goodwill in the book.
Although Management is actively bidding for new infrastructure construction jobs between now and the expected
completion of existing projects there is an element of uncertainty of securing new jobs to replenish the balance of
order book. The Board had therefore impaired the goodwill of RM52.9 million in relation to the Construction CGU.
The recoverable amount of the Manufacturing CGU as at 31 March 2014, has been determined based on a value
in used calculation using cash flow projections from financial budgets approved by management covering a fiveyear period. The projected cash flows have been updated to the manufacturing division revenue and profit from
local operations which reflect a downtrend situation. The local manufacturing operations is facing stiff competition
from multiple players in the industry resulting in downtrend in revenue and margins over the years. Notwithstanding,
Management has implemented various cost cutting initiatives and scaling down of operations to stay competitive.
As a result, the Board of Directors have recognised an impairment charge of RM9.8 million against goodwill. The
impairment of goodwill is a charge to the income statement.
17.Investments in subsidiaries
Company 2014 2013
RM’000
RM’000
Unquoted shares, at cost
Less: Accumulated impairment losses
148,861 (78,681)
70,180 148,861
(7,743)
141,118
he subsidiaries are incorporated in Malaysia and the financial statements are audited by Ernst & Young, Malaysia
T
or member firms of Ernst & Young Global, except where otherwise indicated. Further details of the subsidiaries are
as follows:
Proportion (%) of
ownership interest
Name Principal Activities
2014 2013
Incorporated in Malaysia
96
ACP - DMT Sdn. Bhd.
Manufacturing and marketing of speciality highway
and safety products and providing related services
100100
ACP Technologies Sdn. Bhd.
(“ACP Tech”)
Investment holding
100100
ACPI Engineering Sdn. Bhd.
Steel fabrication and manufacturing, construction, 100100
management and contracting in the field
of environmental systems engineering
Gandaan Unik Sdn. Bhd.
Investment holding
100100
Makin Permata Sdn. Bhd.
Investment holding
(temporary ceased operation)
100100
Persys Engineering Sdn. Bhd.
Construction, manufacturing and marketing of precast concrete system products
(temporary ceased operation)
100100
ANNUAL REPORT 2014
17.Investments in subsidiaries (CONT’D)
Proportion (%) of
ownership interest
Name Principal Activities
2014 2013
Incorporated in Malaysia (cont’d)
MTD Construction Sdn. Bhd.
(“MTDC”)
Civil engineering and construction works
100100
ACP (Tracks) Sdn. Bhd.
(“ACP Tracks”)
Investment holding
100100
MTD ACP Precast Sdn. Bhd.
(“MAP”)
Manufacturing and supplying of precast concrete products 100100
Subsidiaries of ACP (Tracks)
Persys Sdn. Bhd.
Construction, manufacturing and marketing of
heavy element precast products for viaducts,
elevated highways, highways, light rail transit
guideways and bridges and construction
related businesses
100100
Acentis Engineering Sdn. Bhd.
Construction and provision of infrastructure and services for water and waste water
treatment (temporary ceased operation)
100100
ASC Tiles Sdn. Bhd. Manufacturing of concrete roof tiles
100100
Associated Structural Concrete Sdn. Bhd.
Manufacturing of building system products (temporary ceased operation)
C & G Fabricators Sdn. Bhd. Manufacturing and marketing of metal based products for building and construction industry
(temporary ceased operation)
100100
Universal Building Products Sdn. Bhd.
Manufacturing and marketing of metal and timber based products for building and construction industry
(temporary ceased operation)
100100
Associated Concrete Products (Malaysia) Sdn. Bhd. (“ACPM”)
Manufacturing and marketing of precast concrete products 100100
100100
Incorporated in Malaysia
Subsidiaries of ACPM
ACP Marketing Sdn. Bhd.
Marketing of precast concrete products
100100
Precast Solutions Sdn. Bhd.
Project management, construction works, licensing and franchising of precast
concrete products (temporary ceased operation)
100100
Incorporated in Qatar
Subsidiary of MAP
MTD ACP Precast LLC
Production and supply of precast concrete products, (“MAP LLC”)engineering, constructions, buildings and infrastructure
projects, trading and real estate development in the
State of Qatar.
100
MTD ACPI ENGINEERING BERHAD
–
97
Notes to the Financial Statements (Cont’d)
31 March 2014
17.Investments in subsidiaries (CONT’D)
Proportion (%) of
ownership interest
Name Principal Activities
2014 2013
Incorporated in Malaysia
Subsidiary of ACP Tech
Manufacturing of engineered products and providing specialist contracting services
100100
Investment holding
100100
ASCE Construction Limited. (1) Manufacturing of engineered products and providing specialist contracting services
100100
ASC Engineering Sdn. Bhd. Ltd.(1)
Manufacturing of engineered products and providing specialist contracting services
100100
ASC Engineering Sdn. Bhd. - ASCE Construction
Limited. Joint Venture (1)
(Unincorporated)
Construction and engineering
100100
ASC Engineering Sdn. Bhd. Ltd.
- ASCE Construction
Limited. Joint Venture (1)
(Unincorporated)
Construction and engineering
100100
ASC Engineering Sdn. Bhd.
Incorporated in Thailand
Subsidiary of ASC
Engineering Sdn. Bhd.
ACPI Holding Limited. (1)
Incorporated in Thailand
Subsidiaries of ACPI
Holding Limited.
Subsidiaries of MTDC
Incorporated in Malaysia
MTD Tunneltech Sdn. Bhd.
Source, secure and undertaken pipe-jacking, micro-tunneling, direct drillings, curve jacking
and manholes sewer and utilities rehabilitation
and provision of consultancy, turnkey and project
management services (temporary ceased operation)
6060
Civil engineering and construction works
6060
Incorporated in Philippines
MTD Construction
(Philippines), Inc. (2) 98
(1)
Audited by firms of auditors other than Ernst & Young.
(2)
Audited by Ernst & Young, Philippines.
ANNUAL REPORT 2014
17.Investments in subsidiaries (CONT’D)
(a)Incorporation of a subsidiary, MTD ACP Precast LLC
MAP, a wholly owned subsidiary of the company, had on 9 October 2013, incorporated a subsidiary MAP LLC in
the State of Qatar under the Law of the State of Qatar.
The initial authorised and issued and paid-up share capital of MAP LLC is Qatari Riyal (“QR”) 200,000 divided
into 200,000 ordinary shares of QR1.00 each of which 49% of the issued and paid-up capital of MAP LLC is
held by MAP and the remaining 51% is held by Links Commercial Brokers Qatar LLC. MAP has control over
MAP LLC through a Shareholders Agreement with Links Commercial Brokers Qatar LLC dated 9 October 2013.
Consequently MAP has beneficiary interest in MAP LLC of 100%.
(b)Subsidiaries with material non-controlling interest
Summarised information of companies with non-controlling interests that are material to the Group is set out
below. The summarised financial information presented below is the amount before inter-company elimination.
The non-controlling interests of the other company is not material to the Group.
(i) Summarised statements of financial position
As at 31 March 2014
MTD
Construction
(Philippines)
Inc.
RM’000
Proportion of non-controlling interest
40%
Non-current assets
Current assets
479
57,558
Total assets
58,037
Current liabilities
29,902
Net assets
28,135
Equity attributable to owners of the Parent
16,881
Non-controlling interests
11,254
28,135
As at 31 March 2013
Non-current assets
Current assets
309
60,139
Total assets
60,448
Current liabilities
32,152
Net assets
28,296
Equity attributable to owners of the Parent
Non-controlling interests
16,978
11,318
28,296
MTD ACPI ENGINEERING BERHAD
99
Notes to the Financial Statements (Cont’d)
31 March 2014
17.Investments in subsidiaries (CONT’D)
(b)Subsidiaries with material non-controlling interest (cont’d)
(ii)Summarised statements of comprehensive income
MTD
Construction
(Philippines)
Inc.
RM’000
For the financial year ended 31 March 2014
Revenue 34,781
Profit/(Loss) for the year
(164)
Profit/(Loss) attributable to:
- owners of the Parent
- non-controlling interest
(98)
(66)
For the financial year ended 31 March 2013
Revenue
Profit/(Loss) for the year
Profit/(Loss) attributable to:
- owners of the Parent
- non-controlling interest
12,407
462
278
184
(iii) Summarised cash flows
MTD
Construction
(Philippines)
Inc.
RM’000
For the financial year ended 31 March 2014
Net cash generated from operating activities
Net cash used in financing activities
(7,626)
19
Net increase in cash and cash equivalents
Effects of foreign exchange rate changes
Cash and cash equivalents beginning of the year
(7,607)
(571)
14,971
Cash and cash equivalents at end of the year
6,793
For the financial year ended 31 March 2013
100
Net cash generated from operating activities
Net cash used in investing activities
Net cash used in financing activities
(9,440)
132
104
Net increase in cash and cash equivalents
Effects of foreign exchange rate changes
Cash and cash equivalents at beginning of the year
(9,204)
1,385
22,790
Cash and cash equivalents at end of the year
14,971
ANNUAL REPORT 2014
18.Investments in associates
Group 2014 2013
RM’000
RM’000
11,045 8,664 10,737
11,275
19,709 22,012
Unquoted shares, at cost
Share of post-acquisition reserves
Proportion (%) of
ownership interest
Name Principal Activities
2014 2013
Incorporated in Malaysia
Associate of MTDC
Intraxis Engineering Sdn. Bhd. (1) Civil works for Hydroelectric project
40 40
Property development
49 49
Construction and engineering
49 49
Associate of Gandaan Unik
Sdn. Bhd.
Modal Ehsan Sdn. Bhd.
Unincorporated in Thailand
Associate of ACP Tech
ASC Engineering Sdn. Bhd.
and U and O Corporation
Ltd. Joint Venture
(“ASC Engineering”)
(1)
The financial statements of the above associate is not coterminous with those of the Group. It has a financial year
end of 31 December 2013. For the purpose of applying the equity method of accounting, the unaudited financial
statements of this associate as at 31 March 2014 has been used as there are no significant transactions between
the reporting date of their last audited financial statements and 31 March 2014.
Summarised financial information in respect of each of the Group’s material associates is set out below. The
summarised financial information represents the amounts in the MFRS financial statements of the associates and not
the Group’s share of those amounts.
MTD ACPI ENGINEERING BERHAD
101
Notes to the Financial Statements (Cont’d)
31 March 2014
18.Investments in associates (CONT’D)
(i) Summarised statement of financial position
Intraxis
Modal
Engineering Ehsan ASC
Sdn. Bhd. Sdn. Bhd. Engineering Total
RM’000 RM’000 RM’000 RM’000
As at 31 March 2014
Assets and liabilities:
Current assets
104,897 Non-current assets
338 55,549 29,763 5
–
160,451
30,101
Total assets
105,235 85,312 5
190,552
Current liabilities
Non-current liabilities
69,416 76 73,730 –
861 –
144,007
76
Total liabilities
69,492 73,730 861 144,083
Net assets
35,743 11,582 (856)
46,469
Assets and liabilities:
Current assets 106,665 Non-current assets 4,976 51,310 37,245 5
–
157,980
42,221
Total assets 111,641 88,555 5
200,201
Current liabilities 1,081 Non-current liabilities 76,075 70,559 –
906 –
72,546
76,075
Total liabilities 77,156 70,559 906 148,621
Net assets 34,485 17,996 (901)
51,580
As at 31 March 2013
(ii)Summarised statement of comprehensive income
Intraxis
Modal
Engineering Ehsan ASC
Sdn. Bhd. Sdn. Bhd. EngineeringTotal
RM’000 RM’000 RM’000RM’000
For the financial year ended 31 March 2014
Results:
Revenue
–
Profit for the year
1,258 48,515 (6,414)
–
60 34,415 13,622 –
(129)
48,515
(5,096)
For the financial year ended 31 March 2013
Results:
Revenue
Profit for the year
102
ANNUAL REPORT 2014
–
286 34,415
12,806
18.Investments in associates (CONT’D)
(iii) Reconciliation of the summarised financial information presented above to the carrying amount of the
Group’s interest in associates:
Intraxis
Modal
Engineering Ehsan ASC
Sdn. Bhd. Sdn. Bhd. Engineering
RM’000 RM’000 RM’000
Post-acquisition reserves at 1 April 2012
Profit/(loss) for the year
Dividend paid
33,899 286 –
(17,292)
13,622 –
(1,097)
(129)
–
Post-acquisition reserves at 31 March 2013
34,185 (3,670)
(1,226)
Interest in associates
Carrying value of Group’s interest in associatesat 31 March 2013
40%
13,674 49%
(1,798)
49%
(601)
Post-acquisition reserves at 1 April 2013
Profit/(loss) for the year
Dividend paid
34,185 1,258 –
(3,670)
(6,414)
–
(1,226)
60
–
Post-acquisition reserves at 31 March 2014
35,443 (10,084)
(1,166)
Interest in associates
Carrying value of Group’s interest in associates at 31 March 2014
40%
14,177 49%
(4,942)
49%
(571)
19.Investments in joint ventures
Group
2014 2013
RM’000 RM’000
Unquoted shares, at cost
Share of post-acquisition profits
Dividend received
2,926 17,319 (12,000)
8,245 3,879
19,496
(6,000)
17,375
The Group has 50% of the voting rights of its joint arrangements. Under the contractual arrangements, unanimous consent
is required from all parties to the agreements for all relevant activities.
The joint arrangements are structured via separate entities and provide the group with the rights to the net assets of the
entities under the arrangements. Therefore these entities are classified as joint ventures of the Group.
MTD ACPI ENGINEERING BERHAD
103
Notes to the Financial Statements (Cont’d)
31 March 2014
19.Investments in joint ventures (CONT’D)
(a) Details of the joint venture are as follows:
Proportion (%) of
ownership interest
held by the Group
Name
2014 2013
Buildcast-Persys Joint Venture (“Buildcast-Persys JV”)
3030
Al-Meraikhi Industrial Complex- MTD ACP Precast Sdn. Bhd-Abu Dhabi Joint Venture
(“AMIC-MTD JV”)
5050
SMEET Precast SPC- MTD ACP Precast LLC (“SMEET-MTD JV”)
49
–
(b) Summarised financial information of Buildcast-Persys JV is set out below. The summarised information represents the
amounts in the MFRS financial statements of the joint ventures and not the Group’s share of those amounts.
(i)
Summarised statement of financial position
Buildcast- AMIC-SMEETPersys MTD
MTD
JV JV
JV
RM’000 RM’000 RM’000 Total
RM’000
As at 31 March 2014
Assets and liabilities:
Current assets
Non-current assets
5,364 9,997 7,310 –
3,908 4,874 16,582
14,871
15,361 7,310 8,782 31,453
Current liabilities
Non-current liabilities
1,227 –
682 728 12,601 –
14,510
728
Total liabilities
1,227 1,410 12,601 15,238
14,134 5,900 (3,819)
16,215
Current assets
Non-current assets
15,368 22,006 17,087 6,680 –
–
32,455
28,686
Total assets
37,374 23,767 –
61,141
Current liabilities
Non-current liabilities
7,339 –
12,799 1,998 –
–
20,138
1,998
Total liabilities
7,339 14,797 –
22,136
30,035 8,970 –
39,005
Total assets
Net assets/(liabilities)
As at 31 March 2013
Assets and liabilities:
Net assets
104
ANNUAL REPORT 2014
19.Investments in joint ventures (CONT’D)
(b) Summarised financial information of Buildcast-Persys JV is set out below. The summarised information represents the
amounts in the MFRS financial statements of the joint ventures and not the Group’s share of those amounts. (cont’d)
(i)
Summarised statement of comprehensive income
For the financial year ended 31 March 2014
Results:
Revenue
Profit/(loss) for the year
Buildcast- AMIC-SMEETPersys MTD
MTD
JV JV
JV
RM’000 RM’000 RM’000 1,465 4,099 21,264 (3,070)
195,074 22,517 39,959 10,648 –
(3,819)
Total
RM’000
22,729
(2,790)
For the financial year ended 31 March 2013
Results:
Revenue
Profit for the year
–
–
235,033
33,165
(c) Reconciliation of the summarised financial information presented above to the carrying amount of the Group’s interest
in joint ventures:
Buildcast- AMIC-SMEET
Persys MTD
MTD
JV JV
JV
RM’000 RM’000 RM’000
Net assets at 1 April 2012
Profit for the year
Dividend paid
27,518 22,517 (20,000)
(1,678)
10,648 –
–
–
–
Net assets at 31 March 2013
30,035 8,970 –
Interest in joint ventures
Carrying value of Group’s interest in joint ventures at 31 March 2013 30%
9,011 50%
4,485 49%
–
Net assets at 1 April 2013
Profit for the year
Dividend paid
30,035 4,099 (20,000)
8,970 (3,070)
–
–
(3,819)
–
Net assets at 31 March 2014
Interest in joint ventures
Carrying value of Group’s interest in joint ventures at 31 March 2014 14,134 5,900 (3,819)
30% 50%49%
4,240 2,950 (1,871)
MTD ACPI ENGINEERING BERHAD
105
Notes to the Financial Statements (Cont’d)
31 March 2014
20.Other investments
Current
Fair value through profit or loss
Quoted shares:
- Equity instruments
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
89 88 – –
Non-current
Other non-financial asset
At cost:
Golf club corporate memberships #
290 289 261 261
Less: Accummulated impairment loss
(64)
(40)
(64)
(40)
226 249 197 221
315 337 197 221
89 104 Market value of quoted shares
#
– –
The fair value information has not been disclosed for these financial instruments as their fair value cannot be
measured reliably.
21.Trade and other receivables
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
Current
Trade receivables
Third parties
127,836 80,923 Associates
19,306 18,839 Joint venture
–
964 Ultimate holding company
321 –
Immediate holding company
7,347 19,277 Related companies
33,727 26,306 Progress billings - third parties
4,371 6,357 Retention sums on contracts
- third parties (Note 23)
9,238 11,472 –
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Less: Allowance for impairment
Third parties
Ultimate holding company
202,146 164,138 –
–
(42,383)
(321)
(47,403)
–
–
–
–
–
(42,704)
(47,403)
–
–
159,442 116,735 –
–
Amounts due from related parties:
- Subsidiaries
- Associate
- Related companies
- Joint venture
–
14,344 1,493 484 –
14,346 16,648 657 389,640 1
–
–
396,087
3
415
–
16,321 31,651 389,641 396,505
Trade receivables, net
Other receivables
106
ANNUAL REPORT 2014
21.Trade and other receivables (cont’d)
Other receivables (cont’d)
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
Deposits 1,673 Advances to suppliers
–
Value added tax and withholding tax recoverable
15,315 Sundry receivables
12,516 2,472 168 23 21,309 55 –
–
66 132
–
–
56
45,825 55,623 389,762 396,693
(5,873)
(293)
–
(1,753)
–
–
(55)
–
(235,879)
(55)
–
(16,952)
(6,166)
(1,753)
(235,934)
(17,007)
Other receivables, net
39,659 53,870 153,828 379,686
199,101 170,605 153,828 379,686
13,218 1,672 –
–
Total trade and other receivables
(current and non–current)
Add: Cash and bank balances (Note 26)
Less: Value added tax and withholding tax recoverable
212,319 34,023 (15,315)
172,277 56,576 (23)
153,828 2,967 –
379,686
1,117
–
Total loans and receivables
231,027 228,830 156,795 380,803
Less: Allowance for impairment
Third parties
Related companies
Subsidiaries
Non-current
Trade receivables
Retention sum on contracts
Third parties (Note 23)
(a)Trade receivables
Trade receivables are non-interest bearing and are generally on 30 to 60 days (2013: 30 to 60 days) terms.
Retention sums are receivable at the expiry period of 12 to 24 (2013: 12 to 24) months after completion of
respective construction contracts. They are recognised at their original invoice amounts which represent their
fair values on initial recognition.
Ageing analysis of trade receivables
The ageing analysis of the Group’s trade receivables is as follows:
Group
2014 2013
RM’000 RM’000
Neither past due nor impaired
130,867 52,728
1 to 30 days past due not impaired 31 to 60 days past due not impaired
61 to 90 days past due not impaired
More than 91 days past due not impaired
4,264 3,245 2,041 32,243 8,857
7,434
10,967
38,421
41,793 Impaired
42,704 65,679
47,403
215,364 165,810
MTD ACPI ENGINEERING BERHAD
107
Notes to the Financial Statements (Cont’d)
31 March 2014
21.Trade and other receivables (cont’d)
(a)Trade receivables (cont’d)
Receivables that are neither past due nor impaired
Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment
records with the Group.
None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the
financial year.
Receivables that are past due but not impaired
The Group has trade receivables amounting to RM41,793,000 (2013: RM65,679,000) that are past due at the
reporting date but not impaired. The receivable balance is unsecured in nature.
The Group’s primary exposure to credit risk arises through its trade receivables where trading terms are mainly on
credit. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its receivables
through its credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior
management. The Group’s trade receivables relate to a large number of diversified customers and has no
significant concentration of credit that may arise from exposures to a single debtor or to groups of debtors.
Receivables that are impaired
The Group’s trade receivables that are impaired at the reporting date and the movement of the allowance
accounts used to record the impairment are as follows:
Individually impaired
2014 2013
RM’000 RM’000
Group
Trade receivables
- nominal amounts
Less: Allowance for impairment
42,704 (42,704)
– 47,403
(47,403)
–
Movement in allowance accounts:
Group
2014 2013
RM’000 RM’000
Trade receivables
At 1 April 47,403 51,874
Written off
(2,348)
(1,320)
Reversal of impairment losses (Note 6)
(4,325)
(4,807)
Charge for the year (Note 8)
1,974 1,656
At 31 March
108
ANNUAL REPORT 2014
42,704 47,403
21.Trade and other receivables (cont’d)
(b)Other receivables
In the prior year, advances to suppliers are made primarily for supply of raw materials and purchase of plant and
machinery.
Movement in allowance accounts:
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
Individually impaired:
At beginning of year
Written off
Reversal of impairment losses (Note 6)
Charge for the year (Note 8) 1,753 1,646 17,007 1,135
(423)– ––
(30)
–
(70)
(39)
4,866 107 218,997 15,911
At end of year
6,166 235,934 1,753 17,007
(c)Amounts due from related companies (Trade and other receivables)
Amounts due from all related companies are unsecured, non-interest bearing and are repayable on demand.
Further details on related party transactions are disclosed in Note 39.
22.Other current assets
Prepaid operating expenses GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
1,466 14 3,090 32
23. Gross amount due (to)/from customers for contracts
Group
2014 2013
RM’000 RM’000
Construction contract costs incurred to date
Attributable profits
Less: Provision for foreseeable losses
3,775,367 4,005,601
358,237 385,869
(820)
(820)
4,132,784 4,390,650
Less: Progress billings (4,127,498) (4,387,513)
5,286 3,137
Presented as:
Gross amount due from customers for contract work
Gross amount due to customers for contract work
24,612 (19,326)
5,286 23,745
(20,608)
3,137
MTD ACPI ENGINEERING BERHAD
109
Notes to the Financial Statements (Cont’d)
31 March 2014
23. Gross amount due (to)/from customers for contracts (CONT’D)
Group
2014 2013
RM’000 RM’000
Retention sums on construction contract, included within trade receivables:
Current (Note 21)
9,238 11,472
Non-current (Note 21)
13,218 1,672
22,456 13,144
Retention sums and advances received on contracts, included within trade payables:
Current (Note 33)
Non-current (Note 33)
18,682 16,032 32,031
4,266
34,714 36,297
24. Deferred taxation
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
Presented after appropriate offsetting as follows:
Deferred tax assets
Deferred tax liabilities
(479)
137 (418)
1,831 – –
102 168
(342)
1,413 102 168
Deferred income tax relates to the following:
Recognised
in profit As at
or loss Exchange
As at
1 April (Note 11) differences 31 March
RM’000 RM’000 RM’000 RM’000
Group
2013
Deferred tax assets:
Unused tax losses and unabsorbed capital allowances
Others
(5,308)
(6,661)
9
6,086 –
–
(5,299)
(575)
(11,969)
6,095 –
(5,874)
Deferred tax liabilities:
Accelerated capital allowances
Others
6,018 1,494 (228)
3
–
–
5,790
1,497
7,512 (225)
–
7,287
(4,457)
5,870 –
1,413
110
ANNUAL REPORT 2014
24. Deferred taxation (CONT’D)
Recognised
in profit As at
or loss Exchange
As at
1 April (Note 11) differences 31 March
RM’000 RM’000 RM’000 RM’000
2014
Deferred tax assets:
Unused tax losses and unabsorbed capital allowances
Others
(5,299)
(575)
178 (1,656)
4
12 (5,117)
(2,219)
(5,874)
(1,478)
16 (7,336)
5,790 1,497 417 (710)
–
–
6,207
787
7,287 (293)
–
6,994
1,413 (1,771)
16 Deferred tax liabilities:
Accelerated capital allowances
Others
(342)
Recognised
in profit As at
or loss Exchange
As at
1 April (Note 11) differences 31 March
RM’000 RM’000 RM’000 RM’000
Company
2013
Deferred tax assets:
Others
(57)
(19)
–
(76)
Deferred tax liabilities:
Accelerated capital allowances
241 3
–
244
184 (16)
–
168
Deferred tax assets:
Others
(76)
(50)
–
(126)
Deferred tax liabilities:
Accelerated capital allowances
244 (16)
–
228
168 (66)
–
102
2014
MTD ACPI ENGINEERING BERHAD
111
Notes to the Financial Statements (Cont’d)
31 March 2014
24. Deferred taxation (CONT’D)
Deferred tax assets not recognised
No deferred tax asset is recognised on the following items due to uncertainty of future taxable profits of the Company
and the respective subsidiaries. The availability of unused tax losses for offsetting against future taxable profit of the
respective subsidiaries in Malaysia is subject to no substantial changes in shareholdings of those subsidiaries under
the Income Tax Act, 1967 and guidelines issued by the tax authority.
Deferred tax assets have not been recognised in respect of the following items:
Group
2014 2013
RM’000 RM’000
77,977 66,743 22,593 28,848 61,659
45,855
39,463
17,434
196,161 164,411
Unused tax losses
Unabsorbed capital allowances
Unutilised reinvestment allowance
Other temporary difference
25.Inventories
Group
2014 2013
RM’000 RM’000
Cost
11,043 27,496 12,207
34,860
38,539 47,067
Raw materials
Finished goods
During the year, the amount of inventories recognised as an expense in cost of sales of the Group was RM67,897,612
(2013: RM73,814,720). A write off of inventories amounted to RM2,170,113 (2013: RM4,998,000) was recognised
during the year.
26.Cash and bank balances
112
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
Deposits with licensed banks
Cash at banks and on hand
4,995 29,028 7,024 49,552 2,633 334 1,067
50
Cash and bank balances
34,023 56,576 2,967 1,117
Deposits with licensed banks are made for varying periods of between one day and three months depending on the
immediate cash requirements of the Group and the Company, and earn interests at the respective short-term deposit
rates. The weighted average effective interest rates as at 31 March 2014 or the Group and the Company were 3.00%
(2013: 2.94%) and 3.00% (2013: 3.02%) per annum respectively.
Deposits with licensed banks of the Group and Company amounting to RM4,995,000 (2013: RM3,982,000) and
RM2,633,000 (2013: RM1,067,000) respectively are pledged as securities for borrowings as disclosed in Note 31.
Involved in cash at banks and on hand is an amount of RM51,768 (2013: RM25,022,114) and RM7,238,580 (2013:
RM259,081) secured as Escrow accounts and sinking funds respectively.
ANNUAL REPORT 2014
26.Cash and bank balances (CONT’D)
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following as at the reporting
date:
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
Cash and bank balances
Bank overdrafts (Note 31)
34,023 (5,595)
56,576 (4,117)
2,967 (2,903)
1,117
(2,900)
Cash and cash equivalents
28,428 52,459 64 (1,783)
27.Non-current asset classified as held for sale
Group
2014 2013
RM’000 RM’000
At 1 April 2013/ 2012
275 –
Reclassed from investment property (Note 15)
–
275
Reclassed to investment property (Note 15)
(275)–
–
275
Asset carried at fair value less costs to sell classified as held for sale
–
275
On 3 July 2011, Universal Building Products Sdn. Bhd. (“UBP”), a wholly-owned subsidiary of the Company, has
entered into a conditional sale and purchase agreement with a third party (“Purchaser”), for the disposal of its building
located at the Summit Subang USJ, Mukim Damansara for a consideration of RM290,000. UBP has vide a letter dated
22 May 2013, granted an extension of time till 1 August 2013, for the Purchaser to make the payment of the balance
consideration. As at 31 March 2013, the Purchaser has yet to fulfill all the conditions as stipulated in the said sale and
purchase agreement.
On 20 September 2013, the agreement was terminated. The non-current asset classified as held for sale is reclassified
to investment property.
28.Share capital and treasury shares
(a)Share capital
Group and Company
Number of ordinary
shares of RM1 each Amount
2014 2013 2014 2013
‘000 ‘000 RM’000 RM’000
Authorised
At 1 April/31 March 500,000 500,000 500,000 500,000
Issued and fully paid
At 1 April/31 March 231,633
The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by
the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the
Company’s residual assets.
231,633 231,633 231,633 MTD ACPI ENGINEERING BERHAD
113
Notes to the Financial Statements (Cont’d)
31 March 2014
28.Share capital and treasury shares (CONT’D)
(b)Treasury shares
Group and Company
Number of ordinary shares Amount
2014 2013 2014 2013
‘000 ‘000 RM’000 RM’000
At 1 April/31 March 637 637 1,905 1,905
Treasury shares relate to ordinary shares of the Company that are held by the Company. The amount consists of the
acquisition costs of treasury shares net of the proceeds received on their subsequent sale of issuance during the year.
There were no treasury shares purchased during the year.
The shares repurchased were held as treasury shares in accordance with Section 67A of the Companies Act, 1965.
The amount consists of the acquisition costs of treasury shares net of the proceeds received on their subsequent sale
or issuance.
29.Reserves
The nature and purpose of each category of reserves are as follows:
(a)Share premium
Share premium is in respect of issue of shares, net of its related expenses.
(b)Capital redemption reserve
Capital redemption reserve comprises principally capital gains from the disposal of property, plant and equipment
and investments of certain foreign subsidiaries maintained for future appropriation of dividends.
(c)Foreign currency translation reserve
The foreign currency translation reserve is used to record all foreign exchange differences arising from the
translation of the financial statements of foreign operations whose functional currencies are different from that of
the Group’s presentation currency.
(d)Other reserves
Included in other reserves are:
(i)
Statutory reserve arising from Saudi Arabia from a branch of a subsidiary, Persys Sdn. Bhd.. According to
Article 176 of the company law in the Kingdom of Saudi Arabia, 10% of the net profit should be transferred
to the Statutory Reserve. The branch may discontinue such annual transfer when the Statutory Reserve
equals 50% of the capital. The statutory reserve is not available for dividend distribution to shareholders.
(ii) Capital reserve where the Group’s share of the associate capital reserve in respect of the remaining
investment which is currently captured as long term investment.
(iii) Capital reserve arising from a subsidiary’s bonus issue capitalised from retained earnings, totalling
RM29,000,000.
(e)Retained earnings
The entire retained earnings can be distributed as dividend under the single tier system.
114
ANNUAL REPORT 2014
30. Defined benefit plan
The Group operates unfunded defined retirement benefit scheme for its eligible employees. Provision for the unfunded
retirement benefit obligations is made in accordance with the terms stipulated in the Collective Agreement for all
eligible employees. This is calculated based on the employees’ current emoluments and the length of their service
with the subsidiaries within the Group and the Company.
The actuarial valuation for financial year ended 31 March 2013 was conducted by a professional actuarist which
covers a two years estimation up to 31 March 2014.
The following tables summarise the components of net benefit expense recognised in profit or loss and amounts
recognised in the statements of financial position for the plan:
Net benefits expense
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
608 468 –
599 606 (241)
13 12 –
11
12
(8)
1,076 964 25 15
Current service cost
Interest cost on benefit obligation
Net actuarial gain recognised in the year
Net benefit expense, included in employee benefits
expense (Note 9)
Actuarial gain recognised in other comprehensive income
Benefit liability
Defined benefit obligation
Unrecognised actuarial gain
11,453 –
11,551 2,282 288 –
213
90
Benefit liability
11,453 13,833 288 303
Analysed as:
Current
1,397 Non-current 10,056 238 13,595 84 –
204 303
11,453 13,833 288 (2,839) – (40)–
303
Changes in present value of defined benefit obligation are as follows:
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
At 1 April 2013/2012
13,833 13,174 303 288
Current service cost
608 599 13 11
Interest cost
468 606 12 12
Actuarial gain on obligation
(2,839)
(241)
(40)
(8)
Benefits paid
(617)
(305)
––
At 31 March
11,453 13,833 288 303
MTD ACPI ENGINEERING BERHAD
115
Notes to the Financial Statements (Cont’d)
31 March 2014
30. Defined benefit plan (cont’d)
The principal assumptions used in determining the defined benefit obligation are shown below:
Discount rate (%)
Expected rate of salary increases (%)
A 1.0% increase/decrease in discount rate will
decrease/increase the defined benefit obligation by:
A 1.0% increase/decrease in expected rate of salary increases
will increase/decrease the defined benefit obligation by:
Group and Company
2014 2013
4.4 5.0 4.0
5.0
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
(557)
(599)
(11)
478 427 3
(12)
3
The sensitivity analysis presented above may not be representative of the actual change in defined benefit obligation
as it is unlikely that the change in assumptions would occur in isolation of one another as some assumptions may be
correlated.
31.Loans and borrowings
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
Current
Secured:
Bank overdrafts
Revolving credits
- COF + 1.50% p.a.
- COF + 0.75% p.a.
Term loans
- BLR + 1.5%
Obligations under finance leases (Note 32)
42,024 51,018 ––
3,700 – –
–
–
160 697 234 ––
––
48,575 53,166 ––
2,904 2,900 2,903 2,900
1,500 1,500 1,500 1,500
4,404 4,400 4,403 4,400
52,979 57,566 4,403 4,400
Unsecured:
Bank overdrafts
Revolving credits
- COF + 1% p.a.
116
ANNUAL REPORT 2014
2,691 1,217 ––
31.Loans and borrowings (CONT’D)
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
Non-current
Secured:
Obligations under finance leases (Note 32)
–
177 –
–
52,979 57,743 4,403 4,400
Bank overdrafts (Note 26)
Revolving credits
Term loans
Obligations under finance leases
5,595 47,224 –
160 4,117 52,518 697 411 2,903 1,500 –
–
2,900
1,500
–
–
52,979 57,743 4,403 4,400
Total loans and borrowings
Total borrowings
Bank overdrafts
Bank overdrafts bear interest at BLR plus a percentage mark up ranging from 0.75% and 1.75% per annum (2013:
0.75% and 1.75% per annum) during the financial year.
Revolving credits
Revolving credits bear interest at COF plus a percentage mark up ranging from 0.75% and 1.50% per annum (2013:
0.75% and 2.00% per annum) during the financial year.
Term loans
Term loans bear interest at BLR plus 1.5% per annum during the previous financial year.
Securities
The borrowings (excluding hire purchase and finance lease liabilities) of the Group and of the Company are secured
by certain assets of the Group and of the Company as disclosed in Note 26.
The borrowings are secured by the following:
(a) Corporate guarantees by the Company; and
(b) Negative pledge from subsidiaries’ assets, both present and future.
(c) Respective contract proceeds of MTD Construction Sdn. Bhd..
MTD ACPI ENGINEERING BERHAD
117
Notes to the Financial Statements (Cont’d)
31 March 2014
32.Obligations under finance leases
The Group has finance leases for motor vehicles as disclosed in Note 14(a). There are no restrictions placed upon
the Group by entering into these leases and no arrangements have been entered into for contingent rental payments.
Future minimum lease payments under finance leases together with the present value of the net minimum lease
payments are as follows:
Group
2014 2013
RM’000 RM’000
Minimum lease payments:
Not later than 1 year
Later than 1 year but not later than 2 years
Later than 2 years but not later than 5 years
163 250
–
180
––
Total minimum lease payments
Less: Amounts representing finance charges
163 (3)
430
(19)
160 411
Present value of minimum lease payments
Present value of payments:
Not later than 1 year
160 234
Later than 1 year but not later than 2 years
–
177
Later than 2 years but not later than 5 years
––
Present value of minimum lease payments
Less: Amount due within 12 months (Note 31)
160 (160)
Amount due after 12 months (Note 31)
–
411
(234)
177
The Group has finance lease and hire purchase contracts for motor vehicles (Note 14 (a)). There are no restrictions
placed upon the Group by entering into these leases and no arrangement have been entered into for contingent rental
payment.
The average discount rate implicit in the leases is 3.15% to 3.20% p.a. (2013: 3.15% to 3.20% p.a.).
33.Trade and other payables
Current
Trade payables
Third parties
Amount due to related parties:
- Ultimate holding company
- Related companies
Retention sum on contracts
- Third parties
118
ANNUAL REPORT 2014
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
130,908 142,127 –
–
6,807 6
–
–
–
–
–
–
18,682 32,031 –
–
156,403 174,158 –
–
33.Trade and other payables (CONT’D)
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
Other payables
Amounts due to related parties:
- Ultimate holding company
- Immediate holding company
- Subsidiaries
- Joint venture
- Related companies
644 21,520 –
344 6,869 –
637 –
–
27,828 –
21,520 124,168 –
5,975 –
637
146,204
–
6,945
Sundry payables
Accrued operating expenses
29,377 27,107 40,033 28,465 16,078 4,551 151,663 425 49 153,786
299
122
96,517 49,094 152,137 154,207
252,920 223,252 152,137 154,207
Non-current
Trade payables
Retention sum on contracts (Note 23):
- Third parties
16,032 4,266 –
–
Total trade and other payables
Add: Loans and borrowings (Note 31)
268,952 52,979 227,518 57,743 152,137 4,403 154,207
4,400
Total financial liabilities carried at amortised cost
321,931 285,261 156,540 158,607
(a)Trade payables
These amounts are non-interest bearing. Trade payables are normally settled on 30 to 120 day (2013: 30 to 120
day) terms.
Included within trade payables are:
Group
2014 2013
RM’000 RM’000
Advances received on contracts
59,860 42,808
Advances received on contracts are recovered against future progress billings by applying a certain formula as
stated in the contract.
(b)Amounts due to related parties
These amounts are non-interest bearing, other than amounts due to subsidiaries of RM123,568,000 (2013:
RM144,651,000) which attract interest of 5% (2013: 5%) per annum. All amounts are unsecured, repayable on
demand and are to be settled in cash.
MTD ACPI ENGINEERING BERHAD
119
Notes to the Financial Statements (Cont’d)
31 March 2014
34.Provisions
Provision for liquidated ascertained damages
RM’000
Group
Current:
2014
At 1 April 2013
Arose during the year (Note 8)
At 31 March 2014
815
323
1,138
2013
At 1 April 2012
Arose during the year (Note 8)
Write back of provision At 31 March 2013
35,220
394
(34,799)
815
Provision for liquidated ascertained damages
Provision for liquidated ascertained damages is in respect of construction projects undertaken by certain subsidiaries.
The provision is recognised for expected liquidated ascertained damages claims based on the terms of the contracts.
In the prior year, the provision was written back because the Group was granted extension of time by the relevant
authorities and is no longer obligated to settle the provision.
35.Capital commitments
Group
2014 2013
RM’000 RM’000
Property, plant and equipment:
- Approved and contracted for 1,696 793
- Approved but not contracted for
1,396 3,941
3,092 4,734
36.Contingent liabilities
Guarantees
The Group and the Company have provided the following guarantees as follows:
120
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
Unsecured:
Corporate guarantees given to financial institutions for:
- Facilities granted to subsidiaries
- Performance bonds to clients
––
187,045 26,652 26,652 2,238 86,255
648
26,652 86,903
ANNUAL REPORT 2014
26,652 189,283 36.Contingent liabilities (CONT’D)
In compliance to the terms of the various contracts, the Group is required to give bank guarantees or performance
bonds to clients.
The Group and the Company concluded that the guarantee is more likely not be called upon by the banks and
accordingly not recognised as financial liability as at 31 March 2014 and 31 March 2013.
37.Contingent asset
MTD Construction Sdn. Bhd. (“MTD Construction”) vs AXA Affin Assurance Berhad (“AXA”)
On 23 March 2005, MTDC, a wholly-owned subsidiary of MTDACPI through its solicitors had served a Writ of
Summons and Statement of Claim on AXA. The suit involves a claim under a Contractor’s All Risk Policy (“CAR
Policy”) underwritten by AXA and procured by MTDC in respect of a project known as “Construction and Completion of
Jalan Simpang Pulai-Lojing-Gua Musang-Kuala Berang, Package 2 (“the Project”). The coverage period of the CAR
Policy was from 11 April 1996 to 10 April 1999, which was extended to 31 January 2004 plus 24 months maintenance
plus 3 months and 14 days thereafter, for making good defects, imperfections, shrinkages or any other faults or
indemnify the Plaintiff for any losses or damages in respect of the Project.
MTDC contends that AXA is in breach of the CAR Policy when it failed to decide on acceptance of its liability or make
payment in settlement of the claims and is claiming for inter alia, RM38,586,234 as at August 2003 being cost for
remedial works in respect of slope failures/landslips at the Project site, alternatively damages to be assessed and
costs.
On 27 May 2011, the learned judge ruled the suit in favour of the Plaintiff and held that:
(1) AXA is liable to all losses and damages suffered by MTDC and MTDC is entitled for indemnity under the
CAR Policy;
(2) MTDC’s claim is allowed on liability with costs. Costs shall be taxed unless agreed; and
(3) Damages (indemnity) to be assessed before the Registrar.
On 10 June 2011, AXA filed a Notice of Appeal and the Court had fixed for hearing the appeal on 8 August 2012,
which was then postponed to 5 December 2012. The Court also fixed the same date, for AXA to file Affidavit in Reply
to MTDC’s Affidavit in Support of the application for Assessment of Damages.
On 5 December 2012, the Court of Appeal ruled the following:
(i)
AXA’s liability is limited only for slope failures arising after 13 July 2000; and
(ii) AXA’s is entitled to pay 50% of the costs and remedial works as assessed by the Court.
The Court of Appeal’s decision varied the decision of the High Court made on 27 May 2011 but it did not set aside the
decision of the High Court.
On 4 January 2013, AXA applied to Federal Court on the Court of Appeal’s decision.
On 20 May 2013, the Grounds of Judgment of the Court of Appeal was finally issued. Both parties noted that there is
a serious inconsistency in respect of the cut off date on AXA’s liability for the landslips which previously decided on 5
December 2012 to be 13 July 2000, as compared to what’s written in the Grounds of Judgment as at 11 May 2001.
Due to the inconsistency in respect of the cut off dates MTDC applied to get clarification from the Court of Appeal
(“Clarification”).
On 28 February 2014 the Clarification application was heard and the following directions were given:-
(i) The correct date in the Sealed Order of the Court of Appeal ought to read as 11 May 2001 instead of 13 July
2000;
(ii) The parties are to apply to amend the Sealed Order dated 5 December 2012 to reflect 11 May 2001.
MTD ACPI ENGINEERING BERHAD
121
Notes to the Financial Statements (Cont’d)
31 March 2014
37.Contingent asset (CONT’D)
MTDC then proceeded to appeal. On 30 June 2014, the Federal Court has granted MTDC’s application for enlargement
of time to file an appeal to the Federal Court. MTDC filed its application for leave to appeal to Federal Court on 24 July
2014. Case Management is fixed on 6 August 2014.
Based on solicitors advice, MTDC has a sustainable claim and good chances of success on the balance of probabilities
provided full proof of MTDC’s loss is produced at trial.
38. Material litigations
(a) Perwira Affin Bank Berhad (now known as Affin Bank Berhad) (“Affin”) vs ACP Industries Berhad (now
known as MTDACPI) (“MTDACPI”)
On 9 June 1998, Affin filed a Writ of Summons and Statement of Claim in the Kuala Lumpur High Court against
MTDACPI seeking for inter-alia, a declaration that all progress payments due and owing by MTDACPI to a third
party, LK Ooi Construction Sdn Bhd under a letter of award/contract with MTDACPI in relation to construction
and completion of a subcontract that was valued at RM8,851,935, which had been assigned to Affin by way of a
deed of assignment, to be paid to Affin.
Whilst the aggregate amount of the progress payments is not specified in the Statement Of Claim, Affin claims that
MTDACPI had, save for an amount of approximately RM2,821,190, failed to pay to Affin any or all of the progress
payments due under the subcontract. As such, Affin’s claim against MTDC is estimated to be approximately
RM6,030,745.
Affin’s application for summary judgment was heard and dismissed with costs on 30 March 2000. Affin’s appeal
to the Court of Appeal against the summary judgment was also dismissed with costs on 23 June 2003.
Hearing of the matter began 25 October 2005 and decision was fixed on 30 August 2007. Affin filed an application
to further amend the statement of claim on 17 August 2007. The hearing of the application was heard on 13
February 2009 and the court dismissed Affin’s application. Affin filed an appeal to the Court of Appeal. Therefore,
the matter which is fixed for decision of the full trial on 29 May 2009, was postponed as the Learned Judge was
of the view that the decision ought to be delivered after the disposal of Affin’s appeal.
On 6 October 2010, the Court of Appeal had dismissed Affin’s appeal with costs for RM4,000.00. Upon disposal
of the appeal, the High Court had fixed the decision date on 24 January 2011 in regards to the full trial which
was conducted on 29 May 2009. On 24 January 2011, the learned Judge dismissed Affin’s claim with cost.
Subsequently, Affin filed a Notice of Appeal against the High Court decision and the said notice was served on
4 March 2011 to MTDACPI. The appeal has been fixed for case management on 2 October 2012 and hearing
date fixed on 14 January 2013.
On 14 January 2013, the Court of Appeal allowed Affin’s claim (“Order”). MTDACPI filed a notice of motion
to appeal to Federal Court on 7 February 2013 (“Motion to Appeal”). Affin had on 13 February 2013 filed an
application for directions and consequential orders in execution of the Order granted by the Court of Appeal on
14 January 2013 (“Application for Account and Proceedings”) and MTDACPI subsequently filed notice of motion
for stay of execution on 26 February 2013 (“Motion for Stay”). On 21 August 2013, the Motion to Appeal was
dismissed with costs of RM10,000.00. Subsequently, on 10 September 2013, the Court struck out the Motion for
Stay with costs of RM2,000.00.
Affin’s Application for Account and Proceedings was heard fixed for Hearing on 11 July 2014. The said Application
is fixed for decision on 15 August 2014. Based on solicitor’s advice, MTDACPI has a 50% chance of success in
the application.
122
ANNUAL REPORT 2014
38. Material litigations (CONT’D)
(b)Tenaga Nasional Berhad (“TNB”) vs MTD Construction Sdn Bhd (“MTDC”)
On 4 July 2008, TNB through their solicitor had served the Writ of Summons and Statement of Claim against
MTDC, a wholly-owned subsidiary of MTDACPI, alleging that, the Company and/or agent and/or employees
have negligently caused damage to TNB’s 33KV power cables during the road work and excavation near the
Plaza Phoenix. TNB’s claim are as follows:
i)
RM1,407,000 - Loss and Special Damages done to the 33KV power cable;
ii)
RM10,000,000 - Aggravated Damages and Exemplary Damages;
iii) 8% interest on the amount of RM1,407,000 from the date of filing of the Writ of Summons and Statement of
Claim until full realisation;
iv) 8% interest on the amount of RM10,000,000 from the date of filing of Writ of Summons and Statement of
Claim until full realisation;
v)
Costs; and
vi) Other reliefs as deem fit by the Court.
MTDC had categorically denied liability for any damages to the power cables. The trial have been fixed on 21
and 22 May 2012.
On 24 July 2012, the Learned Judge had dismissed TNB’s claim with cost and further ordered that the cost to
be taxed.
On 13 August 2012, TNB filed an appeal of this matter to the Court of Appeal. Subsequently, the Court of Appeal
had fixed the matter hearing on 21 October 2013.
On 21 October 2013, the Court had given the decision as follows:
(i)
TNB’s appeal against MTDC was dismissed with RM10,000.00 costs;
(ii) decision of the High Court is maintained; and
(iii) the deposit is refunded to TNB.
(c)ASC Engineering Sdn Bhd (“ASC”) vs Mohd Zahari Hassan Sdn Bhd (“Zahari”)
On 24 November 2003, ASC Engineering Sdn Bhd (“ASC”), a wholly-owned subsidiary of MTDACPI, filed a Writ
of Summons and Statement of Claim against Zahari for the outstanding sum of RM2,251,000 for works done
arising from the Contract of Water Supply Scheme, Selangor River, Phase 2 for the Development of 46 units
Class G Quarters, 1 unit of surau and related works at Sungai Selangor Water Treatment Plant. Zahari also
filed a counterclaim for the sum of RM2,925,200 being alleged losses and damages suffered by Zahari. On 5
February 2009, Zahari filed an application for leave to issue Third Party Notice to include a third party into the
proceeding.
The case went on for full trial on 20 December 2010 and 11 January 2011. On 14 June 2011, the learned Judge
held that:
i) ASC’s claim to the extent of RM504,984 was allowed with costs;
ii) Zahari’s counterclaim dismissed with costs;
iii) Zahari’s claim against the Third Party dismissed with costs; and
iv) all costs to be agreed on or taxed.
MTD ACPI ENGINEERING BERHAD
123
Notes to the Financial Statements (Cont’d)
31 March 2014
38. Material litigations (CONT’D)
(c)ASC Engineering Sdn Bhd (“ASC”) vs Mohd Zahari Hassan Sdn Bhd (“Zahari”) (cont’d)
ASC filed a Notice of Appeal on 13 July 2011 for item (i) above and filed the Record of Appeal on 16 December
2011. Zahari also filed a Notice of Appeal against the whole decision in dismissing its counterclaim and its claim
against the third party.
On the hearing of the appeals on 27 June 2013, ASC’s appeal was allowed to the extent of RM1,784,189 and
Zahari is to pay the said sum together with interest of 5% per annum from 26 October 2002 to the date of
Judgment and thereafter to the date of full settlement plus costs of RM10,000.00. Zahari’s appeal was dismissed
with costs of RM5,000, to be paid to ASC.
Zahari has been wound up via Court Order dated 8 November 2013. Subsequently, ASC filed its Proof of Debt
for a total amount of RM2,957,333.34 with the Melaka Insolvency Department on 7 February 2014.
Awaiting for Creditor’s Meeting to be fixed by the Insolvency Department.
(d)In the matter of an arbitration between ACP Industries Berhad & Mendza Builders Sdn Bhd and Air
Kelantan Sdn Bhd
The arbitration proceedings relates to disputes arising from a contract awarded by Air Kelantan Sdn Bhd (“AKSB”
or “Respondent”) to ACPI-Mendza Joint Venture via a Letter of Acceptance dated 19 December 2000 for the
Design, Build and Finance of Chica Water Supply Scheme, Kota Bahru, Kelantan with a total contract sum of
Ringgit Malaysia (“RM”) 77.9 million (“Contract”). ACPI-Mendza Joint Venture is an unincorporated joint venture
between ACP Industries Berhad (now known as MTDACPI) (“ACPI”) and Mendza Builders Sdn Bhd (“Mendza”)
(collectively referred to as the “Claimants”).
The Certificate of Practical Completion for the Contract was issued by AKSB on 28 December 2003 with the
certified completion date being 2 October 2003 and the Final Certificate was subsequently issued by AKSB on
1 June 2006.
Disputes arose between the parties on closing of the final account for the Contract. The Claimants contended
that the final account:
1.
assigns no value to the following variation works:
(i)
the construction and completion of elevated water tank;
(ii) the pipe laying on the road in lieu of road verges;
(iii) the construction and completion of aeration tank system;
2.
appears to incorrectly tabulate the profit portion, and incorrectly imposed the liquidated ascertained
damages;
3.
incorrectly deducted the cost of Scada System;
4.
has not taken into consideration the prolongation costs; and
5.
does not address the issue of interest/financing charges.
Based on the above, the total estimated claim is RM13.5 million. The parties had attempted but were unable to
amicably resolve such disputes.
Under the Contract, either party may require that any dispute and/or difference be referred to arbitration and the
arbitration is to be conducted in accordance to the Arbitration Act 2005.
124
ANNUAL REPORT 2014
38. Material litigations (CONT’D)
(d)In the matter of an arbitration between ACP Industries Berhad & Mendza Builders Sdn Bhd and Air
Kelantan Sdn Bhd (cont’d)
The Claimant, via its solicitors had issued the Notice of Dispute dated 22 April 2011 and the Notice of Arbitration
dated 27 May 2011 to the Respondent. In the Statement of Claim submitted to the Regional Centre of Arbitration
Kuala Lumpur, the Claimant is claiming for the sum of RM13,495,356 from the Respondent in respect of the
following heads of claims:
i)
Value of variation of works for the elevated water tank, in the sum of RM1,529,822;
ii)
Value of variation of works for pipe laying works, in the sum of RM2,563,561;
iii) Value of variation works for aeration tank system, in the sum of RM1,441,534;
iv) Profit portion due to early settlement of sums financed by the Claimant, in the sum of RM1,325,162;
v)
Wrongful deduction of RM1,593,000 as liquidated and ascertained damages;
vi) Wrongful deduction of RM50,000 for the replacement of the T-Box for filter No.1 or OP system T7 (Scada
System);
vii) Prolongation cost due to the extension of the contract period from 3 January 2003 to 3 August 2003, in the
sum of RM499,808; and
viii) Finance charges due to the delay in payment by the Respondent, in the sum of RM4,442,468 and increasing
at the rate of RM100,000 a month after 15 May 2010.
The matter was originally fixed for hearing on 16 to 18 May 2012 and 27 July 2012 and continued hearing on 23
and 24 August 2012, 6 and 7 September 2012 and 18 to 20 September 2012 and 17 October 2012.
On the hearing fixed on 17 October 2012, the Claimant and the Respondent have closed their respective case
and thereafter, the parties have properly concluded their written submissions to the Arbitrator on 8 March 2013.
Parties are now awaiting for the Award to be delivered by the Arbitrator.
Based on solicitors advice, MTDACPI has a reasonable prospects of success on most of the heads of claims.
(e)In the matter of an arbitration between MTD Construction Sdn Bhd and Kerajaan Malaysia
MTD Construction Sdn Bhd (“Claimant”), a wholly-owned subsidiary of MTDACPI has entered into a formal
contract (“Contract”) with the Kerajaan Malaysia (“GOM” or “Respondent”), wherein the Claimant has been
appointed by the GOM to undertake the design and construction of “Projek Jalan Raya Simpang Pulai-LojingGua Musang ke Kuala Berang, Pakej 2 (dari Pos Selim, Perak Darul Ridzuan ke Ladang Blue Valley, Kampung
Raja, Cameron Highlands, Pahang Darul Makmur) (“Project”), subject to the terms and provisions of the
Contract. Pursuant to an agreement between the Superintendent Officer (“S.O”) of the Project (acting as the
representative of the Respondent), the Claimant had provided a retention bond of RM14.1 million pursuant to
a bank guarantee (“Retention Guarantee”) in lieu of the retention monies to be withheld by the Respondent in
accordance to the terms and provisions of the Contract. The Respondent had issued a demand notice to HSBC
Bank Malaysia Berhad (“HSBC”), demanding the pay out of the Retention Guarantee on the grounds of breach
of Contract by the Claimant and the Claimant had filed an application to restrain the GOM from making a demand
for the Retention Guarantee and receive payment from HSBC for the said Retention Guarantee, and to restrain
HSBC from releasing the money until the final disposal of the matter in respect of the Project. HSBC had paid
out the Retention Guarantee to the Respondent following the judgment from the High Court on 15 March 2011.
The Claimant had filed an application for an injunction at the High Court to restrain among others, the Respondent
from making a demand for the Retention Guarantee. The application for the injunction was heard on 18 February
2011 and the Learned Judge dismissed the application for the injunction with cost. An application for an injunction
pending the hearing of the appeal was also dismissed by the Learned Judge.
In addition to the above, the S.O has continuously demanded the Claimant to rectify the slope at Chainage (Ch.)
26+000 of the Project which has shown distress.
MTD ACPI ENGINEERING BERHAD
125
Notes to the Financial Statements (Cont’d)
31 March 2014
38. Material litigations (CONT’D)
(e)In the matter of an arbitration between MTD Construction Sdn Bhd and Kerajaan Malaysia (cont’d)
In view of the foregoing and to safeguard the interest of the Claimant, the Claimant had on 14 June 2011 issued
the Notice of Dispute and Notice of Arbitration pursuant to the provision of Clause 52 of the Conditions of
Contract and required the matter to be referred to Arbitration for the disputes which is not limited to the following:
(i)
that the Respondent had wrongly demanded the paid out of the Retention Guarantee and that the amount
so paid out of the Respondent on the Retention Guarantee ought to be refunded to the Claimant;
(ii) that the S.O ought to issue a Certificate of Making Good Defects to the Claimant; and
(iii) a declaration by the arbitral tribunal that the Claimant was not liable to rectify the distress on the slope at
Ch.26+000 of the Project and the Claimant would not be responsible for any failures on any part of the
Project.
On 9 August 2012, an arbitrator has been appointed by the Kuala Lumpur Regional Centre of Arbitration.
The hearing of this matter had already begun since 17 September 2013 and few hearing dates had been fixed
and proceeded up to 10 February 2014.
However the continued hearing of this matter had been postponed pending the disposal of Respondent’s
application to amend their Points of Defence which was filed on the 28 February 2014. Hearing for this application
was held on the 7 March 2014 and the Arbitrator accepted the Respondent’s contentions to support its application
vide order dated 14 March 2014 except on the issue of whether the Respondent’s application is time barred. The
Arbitrator had given further directions on 17 April 2014 for parties to file their respective affidavits and written
submissions by the 13 June 2014 and date for the oral submissions will be fixed by the Arbitrator. The Claimant
vide its lawyer had thereafter requested for the filing of the documents to be deferred to 30th June 2014 due to
the witness of the Claimant being on long medical leave post-surgery. The parties are now waiting for further
directions to be given by the Arbitrator.
Based on solicitors advice, the Claimant has a reasonable prospects of success in its claim against the
Government of Malaysia as the evidence and documents now stand.
(f)Persys Sdn. Bhd. (“Persys”) vs Seri Meraga Construction Sdn Bhd (“Seri Meraga”)
On or about 20 December 2000, Seri Meraga was awarded a contract titled “Cadangan Merekabentuk, Membina,
dan menyiapkan Jejambat di Laluan Persekutuan 6, Menghubungkan Bulatan Bayan Baru hingga Persimpangan
Jalan Sultan Azlan Shah/Jalan Aziz Ibrahim, Pulau Pinang” (“Main Contract”)” by the Government of Malaysia.
Seri Meraga scope of work comprised of design, construction, completion and maintenance of the Main Contract
works.
Seri Meraga thereafter appointed Persys for the following subcontract works (“Subcontracts”):
i)
Supply Contract No. SA9014 for the design and supply of precast segments to the Defendant; and
ii)
Supply Contract No. SA9014E for the supply and delivery of an additional 304 viaduct segments.
Persys initiated this legal suit vide Writ of Summons and Statement of Claims dated 5 June 2013 and amended
Summons and Statement of Claims dated 20 June 2013 against Seri Meraga due to its failure/refusal/neglect to
make payment of the above Subcontracts, for the following:
i)
Final claim of RM10,591,506 and retention sum of RM1,485,000 under Sub-Contract SA9014; and
ii)
Final claim of RM3,927,891 and retention sum of RM692,500 under Sub-Contract SA9014E.
This matter was set for trial on 30 to 31 October 2013 and the trial continued on 9 December 2013.
On 5 February 2014, a winding up order was obtained by third party against Seri Meraga in Penang High Court.
In view of the conclusion of a separate winding up proceeding initiated by third party against Seri Meraga and
the issuance of Winding up Order, Persys has withdraw the suit against the Seri Meraga on 6 February 2014.
126
ANNUAL REPORT 2014
38. Material litigations (CONT’D)
(f)Persys Sdn. Bhd. (“Persys”) vs Seri Meraga Construction Sdn Bhd (“Seri Meraga”) (cont’d)
Subsequently, Persys had on 30 April 2014 filed its Proof of Debt to the Insolvency Department.
Awaiting for Creditor’s Meeting to be fixed by the Insolvency Department.
(g)Persys Engineering Sdn Bhd (“Persys”) vs Waterize Sdn Bhd (“Waterize”)
On 5 May 2003, Persys, a wholly-owned subsidiary of MTDACPI, filed a Writ of Summons and Statement of
Claim against Waterize for the outstanding sum of RM1,901,620.10 for works done arising from the Contract of
Site Clearance, Earthworks, Retaining Walls, and Drainage Works for Cadangan Pembagunan di Atas Lot 48731
(PT 45264), Mukim Petaling, Daerah Petaling, Selangor Darul Ehsan. Waterize had also on 2 June 2014 filed
a counterclaim for the sum of RM1,095,874.63 being alleged losses and damages suffered by the Defendant.
The Reply to Defence and Counterclaim has been filed by Persys on 27 June 2014. On 27 June 2014, Persys
proceeded with filing of Summary Judgment application.
The matter has been fixed for case management on 13 August 2014 in regards of the Summary Judgment
application.
Based on solicitors advice, Persys has a reasonable prospects of success in its claim as the evidence and
documents now stand.
39.Related party transactions
(a) Significant transactions with related parties
In addition to the related party information disclosed elsewhere in the financial statements, the following significant
transactions between the Group and related parties took place at terms agreed between the parties during the
financial year:
Group
Contract revenue from:
- Ultimate holding company
(i) - Immediate holding company
(i) - Related companies
(i)
Contract cost charged to ultimate holding company (ii) Insurance expense paid to a related company (iii) Rental payable to a related company
(iv) Consultancy on fixed assets management
(v) Security service fee paid and payable to related party
2014 RM’000 2013
RM’000
(3,268)
(12,186)
(44,224)
30,443 605 2,466 130 932 (3,482)
(27,795)
(43,576)
11,437
692
2,466
130
932
(5,000)
(5,824)
4,899 (5,000)
(5,946)
6,628
Company
Dividend income received and receivable from subsidiary/ (subsidiaries)
Management fees receivable from subsidiaries
Interest expense payable to subsidiaries
(vi)
(vii)
(viii) (i) The contract revenue were made according to the published prices and conditions offered to the major
customers of the Group, except that a longer credit period of up to 6 months is normally granted.
(ii) The rendering of contract services was made at arm’s length pricing with fixed term of repayment.
(iii) Insurance charges were made according to published prices and conditions similar to those offered to major
external customers of the insurer except that interest was not charged on overdue balances.
MTD ACPI ENGINEERING BERHAD
127
Notes to the Financial Statements (Cont’d)
31 March 2014
39.Related party transactions (CONT’D)
(a) Significant transactions with related parties (cont’d)
(iv) The rental payable to a related company arose from the use of office premises from the related company
at prevailing market price and terms similar to those offered by the related companies to their major
tenants.
(v) The consultancy on fixed assets management by a related company was made at arm’s length pricing with
fixed term of repayment.
(vi) The dividend income are distributed by a wholly-owned subsidiary of the Company.
(vii) The management fee receivables from subsidiaries when services are delivered, except that a longer credit
period of up to 6 months is normally granted.
(viii)The loan interest income/expense arose from the amounts due from/(to) holding company and fellow
subsidiaries.
Information regarding outstanding balances arising from related party transactions as at 31 March 2014 are
disclosed in Notes 21 and Note 33.
(b)Compensation of key management personnel
The remuneration of directors and other members of key management during the year was as follows:
Short-term employee benefits
Contributions to defined contribution plan
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
1,646 2,432 397 582
133 218 11 29
1,779 2,650 408 611
Included in the total key management personnel of the Group and of the Company is director remuneration of
RM971,000 (2013: RM2,373,000) and RM326,000 (2013: RM611,000) respectively as disclosed in Note 10.
40.Fair value of financial instruments
A. Fair value of financial instruments by classes that are not carried at fair value and whose carrying
amounts are not reasonable approximation of fair value
Note
At 31 March 2014
Group
Financial liabilities:
Loans and borrowings
- Obligations under finance leases
Carrying amount RM’000 Fair
value
RM’000
32
160 159
32
411 430
At 31 March 2013
Group
Financial liabilities:
Loans and borrowings
- Obligations under finance leases
128
ANNUAL REPORT 2014
40.Fair value of financial instruments (CONt’D)
B. Determination of fair value
Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation
of fair value
The following are classes of financial instruments that are not carried at fair value and whose carrying amounts
are reasonable approximation of fair value:
Note
Trade and other receivables (current)
Trade and other payables (current)
Loans and borrowings (current)
21
33
31
The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either
due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates
on or near the reporting date.
C.Fair value hierarchy
The Group and Company uses the following hierarchy for determining and disclosing the fair value of financial
instruments by valuation technique:Level 1 - the fair value is measured using quoted prices (unadjusted) in active markets for identical assets or
liabilities
Level 2 - the fair value is measured using inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly
Level 3 - the fair value is measured using inputs for the asset or liability that are not based on observable market
data
The following table presents other financial assets that are measured at fair value during the financial year:
Level 1 Level 2 Level 3 Total
Note RM’000 RM’000
RM’000
RM’000
2014
Group
Asset
Investment property
15
– – 290 290
Financial assets at fair value through profit or loss
- Equity instrument
20
–
–
–
–
–
–
290 290
Level 1 Note RM’000 Level 2 RM’000
Level 3 RM’000
Total
RM’000
–
–
104
2013
Group
Asset
Financial assets at fair value through profit or loss
- Equity instrument
20
104 MTD ACPI ENGINEERING BERHAD
129
Notes to the Financial Statements (Cont’d)
31 March 2014
41.Financial risk management objectives and policies
The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments.
The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk.
The Board of Directors reviews and agrees policies and procedures for the management of these risks. The audit committee
provides independent oversight to the effectiveness of the risk management process.
It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be undertaken
except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply
hedge accounting.
The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks
and the objectives, policies and processes for the management of these risks.
(a)Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its
obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables.
For other financial assets (including cash and bank balances, non-current investments), the Group and the Company
minimise credit risk by dealing exclusively with high credit rating counterparties.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk
exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers
who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are
monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. For transactions
that do not occur in the country of the relevant operating unit, the Group does not offer credit terms without the approval
of the Head of Credit Control.
Exposure to credit risk
At the reporting date, the Group’s and Company’s maximum exposure to credit risk are represented by the carrying
amount of each class of financial assets recognised in the statements of financial position.
Credit risk concentration profile
The Group determines concentrations of credit risk by monitoring the country customers’ profile of its trade receivables
on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date are as
follows:
Group
20142013
RM’000 % of total
RM’000 % of total
By country:
Malaysia 146,374 Thailand
650 Philippines
11,201 Abu Dhabi
– Singapore
14,435 85%
1%
6%
0%
8%
109,650 3,848 392 964 3,553 93%
3%
0%
1%
3%
172,660 100%
118,407 100%
At the reporting date, approximately:
34.28% (2013: 29%) of the Group’s trade and other receivables were due from related parties while almost all of the
Company’s receivables were balances with related parties.
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ANNUAL REPORT 2014
41.Financial risk management objectives and policies (CONT’D)
(a)Credit risk (cont’d)
Financial assets that are neither past due nor impaired
Information regarding trade and receivables that are neither past due nor impaired is disclosed in Note 21. Deposits
with banks that are neither past due nor impaired are placed with reputable financial institution with high credit ratings
and no history of default.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in Note 21.
(b)Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to
shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the
maturities of financial assets and liabilities. The Group’s and the Company’s objective is to maintain a balance between
continuity of funding and flexibility through the use of stand-by credit facilities.
The Group and Company manage its debt maturity profile, operating cash flows and the availability of funding so as to
ensure that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group
maintains sufficient levels of cash convertible investments to meet its working capital requirements. In addition, the
Group strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible,
the Group raises committed funding from both capital markets and financial institutions and balances its portfolio with
some short term funding so as to achieve overall cost effectiveness. In addition, the Group may also obtain additional
funding from its ultimate holding company and immediate holding company as and when there is funding deficiency.
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based
on contractual undiscounted repayment obligations.
2014
On demand
or within One to
one year five years RM’000 RM’000 Group
Total
RM’000
Financial liabilities:
Trade and other payables (Note 33)
Loans and borrowings (Note 31)
252,920 52,979 21,406 –
274,326
52,979
Total undiscounted financial liabilities
305,899 21,406 327,305
Trade and other payables (Note 33)
Loans and borrowings (Note 31)
152,137 4,403 –
–
152,137
4,403
Total undiscounted financial liabilities
156,540 –
156,540
Company
Financial liabilities:
MTD ACPI ENGINEERING BERHAD
131
Notes to the Financial Statements (Cont’d)
31 March 2014
41.Financial risk management objectives and policies (cont’d)
(b)Liquidity risk (cont’d)
2013
On demand
or within One to
one year five years RM’000 RM’000 Group
Total
RM’000
Financial liabilities:
Trade and other payables (Note 33)
Loans and borrowings (Note 31)
223,252 57,566 4,266 177 227,518
57,743
Total undiscounted financial liabilities
280,818 4,443 285,261
Trade and other payables (Note 33)
Loans and borrowings (Note 31)
154,207 4,400 –
–
154,207
4,400
Total undiscounted financial liabilities
158,607 –
158,607
Company
Financial liabilities:
(c)Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments
will fluctuate because of changes in market interest rates.
The Group’s and the Company’s exposure to interest rate risk arises primarily from their interest-bearing loans and
borrowings. The Group has no significant interest-bearing financial assets, other than fixed rate interest-bearing trade
receivables as disclosed in Note 21. The Group’s income and operating cash flows are substantially independent of
changes in market interest rates. The Group’s other interest-bearing financial assets are mainly short-term in nature and
have been mostly placed in fixed deposits.
The Group manages the interest rate risk exposure by optimising the mix between fixed and floating interest rate in view
of the estimated interest rate trend. The Group does not use any derivatives to manage interest rate risk.
Sensitivity analysis for interest rate risk
At the reporting date, if interest rates had been 100 basis points lower/higher, with all other variables held constant, the
Group’s and the Company’s profit/(loss) net of tax would have been RM485,750 (2013: RM429,900) and RM447,151
(2013: RM33,000) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loans and
borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently
observable market environment.
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ANNUAL REPORT 2014
41.Financial risk management objectives and policies (cont’d)
(d)Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates.
The Group is not significantly exposed to foreign currency risk as majority of the Group’s transactions, assets and
liabilities are denominated in Ringgit Malaysia other than foreign subsidiaries operate. The Group is exposed to
transactional currency risk primarily through sales and purchases that are denominated in a currency other than the
functional currency of the operations to which they relate.
The currencies giving rise to this risk are primarily United States Dollar (‘USD’), Indian Rupees (‘INR’), Saudi Arabia
Riyals (‘SAR’), United Arab Emirates Dirhams (‘AED’), Thailand Baht (‘THB’), Singaporean Dollar (‘SGD’) and Philippines
Peso (‘PHP’). Foreign currency exposures in transactional currencies other than functional currencies of the operating
entities are kept to an acceptable level.
The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country in which the
property or investment is located or by borrowing in currencies that match the future revenue stream to be generated
from its investments.
The net unhedged financial assets and financial liabilities of the Group that are not denominated in their functional
currencies as follows:
Functional currency of the Group
United States Dollar
Indian Rupee
Saudi Arabia Riyals
United Arab Emirates Dirhams
Thailand Baht
Singaporean Dollar
Philippines Peso
2014 RM’000 2013
RM’000
(246)
(453)
1,263 (138)
78 –
(1,484)
964
(1,168)
1,507
5,530 –
36,881 (14,017)
Sensitivity analysis for foreign currency risk
The following table demonstrate the sensitivity of the Group’s loss net of tax to a reasonably possible change in the
USD, INR, SAR, UAE, THB, SGD and PHP exchange rates against the functional currencies of the Group entities, with
all other variables held constant.
MTD ACPI ENGINEERING BERHAD
133
Notes to the Financial Statements (Cont’d)
31 March 2014
41.Financial risk management objectives and policies (cont’d)
(d)Foreign currency risk (cont’d)
Group
2014 2013
RM’000 RM’000
(Loss)/profit net of tax
USD/RM
- strengthened 3%
- weakened 3%
(7)
7
(14)
14
INR/RM
- strengthened 3%
- weakened 3%
38 (38)
(4)
4
SAR/RM
- strengthened 3%
- weakened 3%
AED/RM
- strengthened 3%
- weakened 3%
(45)
45 29
(29)
THB/RM
- strengthened 3%
- weakened 3%
(35)
35 45
(45)
SGD/RM
- strengthened 3%
- weakened 3%
PHP/RM
- strengthened 3%
- weakened 3%
2 –
(2)
–
166 –
(166)–
1,106 (1,106)
(421)
421
42.Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy
capital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain
or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or
issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 March 2014
and 31 March 2013.
As disclosed in Note 29(d)(i), a branch of a subsidiary of the Group is required by the Article 176 of the company law in the
Kingdom of Saudi Arabia to contribute to and maintain a non-distributable statutory reserve fund whose utilisation is subject
to approval by the relevant authorities. This externally imposed capital requirement has been complied with by the abovementioned subsidiary for the financial years ended 31 March 2014 and 31 March 2013.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital. Net debt includes current and
non-current loans and borrowings less deposits, cash and bank balances. Capital is the equity attributable to the owners of
the parent less the above mentioned restricted reserve fund.
Loans and borrowings (Note 31)
52,979 Less: Cash and bank balances (Note 26) (34,023)
57,743 (56,576)
4,403 (2,967)
4,400
(1,117)
Net debt 18,956 1,167 1,436 3,283
Equity attributable to the owners of the parent 75,988 Less: Other reserves
(29,272)
161,883 (29,272)
72,826 365,854
––
46,716 132,611 72,826 365,854
Gearing ratio
41%
1%
2%
1%
Total capital
134
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
ANNUAL REPORT 2014
43.Segmental information
For management purposes, the Group is organised into business units based on their products and services, and has 3
reportable operating segments as follows:
(i)
Construction - Constructing and marketing of heavy element precast products for viaducts, elevated highways, light rail
transit guideways, bridges, building system products, contracting in the fields of environmental systems and providing
specialist contracting services.
(ii) Manufacturing and related services - Manufacturing and marketing of industrial products, project management,
manufacturing, marketing, licensing and franchising of precast and engineered products and investment holding.
(iii) Others - Holding of investment in the shares of subsidiaries, associates and other investments.
Except as indicated above, no operating segments have been aggregated to form the above reportable operating
segments.
Management monitors the operating results of its business units separately for the purpose of making decisions about
resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss
which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the
consolidated financial statements.
MTD ACPI ENGINEERING BERHAD
135
Notes to the Financial Statements (Cont’d)
31 March 2014
43.Segmental information (CONT’d)
Per
consolidated
Adjustments financial
and statements
Construction Manufacturing Other Total Elimination Notes Total
2014
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue:
External customers
222,546 105,639 – 328,185 – 328,185
Inter-segment
34,415 15,896 5,000 55,311 (55,311)
A
–
Total revenue
256,961 121,535 5,000 383,496 (55,311)
328,185
Results:
Interest income
5,054 274 85 5,413 (4,899)
A
514
Finance costs
(3,549)
(464)
(5,216)
(9,229)
4,899 A
(4,330)
Depreciation
(1,566)
(5,298)
(66)
(6,930)
192 (6,738)
Share of results of associates
(2,611)
– – (2,611)
– (2,611)
Share of results of joint venture
1,230 (3,406)
– (2,176)
– (2,176)
Provisions
323 – – 323 – 323
Impairment of non-financial
assets
- Goodwill
(52,900)
(9,800)
– (62,700)
– (62,700)
- Property, plant and equipment
– (1,921)
– (1,921)
– (1,921)
Other non-cash expenses
(1,146)
(69)
– (1,215)
– B
(1,215)
Income tax expense
5,641 (461)
(1,034)
4,146 1,250 5,396
Segment loss
(40,765)
(9,019) (335,471) (385,255)
284,284 (100,971)
Total assets 429,301 189,772 272,603 891,676 (450,397)
441,279
Total liabilities
540,396 226,632 241,572 1,008,600 (654,563)
354,037
Investments in associates
19,709 – – 19,709 – 19,709
Investments in joint ventures
4,240 4,005 – 8,245 – 8,245
Capital expenditure
8,197 3,762 3
11,962 –
C
11,962
136
ANNUAL REPORT 2014
43.Segmental information (CONT’d)
Per
consolidated
Adjustments financial
and statements
Construction Manufacturing Other Total Elimination Notes Total
2013
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue:
External customers
160,040 109,963 –
270,003 Inter-segment
1,983 21,570 5,000 28,553 – (28,553)
A
270,003
–
Total revenue
(28,553)
270,003
162,023 131,533 5,000 298,556 Results:
Interest income
7,219 146 49 7,414 (6,628)
A
786
Finance costs
(3,830)
(711)
(7,009)
(11,550)
6,628 A
(4,922)
Depreciation
(1,260)
(6,840)
(70)
(8,170)
– (8,170)
Share of results of associates
713 – – 713 6,227 6,940
Share of results of joint venture
755 5,320 – 6,075 – 6,075
Provisions
394 – – 394 – 394
Impairment of non-financial
assets - Goodwill
(216)
– – (216)
– (216)
- Property, plant and equipment
– – – – – –
Other non-cash expenses
(84)
(1,763)
– (1,847)
– B
(1,847)
Income tax expense
(14,012)
(1,122)
– (15,134)
1,250 (13,884)
Segment profit/(loss)
36,839 (2,277) (18,404)
16,158 12,799 28,957
Total assets
184,622 35,712 378,805 599,139 (97,070)
502,069
Segment liabilities
262,366 53,849 12,950 329,165 77 329,242
22,012 17,375 3,723 – – – C
22,012
17,375
3,723
Investments in associates
Investments in joint ventures
Capital expenditure
22,012 11,883 402 – 5,492 3,321 – – – MTD ACPI ENGINEERING BERHAD
137
Notes to the Financial Statements (Cont’d)
31 March 2014
43.Segmental information (CONT’d)
A
Inter-segment revenues, interest income and finance costs are eliminated on consolidation
B
Other material non-cash expenses consist of the following items as presented in the respective notes to the financial
statements:
Note Net impairment losses on financial assets: - Trade receivables
Inventories written off
Net reversal of allowance for impairment loss of:
- Trade receivables
- Other receivables
8
8
6
6
2014 RM’000 (3,400)
(2,170)
(1,656)
(4,998)
4,325 4,807
30 –
(1,215)
C
2013
RM’000
(1,847)
Capital expenditure consists of additions of:
2014 RM’000 2013
RM’000
Property, plant and equipment
11,962 3,723
Geographical information
Revenue and non-current assets information based on geographical location of its customers and assets respectively are as
follows:
Revenue 2014 2013 RM’000 RM’000 Malaysia
293,404 Thailand
–
Philippines
34,781 257,596 –
12,407 97,871 85 –
157,320
129
–
328,185 270,003 97,956 157,449
*
138
Non-current assets *
2014 2013
RM’000 RM’000
Non-current assets information presented above consist of the following items as presented in the consolidated
statement of financial position:
2014 RM’000 2013
RM’000
Property, plant and equipment
Intangible asset
97,956 –
94,749
62,700
97,956 157,449
ANNUAL REPORT 2014
44.Significant event
During the year, inventories of the Group with net carrying value of RM44,272 was written off due to the fire incident
occurred in May 2013 at ACP-DMT Sdn. Bhd. Port Klang factory. ACP-DMT Sdn. Bhd. has accepted the offer
from insurer amounting to RM108,433, being the compensation for the movable laboratory equipment and plant &
machinery damaged during the fire incident. However, as at the date of this report, the insurance claim for damaged
inventories and other incidental loss such as Bitumen Emulsion Plant, AP Binder Plant and consequences loss with
value of approximately RM2 million has yet to be ascertained by the insurer. The financial statements for the year
ended 31 March 2014 have not been adjusted for the financial effect of this insurance claim.
45.Supplementary information - breakdown of retained profits into realised and unrealised
The breakdown of the retained profits of the Group and of the Company as at 31 March 2014 and 2013 into realised
and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad
dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised
and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing
Requirements, as issued by the Malaysian Institute of Accountants.
GroupCompany
2014 2013 2014 2013
RM’000 RM’000 RM’000 RM’000
Total retained profits of the Company and its subsidiaries
- Realised
- Unrealised
(336,548)
11,098 (243,990)
(2,395)
(265,068)
(62)
28,066
(168)
(325,450)
(246,385)
(265,130)
27,898
11,653 (378)
–
–
–
–
(314,987)
(235,110)
(265,130)
27,898
6,280 6,075 –
–
10,061 25,206 –
–
(298,646)
(203,829)
(265,130)
27,898
Total share of retained profits from associate
- Realised
- Unrealised
Total share of retained profits from joint venture
- Realised
Less: Consolidation adjustments
(Accumulated losses)/retained profits as per
financial statements 10,463 – MTD ACPI ENGINEERING BERHAD
139
List of Properties
held by the Group as at 31 March 2014
Item Location
Owner
Freehold
Land
area
(sq ft)
PTD No. 34735 Lot 9041
Mukim Ampangan
District of Seremban
Negeri Sembilan Darul Khusus
MTD ACPI Land
Engineering
Berhad
–
–
1,414
2
PTD 30196 Lot No.47084,
PTD 30197 Lot No.47085 and
PTD 24102 Lot No.23528
Mukim Hulu Kinta
District of Kinta
Perak Darul Ridzuan
Associated Office and
Freehold
841,415
45,703
Concrete
factory
Products
building
(Malaysia)
Sdn. Bhd.
25 years
6 months
9,341
3
PTD 18416 Lot No.9020,
PTD 18417 Lot No.9021 and
PTD 18418 Lot No.9022
Mukim Ampangan
District of Seremban
Negeri Sembilan Darul Khusus
Associated Office and
Freehold
1,279,183
103,531
Concrete
factory
Products
building
(Malaysia)
Sdn. Bhd.
19 years
8 months
11,804
4
PTD 18415 Lot No.9019 and
PTD 18419 Lot No.9023
Mukim Ampangan
District of Seremban
Negeri Sembilan Darul Khusus
Associated Office and
Freehold
852,825
87,000
Concrete
factory
Products
building
(Malaysia)
Sdn. Bhd.
19 years
6 months
10,893
Associated Office and
Concrete
factory
Products
building
(Malaysia)
Sdn. Bhd.
254,307
10 years
12,683
Freehold
616,844
Built-up Approximate
Net Book
area
age ofValue
(sq ft)
building
(RM’000)
1
5
Lot No.676 & 677
Mukim Jeram Batu
District of Pontian
Johor Darul Takzim
140
Description Tenure
and
existing use
926,098
6
H.S(M) 5569 Associated Office and
No.P.T.8209K and
Concrete
factory
H.S(D) 4418 No.P.T 14711K Products
building
Mukim Kuala Nerus
(Malaysia)
District of Terengganu
Sdn. Bhd.
Terengganu Darul Iman
60-year
464,570
17,606
leases
expiring on
29.06.2045 and
13.06.2052
respectively
33 years
6 months
2,578
7
PTD No. 10140
Lot No. 2394 and 2396
Mukim Batang Kali
District of Selangor
Selangor Darul Ehsan
Freehold
25,039 *
8
H.S.(D)139005 PTD No.8783 ACP
Land
Mukim Senai-Kulai
Marketing
District of Johor
Sdn. Bhd.
Johor Darul Takzim
ANNUAL REPORT 2014
Associated Office and
Concrete
factory
Products
building
(Malaysia)
Sdn. Bhd.
60-year
leases
expiring
12.01.2047
2,134,483
419,381
20 years
261,348
–
–
1,902
Item Location
Owner
Description Tenure
and
existing use
Land
area
(sq ft)
Built-up Approximate
Net Book
area
age ofValue
(sq ft)
building
(RM’000)
9
H.S (M) 6209 No.PT4175
ACP-DMT Office and
Mukim Kapar
Sdn. Bhd. factory
District of Klang
building
Selangor Darul Ehsan
99-year
78,135
20,380
leases
expiring on
09.06.2086
24 years
6 months
1,256
10
Parcel No. T3.01
The Summit Subang USJ
H.S.(D) 121185
Lot P.T. No.8
Mukim Damansara
Daerah Petaling
Selangor Darul Ehsan
Shoplot
Freehold
457
16 years
275
11
A1/4A-0019
Persys
No. 17, Jalan Kenangasari 2A Engineering
Bandar Sg. Buaya
Sdn. Bhd.
48010 Rawang
Selangor Darul Ehsan
Double
storey
shop
office
99-year
1,651
3,058
leases
expiring on
04.01.2095
18 years
6 months
–
12
A1/12DS-0120
Persys
No. 27, Jalan Melatisari 2E
Engineering
Bandar Sg. Buaya
Sdn. Bhd.
48010 Rawang
Selangor Darul Ehsan
Double
storey
terrace
house
99-year
1,644
1,460
leases
expiring on
04.01.2095
18 years
6 months
–
13
A1/16-0008
Persys
No.15, Jalan Inaisari 3
Engineering
Bandar Sg. Buaya
Sdn. Bhd.
48010 Rawang
Selangor Darul Ehsan
One and
half storey
terrace
house
99-year
3,029
1,743
leases
expiring on
04.01.2095
18 years
6 months
–
14
Unit B02-15 Meranti Park
Bukit Tinggi
Bentung
Pahang Darul Makmur
MTD
Apartment
Construction
Sdn. Bhd.
Leasehold
Expiring 2091
–
525
15 years
110
15
Unit C03-10 Meranti Park
Bukit Tinggi
Bentung
Pahang Darul Makmur
MTD
Apartment
Construction
Sdn. Bhd.
Leasehold
Expiring 2091
–
805
15 years
162
*
Universal
Building
Products
Sdn. Bhd.
–
Include office and factory building amounting to net book value of RM2,083,369 which are held under Persys Sdn. Bhd..
MTD ACPI ENGINEERING BERHAD
141
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Twenty-first Annual General Meeting of the Company will be held at its Registered
Office at 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan on Thursday, 25 September 2014 at 9.30 a.m.
for the following purposes:
AGENDA
AS ORDINARY BUSINESS
1.
To receive the Audited Financial Statements for the financial year ended 31 March 2014
together with the reports of the Directors and the Auditors thereon.
2.
To approve the payment of Directors’ fees for the financial year ended 31 March 2014.
3.
To re-elect the following Directors who retire in accordance with Article 85 of the
Company’s Articles of Association:
(Ordinary Resolution 1)
i)
Dato’ Ir. A. Rashid bin Omar
(Ordinary Resolution 2)
ii)
Keith George Cowling
(Ordinary Resolution 3)
4. To re-elect Datin Nik Fuziah binti Tan Sri Nik Hussein who retires in accordance with
Article 92 of the Company’s Articles of Association.
(Ordinary Resolution 4)
5.
To re-appoint Messrs. Ernst & Young as Auditors of the Company for the ensuing year
and to authorise the Directors to fix their remuneration.
(Ordinary Resolution 5)
AS SPECIAL BUSINESS
To consider and, if thought fit, with or without modification, to pass the following resolutions:
6.
Retention of Independent Directors
“That the following Directors be retained as Independent Non-Executive Directors of the
Company, until the conclusion of the next Annual General Meeting of the Company in
accordance with the Malaysia Code on Corporate Governance 2012:
(i)
Dato’ Ir. A. Rashid bin Omar
(ii) Dato’ Ir. Kalid bin Alias”
7.
(Ordinary Resolution 6)
(Ordinary Resolution 7)
Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965
“That, subject always to the Companies Act, 1965 (“the Act”), the Articles of Association
of the Company and approvals of the relevant regulatory authorities, the Directors be and
are hereby empowered pursuant to Section 132D of the Act to issue and allot shares in
the Company at any time and upon such terms and conditions and for such purposes
as the Directors may, in their absolute discretion deem fit provided that the aggregate
number of shares to be issued pursuant to this resolution does not exceed ten per centum
(10%) of the issued and paid-up share capital of the Company for the time being and
that the Directors be and are also empowered to obtain the approval for the listing of and
quotation for the additional shares so issued on Bursa Malaysia Securities Berhad; and
that such authority shall continue to be in force until the conclusion of the next Annual
General Meeting of the Company.”
(Ordinary Resolution 8)
142
ANNUAL REPORT 2014
8.
Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party
Transactions of a Revenue or Trading Nature
“That, subject to Bursa Malaysia Securities Berhad Main Market Listing Requirements,
approval be and is hereby given for the renewal of the shareholders’ mandate for the
Company and/or its subsidiaries to enter into the recurrent related party transactions of
a revenue or trading nature with those related parties as set out in Section 2.1.3 of the
Circular to Shareholders dated 3 September 2014, subject further to the following:
(i)
the transactions are in the ordinary course of business which are necessary for the
day-to-day operations and are on normal commercial terms not more favourable
to related parties than those generally available to the public and are not to the
detriment of the minority shareholders of the Company;
(ii) disclosure is made in the annual report of the aggregate value of transactions
conducted pursuant to the shareholders’ mandate during the financial year; and
(iii) such approval shall continue to be in force until:
(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company,
at which time it will lapse, unless renewed by an ordinary resolution passed by
the shareholders of the Company at that general meeting of the Company;
(b) the expiry of the period within which the next AGM is required to be held
pursuant to Section 143(1) of the Companies Act, 1965 (“the Act”) (but shall
not extend to such extension as may be allowed pursuant to Section 143(2) of
the Act); or
(c) revoked or varied by an ordinary resolution passed by the shareholders of the
Company in a general meeting;
whichever is the earlier.
And that the Directors of the Company be and are hereby authorised to do all such
acts and things as they may consider expedient or necessary (including executing such
documents as may be required) to give full effect to and complete the matters described
(Ordinary Resolution 9)
in this ordinary resolution.”
9.
Proposed New Shareholders’ Mandate for New Recurrent Related Party
Transactions of a Revenue or Trading Nature
“That, subject to Bursa Malaysia Securities Berhad Main Market Listing Requirements,
approval be and is hereby given to the Company and/or its subsidiaries to enter into new
recurrent related party transactions of a revenue or trading nature with those related
parties as set out in Section 2.1.3 of the Circular to Shareholders dated 3 September
2014, subject further to the following:
(i)
the transactions are in the ordinary course of business which are necessary for the
day-to-day operations and are on normal commercial terms not more favourable
to related parties than those generally available to the public and are not to the
detriment of the minority shareholders of the Company;
(ii) disclosure is made in the annual report of the aggregate value of transactions
conducted pursuant to the shareholders’ mandate during the financial year; and
MTD ACPI ENGINEERING BERHAD
143
Notice of Annual General Meeting (Cont’d)
(iii) such approval shall continue to be in force until:
(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company,
at which time it will lapse, unless renewed by an ordinary resolution passed by
the shareholders of the Company at that general meeting of the Company;
(b) the expiry of the period within which the next AGM is required to be held
pursuant to Section 143(1) of the Companies Act, 1965 (“the Act”) (but shall
not extend to such extension as may be allowed pursuant to Section 143(2) of
the Act); or
(c) revoked or varied by an ordinary resolution passed by the shareholders of the
Company in a general meeting;
whichever is the earlier.
And that the Directors of the Company be and are hereby authorised to do all such
acts and things as they may consider expedient or necessary (including executing such
documents as may be required) to give full effect to and complete the matter described
in this ordinary resolution.”
(Ordinary Resolution 10)
10. To transact any other ordinary business of which due notice has been given.
By Order of the Board,
Chan Bee Kuan (MAICSA 7003851)
Lee Poh Yean (MAICSA 7015043)
Company Secretaries
Selangor Darul Ehsan
3 September 2014
144
ANNUAL REPORT 2014
Explanatory Notes to Ordinary Business:
Agenda 1 is meant for discussion only as under the provisions of Section 169(1) of the Companies Act, 1965 and the
Company’s Articles of Association, the formal approval of shareholders is not required to be obtained. Hence, the matter
will not be put forward for voting.
Explanatory Notes to Special Business:
1.
Retention of Independent Directors
The Ordinary Resolution 6 and 7, if passed, will allow Dato’ Ir. A. Rashid bin Omar and Dato’ Ir. Kalid bin Alias to be
retained as Independent Non-Executive Directors of the Company even after they have served in that capacity for a
cumulative term of over nine (9) years in August 2015, in line with the recommendation under the Malaysian Code of
Corporate Governance 2012.
The Board values the contributions and commitments of Dato’ Ir. A. Rashid bin Omar and Dato’ Ir. Kalid bin Alias to
the Company, in performing their functions and duties in their respective roles, including but not limited to attendance
at Board and Board Committees’ meetings. They have vast experience and in-depth knowledge of the business of
MTDACPI Group, and the challenges faced by the Company. They have the ability to maintain independent judgment
and express constructive and unbiased views without any influence, in the decision making process of the Board.
The Board through the Nomination Committee has made the necessary assessment on their independence and
recommend that Dato’ Ir. A. Rashid bin Omar and Dato’ Ir. Kalid bin Alias be retained as Independent Non-Executive
Director, to serve in their respective positions as Chairman of the Board and Senior Independent Non-Executive
Director, in the best interest of the Company.
2.
Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965
The Ordinary Resolution 8, if passed, will enable the Directors to issue and allot shares at any time in their absolute
discretion without convening a general meeting. This authority, unless revoked or varied at a general meeting, will
expire at the conclusion of the next Annual General Meeting of the Company.
The renewal of this authority will provide flexibility to the Company for any possible fund raising proposals, including
but not limited to placing of shares, for purpose of funding investment, acquisition and/or reduction of borrowings.
As at the date of this Notice, there is no issuance and allotment of shares pursuant to the shareholders’ mandate
obtained on 26 September 2013.
3.
Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature
The Ordinary Resolutions 9 and 10, if passed, will allow the Company and its subsidiaries to enter into recurrent
related party transactions of a revenue or trading nature with the related parties in the ordinary course of business
which are necessary for day-to-day operations and on normal commercial terms which are not more favourable to
related parties than those generally available to the public and are not to the detriment of the minority shareholders
of the Company. The details of the proposed shareholders’ mandate are set out in the Circular to Shareholders dated
3 September 2014.
MTD ACPI ENGINEERING BERHAD
145
Notice of Annual General Meeting (Cont’d)
Notes:
1.
In respect of deposited securities, only members whose names appear in the Record of Depositors as at 19 September 2014 shall
be eligible to attend, speak and vote at the Meeting or appoint proxy/proxies to attend, speak and vote on their stead at the Meeting.
2.
A member of the Company entitled to attend and vote at the Meeting is entitled to appoint up to two (2) proxies to attend, speak
and vote in his stead at the Meeting. A proxy need not be a member of the Company and there shall be no restriction as to the
qualification of the proxy.
3.
Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act,
1991, it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds with
ordinary shares of the Company standing to the credit of the said securities account.
4.
Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories)
Act, 1991, it may appoint multiple proxies in respect of each omnibus account it holds with ordinary shares of the Company standing
to the credit of the said omnibus account.
5.
The instrument appointing a proxy in the case of an individual member, shall be in writing under the hand of the appointer or his
attorney duly authorised in writing or in the case of a corporate member, shall be either under its Common Seal or under the hand of
an officer or attorney, duly authorised.
6.
Where a member / authorised nominee appoints two (2) proxies or an exempt authorised nominee appoints multiple proxies, the
appointment shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy.
7.
The instrument appointing a proxy must be deposited at the Registered Office of the Company at 1, Jalan Batu Caves, 68100 Batu
Caves, Selangor Darul Ehsan not less than forty-eight (48) hours before the time for holding the Meeting i.e. before 9.30 a.m. on 23
September 2014 or at any adjournment thereof.
8.
Member has the right to demand a poll for any resolution in the Notice of Annual General Meeting, on or before the declaration
of result of the show of hands. Unless a poll is demanded, a declaration that a resolution has on a show of hands been carried
unanimously / by a particular majority / lost, shall be conclusive evidence of the fact without proof of the number of proportion of the
votes recorded in favour of or against the resolution. The demand for a poll, may before the poll is taken, be withdrawn.
9.
A poll may be demanded by either:
(a) the Chairman of the Meeting; or
(b) any member or members present in person or proxy and representing not less than one-tenth (10%) of total voting rights of all
members having the right to attend and vote at the Meeting; or
(c) a member or members holding shares in the Company conferring a right to attend and vote at the Meeting being shares on
which an aggregate sum has been paid up equal to not less than one-tenth (10%) of the total sum paid up on all the shares
conferring that right.
Statement Accompanying Notice of Annual General Meeting
(Pursuant to Paragraph 8.27(2) of Bursa Malaysia Securities Berhad
Main Market Listing Requirements)
Details of individuals who are standing for election as Directors (excluding Directors standing for a re-election)
No individual is seeking election as a Director at the Twenty-first Annual General Meeting of the Company.
146
ANNUAL REPORT 2014
Form of Proxy
Number of shares held
*I/We,
CDS Account No.
*NRIC No./Company No
(FULL NAME IN BLOCK LETTERS)
of
(FULL ADDRESS)
being a *member/members of MTD ACPI ENGINEERING BERHAD, hereby appoint
NRIC No
(FULL NAME IN BLOCK LETTERS)
of
(FULL ADDRESS)
or, *failing him/her,
(FULL NAME IN BLOCK LETTERS)
NRIC No
of
(FULL ADDRESS)
or failing *him/her, the *CHAIRMAN OF THE MEETING as *my/our proxy to attend and vote for *me/us and on *my/our behalf
at the Twenty-first Annual General Meeting of the Company to be held at the Registered Office of the Company at 1, Jalan Batu
Caves, 68100 Batu Caves, Selangor Darul Ehsan on Thursday, 25 September 2014 at 9.30 a.m. and at any adjournment thereof.
(Please indicate with an “X” in the spaces provided below as to how you wish your votes to be cast. If no specific direction as to
voting is given, the proxy/proxies will vote or abstain from voting at *his/her discretion.)
NO.RESOLUTIONSFORAGAINST
1.
To approve the payment of Directors’ fees for the financial year ended 31 March 2014.
2.
To re-elect Dato’ Ir. A. Rashid bin Omar as Director.
3.
To re-elect Mr. Keith George Cowling as Director.
4.
To re-elect Datin Nik Fuziah binti Tan Sri Nik Hussein as Director.
5.
To re-appoint Messrs. Ernst & Young as auditors and to authorise the Directors to
determine their remuneration.
6.
Proposed Retention of Independent Directors – Dato’ Ir. A. Rashid bin Omar
7.
Proposed Retention of Independent Directors – Dato’ Ir. Kalid bin Alias
8.
Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965.
9.
Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions
of a Revenue or Trading Nature.
10.
Proposed New Shareholders’ Mandate for New Recurrent Related Party Transactions
of a Revenue or Trading Nature.
* Strike out whichever not applicable.
As witness *my/our hand(s) this
day of
2014.
Signature of Member/Common Seal
Notes:
1. In respect of deposited securities, only members whose names appear in the Record of Depositors as at 19 September 2014 shall be eligible to attend, speak and vote at the Meeting or appoint
proxy/proxies to attend, speak and vote on their stead at the Meeting.
2. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint up to two (2) proxies to attend, speak and vote in his stead at the Meeting. A proxy need not be a member
of the Company and there shall be no restriction as to the qualification of the proxy.
3. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy but not more than two
(2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.
4. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint multiple proxies in respect of each
omnibus account it holds with ordinary shares of the Company standing to the credit of the said omnibus account.
5. The instrument appointing a proxy in the case of an individual member, shall be in writing under the hand of the appointer or his attorney duly authorised in writing or in the case of a corporate
member, shall be either under its Common Seal or under the hand of an officer or attorney, duly authorised.
6. Where a member / authorised nominee appoints two (2) proxies or an exempt authorised nominee appoints multiple proxies, the appointment shall be invalid unless he specifies the proportions
of his shareholdings to be represented by each proxy.
7. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan not less than forty-eight (48)
hours before the time for holding the Meeting i.e. before 9.30 a.m. on 23 September 2014 or at any adjournment thereof.
8. Member has the right to demand a poll for any resolution in the Notice of Annual General Meeting, on or before the declaration of result of the show of hands. Unless a poll is demanded, a
declaration that a resolution has on a show of hands been carried unanimously / by a particular majority / lost, shall be conclusive evidence of the fact without proof of the number of proportion of
the votes recorded in favour of or against the resolution. The demand for a poll, may before the poll is taken, be withdrawn.
9. A poll may be demanded by either:
(a) the Chairman of the Meeting; or
(b) any member or members present in person or proxy and representing not less than one-tenth (10%) of total voting rights of all members having the right to attend and vote at the Meeting; or
(c) a member or members holding shares in the Company conferring a right to attend and vote at the Meeting being shares on which an aggregate sum has been paid up equal to not less than
one-tenth (10%) of the total sum paid up on all the shares conferring that right.
Fold this flap for sealing
Then fold here
AFFIX
STAMP
THE COMPANY SECRETARIES
MTD ACPI ENGINEERING BERHAD (258836-V)
1, Jalan Batu Caves
68100 Batu Caves
Selangor Darul Ehsan
Malaysia
1st fold here
www.alloymtd.com
MTD ACPI Engineering Berhad
(258836-V)
1, Jalan Batu Caves
68100 Batu Caves
Selangor Darul Ehsan
Malaysia
Tel :03-6195 1111
Fax :03-6188 0101