AR2013
AR2013
AR2013
Annual Report
‘13
Annual Report 2013
Menara AZRB
No. 71, Persiaran Gurney,
54000 Kuala Lumpur, Malaysia.
Tel : +603-2698 7171
Fax : +603-2694 8181
email : azrb@azrb.com
Ayer@8
Precint 8, Putrajaya
Contents
2 Notice of Annual General
Meeting
5 Statement Accompanying Notice
of Annual General Meeting
6 Corporate Information
7 Corporate Structure
8 5-Year Financial Highlights
12 Directors’ Profile
24 Statement on Risk Management
and Internal Control
27 Corporate Governance Statement
35 Statement of Directors’
Responsibilities in Preparing the
Financial Statements
36 Report of the Audit Committee
40 Other Information
42 Quality, Health, Safety and
Environment
44 Chairman’s Statement
50 Review of Operations
54 Calendar of Events
63 Financial Statements
165 Notice of Nomination of Auditors
166 Analysis of Shareholdings
169 List of Properties
• Proxy Form
Notice of
ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the 17th Annual General Meeting of the Company will be held at
Taming Sari 3, Ground Floor, The Royale Chulan Kuala Lumpur, 5, Jalan Conlay, 50450 Kuala Lumpur on
Thursday, 26 June 2014 at 10.00 am for the following purposes:-
AGENDA
Ordinary Business
1. To receive the Audited Financial Statements of the Company for the year ended Please refer to
31 December 2013 together with the Reports of the Directors and Auditors thereon. Note A
2. To approve the payment of Directors’ fees for the year ended 31 December 2013. Resolution 1
3. To re-elect the following Directors retiring in accordance with Article 80 of the Company’s
Articles of Association:
(i) Raja Dato’ Seri Aman Bin Raja Haji Ahmad Resolution 2
(ii) Tan Sri Dato’ Lau Yin Pin @ Lau Yen Beng Resolution 3
(iii) Dato’ W Zulkifli Bin Haji W Muda Resolution 4
4. To re-elect Dato’ Wan Ahmad Farid Bin Haji Wan Salleh who retires in accordance with Article Resolution 5
87 of the Company’s Articles of Association.
5. To appoint Auditors of the Company and to authorise the Directors to fix their remuneration. Resolution 6
Notice of Nomination pursuant to Section 172(11) of the Companies Act, 1965, as set out on
page 165 of the Annual Report, has been received by the Company for the nomination of Messrs
Deloitte for appointment as Auditors and of the intention to propose the following ordinary
resolution:-
“THAT, Messrs Deloitte be and are hereby appointed as Auditors of the Company in place of the
retiring Auditors, Messrs KPMG, to hold office until the conclusion of the next Annual General
Meeting and to authorise the Directors to fix their remuneration.”
Special Business
To consider and if thought fit, to pass with or without modifications, the following resolutions:-
Ordinary Resolutions
6. Authority to Allot and Issue Shares pursuant to Section 132D of the Companies Act, 1965
“THAT, subject to the Companies Act, 1965, the Articles of Association of the Company and the Resolution 7
approval from the relevant authorities, where such approval is necessary, the Directors be and
are hereby authorised, pursuant to Section 132D of the Companies Act, 1965, to issue and allot
shares in the Company at any time until the conclusion of the next Annual General Meeting 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 does not exceed
10% of the issued share capital of the Company for the time being AND THAT the Directors be
and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the
listing of and quotation for the additional shares so issued.”
7. Proposed Renewal of Existing Shareholders’ Mandate and New Shareholders’ Mandate for
Recurrent Related Party Transaction of a Revenue or Trading Nature
“THAT, subject to the Companies Act, 1965 (“Act”), the Memorandum and Articles of Association Resolution 8
of the Company and the Main Market Listing Requirements of Bursa Malaysia, approval be
and is hereby given to the Company, its subsidiaries or any of them to enter into any of the
transactions falling within the types of the Recurrent Related Party Transactions, particularly of
which are set out in the Circular to Shareholders dated 4 June 2014 with the Related Parties as
described in the said Circular, provided that such transactions are of revenue or trading nature,
which are necessary for the day-to-day operations of the Company and/or its subsidiaries, in
the ordinary course of business and are on terms not more favourable to the related parties than
those generally available to the public and not to the detriment of the minority shareholders and
that such transactions are made on the arm’s length basis and on normal commercial terms.
(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company (being
the 18th AGM of the Company), at which time the said authority will lapse, unless by a
resolution passed at a general meeting whereby the authority is renewed;
(ii) the expiration of the period within which the next AGM of the Company (being the 18th
AGM of the Company) is required to be held pursuant to Section 143(1) of the Act (but
shall not extend to such extension as may be allowed pursuant to Section 143(2) of the
Act); or
AND THAT the Directors of the Company be authorised to complete and do all such acts and
things as they may consider expedient or necessary to give effect to the transactions contemplated
and/or authorised by this Ordinary Resolution.”
“THAT authority be and is hereby given to the following Directors who have served as Independent
Non-Executive Directors of the Company for a cumulative term of more than nine (9) years, to
continue to act as Independent Non-Executive Directors of the Company”:
(i) Raja Dato’ Seri Aman Bin Raja Haji Ahmad Resolution 9
(ii) Datuk (Prof.) A. Rahman @ Omar Bin Abdullah Resolution 10
(iii) Dato’ Haji Ismail @ Mansor Bin Said Resolution 11
Kuala Lumpur
4 June 2014
Notes: The general mandate for issue of shares will provide flexibility to
the Company for any possible fund raising activities, including
A. This Agenda item is meant for discussion only as the provision but not limited to further placement of shares for the purpose of
of Section 169(1) of the Companies Act, 1965 does not require repayment of bank borrowings, funding future investment and
a formal approval of the shareholders and hence, is not put working capital.
forward for voting.
7. Resolution 8 - Proposed Renewal of Existing Shareholders’
1. A member of the Company shall not be entitled to appoint more Mandate and New Shareholders’ Mandate for Recurrent
than two (2) proxies to attend and vote at the same meeting Related Party Transactions of a Revenue or Trading Nature
and where the member appoints two (2) proxies to attend and
vote at the same meeting, such appointment shall be invalid The ordinary resolution proposed under item 7, if passed will
unless the member specifies the proportion of his/her holdings enable the Company and its subsidiaries to enter into recurrent
to be presented by each proxy. A proxy may but need not be a related party transactions of a revenue or trading nature pursuant
member of the Company and the provision of Section 149(1) (b) to Paragraph 10.09 of the Main Market Listing Requirements of
of the Companies Act, 1965 shall not apply to the Company. Bursa Malaysia Securities Berhad.
2. Where a member of the Company is an exempt authorised 8. Resolutions 9 to 11 – Authority to Continue in Office as
nominee which holds ordinary shares in the Company for Independent Non-Executive Director
multiple beneficial owners in one securities account (“omnibus
account”) as defined under the Securities Industry (Central In line with the Malaysian Code on Corporate Governance 2012,
Depositories) Act 1991, there is no limit to the number of proxies the Board of Directors has assessed the independence of Raja
which the exempt authorised nominee may appoint in respect of Dato’ Seri Aman Bin Raja Haji Ahmad, Datuk (Prof.) A. Rahman
each omnibus account it holds. @ Omar Bin Abdullah and Dato’ Haji Ismail @ Mansor Bin Said,
who have served as Independent Non-Executive Directors of
3. The instrument appointing a proxy shall be in writing under the Company for a cumulative term of more than nine (9) years
the hand of the appointer or of his/her attorney duly authorised and the Board has recommended them to continue to act as
in writing or, if the appointer is a corporation, either under its Independent Non-Executive Directors of the Company based on
Common Seal or under the hand of an officer or attorney duly the following justifications:-
authorised.
(i) Raja Dato’ Seri Aman Bin Raja Haji Ahmad, Datuk (Prof.)
4. The instrument appointing a proxy must be completed, signed A. Rahman @ Omar Bin Abdullah and Dato’ Haji Ismail
and deposited at the office of the Share Registrar, Mega Corporate @ Mansor Bin Said have fulfilled the criteria under the
Services Sdn Bhd at Level 15-2, Bangunan Faber Imperial Court, definition of Independent Director as stated in the Main
Jalan Sultan Ismail, 50250 Kuala Lumpur, not less than forty- Market Listing Requirements of Bursa Malaysia, and hence,
eight (48) hours before the time set for the meeting or at any they would be able to provide an element of objectivity,
adjournment thereof. independent judgement and balance to the Board;
5. In respect of deposited securities, only members whose names (ii) Their length of services on the Board of more than nine
appear on the Record of Depositors as at 20 June 2014 shall be (9) years does not in any way interfere with their exercise
eligible to attend, speak and vote at the 17th Annual General of objective judgement or their ability to act in the best
Meeting or appoint proxy(ies) to attend and/or vote on his/her interests of the Company and Group. In fact, Raja Dato’ Seri
behalf. Aman Bin Raja Haji Ahmad, Datuk (Prof.) A. Rahman @
Omar Bin Abdullah and Dato’ Haji Ismail @ Mansor Bin
Explanatory Notes on Special Business: Said, having been with the Company for more than nine (9)
years, are familiar with the Group’s business operations and
6. Resolution 7 - Authority to Allot and Issue Shares pursuant to have devoted sufficient time and commitment to their role
Section 132D of the Companies Act, 1965 and responsibilities as an Independent Director for informed
and balance decision making; and
The ordinary resolution proposed under item 6, if passed will
give powers to the Directors to issue shares in the Company up (iii) They have exercised due care during their tenures as
to an amount not exceeding in total ten per centum (10%) of the Independent Director of the Company and have discharged
issued share capital of the Company for such purposes as the their duties with reasonable skill and competence, bringing
Directors would consider in the best interest of the Company. independent judgement and depth into the Board’s decision
The approval is sought to avoid any delay and cost involved in making in the interest of the Company and its shareholders.
convening a general meeting for such issuance of shares. This
authority, unless revoked or varied at a general meeting will
expire at the next Annual General Meeting of the Company.
There were seven (7) Board Meetings held during the financial year ended 31 December 2013. Details of the
attendance of the Directors are as follows:-
Total Meetings
Executive Directors % of Attendance
Attended
Dato’ Sri Haji Wan Zaki Bin Haji Wan Muda 6/7 86%
Dato’ Wan Zakariah Bin Haji Wan Muda 7/7 100%
Dato’ Haji Mustaffa Bin Mohamad 7/7 100%
Dato’ W Zulkifli Bin Haji W Muda 6/7 86%
Non-Executive Directors
Raja Dato’ Seri Aman Bin Raja Haji Ahmad 7/7 100%
Tan Sri Dato’ Lau Yin Pin @ Lau Yen Beng 7/7 100%
Datuk (Prof.) A Rahman @ Omar Bin Abdullah 7/7 100%
Dato’ Haji Ismail @ Mansor Bin Said 6/7 86%
Dato’ Wan Ahmad Farid Bin Haji Wan Salleh
3/3 100%
(Appointed w.e.f. 12 July 2013)
The 17th Annual General Meeting of the Company will be held at Taming Sari 3, Ground Floor, The Royale
Chulan Kuala Lumpur, 5, Jalan Conlay, 50450 Kuala Lumpur on Thursday, 26 June 2014 at 10.00 am.
3. Directors who are seeking for re-election at the 17th Annual General Meeting of the Company
The Directors who are offering themselves for re-election at the 17th Annual General Meeting of the Company are
as follows:-
(i) Raja Dato’ Seri Aman Bin Raja Haji Ahmad (Article 80)
(ii) Tan Sri Dato’ Lau Yin Pin @ Lau Yen Beng (Article 80)
(iii) Dato’ W Zulkifli Bin Haji W Muda (Article 80)
(iv) Dato’ Wan Ahmad Farid Bin Haji Wan Salleh (Article 87)
Details of the Directors are set out on pages 12 to 20 of this Annual Report and their securities holdings in the
Company are set out in the Analysis of Shareholdings on page 166.
1. Raja Dato’ Seri Aman Bin 1. Raja Dato’ Seri Aman Bin Mega Corporate Services Sdn Bhd
Raja Haji Ahmad Raja Haji Ahmad Level 15-2
(Independent Non-Executive Chairman) (Chairman) Bangunan Faber Imperial Court
Jalan Sultan Ismail
2. Dato’ Sri Haji Wan Zaki Bin 2. Tan Sri Dato’ Lau Yin Pin @ 50250 Kuala Lumpur
Haji Wan Muda Lau Yen Beng Tel : 03-2692 4271
(Executive Vice Chairman) (Member) Fax : 03-2732 5388
CONCESSION
1. EKVE SDN BHD 100%
2. PENINSULAR MEDICAL SDN BHD 100%
PROPERTY DEVELOPMENT
1. KEMAMAN TECHNOLOGY & INDUSTRIAL PARK SDN BHD 60%
2. AZRB PROPERTIES SDN BHD 100%
3. TREND VISTA DEVELOPMENT SDN BHD 100%
4. TEMALA DEVELOPMENT SDN BHD 70%
5. BETANAZ PROPERTIES SDN BHD 51%
PLANTATION
1. PT ICHTIAR GUSTI PUDI 95%
OVERSEAS INVESTMENT
1. AZRB INTERNATIONAL VENTURES SDN BHD 100%
QUARRY OPERATION
1. TADOK GRANITE MANUFACTURING SDN BHD 100%
PROJECT MANAGEMENT
1. PENINSULAR PROKONSULT SDN BHD 100%
800 300
700
250
600
674,650
251,570
200
594,233
500
214,088
207,704
534,868
191,373
400
181,455
150
459,400
430,713
300
100
200
100 50
0 0
‘09 ‘10 ‘11 ‘12 ‘13 ‘09 ‘10 ‘11 ‘12 ‘13
100
60
40 80
90
24,429
24,464
75
37,775
72
60
32,429
20
68
65
0 40
(20) 20
(49,914)
(40) 0
‘09 ‘10 ‘11 ‘12 ‘13
‘09 ‘10 ‘11 ‘12 ‘13
Dato’ Sri Haji Wan Zaki is the founder of Ahmad Zaki Sdn
Bhd (“AZSB”). He began his working career in 1971 as
a Financial Assistant with Syarikat Permodalan Pahang
Bhd, a Pahang state-owned company. In 1973, he joined
Perkayuan Pahang Sdn Bhd as a Financial Assistant and
Marketing Officer and subsequently rose to the position
of Marketing Manager. He left Perkayuan Pahang Sdn Bhd
in 1977 to join Pesaka Terengganu Bhd as its Operation
Manager where he served until 1979 prior to joining
Pesama Timber Corporation Sdn Bhd as Managing
Director. He left Pesama Timber Corporation Sdn Bhd in
1984 to focus on AZSB.
Notes:
FAMILY RELATIONSHIP
Except for Dato’ Sri Haji Wan Zaki Bin Haji Wan Muda, Dato’ Wan
Zakariah Bin Haji Wan Muda and Dato’ W Zulkifli Bin Haji W Muda
who are brothers, none of the other Directors are related to one another,
nor with any substantial shareholders.
CONFLICT OF INTEREST
Save as disclosed in the related party transactions on page 156 to 157
(note 39) of this Annual Report, none of the other Directors have any
conflict of interest with the Company during the financial year.
In compliance with the Main Market Listing Requirements Paragraph 15.26(b), which requires inclusion of a statement
about the state of internal control of the listed issuer as a group and fulfilling the revised guideline requirement, the Board
is pleased to provide the Statement on Risk Management and Internal Control for the financial year under review.
A. RESPONSIBILITY
The Board is fully committed to its responsibility in establishing a sound risk management and internal control
system for the Group with few main objectives such as to promote good governance practices, enhancing
transparency, proper management of Group’s assets and ultimately to safeguard shareholders’ interest.
Nevertheless, due to the inherent limitations of any risk management approach and internal control system, the
actions taken in managing the risks and implementing internal control system throughout the business activities
could only provide reasonable and not absolute assurance against any material losses, frauds, misstatements or
violations of laws or regulations in achieving the Group’s objectives.
The Group has continued with its Enterprise Risk Management Policy (“ERMP”) to ensure that business risks are
properly identified, assessed and managed.
• To facilitate identification of key business risks for AZRB and its major subsidiaries;
• To facilitate assessment of key controls in managing the relevant key business risks identified;
• To enhance the documentation and communication of risks and promote awareness of risk management;
and
• To develop a framework to monitor and report risks and controls, with the assignment of responsibilities
among the companies within the Group for managing risks.
• The Internal Audit function of the Group is performed in-house by its Internal Audit Department. The Internal
Audit Department reports directly to the Audit Committee. The Internal Audit adopts risk-based audit approach
when executing each audit assignment which is carried out in accordance with the annual audit plan. The
annual audit plan covers the major subsidiaries of the Group.
• The principal role of the Internal Audit is to provide independent and objective reports on the effectiveness of
the system of internal controls within the major subsidiaries of the Group. The audit findings were discussed
with Management of respective entities for their corrective actions. The audit reports were presented to the
Audit Committee during the Audit Committee Meeting in January 2014.
• A summary of the Internal Audit activities during the financial year under review is as follows:
i. Performed 9 operational audits on major subsidiaries of the Group to ascertain the adequacy and
compliance with the system of internal controls and made recommendations for improvement where
weaknesses were found.
ii. Conducted 7 follow-up audits to determine the adequacy, effectiveness and timeliness of action taken
by the Management on audit recommendations and provided updates on their status to the Audit
Committee.
Board of Directors
• The Board meets quarterly at a minimum, and more frequently when required, to review and evaluate the
Group’s operations and performance and to address key issues.
• The pre-requisite to decisions made in the meeting is the deliberation and discussion by the Board, together
with recommendations and feedbacks from Management. In addition to quarterly financial results, project
tender status and progress reports on business operations are also tabled at the Board’s quarterly meetings.
• The Audit Committee comprises four (4) Independent Non-Executive Directors. The Audit Committee has full
access to both Internal Auditors and External Auditors and has the right to convene meetings with auditors
without the presence of Executive Directors and senior management.
• The Audit Committee reviews the reports of the Internal Auditors, their findings and recommendations to
ensure that it obtains the necessary level of assurance in respect to the adequacy of the internal controls.
• Annual business plan and budget are prepared by the Group’s major subsidiaries, and are reviewed and
approved by the Board. The performance of each major subsidiary is assessed against budget by the Chief
Financial Officer with explanation on significant variances presented to the Board on a quarterly basis.
• Policies and procedures of business processes are documented and set out in a series of Standard Operating
Procedures (“SOP”) or Integrated Management System (“IMS”) and implemented throughout the Group. These
policies and procedures are subject to reviews, updates and improvements to reflect the changing business
risks and operational needs.
• Policies and procedures developed and implemented during the financial year are Management of Sundry
Wages and Fire Prevention & Action.
• The Group has in place, a Human Resource Policy which is approved by the Establishment Committee. The
Human Resource Policy sets the tone of compliance with the Group’s rules and regulations and employee
conduct as set out in the Employee Handbook.
Performance Management
• Performance appraisals are carried out annually in a Performance Management System to gauge the employee’s
performance for any promotion, bonus payment and annual increment exercise.
• In order to nurture the quality and competencies of employees, training and development programmes are
established.
Business Ethics
• The Standing Instruction on Business Ethics (“the Code”) is communicated to all employees and compliance
to the Code is mandatory. The Code provides guidance and serves as the main source of reference to
assist employees to live up to ethical business standards and explains how business and duties should be
conducted.
The Board believes that the development of the internal control system is an on-going process. The Board
has received assurance from the Group Managing Director and Chief Financial Officer that the Group’s risk
management and internal control system are operating adequately and effectively.
The Board is satisfied with the risk management and internal control system implemented throughout the Group.
Nonetheless, the Board shall continue to review and monitor the effectiveness of the Group’s risk management
and internal control system in ensuring continuous and acceptable level of assurance in conducting daily business
activities.
Based on the assessment of the Group’s risk management and internal control system for the financial year under
review and up to the approval date of this statement, there were no significant control failures or weaknesses that
would result in material losses, contingencies or uncertainties requiring separate disclosure in the Group’s Annual
Report.
This statement, prepared for inclusion in the Annual Report of the Company for the year ended 31 December
2013 has been reviewed by the Audit Committee prior to their recommendation to the Board for approval.
This statement is made on the recommendation of the Audit Committee to the Board of Directors and as per the
Board’s resolution dated 20 May 2014.
The Board of Directors of Ahmad Zaki Resources Berhad (“AZRB”) is committed towards the adoption of principles
and best practices as enshrined in the Malaysian Code of Corporate Governance (“MCCG”) throughout the Group. It is
recognised that the adoption of the highest standards of governance is imperative for the enhancement of stakeholders’
value. The Group has adopted and complied with the principles and Best Practices set out in MCCG 2012 throughout
the financial year ended 31 December 2013.
The Board is pleased to present the following report on the application of principles and compliance with best practices
as set out in the MCCG.
BOARD OF DIRECTORS
Board Composition
The Board is currently led by an Independent Non-Executive Chairman and has nine (9) members comprising four
(4) Executive Directors and five (5) Independent Non-Executive Directors. The Board is composed of members with
experience in business, construction, legal and finance, required for effective and independent decision-making at the
Board level. The Board considers its current size adequate given the present scope and nature of the Group’s business
operations. A brief description on the background of each Director is presented on pages 12 to 20 of the Annual
Report.
The present five (5) Independent Non-Executive Directors do not participate in the day-to-day management or in
the daily business of the Company or Group. They shall provide unbiased, independent views and judgment in the
decision-making process at the Board level and ensure that the interest of minority shareholders are safeguarded.
The MCCG 2012 has recommended that the tenure of an independent director should not exceed a cumulative term of
nine (9) years. Based on the independent assessment made, the independence of Raja Dato’ Seri Aman Bin Raja Haji
Ahmad, Datuk (Prof.) A Rahman @ Omar Bin Abdullah and Dato’ Haji Ismail @ Mansor Bin Said, who have served as
Independent Non-Executive Directors of the Company for a cumulative term of more than nine (9) years each, remain
objective and independent-minded in their participation in deliberations and decision making of the Board and Audit
Committee. The length of their service does not in any way interfere with their exercise of independent judgment.
Hence, the Board has recommended to retain those independent directors whose tenure has exceeded nine (9) years
and shall seek shareholders’ approval at the forthcoming AGM.
The positions of the Chairman and the Managing Director are held by two (2) different individuals. There is a clear
division of responsibilities between the Chairman and the Managing Director which will ensure a balance of power and
authority. Generally, the Chairman is responsible for the orderly conduct and working of the Board while the Managing
Director is responsible for the day to day management of the Group as well as to implement policies and strategies
adopted by the Board. The Board exercises its responsibilities collectively.
All the Directors have given their undertaking to comply with the Main Market Listing Requirements of Bursa Malaysia
Securities Berhad (“Listing Requirements”).
The Board recognises its roles and responsibilities in discharging its fiduciary and leadership functions. The Board is
also firmly committed to ensuring the highest standards of corporate governance and corporate conduct are adhered
to. The Board delegates the day-to-day management of the Company to the Executive Directors but reserves for its
consideration pertaining to significant matters, amongst others as follows:-
The Board has laid down a formal schedule of matters specifically reserved to it for decision to ensure that the direction
and control of the Group is firmly in its hands. The Board delegates and confers some of the Board’s authorities
and discretion to the Executive Vice Chairman as well as to the Managing Director. The Managing Director is also
responsible to ensure that the Management adheres to the guidelines and policies set by the Board.
The Directors have full access to information pertaining to all matters requiring the Board’s decision. Prior to any Board
meeting, all Directors shall be furnished with proper board papers which contains the necessary information for each of
the meeting agenda in advance to enable each Director to obtain further explanations, where necessary, in order to be
briefed properly before the meeting. Matters to be discussed are not limited to financial performance of the Group but
also to address major investment decisions as well as operational issues and problems encountered by the Group.
The Board has set out agreed procedures for the Directors to take independent professional advice at the Company’s
expense, if necessary.
All Directors have access to the advice and services of the Company Secretary who ensures compliance on procedural
and regulatory requirements such as statutory obligations, Listing Requirements or other regulatory requirements. The
Company Secretary plays an important role in supporting the Board by ensuring adherence to Board policies and
procedures. The removal of the Company Secretary shall be a matter for the Board as a whole.
Besides the Audit Committee, which was set up on 24 March 1999, several Board committees were established
subsequently to assist the Board in discharging its duties and responsibilities. All committees have written terms of
reference and procedures duly endorsed by the Board to examine a particular issue and report back to the Board with
a recommendation. The Chairman of the committee concerned will report to the Board on matters dealt by the said
committee which will be incorporated as part of the Board minutes.
In previous years, the process of assessing existing Directors and identifying, recruiting, nominating, appointing and
orientating new directors are performed by the Board. In compliance with the best practices recommended under the
MCCG, these functions have been delegated to Nomination Committee with effect from 16 January 2002.
Directors’ Re-election
In accordance with the Company’s Articles of Association, one-third of the Directors, including Managing Director,
shall retire from office by rotation each year and all Directors are subject to retire at least once in every three (3) years.
Retiring Directors may offer themselves for re-election at the AGM. Any Director who is appointed by the Board during
the year is required to retire and seek re-election by shareholders at the following AGM held following his appointment.
Any Director over seventy (70) years of age is required to submit himself for re-appointment annually in accordance
with Section 129(6) of the Companies Act, 1965.
Board Meetings
During the financial year ended 31 December 2013, seven (7) Board meetings were held. The date and details of
attendance of each Board meeting held are as follows:-
Attendance by Directors
Total Board (Percentage Attendance)
Date of meeting Venue
Members Non
Independent
Independent
Board Room, 7th Floor,
27 February 2013 Menara AZRB, Persiaran Gurney, 8 4 (100%) 4 (100%)
54000 Kuala Lumpur
Board Room, 7th Floor,
26 March 2013 Menara AZRB, Persiaran Gurney, 8 3 (75%) 3 (75%)
54000 Kuala Lumpur
Board Room, 7th Floor,
26 April 2013 Menara AZRB, Persiaran Gurney, 8 4 (100%) 4 (100%)
54000 Kuala Lumpur
Board Room, 7th Floor,
30 May 2013 Menara AZRB, Persiaran Gurney, 8 4 (100%) 4 (100%)
54000 Kuala Lumpur
Board Room, 7th Floor,
28 August 2013 Menara AZRB, Persiaran Gurney, 9 5 (100%) 3 (75%)
54000 Kuala Lumpur
Board Room, 7th Floor,
29 August 2013 Menara AZRB, Persiaran Gurney, 9 5 (100%) 4 (100%)
54000 Kuala Lumpur
Board Room, 7th Floor,
28 November 2013 Menara AZRB, Persiaran Gurney, 9 5 (100%) 4 (100%)
54000 Kuala Lumpur
The details of attendance of each Board member in the Board meetings held during the financial year ended 31
December 2013 are set out in the Statement Accompanying Notice of AGM on page 5 of this Annual Report.
Directors’ Remuneration
The Board believes that the level of remuneration offered by the Company is sufficient to attract and retain Directors
needed to run the Company. The component part of remuneration has been structured to link rewards to corporate and
individual performance for Executive Directors whilst Non-Executive Directors’ remuneration reflects their experience
and level of responsibilities.
The details of the remuneration of the Directors of the Company received from the Group during the financial year
ended 31 December 2013 are as follows:
Benefits-
Salaries* Allowances Fees Bonuses Total
in-kind
RM RM RM RM RM
RM
Executive Directors 3,579,512 36,200 419,000 581,955 291,833 4,908,500
Non-Executive Directors 0 32,500 611,476 0 66,350 710,326
The number of Directors whose remuneration falls into the following bands:-
Directors’ Training
Every Director of the Company undergoes continuous training as an on-going process to equip himself to effectively
discharge his duties as a Director. For that purpose, he ensures that he attends such training programs to continually
develop and update himself from time to time. The Company also provides briefings for new members of the Board, to
ensure that they have a comprehensive understanding on the operations of the Group and the Company.
Conferences, seminars and training programmes attended by Directors in 2013 included the following areas:
Board Charter
The Board Charter was established in year 2002 to set out the strategic intent and outlines the Board’s structure and
procedures, roles and responsibilities and relationship of the Board to Management. The Board has assessed the current
Board Charter and its conformity in accordance with MCCG 2012. The Board is of the opinion that the Board Charter
conforms in all material aspects to the MCCG 2012. Nevertheless, the Board recognises the importance of the Board
Charter thus will take steps to enhance the Board Charter to bridge any gaps that may arise out of the MCCG 2012 so
as to ensure its continuous relevance in the corporate governance of the Group.
BOARD COMMITTEES
1. NOMINATION COMMITTEE
Primary function
The Nomination Committee was established on 16 January 2002 and operates within clearly defined terms of
reference. The Nomination Committee is primarily responsible for constantly assessing the overall effectiveness
of the Board and Board committees and make recommendations to the Board for any new candidate as Board
member or Board committee member. Due consideration is given to the required mix of skills, expertise and
experience of the new candidate to meet the needs and complement the Board. In addition, the Nomination
Committee also performs introduction briefing for the new Board members with regards to the overall operations
and corporate objectives of the Group and continues to ensure that new Board members undergoes the necessary
Mandatory Accreditation Programme (“MAP”) prescribed by Bursa Malaysia.
The decision as to who shall be appointed as Board member will be the responsibility of the full Board after
considering the recommendations of the Nomination Committee.
During the year, the Nomination Committee has recommended to the Board for consideration, the appointment
of Dato’ Wan Ahmad Farid Bin Haji Wan Salleh as Independent Non-Executive Director of the Company.
Member
The present members of the Nomination Committee who are the Independent Non-Executive Directors of the
Company are as follows:
2. REMUNERATION COMMITTEE
Primary function
The Remuneration Committee was established on 20 August 2001. Its primary function is to set the policy
framework and recommend to the Board on remuneration packages and benefits extended to the Directors,
drawing from outside advice as necessary to ensure that the remuneration is sufficient to attract and retain the
Directors needed to run the Company successfully.
The determination of the remuneration package for Non-Executive Directors shall be a matter for the Board
as a whole. The Director concerned shall abstain from deliberations and voting on decisions in respect of his
individual remuneration package.
Member
The present members of the Remuneration Committee of the Company are as follows:
• Dato’ Sri Haji Wan Zaki Bin Haji Wan Muda (Chairman)
• Raja Dato’ Seri Aman Bin Raja Haji Ahmad
• Dato’ Wan Zakariah Bin Haji Wan Muda
• Datuk (Prof.) A Rahman @ Omar Bin Abdullah
• Dato’ Haji Ismail @ Mansor Bin Said
3. ESTABLISHMENT COMMITTEE
Primary function
The Establishment Committee was established on 16 January 2002. The main purpose for setting up this committee
is to formulate policies and execution of the whole spectrum of Human Resource Management for the Group, on
behalf of the Board as well as to formulate and implement Employee Share Option Scheme (“ESOS”) under the
direction of the Board, in accordance with the rules and regulations determined by the authorities.
Member
The present members of the Establishment Committee of the Company are as follows:
The Head of Group Human Resource and Administration Department is the secretary of the Establishment
Committee.
Primary Function
The Board Risk Committee (“BRC”) was established on 18 August 2004 with the primary responsibility of ensuring
an effective functioning of the integrated risk management function within the organisation. The BRC oversees
and monitor the overall risks impacting the Group. It is being chaired by the Group Chairman, who is also an
Independent Director to ensure independence from Management as it is the BRC that reviews and approves risk
management policies and risk tolerance limits.
The BRC specifically is to define, sponsor and support all risk management activities within AZRB Group including
its associated companies, significant joint ventures and where management responsibility is vested to AZRB. Apart
from setting and approving the Group’s Risk Management Strategy, Policy and Guidelines, the BRC also receives
and reviews reports such as Statement on Internal Control on risk management issues to ensure that critical and
significant risks are being addressed and mitigated by proper action plans.
Member
The Board maintains effective communications that enables both the Board and the Management to
communicate effectively with its shareholders, stakeholders and the public. The policy effectively interprets the
operations of the Group to the shareholders and accommodates feedback from shareholders, which are factored into
the Group’s business decision.
The Board values its dialogue with shareholders, public, media, authorities and private investors and recognises that
equal and timely dissemination of relevant information be provided to them.
The AGM serves as an important means for shareholders communication. Notice of the AGM and Annual Reports are
sent to shareholders twenty one (21) days prior to the meeting. At each AGM, the Board presents the performance and
progress of the Group and provides shareholders with the opportunity to raise questions pertaining to the Group. The
AGM is also an avenue for the Chairman and the Board to respond personally to all queries and undertake to provide
clarification on issues and concerns raised by the shareholders.
The Board has ensured each item of special business included in the Notice of AGM will be accompanied by an
explanatory statement on the effects of the proposed resolution.
Other mediums of communication used by the Group to communicate information on the operations, activities and
performance of the Group to the shareholders, stakeholders and the public are as follows:-
i. the Annual Report, which contains the financial and operational review of the Group’s business, corporate
information, financial statements, and information on Audit Committee and Board of Directors;
ii. various announcements made to Bursa Malaysia, which includes announcements on quarterly results; and
iii. the Company’s website at http://www. azrb.com.
The Board is fully committed in providing and presenting a true and fair view of the financial performances and future
prospects in the industry. This is provided through the quarterly, half yearly and annual financial statements as well as
the Annual Report.
Financial Reporting
The Board, which is assisted by the Audit Committee aims to present a balanced and understandable assessment of
the Group’s position and prospects through the annual financial statements and quarterly announcements of results to
Bursa Malaysia.
The Directors are responsible to ensure the annual financial statements are prepared in accordance with the provisions
of the Companies Act, 1965 and applicable approved accounting standards in Malaysia.
A statement by the Directors of their responsibilities in preparing the financial statements is set out separately on page
35 of this Annual Report.
The Statement on Risk Management and Internal Control furnished on pages 24 to 26 of this Annual Report provides an
overview on the state of internal controls within the Group.
Through the Audit Committee, the Board has established formal and transparent arrangements for maintaining an
appropriate relationship with the Group’s external auditors. The role of the Audit Committee in relation to the external
auditors is stated in the Audit Committee Report.
This Corporate Governance Statement is made in accordance with the resolution of the Board dated 20 May 2014.
The Directors acknowledged their responsibilities as required by the Companies Act, 1965 to prepare the financial
statements for each financial year so as to give a true and fair view of the state of affairs of the Group and the Company
as at end of the financial year and of the results and cash flows of the Group and the Company for the financial year
then ended.
The Directors are responsible for ensuring that proper accounting and other records are kept, which disclose with
reasonable accuracy at any time the financial position of the Group and the Company and to enable them to ensure
that the financial statements comply with the Companies Act, 1965. The Directors are also responsible for safeguarding
the assets of the Group and hence for taking reasonable steps for prevention and detection of fraud and other
irregularities.
This Statement of Directors’ Responsibilities is made in accordance with the resolution of the Board of Directors dated
20 May 2014.
Membership
The present members of the Audit Committee of the Company are as follows:
TERMS OF REFERENCE
Membership
1. The Committee shall be appointed by the Board of Directors amongst its members and consist of at least three (3)
members, all of whom must be a Non-Executive Director, with a majority of them being Independent Directors.
3. In the event of any vacancy in the Committee resulting in the non-compliance with Paragraph 15.10 of the Listing
Requirements of Bursa Malaysia, the Board shall appoint a new member within three (3) months.
4. The Board of Directors must review the term of office and performance of the Committee and each of its members
at least once in every three (3) years.
Meetings
2. The Audit Committee may require the attendance of any management staff from the Finance/Accounts Department
or other departments as deemed necessary.
3. The Committee shall meet with the external auditors at least once a year without Executive Board members or
management present. Upon the request of the external auditors, the Chairman of the Audit Committee shall
convene a meeting of the Committee to consider any matter the external auditors believe should be brought to the
attention of the Directors or shareholders.
Quorum
The quorum shall be at least two (2) persons, both of whom are to be Independent Directors.
Secretary
Reporting Procedure
Minutes of the meetings were tabled for confirmation at the following Audit Committee meeting. In 2013, the Chairman
presented the recommendations of the Committee to the Board for approval of the annual and quarterly financial
statements. The Chairman also conveyed to the Board, matters of significant concern as and when raised by the external
or internal auditors.
The duties and responsibilities of the Audit Committee shall include the following:-
1. to consider the appointment of the external auditor, the audit fee and any questions of resignation or dismissal;
2. to discuss with the external auditors before the audit commences, the nature and scope of the audit;
3. to discuss with the external auditors on the evolution of the system of internal controls and the assistance given by
the employees to the external auditors;
4. to review and report to the Board if there is reason (supported by grounds) to believe that the external auditors is
not suitable for reappointment;
5. to review the quarterly and year-end financial statements of the Board, focusing particularly on:
• any changes in the accounting policies and practices;
• significant adjustments arising from the audit;
• the going concern assumption; and
• compliance with accounting standards and other legal requirements.
6. to discuss problems and reservations arising from the interim and final audits, and any matter the auditors may
wish to discuss (in the absence of the management where necessary);
7. to review the external auditor’s management letter and the management’s response;
9. to consider any related party transactions that may arise within the Company or the Group;
10. to consider the major findings of internal investigations and the management’s response; and
Authority
In carrying out their duties and responsibilities, the Audit Committee shall:
Review
The Board of Directors has ensured that the term of office and performance of the Audit Committee and each of its
members are being reviewed at least once in every three (3) years to determine whether the Audit Committee and its
members have carried out their duties in accordance with their terms of reference.
The details of attendance of each member at the Committee meetings held during the financial year ended 31 December
2013 are as follows:
Meetings
Name of Directors Total Attendance
23.1 27.2 26.4 30.5 29.8 28.11
Raja Dato’ Seri Aman Bin Raja Haji Ahmad 6/6 (100%)
Tan Sri Dato’ Lau Yin Pin @ Lau Yen Beng 6/6 (100%)
Datuk (Prof.) A Rahman @ Omar Bin Abdullah 6/6 (100%)
Dato’ Haji Ismail @ Mansor Bin Said 6/6 (100%)
SUMMARY OF ACTIVITIES
During the financial year, the Audit Committee met six (6) times. Activities carried out by the Committee included the
deliberation and review of:
1. the Group’s year end audited financial results presented by the external auditors prior to submission to the Board
for approval;
2. the Group’s quarterly financial results presented by the management prior to submission to the Board for
approval;
3. the Audit Planning Memorandum of the external auditors in a meeting to discuss their audit strategy, audit focus
and resources prior, to commencement of their annual audit;
4. matters arising from the audit of the Group in a meeting with the external auditors without the presence of any
executive directors or members of the Group’s management;
5. related party transactions within the Group pursuant to Bursa Malaysia Listing Requirements prior to submission
for the Board’s consideration and, where appropriate, shareholders’ approval; and
6. the internal audit plan, consider the major findings of internal audit reports and recommendations in relation to
weaknesses in the internal controls and discussion with management on corrective actions to be taken.
During the financial year, there was no share buy back transacted, resale or cancellation of treasury shares. As at 31
December 2013, the treasury shares stood at 1,478,100. The purchased shares are being held as treasury shares in
accordance with Section 67A of the Companies Act, 1965.
The Company does not have an Employees’ Share Option Scheme and as such, there were no options over ordinary
shares exercised during the financial year.
During the financial year, the Company did not implement any Warrants or Convertible Securities.
During the financial year, the Company did not sponsor any ADR/ GDR programme.
Since the end of the previous financial year, there was no material sanction and/or penalty imposed on the Company
and its subsidiaries, Directors or Management by the relevant regulatory bodies.
PROFIT GUARANTEE
The Company did not implement any corporate proposals to raise funds for the financial year ended 31 December
2013.
AUDIT FEES
The amount of audit fees and non-audit fees paid to the external auditors and their affiliated companies by the Group
for the financial year ended 31 December 2013 are as follows:-
VARIATION IN RESULTS
There is no significant difference between the Audited and Unaudited Results released to Bursa Malaysia in respect of
the financial year ended 31 December 2013.
Save as those disclosed in the following recurrent related parties transactions of a revenue in nature, there were no
material contracts or loans entered into by the Company and its subsidiaries involving Directors’ and major shareholders’
interests either subsisting at the end of the financial year ended 31 December 2013 or entered into since the end of
previous financial year.
The value of related party transactions entered into by the Company and its subsidiaries during the financial year which
have obtained shareholders’ mandate in the previous AGM are qualified as follows:-
i. Chuan Huat Resources Berhad (“CHRB”) Chuan Huat Resources Berhad, a company in which Dato’ Sri
Haji Wan Zaki bin Haji Wan Muda has substantial financial
interest and is also a director
ii. Residance Inn & Motels Sdn Bhd (“RIM”) A subsidiary to Zaki Holdings (M) Sdn Bhd
iii. Zaki Holdings (M) Sdn Bhd (“ZHSB”) Holding company of Ahmad Zaki Resources Berhad
QHSE PERFORMANCE
Man Hours
Project
Without LTI
Kertih Polymer Park 1 26,020
Kertih Polymer Park 2 6,020
East Coast Expressway Phase 2 –
526,500
Package 2
Waterfront Shop Office, Lot 8C1,
132,060
Putrajaya
Public Housing Scheme, Chabang
1,182,280
Tiga, Kuala Terengganu
Universiti Darul Iman Malaysia
906,700
(“UDM”), Besut
Kompleks Kerja Raya 2, Kuala Lumpur 1,484,000 Although our primary concern is to promote the health,
IIUM Teaching Hospital, Kuantan 759,990 safety and environment in our daily operation, we have
not neglected the need to meet our clients’ expectations
KVMRT Package V6 1,226,937 with respect to the quality of our products and services.
PNB Hotel & Officer Tower, Kuala
426,630 With the regards of the clients’ satisfaction
Lumpur
achievement, AZRB successfully handed over various
Royal Malaysian Police Air Wing Unit projects in the year of 2013 such as the maternity complex,
6,208 Hospital Sultanah Nur Zahirah, Kuala Terengganu,
(Package 3), Selangor
the Sultan Zainal Abidin University (“UNISZA”), Besut
TOTAL 6,683,345 Campus, Terengganu and the Ayer@8 commercial
complex, Putrajaya to our clients.
Man Hours Without Any Lost Time Tabulation For Year 2013
Dear Valued
Let’s take a look at some details on both EKVE and the AFU
Case. EKVE is an expressway that has been long coming,
having been on the drawing board since the mid 1980s.
In 2007, the Government had called for a selective tender
for KLORR under the Build, Operate and Transfer (“BOT”)
model. AZRB was selected based on its competitive
tender via a Letter of Interest (“LoI”) by the Government
in 2008. Following the LoI, the Group was invited to
further discuss with the Selangor state government on
the most suitable alignment of the expressway especially
along the forest reserve corridors. Negotiations involving
the Group and various state agencies took into account
various environmental and social concerns. In April 2011,
the Selangor state government gave its approval for the
alignment of EKVE. Thereafter, the Group entered into
Profit before tax for 2013 was RM20.2 million (2012: Delivering projects and securing new wins
RM20.3 million). The Oil and Gas Division saw its revenue
affected by the increasing congestion at Kemaman Supply The year under review was an eventful year for our
Base which saw its direct bunkering sales decrease. Engineering and Construction Division which saw the
However, the Division recorded better volume of Division deliver five (5) projects to our clients. Amongst
throughput revenue with Petronas, which helped the the notable projects delivered to our clients were the new
Division maintain its profitability for the year. Maternity Complex at the Hospital Sultanah Nur Zahirah,
Kuala Terengganu; the Sultan Zainal Abidin University
The Plantation Division in 2013 recognised revenue of (“UniSZA”) campus at Besut, Terengganu; and the Ayer@8
RM4.1 million (2012: RM2.5 million) and loss before tax commercial complex in Putrajaya. 2013 also saw one of
of RM27.1 million (2012: RM12.4 million). The higher our iconic projects, the new Ministry of Works headquarters
losses recognised in the Plantation Division for 2013 was (“KKR2 Project”) in Kuala Lumpur, being substantially
mainly due to unrealised foreign exchange losses due complete. This project, which is an engineering marvel,
to weakening of the Rupiah versus US Dollar, generally is presently undergoing internal fit out and is on track for
lower prices for palm oil and higher employee expenses handover to our client by second quarter of 2014. Our
due to rise in minimum wage in Indonesia. The Board and undertaking of the KKR2 Project showcases our ability
Management are closely monitoring the performance of to undertake complex projects. Comprising 38 floors,
the Plantation Division, and we remain confident that it boasts twisting columns and a total number of 6,248
the Division will improve progressively and will be an window panes, of which no two (2) pieces are identical.
important contributor to Group’s results in the future. The KKR2 Project was our first high rise project and we
are proud to see it take its place in the skyline of Kuala
Lumpur.
Beyond delivering projects, the Group was successful in Whilst the Engineering and Construction Division works
procuring two (2) construction projects during the year. On hard in winning new construction projects, the Group
11 July 2013, the Group secured the design and build of a is keen to pursue projects that provide a combination
Student Accommodation Complex at UTM Kuala Lumpur of immediate construction opportunities and long term
(“UTM Student Complex”) worth RM171.5 million. earnings. Our EKVE project, exemplifies such projects the
Whilst on 11 October 2013, the Group was awarded the Group is keen on for long term growth strategy.
construction of the new Royal Malaysian Police Air Wing
Unit base at Subang (“PDRM Air Base”) for Perbadanan
Perwira Harta Malaysia (“PPHM”) worth RM163 million. Continuous Change and Strategic
Both projects were awarded on a tender basis and Diversification
demonstrates the market’s continuing confidence in the
Group’s ability as well as the Group’s competitiveness in As we move forward, the growth of the Group’s businesses
its tenders and pricing. is a key focus area for the Board and Management. We
have charted out a path that diversifies our revenue
Last but not least, as at the date of this report, the Board base but which leverages on our core strength, that is
is also pleased to announce the award of Langat 2 Water construction. Whilst we have seen some aspects of
Treatment Plant Project (“Langat 2”) to the Salcon MMCB that strategy, primarily through our agreement with the
AZSB JV Sdn Bhd (“the JV”) for RM994 million. The JV, Government for EKVE, we hope to roll out more projects
of which, our construction subsidiary Ahmad Zaki Sdn of such nature in the near future.
Bhd (“AZSB”) holds a share of 30%, was given the Letter
of Award on 16 April 2014. Together with our partners, Both our Oil and Gas and Plantation Divisions remain
Salcon Engineering Berhad and MMC Corporation important segments in our Group. In particular, we wish
Berhad, we are proud to be entrusted with a project of to reiterate our commitment on Plantation Division and we
such national importance. look to this Division contributing positively in the future.
We have had to face certain challenges along the way and
The present balance order book stands at RM2.0 billion. whilst the Division has impacted negatively on our Group
Together with our EKVE project, worth RM1.55 billion, the results, in the long term we are positive that this Division
Group will be fairly occupied for the next three (3) to four will be an important segment to the Group. For both the
(4) years. Nevertheless, the Group is continuously on the Oil and Gas and Plantation Divisions, we are very much
lookout for sizeable new projects, both to replenish the on the lookout for new opportunities that would augment
Group’s balance order book as well as to raise its profile. and enhance the value of both Divisions.
Special Mention
Note of Appreciation
The E&C Division continued to be the major contributor to the Group’s results by recording revenue of
RM524 million (2012: RM597 million); a decrease of 12% over the previous year. The decrease is due to completion
and delivery of five (5) projects during the year and also due to new projects that have yet to reach the peak of its
completion progress.
The profit before tax increased to RM49.1 million (2012: RM42.8 million) as a result of differences in the project mix
and stages of completion of the various projects of the Group in 2012 and 2013.
In 2013, projects secured by the Group; namely the UTM Student Complex as well as the new PDRM Air Base with a
combined contract value worth RM334 million, are expected to contribute positively to the Group for years to come.
In addition, the Group inked the concession agreement with the Government of Malaysia, via the Ministry of Works,
for the proposed design, construction, completion, operation, management and maintenance of the East Klang Valley
Expressway (“EKVE”). EKVE entails the building and operation of an expressway totalling 36km along the eastern
corridor of Klang Valley from Sungai Long in Kajang to Ukay Perdana in Ampang.
Buoyed by the coveted high multiplier industry classification, the Group is confident that the construction industry
will be seeing the churning out of new infrastructure projects by the Malaysian Government particularly in public
transportation, which will spur the Group in the future.
Infrastructure –
4. East Coast Expressway Phase 2 - Package 2 145 43
Highways
Universiti Teknologi Malaysia (“UTM”) Building – Student
5. 172 168
Jalan Semarak, Kuala Lumpur Complex
Royal Malaysian Police Air Wing Unit, Building – Hangar &
6. 162 158
Subang 5-storey Building
Infrastructure –
7. Langat 2 Water Treatment Plant Water treatment & 298* 298*
reticulation plant
The Oil & Gas Division recorded a slight decrease in revenue for the year 2013 compared to the previous year. For 2013,
revenue was RM53.7 million, a decrease of 22.7% from the RM69.5 million recorded in 2012. However, the profit before
tax were not impacted by the decrease of revenue during the year. The Division continues to contribute significantly to
the bottom line of the Group. Profit before tax contribution was RM20.2 million (2012: RM20.3 million).
The Oil & Gas Division saw its revenue affected by the increasing congestion at Kemaman Supply Base which saw its
direct bunkering sales decrease. However, the Division recorded better volume of throughput revenue with Petronas,
which helped the Division maintain its profitability for the year.
The expected increase in demand and consumption of oil and oil related products in the downstream activities of Oil
& Gas industry in the coming years augurs well for the Oil & Gas Division and we foresee it to be a strong indication
of revenue growth and profitability.
PLANTATION DIVISION
The Division contributed revenue of RM4.1 million (2012: RM2.5 million) and a loss before taxation of RM27.1 million
(2012: RM12.4 million). The losses are generally resulted from unrealised foreign exchange and higher operational
costs. We are confident that the contributions from this Division will improve over the next few years as the trees
become more mature.
Corporate Events
13 February | Signing of Concession Agreement between EKVE Sdn Bhd with Government of Malaysia
27 June | AZRB 16th Annual General Meeting at The Royale Chulan Kuala Lumpur
23 July | AZRB Staff Breaking Fast 2013 at The Royale Chulan Kuala Lumpur
25 August | AZRB Hari Raya Open House 2013 at Saloma Bistro, Kuala Lumpur
Corporate Events
2 October | Joint Venture Signing Ceremony between AZRB, Malaysian Harvest Sdn Bhd and Primary Horizon to
establish Peninsular IFM Sdn Bhd
22 October | Master Builder Association Malaysia (“MBAM”) Visit to Kompleks Kerja Raya 2
13 December | Signing of Contract Document Between Universiti Teknologi Malaysia (“UTM”) and Ahmad Zaki Sdn
Bhd (“AZSB”)
29 November – 2 December | Directors & Senior Management Retreat 2013 at The Andaman Langkawi
28 July | ‘Baju Raya’ Shopping with the children from Rumah Baitul Ummah
29 July | Breaking fast with the children of Rumah Silaturrahim Nurul Qanaah
31 October | ‘Majlis Doa Selamat dan Solat Hajat’ for MRT V6 Project
3 August | ‘Baju Raya’ Shopping with the children from Rumah Silaturrahim Nurul Qanaah
64 Directors’ Report
69 Statements of Financial Position
71 Statements of Profit or Loss and
other Comprehensive Income
73 Consolidated Statements of
Changes in Equity
75 Statements of Changes in Equity
76 Statements of Cash Flows
79 Notes to the Financial Statements
162 Statement by Directors
162 Statutory Declaration
163 Independent Auditors’ Report
Maternity Hospital
Kuala Terengganu, Malaysia
directors’ report
for the year ended 31 December 2013
The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company
for the financial year ended 31 December 2013.
Principal activities
The Company is principally engaged in investment holding, providing management services and as contractors of civil and
structural works, whilst the principal activities of the subsidiaries are as stated in Note 10 to the financial statements. There
has been no significant change in the nature of these activities during the financial year.
Results
Group Company
RM RM
Profit/(Loss) for the year attributable to:
Owners of the Company 5,525,874 (30,621,423)
Non-controlling interests (122,666) -
5,403,208 (30,621,423)
There were no material transfers to or from reserves and provisions during the financial year under review except as
disclosed in the financial statements.
Dividends
Since the end of the previous financial year, the Company paid:
i) an interim dividend of 2.00 sen per ordinary share, less tax at 25%, totalling RM4,131,961 (1.50 sen net per ordinary
share) in respect of the financial year ended 31 December 2013 on 23 August 2013.
The Directors do not recommend any final dividend to be paid for the financial year under review.
Directors who served since the date of the last report are:
The interests and deemed interests in the ordinary shares of the Company and of its related corporations (other than wholly-
owned subsidiaries) of those who were Directors at financial year end (including the interests of the spouses or children of
the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are
as follows:
By virtue of his interests in the shares of the ultimate holding company, Dato’ Sri Haji Wan Zaki bin Haji Wan Muda is also
deemed interested in the shares of the Company and its subsidiaries during the financial year to the extent that the Company
has an interest.
None of the other Directors holding office at 31 December 2013 had any interest in the ordinary shares of the Company
and of its related corporations during the financial year.
Directors’ benefits
Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any
benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors
as shown in the financial statements of the Company or of related corporations) by reason of a contract made by the
Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company
in which the Director has a substantial financial interest other than certain Directors who have significant financial interests
in companies which traded with certain companies in the Group in the ordinary course of business as disclosed in Note 39
to the financial statements.
There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the
Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body
corporate.
There were no changes in the authorised, issued and paid-up capital of the Company during the financial year.
No options were granted to any person to take up unissued shares of the Company during the financial year.
At an extraordinary general meeting held on 17 March 2014, the Company’s shareholders approved the establishment of an
Employee Share Scheme (“ESS”) of up to 15% of the issued and paid-up share capital of the Company (excluding treasury
shares) for the eligible employees and Directors of the Company and its subsidiaries which are not dormant at any point in
time.
i) Eligible employees are those full time employees whose employment with the Group has been confirmed while
eligible Directors are those Directors including non-executive and/or independent Directors of the Group. The
maximum allocation of ESS awards to the Directors have been approved by the shareholders of the Company in a
general meeting.
ii) The aggregate number of shares to be issued under the ESS shall not exceed 15% of the issued and paid-up share
capital of the Company at any time throughout the duration of the ESS.
iii) ESS shall be for a period of five (5) years and may be further extended for a maximum period of five (5) years.
iv) The ESS grant price and option exercise price shall not be at a discount of more than 10% (or such other percentage
of discount as may be permitted by the relevant authorities) from the five (5) market days volume weighted average
market price of the shares of the Company immediately preceding the grant date and shall in no event be less than the
par value of the shares of the Company.
v) The allocation of ESS to any individual eligible employee or Director who either singly or collectively through persons
connected with the eligible employee or Director, hold twenty percent (20%) of more of the issued and paid-up
share capital of the Company, shall not exceed ten percent (10%) of the new shares of the Company to be issued and
awarded pursuant to the ESS.
vi) The new shares to be issued under the ESS shall rank pari passu in all respect with the existing shares except that they
shall not be entitled to any dividends, rights, allotments and/or distributions that may be declared, made or paid to the
shareholders, the entitlement date of which is prior to the date of the allotment of the new shares.
Treasury shares
There was no repurchase of the Company’s shares during the financial year under review.
As at 31 December 2013, the Company held as treasury shares a total of 1,478,100 of its 276,942,189 issued and paid-up
ordinary shares. Such treasury shares are held at carrying amount of RM1,025,787 and further relevant details are disclosed
in Note 19 to the financial statements.
Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to
ascertain that:
i) all known bad debts have been written off and adequate provision made for doubtful debts, and
ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down to an
amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:
i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts in the Group
and in the Company inadequate to any substantial extent, or
ii) that would render the value attributed to the current assets in the financial statements of the Group and of the
Company misleading, or
iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and
of the Company misleading or inappropriate, or
iv) not otherwise dealt with in this report or the financial statements that would render
any amount stated in the financial statements of the Group and of the Company misleading.
i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which
secures the liabilities of any other person, or
ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.
No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become
enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors,
will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall
due.
In the opinion of the Directors, other than as disclosed in the financial statements, the financial performance of the Group
and of the Company for the financial year ended 31 December 2013 have not been substantially affected by any item,
transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval
between the end of that financial year and the date of this report.
Significant events during the year are disclosed in Note 40 to the financial statements.
Subsequent events after the year end are disclosed in Note 41 to the financial statements.
Holding company
The Directors regard Zaki Holdings (M) Sdn. Bhd., a company incorporated and domiciled in Malaysia, as the ultimate
holding company of the Company.
Auditors
The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Raja Dato’ Seri Aman bin Raja Haji Ahmad Dato’ Wan Zakariah bin Haji Wan Muda
Kuala Lumpur
Date: 30 April 2014
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
Assets
Property, plant and equipment 3 80,897,559 86,113,177 2,110,544 2,413,563
Prepaid lease payments 4 8,398,951 9,190,342 - -
Land held for development 5 8,958,539 8,657,433 - -
Biological assets 6 123,251,574 125,585,877 - -
Investment property 7 18,000,000 18,000,000 - -
Intangible assets 8 2,796,085 5,002,546 - -
Goodwill 9 3,747,557 3,747,557 - -
Investments in subsidiaries 10 - - 86,002,077 97,536,689
Investments in associates 11 160,885 159,115 - -
Interests in joint ventures 12 (254,352) (288,352) 34,000 -
Available-for-sale investments 13 115,500 115,500 68,000 68,000
Deferred tax assets 22 10,911,561 2,976,412 - -
Trade and other receivables 14 11,573,208 8,722,322 - -
Total non-current assets 268,557,067 267,981,929 88,214,621 100,018,252
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
Equity
Share capital 18 138,471,095 138,471,095 138,471,095 138,471,095
Reserves 19 75,616,563 69,232,762 (96,812,942) (62,250,938)
Equity attributable to owners of the
Company 214,087,658 207,703,857 41,658,153 76,220,157
Non-controlling interests 5,326,675 5,345,872 - -
Total equity 219,414,333 213,049,729 41,658,153 76,220,157
Liabilities
Loans and borrowings 20 230,155,175 145,959,332 1,143,409 1,414,774
Employee benefits 21 1,294,851 - - -
Deferred tax liabilities 22 23,663,382 13,460,425 2,510,979 4,613,348
Total non-current liabilities 255,113,408 159,419,757 3,654,388 6,028,122
The notes on pages 79 to 160 are an integral part of these financial statements.
AHMAD ZAKI RESOURCES BERHAD
Annual Report 2013 page 70
Statements of profit or loss
and other comprehensive income
for the year ended 31 December 2013
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
Profit/(Loss) attributable to:
Owners of the Company 5,525,874 18,678,564 (30,621,423) 10,391,260
Non-controlling interests (122,666) (91,485) - -
Profit/(Loss) for the year 5,403,208 18,587,079 (30,621,423) 10,391,260
The notes on pages 79 to 160 are an integral part of these financial statements.
AHMAD ZAKI RESOURCES BERHAD
Annual Report 2013 page 72
Attributable to owners of the Company
Non-distributable Distributable
Foreign
exchange Non-
Share Share translation Treasury Retained controlling Total
Group Note capital premium reserve shares earnings Total interests equity
RM RM RM RM RM RM RM RM
At 1 January 2012 138,381,722 13,910 1,165,886 (1,025,787) 52,837,439 191,373,170 5,903,135 197,276,305
Foreign currency translation
differences for foreign
operations as previously
reported - - (2,447,976) - - (2,447,976) (40,802) (2,488,778)
Total other comprehensive loss
for the year - - (2,447,976) - - (2,447,976) (40,802) (2,488,778)
Profit for the year - - - - 18,678,564 18,678,564 (91,485) 18,587,079
Total comprehensive income for
the year - - (2,447,976) - 18,678,564 16,230,588 (132,287) 16,098,301
for the year ended 31 December 2013
page 74
Foreign currency translation
The notes on pages 79 to 160 are an integral part of these financial statements.
Statement of changes in equity
for the year ended 31 December 2013
The notes on pages 79 to 160 are an integral part of these financial statements.
AHMAD ZAKI RESOURCES BERHAD
Annual Report 2013 page 75
Statements of cash flows
for the year ended 31 December 2013
Group Company
2013 2012 2013 2012
Note RM RM RM RM
Group Company
2013 2012 2013 2012
Note RM RM RM RM
Group Company
2013 2012 2013 2012
Note RM RM RM RM
During the financial year, the Group and the Company acquired property, plant and equipment with aggregate costs
of RM4,020,467 (2012: RM31,968,751) and RM511,665 (2012: RM919,926) respectively, which were satisfied as
follows:
Group Company
2013 2012 2013 2012
RM RM RM RM
Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial
position amounts:
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
The notes on pages 79 to 160 are an integral part of these financial statements.
AHMAD ZAKI RESOURCES BERHAD
Annual Report 2013 page 78
Notes to the financial statements
Ahmad Zaki Resources Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed
on the Main Market of Bursa Malaysia Securities Berhad. The addresses of the principal place of business and registered
office of the Company are as follows:
Registered office
Level 2, Tower 1, Avenue 5
Bangsar South City
59200 Kuala Lumpur
The consolidated financial statements of the Company as at and for the financial year ended 31 December 2013 comprise
the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”) and
the Group’s interest in associates and joint ventures. The financial statements of the Company as at and for the financial year
ended 31 December 2013 do not include other entities.
The Company is principally engaged in investment holding, providing management services and as contractors of civil and
structural works, whilst the principal activities of the subsidiaries are as stated in Note 10 to the financial statements. There
has been no significant change in the nature of these activities during the financial year.
The Directors regard Zaki Holdings (M) Sdn. Bhd., a company incorporated and domiciled in Malaysia, as the ultimate
holding company of the Company.
These financial statements were authorised for issue by the Board of Directors on 30 April 2014.
1. Basis of preparation
The financial statements of the Group and of the Company have been prepared in accordance with Financial
Reporting Standards (“FRSs”) and the Companies Act, 1965 in Malaysia.
The following are accounting standards, amendments and interpretations that have been issued by the Malaysian
Accounting Standards Board (MASB) but have not been adopted by the Group and the Company:
FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2014
FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2014
The Group and the Company plan to apply the abovementioned accounting standards, amendments and
interpretations:
• from the annual period beginning on 1 January 2014 for those accounting standards, amendments or
interpretations that are effective for annual periods beginning on or after 1 January 2014, except for IC
Interpretation 21 which is not applicable to the Group and the Company; and
• from the annual period beginning on 1 January 2015 for those accounting standards, amendments or
interpretations that are effective for annual periods beginning on or after 1 July 2014.
The initial application of the applicable accounting standards, amendments or interpretations are not expected
to have any material financial impacts to the current period and prior period financial statements of the Group
and the Company except as mentioned below:
FRS 9 replaces the guidance in FRS 139, Financial Instruments: Recognition and Measurement on the
classification and measurement of financial assets and financial liabilities, and on hedge accounting.
The Group is currently assessing the financial impact that may arise from the adoption of FRS 9.
The amendments to FRS 132 clarify the criteria for offsetting financial assets and financial liabilities.
The Company falls within the scope of IC Interpretation 15, Agreements for the Construction of Real
Estate and MFRS 141, Agriculture. Therefore, the Company is currently exempted from adopting the
Malaysian Financial Reporting Standards (“MFRSs”) and is referred to as a “Transitioning Entity”. Being a
Transitioning Entity, the Company will adopt the MFRS and present its first set of MFRS financial statements
when adoption of the aforesaid IC and MFRS is mandated by the MASB.
The financial statements have been prepared on the historical cost basis other than as disclosed in
Note 2.
As at 31 December 2013, the Company’s current liabilities exceeded its current assets by RM42,902,080
mainly arising from amount due to subsidiaries. The Directors believe that the Group has the ability to provide
the necessary liquidity to enable the Company to meet its obligations as and when they fall due.
These financial statements are presented in Ringgit Malaysia (RM), which is the Company’s functional currency.
All financial information is presented in RM unless otherwise stated.
The preparation of the financial statements in conformity with FRSs requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies
that have significant effect on the amounts recognised in the financial statements other than those disclosed in
the following notes:
The accounting policies set out below have been applied consistently to the periods presented in these financial
statements, and have been applied consistently by the Group entities.
(i) Subsidiaries
Subsidiaries are entities, including unincorporated entities, controlled by the Company. The financial
statements of subsidiaries are included in the consolidated financial statements from the date that control
commences until the date that control ceases.
The Group adopted FRS 10, Consolidated Financial Statements in the current financial year. This resulted
in changes to the following policies:
• Control exists when the Group is exposed, or has rights, to variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. In the previous
financial years, control exists when the Group has the ability to exercise its power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities.
• Potential voting rights are considered when assessing control only when such rights are substantive.
In the previous financial years, potential voting rights are considered when assessing control when
such rights are presently exercisable.
• The Group considers it has de facto power over an investee when, despite not having the majority
of voting rights, it has the current ability to direct the activities of the investee that significantly affect
the investee’s return. In the previous financial years, the Group did not consider de facto power in its
assessment of control.
The change in accounting policy has been made retrospectively and in accordance with the transitional
provision of FRS 10. The adoption of FRS 10 has no significant impact to the financial statements of the
Group.
Investments in subsidiaries are measured in the Company’s statement of financial position at cost less
any impairment losses, unless the investment is classified as held for sale or distribution. The cost of
investments includes transaction costs.
The accounting policies of subsidiaries are changed when necessary to align them with the policies
adopted by the Group.
Business combinations are accounted for using the acquisition method from the acquisition date, which
is the date on which control is transferred to the Group.
For new acquisitions, the Group measures the cost of goodwill at the acquisition date as:
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
For each business combination, the Group elects whether it measures the non-controlling interests in the
acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets at the
acquisition date.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group
incurs in connection with a businesss combination are expensed as incurred.
(iii) Associates
Associates are entities, including unincorporated entities, in which the Group has significant influence,
but not control, over the financial and operating policies.
Investments in associates are accounted for in the consolidated financial statements using the equity
method less any impairment losses. The cost of the investment includes transaction costs. The consolidated
financial statements include the Group’s share of the profit or loss and other comprehensive income of
the associates, after adjustments, if any, to align the accounting policies with those of the Group, from the
date that significant influence commences until the date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest
including any long-term investments is reduced to zero, and the recognition of further losses is discontinued
except to the extent that the Group has an obligation or has made payments on behalf of the associate.
When the Group ceases to have significant influence over an associate, any retained interest in the former
associate at the date when significant influence is lost is measured at fair value and this amount is regarded
as the initial carrying amount of a financial asset. The difference between the fair value of any retained
interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date
when equity method is discontinued is recognised in the profit or loss.
When the Group’s interest in an associate decreases but does not result in a loss of significant influence,
any retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised
in profit or loss. Any gains or losses previously recognised in other comprehensive income are also
reclassified proportionately to the profit or loss if that gain or loss would be required to be reclassified to
profit or loss on the disposal of the related assets or liabilities.
Investments in associates are measured in the Company’s statement of financial position at cost less
any impairment losses unless the investment is classified as held for sale or distribution. The cost of the
investments includes transaction costs.
Joint arrangements are arrangements of which the Group has joint control, established by contracts
requiring unanimous consent for decisions about the activities that significantly affect the arrangements’
returns.
The Group adopted FRS 11, Joint Arrangements in the current financial year. As a result, joint arrangements
are classified and accounted for as follows:
• A joint arrangement is classified as “joint operation” when the Group or the Company has rights to
the assets and obligations for the liabilities relating to an arrangement. The Group and the Company
account for each of its share of the assets, liabilities and transactions, including its share of those held
or incurred jointly with the other investors, in relation to the joint operation.
• A joint arrangement is classified as “joint venture” when the Group has rights only to the net assets of
the arrangements. The Group accounts for its interest in the joint venture using the equity method.
In the previous financial years, joint arrangements were classified and accounted for as follows:
• For jointly controlled entity, the Group accounted for its interest using the equity method.
• For jointly controlled asset or jointly controlled operation, the Group and the Company accounted for
each of its share of the assets, liabilities and transactions, including its share of those held or incurred
jointly with the other investors.
The change in accounting policy has been made retrospectively and in accordance with the transitional
provision of FRS 11. The adoption of FRS 11 has no significant impact to the financial statements of the
Group.
Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable
directly or indirectly to the equity holders of the Company, are presented in the consolidated statement
of financial position and statement of changes in equity within equity, separately from equity attributable
to the owners of the Company. Non-controlling interests in the results of the Group is presented in the
consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or
loss and the comprehensive income for the year between non-controlling interests and the owners of the
Company.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling
interests even if doing so causes the non-controlling interests to have a deficit balance.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements.
Unrealised gains arising from transactions with equity-accounted associates and joint ventures are
eliminated against the investment to the extent of the Group’s interest in the investees. Unrealised losses
are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of
impairment.
Transactions in foreign currencies are translated to the respective functional currencies of Group entities
at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are
retranslated to the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end
of the reporting date except for those that are measured at fair value are retranslated to the functional
currency at the exchange rate at the date that the fair value was determined.
Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences
arising on the retranslation of available-for-sale equity instruments, which are recognised in other
comprehensive income.
The assets and liabilities of operations denominated in functional currencies other than RM, including
goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at
the end of the reporting period, except for goodwill and fair value adjustments arising from business
combinations before 1 January 2006 which are reported using the exchange rates at the dates of the
acquisitions. The income and expenses of foreign operations, are translated to RM at exchange rates at
the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated in the
foreign currency translation reserve (“FCTR”) in equity. When a foreign operation is disposed of, such that
control, significant influence or joint control is lost, the cumulative amount in the FCTR related to that
foreign operation is reclassified to profit or loss as part of the profit or loss on disposal.
When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the
relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group
disposes of only part of its investment in an associate or joint venture that includes a foreign operation
while retaining significant influence or joint control, the relevant proportion of the cumulative amount is
reclassified to profit or loss.
In the consolidated financial statements, when settlement of a monetary item receivable from or payable
to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and
losses arising from such a monetary item are considered to form part of a net investment in a foreign
operation and are recognised in other comprehensive income, and are presented in the FCTR in equity.
A financial asset or a financial liability is recognised in the statement of financial position when, and only
when, the Group or the Company becomes a party to the contractual provisions of the instrument.
A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not
at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue
of the financial instrument.
Financial assets
Loans and receivables category comprises debt instruments that are not quoted in an active
market.
Financial assets categorised as loans and receivables are subsequently measured at amortised cost
using the effective interest method.
Available-for-sale category comprises investment in equity and debt securities instruments that are
not held for trading.
Investments in equity instruments that do not have a quoted market price in an active market
and whose fair value cannot be reliably measured are measured at cost. Other financial assets
categorised as available-for-sale are subsequently measured at their fair values with the gain or loss
recognised in other comprehensive income, except for impairment losses, foreign exchange gains
and losses arising from monetary items which are recognised in profit or loss. On derecognition,
the cumulative gain or loss recognised in other comprehensive income is reclassified from equity
into profit or loss. Interest calculated for a debt instrument using the effective interest method is
recognised in profit or loss.
All financial assets are subject to review for impairment (see note 2(n)(i)).
Financial liabilities
(iii) Derecognition
A financial asset or a part of it is derecognised when, and only when the contractual rights to the cash
flows from the financial asset expire or the financial asset is transferred to another party without retaining
control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the
difference between the carrying amount and the sum of the consideration received (including any new
asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised
in equity is recognised in profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the
contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference
between the carrying amount of the financial liability extinguished or transferred to another party and the
consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit
or loss.
Items of property, plant and equipment are measured at cost less any accumulated depreciation and any
accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset and any other
costs directly attributable to bringing the asset to working condition for its intended use, and the costs
of dismantling and removing the items and restoring the site on which they are located. The cost of self-
constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing
costs are capitalised in accordance with the accounting policy on borrowing costs. Purchased software
that is integral to the functionality of the related equipment is capitalised as part of that equipment.
The cost of property, plant and equipment recognised as a result of a business combination is based on
fair value at acquisition date. The fair value of property is the estimated amount for which a property
could be exchanged between knowledgeable willing parties in an arm’s length transaction after proper
marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The
fair value of other items of plant and equipment is based on the quoted market prices for similar items
when available and replacement cost when appropriate.
When significant parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment.
The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net
within “other operating income” and “other operating expenses” respectively in profit or loss.
The cost of replacing a component of an item of property, plant and equipment is recognised in the
carrying amount of the item if it is probable that the future economic benefits embodied within the
component will flow to the Group or the Company, and its cost can be measured reliably. The carrying
amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing
of property, plant and equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual
assets are assessed, and if a component has a useful life that is different from the remainder of that asset,
then that component is depreciated separately.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each
component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of
the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership
by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under
construction are not depreciated until the assets are ready for their intended use.
The estimated useful lives for the current and comparative periods are at the following annual rates:
• Building 2%
• Renovation 20%
• Machinery and equipment 10% - 33.3%
• Motor vehicles 20% - 33.3%
• Furniture, fittings and equipment 6.7% - 20%
Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and
adjusted as appropriate.
As lessee
Leases in terms of which the Group or the Company assumes substantially all the risks and rewards
of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at
an amount equal to the lower of its fair value and the present value of the minimum lease payments.
Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy
applicable to that asset.
Minimum lease payments made under finance leases are apportioned between the finance expense and
the reduction of the outstanding liability. The finance expense is allocated to each period during the
lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining
term of the lease when the lease adjustment is confirmed.
As lessor
The Group shall recognise assets held under a finance lease in its statement of financial position and
present them as a receivable at an amount equal to the net investment in the lease.
Under a finance lease substantially all the risks and rewards incidental to legal ownership are transferred
by the Group, and thus the lease payment receivable is treated by the Group as repayment of principal
and finance income to reimburse and reward the Group for its investment and services.
Initial direct costs are often incurred by the Group and include amounts such as commissions, legal fees
and internal costs that are incremental and directly attributable to negotiating and arranging a lease. These
costs are included in the initial measurement of the finance lease receivable and reduce the amount of
income recognised over the lease term.
Leases, where the Group or the Company does not assume substantially all the risks and rewards of
ownership are classified as operating leases and, except for property interest held under operating lease,
the leased assets are not recognised in the statement of financial position. Property interest held under an
operating lease, which is held to earn rental income or for capital appreciation or both, is classified as
investment property and measured using fair value model.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the
term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total
lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting
period in which they are incurred. Leasehold land which in substance is an operating lease is classified as
prepaid lease payments.
Land held for development consists of land or such portions thereof on which no development activity has been
carried out or where development activities are not expected to be completed within the Company’s operating
cycle of 2 to 3 years. Such land is classified as non-current asset and is stated at cost less any accumulated
impairment losses.
Land held for development is classified as development costs at the point when development activities have
commenced and where it can be demonstrated that the development activities can be completed within the
Group’s operating cycle of 2 to 3 years.
Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp
duties, commissions, conversion fees and other relevant levies.
New planting expenditure incurred on land clearing and upkeep of trees to maturity is capitalised at cost as
biological assets and is not amortised. Replanting expenditure is charged to profit or loss in the financial year in
which the expenditure is incurred.
However, the capitalised costs will be amortised to profit or loss if the land on which the trees are planted is
on a lease term. The amortisation is on a straight-line basis over the economic useful lives of the trees, or the
remaining period of the lease, whichever is shorter.
Investment property is property which is owned or held under a leasehold interest to earn rental income
or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the
production or supply of goods or services or for administrative purposes.
Investment property is measured initially at cost and subsequently at fair value with any change therein
recognised in profit or loss for the period in which they arise. Where the fair value of the investment
property under construction is not reliably determinable, the investment property under construction is
measured at cost until either its fair value becomes reliably determinable or construction is complete,
whichever is earlier.
Cost includes expenditure that is directly attributable to the acquisition of the investment property. The
cost of self-constructed investment property includes the cost of materials and direct labour, any other
costs directly attributable to bringing the investment property to a working condition for their intended use
and capitalised borrowing costs.
An investment property is derecognised on its disposal, or when it is permanently withdrawn from use
and no future economic benefits are expected from its disposal. The difference between the net disposal
proceeds and the carrying amount is recognised in profit or loss in the period in which the item is
derecognised.
An external, independent valuation firm, having appropriate recognised professional qualifications and
recent experience in the location and category of property being valued, values the Group’s investment
property portfolio every year.
The fair values are based on market values, being the estimated amount for which a property could be
exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length
transaction after proper marketing wherein the parties had each acted knowledgeably.
Concession asset comprising highway concession is stated at cost less any accumulated amortisation and
any impairment losses.
Highway concession cost include expenditure that is directly incurred in the design and construction
of the East Klang Valley Expressway. Subsequent costs are included in the asset’s carrying amount, only
when it is probable that future economic benefits associated with the item will flow to the Group and the
cost can be measured reliably. All other repair and maintenance are charged to profit or loss during the
financial year in which they are incurred.
The highway concession cost will be amortised when the highway is ready for its intended use or when
toll collection starts whichever is earlier.
At each reporting date, the Group assesses whether there is any indication of impairment. If such indications
exist, the carrying amount of the highway concession is assessed and written down immediately to its
recoverable amount. See accounting policy Note 2(n)(ii) to the financial statements on the impairment of
other assets.
(ii) Goodwill
Goodwill arises on business combinations is measured at cost less any accumulated impairment losses. In
respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount
of the investment and an impairment loss on such an investment is not allocated to any asset, including
goodwill, that forms part of the carrying amount of the equity-accounted investees.
(j) Inventories
Inventories are measured at the lower of cost and net realisable value.
The cost of inventories is measured based on the weighted average cost formula, and includes expenditure
incurred in acquiring the inventories and other costs incurred in bringing them to their existing location
and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated
costs necessary to make the sale.
Completed properties held for sale are stated at the lower of cost and net realisable value. Cost consists
of costs associated with the acquisition of land, direct costs and appropriate proportion of common costs
attributable to developing the properties to completion.
Construction work-in-progress represents the gross unbilled amount expected to be collected from customers
for contract work performed to date. It is measured at cost plus profit recognised to date less progress billings
and recognised losses. Cost includes all expenditure related directly to specific projects and an allocation of
fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity.
Construction work-in-progress is presented as part of trade and other receivables as amount due from contract
customers in the statement of financial position for all contracts in which costs incurred plus recognised profits
exceed progress billings. If progress billings exceed costs incurred plus recognised profits, then the difference is
presented as amount due to contract customers which is part of the deferred income in the statement of financial
position.
Property development costs comprise all costs that are directly attributable to development activities or that
can be allocated on a reasonable basis to such activities. Costs consist of land and construction costs and other
development costs including related overheads and capitalised borrowing costs.
When the financial outcome of a development activity can be reliably estimated, development revenue and
costs are recognised in the profit or loss by reference to the stage of development activity at the reporting date.
When the financial outcome of a development activity cannot be reliably estimated, development revenue
is recognised only to the extent of development costs incurred that is probable will be recoverable, and
development costs on properties sold are recognised as an expense in the period in which they are incurred.
Property development costs not recognised as an expense is recognised as an asset, which is measured at the
lower of cost and net realisable value.
Accrued billings as current assets represent the excess of revenue recognised in the profit or loss over billings
to purchasers. Progress billings as current liabilities represent the excess of billings to purchasers over revenue
recognised in the profit or loss.
Cash and cash equivalents consist of cash on hand, balances and deposits placed with licensed banks. For the
purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and
pledged deposits.
(n) Impairment
All financial assets (except for investments in subsidiaries, investments in associates and joint ventures) are
assessed at each reporting date whether there is any objective evidence of impairment as a result of one or
more events having an impact on the estimated future cash flows of the asset. Losses expected as a result
of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a
significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If
any such objective evidence exists, then the impairment loss of the financial asset is estimated.
For the determination of impairment on receivables, the Company assesses individually each receivables
whether objective evidence of impairment exists at the end of each reporting period. An impairment
loss in respect of loans and receivables is recognized in profit or loss and is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows discounted at
the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of
an allowance account.
An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured
as the difference between the asset’s carrying amount and the present value of estimated future cash
flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced
through the use of an allowance account.
An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and
is measured as the difference between the asset’s acquisition cost (net of any principal repayment and
amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a
decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive
income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit
or loss and is measured as the difference between the financial asset’s carrying amount and the present
value of estimated future cash flows discounted at the current market rate of return for a similar financial
asset.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as
available for sale is not reversed through profit or loss.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment
loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount
would have been had the impairment not been recognised at the date the impairment is reversed. The
amount of the reversal is recognised in profit or loss.
The carrying amounts of other assets (except for inventories, amount due from contract customers, deferred
tax assets and investment property measured at fair value) are reviewed at the end of each reporting period
to determine whether there is any indication of impairment. If any such indication exists, then the asset’s
recoverable amount is estimated. For goodwill and intangible assets that are not yet available for use, the
recoverable amount is estimated each period at the same time.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the cash inflows of other
assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill
impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the
level at which impairment testing is performed reflects the lowest level at which goodwill is monitored
for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of
impairment testing, is allocated to group of cash-generating units that are expected to benefit from the
synergies of the combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair
value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit
exceeds its estimated recoverable amount.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-
generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-
generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other
assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognised in prior periods are assessed at the end of each reporting period for any indications that the
loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in
the estimates used to determine the recoverable amount since the last impairment loss was recognised.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the
carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year
in which the reversals are recognised.
Instruments classified as equity are measured at cost on initial recognition and are not remeasured
subsequently.
Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction
from equity.
When share capital recognised as equity is repurchased, the amount of the consideration paid, including
directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased
shares that are not subsequently cancelled are classified as treasury shares in the statement of changes in
equity.
Where treasury shares are sold or reissued subsequently, the difference between the sales consideration
net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity.
Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick
leave are measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing
plans if the Group has a present legal or constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can be estimated reliably.
The Group’s contributions to statutory pension funds are charged to profit or loss in the financial year to
which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a
reduction in future payments is available.
As a result of FRS 119 (2011), Employee Benefits, the Group has changed its accounting policy in respect
of the basis for determining the income or expense relating to its post employment defined benefit plans.
The Group’s net obligation in respect of defined benefit plan of an overseas subsidiary calculated by
estimating the amount of future benefit that employees have earned in the current and prior periods and
discounting that amount.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the
projected unit credit method. When the calculation results in a potential asset for the Group, the recognised
asset is limited to the present value of economic benefits available in the form of any future refunds from
the plan or reductions in future contributions to the plan. To calculate the present value of economic
benefits, consideration is given to any applicable minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses are
recognised immediately in other comprehensive income. The Group determines the net interest expense
or income on the net defined liability for the period by applying the discount rate used to measure the
defined benefit obligation at the beginning of the annual period to the then net defined benefit liability,
taking into account any changes in the net defined benefit liability during the period as a result of
contributions and benefit payments, if any.
Net interest expense and other expenses relating to defined benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit
that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss.
The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement
occurs.
The grant date fair value of share-based payment granted to employees is recognised as an employee
expense, with a corresponding increase in equity, over the period that the employees unconditionally
become entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of
awards for which the related service and non-market vesting conditions are expected to be met, such that
the amount ultimately recognised as an expense is based on the number of awards that meet the related
service and non-market performance conditions at the vesting date.
For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based
payment is measured to reflect such conditions and there is no true-up for differences between expected
and actual outcomes.
The fair value of the employee share options is measured using a binomial lattice model. Measurement
inputs include share price on measurement date, exercise price of the instrument, expected volatility
(based on weighted average historic volatility adjusted for changes expected due to publicly available
information), weighted average expected life of the instruments (based on historical experience and
general option holder behaviour), expected dividends, and the risk-free interest rate (based on government
bonds). Service and non-market performance conditions attached to the transactions are not taken into
account in determining fair value.
Termination benefits are expensed at the earlier of when the Group when can no longer withdraw the
offer of those benefits and when the Group recognises costs for a restructuring. If benefits are not expected
to be settled wholly within 12 months of the end of the reporting period, then they are discounted.
(q) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle
the obligation.
(i) Warranties
A provision for warranties is recognised when the underlying products or services are sold. The provision
is based on historical warranty data and a weighting of all possible outcomes against their associated
probabilities.
Provisions for performance guarantees and bonds are recognised when crytallisation is probable. When
crytallisation is possible, the performance guarantees and bonds are disclosed as contingent liabilities.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group
from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The
provision is measured at the present value of the lower of the expected cost of terminating the contract
and the expected net cost of continuing with the contract. Before a provision is established, the Group
recognises any impairment loss on the assets associated with that contract.
Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the
consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
Revenue is recognised when the significant risks and rewards of ownership have been transferred to the
customer, recovery of the consideration is probable, the associated costs and possible return of goods
can be estimated reliably, and there is no continuing management involvement with the goods, and
the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the
amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales
are recognised.
Contract revenue includes the initial amount agreed in the contract plus any variations in contract work,
claims and incentive payments, to the extent that it is probable that they will result in revenue and can be
measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract
revenue and contract cost are recognised in profit or loss in proportion to the stage of completion of
the contract. Contract expenses are recognised as incurred unless they create an asset related to future
contract activity.
The stage of completion is assessed by reference to the proportion that contract costs incurred for work
performed to-date bear to the estimated total contract costs.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised
only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a
contract is recognised immediately in profit or loss.
Revenue from property development activities is recognised based on the stage of completion measured
by reference to the proportion that property development costs incurred for work performed to-date bear
to the estimated total property development costs.
Where the financial outcome of a property development activity cannot be reliably estimated, property
development revenue is recognised only to the extent of property development costs incurred that is
probable will be recoverable, and property development costs on the developed units sold are recognised
as an expense in the period in which they are incurred.
Any expected loss on a development project, including costs to be incurred over the defects liability
period, is recognised immediately in profit or loss.
Rental income from investment property is recognised in profit or loss on a straight-line basis over the term
of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the
term of the lease. Rental income from subleased property is recognised as other income.
Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to
receive payment is established, which in the case of quoted securities is the ex-dividend date.
Interest income is recognised as it accrues using the effective interest method in profit or loss except
for interest income arising from temporary investment of borrowings taken specifically for the purpose
of obtaining a qualifying asset which is accounted for in accordance with the accounting policy on
borrowing costs.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying
asset are recognised in profit or loss using the effective interest method.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which
are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are
capitalised as part of the cost of those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for
the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the
asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when
substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted
or completed.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or
loss except to the extent that it relates to a business combination or items recognised directly in equity or other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates
enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in
respect of previous financial years.
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying
amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not
recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of
assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor
taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of
the reporting period.
When investment properties are carried at their fair value in accordance with the accounting policy set out
in note 2(h), the amount of deferred tax recognised is measured using the tax rates that would apply on sale
of those assets at their carrying value at the reporting date unless the property is depreciable and is held with
the objective to consume substantially all of the economic benefits embodied in the property over time, rather
than through sale. In all other cases, the amount of deferred tax recognised is measured based on the expected
manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or
substantively enacted at the reporting date. Deferred tax assets and liabilities are not discounted.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets
and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available
against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each
reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be
realised.
Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of
an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will
be available against which the unutilised tax incentive can be utilised.
The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”).
Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.
Diluted EPS, if any, is determined by adjusting the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all
dilutive potential ordinary shares, which comprise share options granted to employees.
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components. All operating segments’ operating results are reviewed regularly by the chief operating
decision maker, which in this case is the Managing Director of the Group, to make decisions about resources
to be allocated to the segment and to assess its performance, and for which discrete financial information is
available.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be
estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of
economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or
non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability
of outflow of economic benefits is remote.
From 1 January 2013, the Group adopted FRS 13, Fair Value Measurement which prescribed that fair value of an
asset or a liability, except for share-based payment and lease transactions, is determined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability
takes place either in the principal market or in the absence of a principal market, in the most advantageous
market.
For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
In accordance with the transitional provision of FRS 13, the Group applied the new fair value measurement
guidance prospectively, and has not provided any comparative fair value information for new disclosures. The
adoption of FRS 13 has not significantly affected the measurements of the Group’s assets or liabilities other than
the additional disclosures in Notes 7 and 34.7 to the financial statements.
Cost
page 102
AHMAD ZAKI RESOURCES BERHAD
At 1 January 2012 11,731,241 10,247,579 37,307,639 32,412,386 5,479,407 24,464,120 121,642,372
Additions - - 2,012,306 5,150,108 1,219,876 23,586,461 31,968,751
Disposals - - (85,000) (1,283,227) - - (1,368,227)
Written off - - - - (41,908) - (41,908)
Transfer to/(from) - 48,050,581 - - - (48,050,581) -
Effect of movements in
exchange rates - (408,762) (517,207) (99,268) (76,131) - (1,101,368)
At 31 December 2012/
1 January 2013 11,731,241 57,889,398 38,717,738 36,179,999 6,581,244 - 151,099,620
Notes to the financial statements
Accumulated depreciation
At 1 January 2012 - 4,300,065 29,922,305 18,220,952 4,543,329 - 56,986,651
Depreciation for the year - 547,697 5,023,563 3,905,196 451,316 - 9,927,772
Disposals - - (65,167) (1,241,715) - - (1,306,882)
Written off - - - - (31,063) - (31,063)
Effect of movements in
exchange rates - (99,304) (392,986) (42,937) (54,808) - (590,035)
At 31 December 2012/
1 January 2013 - 4,748,458 34,487,715 20,841,496 4,908,774 - 64,986,443
Reclassification - - 758,468 (758,468) - - -
Notes to the financial statements
Carrying amounts
At 31 December 2012 11,731,241 53,140,940 4,230,023 15,338,503 1,672,470 - 86,113,177
Machinery Furniture,
and Motor fittings and
Company equipment vehicles equipment Total
RM RM RM RM
Cost
At 1 January 2012 47,322 4,305,569 362,636 4,715,527
Additions - 919,926 - 919,926
Disposals - (264,973) - (264,973)
Effect of movements in exchange rates (2,007) - (1,455) (3,462)
At 31 December 2012/1 January 2013 45,315 4,960,522 361,181 5,367,018
Additions - 511,665 - 511,665
Disposal - (919,227) - (919,227)
Effect of movements in exchange rates (2,212) - (1,604) (3,816)
At 31 December 2013 43,103 4,552,960 359,577 4,955,640
Accumulated depreciation
At 1 January 2012 47,322 2,070,178 341,702 2,459,202
Depreciation for the year - 751,928 10,725 762,653
Written off - (264,973) - (264,973)
Effect of movements in exchange rates (2,007) - (1,420) (3,427)
At 31 December 2012/1 January 2013 45,315 2,557,133 351,007 2,953,455
Depreciation for the year - 805,249 9,395 814,644
Disposal - (919,225) - (919,225)
Effect of movements in exchange rates (2,944) - (834) (3,778)
At 31 December 2013 42,371 2,443,157 359,568 2,845,096
Carrying amounts
At 31 December 2012 - 2,403,389 10,174 2,413,563
(i) the cost and the net carrying amount of property, plant and equipment under finance lease arrangements as
follows:
Machinery Furniture,
and Motor fittings and
equipment vehicles equipment Total
RM RM RM RM
Group
2013
Cost 6,961,260 20,614,776 54,123 27,630,159
Net carrying amount 4,083,140 10,474,480 42,813 14,600,433
2012
Cost 10,294,578 19,117,146 - 29,411,724
Net carrying amount 3,802,792 12,019,298 - 15,822,090
Company
2013
Cost - 4,348,443 - 4,348,443
Net carrying amount - 2,109,798 - 2,109,798
2012
Cost - 3,836,779 - 3,836,779
Net carrying amount - 2,403,383 - 2,403,383
(ii) freehold land and buildings of the Group with total net carrying amounts of RM60,065,625 (2012: RM59,638,403)
charged to financial institutions as securities for banking facilities granted to its subsidiaries as disclosed in Note
20(a)(ii).
Group
2013 2012
RM RM
Cost
At 1 January 12,014,517 12,289,552
Effect of movements in exchange rates (391,882) (275,035)
At 31 December 11,622,635 12,014,517
Accumulated amortisation
At 1 January 2,824,175 2,385,078
Amortisation during the year 445,616 452,756
Effect of movements in exchange rates (46,107) (13,659)
At 31 December 3,223,684 2,824,175
Carrying amount
At 31 December 8,398,951 9,190,342
Analysed as follows:
Short term leasehold land 8,398,951 9,190,342
The short term leasehold land of the Group has an unexpired lease period of less than fifty (50) years.
The land held for development represents freehold land that was acquired in 2012 and earmarked for future commercial
development. It is pledged to the bank for the term loan facility granted to the Group as disclosed in Note 20(a)(vi).
Group
Freehold land
2013 2012
RM RM
At 1 January 8,657,433 -
Addition 301,106 8,657,433
At 31 December 8,958,539 8,657,433
6. Biological assets
Group
2013 2012
RM RM
Cost
At 1 January 131,428,182 121,259,136
Additions 4,597,491 9,907,216
Effect of movement in exchange rates 1,505,082 261,830
At 31 December 137,530,755 131,428,182
Accumulated amortisation
At 1 January 5,842,305 492,871
Amortisation during the year 8,566,761 5,349,434
Effect of movement in exchange rates (129,885) -
At 31 December 14,279,181 5,842,305
Carrying amount
At 31 December 123,251,574 125,585,877
This is in respect of expenditure incurred by a subsidiary on new planting of oil palm in a plantation located in the
Republic of Indonesia.
Included in the additions of biological assets (before amortisation) for the year are:
Group
2013 2012
RM RM
7. Investment property
Group
2013 2012
RM RM
At fair value
At 1 January 18,000,000 18,500,000
Change in fair value recognised in profit or loss - (500,000)
At 31 December 18,000,000 18,000,000
Hotel property
Freehold land 793,912 793,912
Hotel buildings 17,206,088 17,206,088
At 31 December 18,000,000 18,000,000
Investment property comprises a hotel property that is leased to a third party. The lease contains an initial non-
cancellable period of ten (10) years. Subsequent renewals are negotiated with the lessee and on average renewal
periods are for three (3) years. The lease has a minimum base rental and a contingent rental based on an agreed
percentage of the net profit of the lessee. The fair value of investment property is determined based on market value.
2013 2012
RM RM
The hotel property is charged to financial institutions as security for facilities granted to a subsidiary as disclosed in
Note 20(c).
2013
Level 1 Level 2 Level 3 Total
Group
Freehold land and Hotel buildings - - 18,000,000 18,000,000
There is no comparative figure of fair value information presented, by virtue of transactional provision given in
Appendix C2 of FRS 13.
Level 3 fair values are generally derived using the sales comparison approach. Sales price of comparable properties
in close proximity are adjusted for differences in key attributes such as property size. The most significant input into
this valuation approach is price per square foot of comparable properties.
8. Intangible assets
Group
Highway concession
2013 2012
RM RM
At cost
At 1 January 5,002,546 -
Additions 278,150 5,002,546
Write off (2,484,611) -
At 31 December 2,796,085 5,002,546
This represents the expenditure incurred to procure the concession rights (license) for collection of toll over a
concession period of fifty (50) years from the Government of Malaysia in exchange for services to be rendered in
connection with the design, construction, completion, operation, management and maintenance of the East Klang
Valley Expressway pursuant to the Concession Agreement signed on 13 February 2013.
9. Goodwill
Group
2013 2012
RM RM
At cost
At 1 January 3,747,557 3,744,605
Addition arising from acquisition of new subsidiary - 2,952
At 31 December 3,747,557 3,747,557
For the purpose of impairment testing, goodwill is allocated to the subsidiaries which represent the lowest level within
the Group at which the goodwill is monitored for internal management purposes.
The aggregate carrying amounts of goodwill allocated to each subsidiary are as follows:
Group
2013 2012
RM RM
9. Goodwill (Cont’d)
The recoverable amount of the Malaysian quarry business unit is calculated at fair value less costs of disposal using
the quarry land held as basis. The fair value less costs of disposal is estimated based on the bid price of other quarry
land within the vicinity of where the Group’s quarry land is located.
Company
2013 2012
RM RM
Unquoted shares, at cost
At 1 January 97,536,689 82,461,179
Addition of new subsidiary 80,000 350,512
Capital injection for existing subsidiary/(ies) 419,998 14,724,998
At 31 December, at cost 98,036,687 97,536,689
Less : Allowance for impairment loss (12,034,610) -
Net 86,002,077 97,536,689
Effective ownership
Country of interest
Name of subsidiary Principal activities incorporation 2013 2012
% %
Ahmad Zaki Sdn. Bhd. Contractors of civil and Malaysia 100 100
structural construction works
Inter-Century Sdn. Bhd. Dealer of marine fuels and Malaysia 100 100
lubricants
Ahmad Zaki Saudi Arabia Co. Contractors of civil and Kingdom of Saudi 95 95
Ltd.**@ structural works Arabia
Effective ownership
Country of interest
Name of subsidiary Principal activities incorporation 2013 2012
% %
Peninsular Medical Sdn. Undertake design, development and Malaysia 100 100
Bhd. the construction of a teaching
hospital as well as to carry out
the related maintenance services
subsequent to the completion of
teaching hospital
Effective ownership
Country of interest
Name of subsidiary Principal activities incorporation 2013 2012
% %
Astral Far East Sdn. Bhd. Dealer of lubricants and petroleum- Malaysia 100 100
based products
Ahmad Zaki Saudi Arabia Contractors of civil and structural Kingdom of Saudi 5 5
Co. Ltd.**@ works Arabia
Group
2013 2012
RM RM
Goodwill included within the Group’s carrying amount of investments in associates is as follows:
Group
2013 2012
RM RM
Goodwill on acquisition
At 1 January/31 December 8,056 8,056
Effective
ownership interest
Name of associate Principal activities 2013 2012
% %
Summarised financial information of associates, not adjusted for the percentage ownership held by the Group:
2013
Fasatimur Sdn. Bhd. 50% - 3,539 586,345 (294,674)
Maxi Heritage Sdn. Bhd. 20% - - 119,408 (84,400)
2012
Fasatimur Sdn. Bhd. 50% - 3,628 594,000 (302,785)
Maxi Heritage Sdn. Bhd. 20% - 1,100 119,408 (84,400)
Group Company
2013 2012 2013 2012
RM RM RM RM
Investment cost
At 1 January - - - -
Investment during the year 34,000 - 34,000 -
At 31 December 34,000 - 34,000 -
Share of post-acquisition results in joint
ventures (288,352) (288,352) - -
At 31 December (254,352) (288,352) 34,000 -
The Group has a 50%, 70% and 34% interest in the jointly-controlled entities as mentioned in (i), (ii) and (iii)
respectively:
(i) BumiHiway - Ahmad Zaki Joint Venture which undertakes the contract for realignment of the route from
Putrajaya to Cyberjaya, Selangor; and
(ii) Ahmad Zaki - Jasa Bakti Joint Venture which undertakes the design and building of “Sekolah Menengah Sains
Hulu Terengganu” in Terengganu.
(iii) Peninsular IFM Sdn. Bhd. (“PIFM”) which intends to engage in integrated facilities management services. As at
the date of reporting period, PIFM remain dormant.
(a) The Group’s share of assets, liabilities, revenue and expenses of the joint ventures are as follows:
Group
2013 2012
RM RM
Current assets
Other receivables, deposits and prepayments 7,860 7,860
Cash and cash equivalents 1,328,646 1,294,646
1,336,506 1,302,506
Current liabilities
Trade payables 1,575,072 1,575,072
Other payables and accruals 15,786 15,786
1,590,858 1,590,858
Share of net liabilities of the joint ventures (254,352) (288,352)
Group
2013 2012
RM RM
All the projects under the joint ventures (i) and (ii) have been completed in previous years and currently pending
finalisation of the joint ventures accounts.
Group Company
2013 2012 2013 2012
RM RM RM RM
Group
2013 2012
RM RM
Non - current
Trade receivable 11,573,208 8,722,322
The amount consists of capital expenditure incurred on behalf of a customer for the construction of a teaching hospital
under the Private Financing Initiative that are only due for payment upon completion of the teaching hospital which
is expected to be in Year 2016.
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
Current
Trade
External parties a 35,961,943 33,006,846 2,822,831 6,467,823
Amount due from contract customers b 326,202,512 242,593,781 16,095,820 23,593,367
Amount due from a joint venture c 49,773 49,773 - -
362,214,228 275,650,400 18,918,651 30,061,190
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
Non-trade
Amount due from:
Ultimate holding company d 333,744 206,020 134,867 134,718
Subsidiaries d - - 150,383,145 150,475,347
Associate e 20,000 20,000 - -
Affiliates f 705,753 420,536 3,697 3,697
1,059,497 646,556 150,521,709 150,613,762
Other receivables 82,805,224 47,988,468 55,838,019 64,099,781
Deposits 2,278,353 1,726,293 47,861 49,066
Prepayments 2,191,183 4,069,092 1,084,900 3,073,382
450,548,485 330,080,809 226,411,140 247,897,181
Included in other receivables of current year as shown below is the award issued by the sole arbitrator of the International
Court of Arbitration under the International Chamber of Commerce in 2013 pertaining to the arbitration initiated by
the Group in year 2011 against a particular contract customer pertaining to the development of a university campus
in Saudi Arabia. The Group, through its external legal counsels in Saudi Arabia, has filed the arbitrator award with the
local Saudi court on 2 February 2014 in order to obtain an enforcement order. Based on the advice from its external
legal counsels, the Group is of the view that it is reasonable to expect that the local court in Saudi Arabia will issue
the enforcement order within 6 months from the date the arbitrator award was filed and the Group can proceed with
legal recovery.
Group Company
Note 2013 2012 2013 2012
RM’million RM’million RM’million RM’million
Note a
The Group’s and the Company’s normal credit term granted to customers ranges from 60 to 90 days (2012: 60 to 90
days).
Included in trade receivables from external parties at 31 December 2013 are retention sums of the Group and of the
Company of RM18,687,580 (2012: RM17,576,840) and RM2,822,831 (2012: RM2,822,831) respectively relating to
construction work-in-progress.
Retention sums are unsecured, interest-free and are expected to be collected within the normal operating cycle as
analysed below:
Group Company
2013 2012 2013 2012
RM RM RM RM
Note b
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
Represented by:
Amount due from contract
customers 326,202,512 242,593,781 16,095,820 23,593,367
Amount due to contract customers 23 (19,709,329) (21,564,912) - -
306,493,183 221,028,869 16,095,820 23,593,367
Included in additions to aggregate costs incurred to-date are the following amounts charged during the year:
Group Company
2013 2012 2013 2012
RM RM RM RM
Note c
Note d
These amounts are non-trade in nature, unsecured, interest-free and repayable on demand.
Note e
The amount is due from Maxi Heritage Sdn. Bhd. which is unsecured, interest-free and repayable on demand.
Note f
Affiliates are companies which have common Directors and shareholders as that of the Company. The amount is
unsecured, interest-free and repayable on demand.
15. Inventories
Group
2013 2012
RM RM
At cost:
Completed properties 2,543,238 2,840,963
Marine fuels and lubricants 8,961,703 11,213,915
Consumable goods 809,913 600,083
12,314,854 14,654,961
Group
2013 2012
RM RM
Development costs:
At 1 January 19,439,671 14,873,143
Costs incurred during the year 8,073,058 7,246,052
At 31 December 27,512,729 22,119,195
Group Company
2013 2012 2013 2012
RM RM RM RM
Included in deposits placed with licensed banks of the Group are deposits of RM44,636,701 (2012: RM62,843,383)
which have been pledged to financial institutions as security for bank guarantee and credit facilities granted to the
Group as disclosed in Note 20.
Included in deposits placed with licensed banks of the Company are deposits of RM2,894,225 (2012: RM2,821,584)
which have been pledged to financial institutions as security for the overdraft facility granted to its subsidiary as
disclosed in Note 20(c).
The deposits placed with licensed banks of the Group and of the Company bear effective interest rates ranging from
2.50% to 3.68% (2012: 2.55% to 3.50%) and 2.55% to 3.05% (2012: 2.55% to 3.05%) per annum respectively.
Authorised:
Ordinary shares of RM0.50 each
At 1 January/31 December 500,000,000 1,000,000,000 500,000,000 1,000,000,000
The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one
vote per share at meetings of the Company.
19. Reserves
Group Company
2013 2012 2013 2012
RM RM RM RM
Non-distributable:
Share premium 24,636 24,636 24,636 24,636
Foreign exchange translation reserve 3,506,815 (1,282,090) 510,107 318,727
3,531,451 (1,257,454) 534,743 343,363
Treasury shares (1,025,787) (1,025,787) (1,025,787) (1,025,787)
The movements of each category of the reserves are disclosed in the statements of changes in equity.
Share premium
The foreign exchange translation reserve comprises all foreign currency differences arising from the translation of the
financial statements of foreign operations.
Treasury shares
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 or issuance.
There was no repurchase of the Company’s shares during the financial year.
Any repurchase transactions will be financed by internally generated funds and shall be held as treasury shares in
accordance with Section 67A of the Companies Act, 1965.
Of the total 276,942,189 (2012: 276,942,189) issued and fully paid-up ordinary shares as at 31 December 2013,
1,478,100 (2012: 1,478,100) shares are held as treasury shares by the Company. As at 31 December 2013, the
number of outstanding ordinary shares in issue after the set off is therefore 275,464,089 (2012: 275,464,089) ordinary
shares of RM0.50 each.
Group Company
2013 2012 2013 2012
Note RM RM RM RM
Non-current
Term loans a 222,817,850 136,389,293 - -
Finance lease liabilities b 7,337,325 9,570,039 1,143,409 1,414,774
230,155,175 145,959,332 1,143,409 1,414,774
Current
Term loans a 15,664,968 14,968,364 - -
Finance lease liabilities b 4,371,506 4,792,089 700,064 608,583
Bank overdrafts c 17,564,069 19,310,739 - -
Trust receipts d 1,168,602 412,981 - -
Revolving credits and Murabahah
facilities e 21,955,600 - - -
60,724,745 39,484,173 700,064 608,583
290,879,920 185,443,505 1,843,473 2,023,357
Note a
Group
2013 2012
Note RM RM
(i) Term loan I is denominated in USD and IDR which bears interest at 10.25% and 5.04% (2012: Nil and 5.52%)
per annum respectively. The term loan is repayable within a period of 108 months upon full disbursement and
is secured by corporate guarantee from the Company.
(ii) Term loan II bears interest at 5.35% (2012: 6.70%) per annum. The term loan was refinanced during the year
with monthly repayable tenure extended to 84 installments which commenced from July 2013 and is secured
and supported by:
(a) first legal charge on freehold land and buildings of its subsidiary as disclosed in Note 3; and
(iii) Term loan III bears interest at 5.05% (2012: 5.04%) per annum. The term loan is repayable in equal quarterly
installments over 9 years which commenced from September 2011 and is secured and supported by:
(iv) Term loan IV bears interest ranging from 5.40% - 5.80% (2012: 5.40% - 5.72%) per annum and is repayable
on quarterly basis by 44 installments commencing on the 51st month from the first date of loan disbursement in
July 2012.
Note a (Cont’d)
(v) Term loan V bears interest ranging from 5.40% - 5.80% (2012: 5.40% - 5.72%) per annum and is repayable on
lump sum basis either on the 60th month from the first date of loan disbursement in July 2012 or upon receipt
of reimbursable cost from contract customer, whichever is earlier.
(a) fixed and floating charges over all present and future assets of a subsidiary,
(b) legal assignment over designated bank accounts and rights, titles, interests and benefits under applicable
insurance policies; and
(c) corporate guarantee from the Company until the expiry of the defect liability period of the project.
(vi) Term loan VI bears interest ranging from 4.80% (2012: 4.79%) per annum. The term loan is repayable on semi-
annually basis by sixteen (16) installments commencing from May 2015.
(a) a first party legal charge over the land held for development as disclosed in Note 5,
(b) legal assignment of rights in rental proceeds to be derived from the future commercial development on
the land; and
(vii) Term loan VII is interest free and repayable by sixty (60) monthly installments commencing from July 2014.
(a) a debenture on a subsidiary’s current and future fixed and floating assets,
Note b
Present Present
Future value of Future value of
minimum minimum minimum minimum
lease lease lease lease
payments Interest payments payments Interest payments
2013 2013 2013 2012 2012 2012
RM RM RM RM RM RM
Group
Less than one year 4,876,650 (505,144) 4,371,506 5,418,748 (626,659) 4,792,089
Between one and five
years 7,818,541 (481,216) 7,337,325 10,295,733 (725,694) 9,570,039
12,695,191 (986,360) 11,708,831 15,714,481 (1,352,353) 14,362,128
Company
Less than one year 770,554 (70,490) 700,064 693,212 (84,629) 608,583
Between one and five
years 1,209,232 (65,823) 1,143,409 1,503,293 (88,519) 1,414,774
1,979,786 (136,313) 1,843,473 2,196,505 (173,148) 2,023,357
Note c
The bank overdraft facilities are repayable on demand and bear interest ranging from 6.65% - 8.10% (2012: 6.65%
- 7.85%) per annum. One of the bank overdraft facilities is secured by freehold land and hotel building as disclosed
in Note 7 and deposits placed with licensed banks of the Company and a subsidiary; while the other bank overdraft
facility is secured by a corporate guarantee from the Company.
Note d
The trust receipts of the Group are repayable within 120 - 180 days and bear interest at 7.40% - 7.90% (2012: 7.60%)
per annum. These facilities are secured and supported by:
Note e
The revolving credit and murabahah facilities are repayable on demand and bear profit rates ranging from 5.41% -
6.16% (2012: Nil) per annum. These facilities are secured by corporate guarantee from the Company and assignment
of projects proceeds of a subsidiary.
Retirement benefits
Group
2013 2012
RM RM
The Group’s subsidiary in Indonesia makes provision for non-contributory defined benefit plan that provide pension
benefits for employees upon retirement, death, disability and voluntary resignation as required under Labour Law No.
13/2003 of the Republic of Indonesia. The plan entitles an employee to receive payment according to the years of
service.
The defined benefit plan exposes the Group to actuarial risks, such as longevity risk, currency risk and interest rate
risk.
Group
At 1 January - -
At 31 December 1,294,851 -
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
A total deferred tax asset of RM6.8 million (2012: RM2.1 million) has been recognised in relation to a loss making
subsidiary of the Group. Based on five (5) years financial projections prepared by the subsidiary, it is expected that
the subsidiary will be able to generate sufficient taxable profits against which these losses can be utilised.
Deferred tax assets have not been recognised in respect of the following items (stated at gross):
Deferred tax assets have not been recognised in respect of these items because it is not probable that sufficient future
taxable profit will be available, against which the Group can utilise the benefits there from.
The unabsorbed capital allowances and tax loss carry-forward do not expire under current tax legislation.
Group Company
Note 2013 2012 2013 2012
RM RM RM RM
Trade
External parties a 245,924,055 228,524,209 3,519 630
Amount due to contract customers 14 19,709,329 21,564,912 - -
Advance payments received b 29,419,421 47,496,001 - -
295,052,805 297,585,122 3,519 630
Non-trade
Amount due to:
Subsidiaries c - - 275,891,138 278,944,728
Associate c 53,089 53,089 - -
Affiliates d - 164,725 - -
53,089 217,814 275,891,138 278,944,728
Note a
The normal credit term granted by suppliers of the Group and of the Company ranges from 30 to 90 days (2012: 30
to 90 days).
Group Company
2013 2012 2013 2012
RM RM RM RM
Note b
Advance payments received are in respect of interest free advances received by the subsidiaries for mobilisation of
its construction contracts. These advances are to be set off against the subsidiaries progress billings on the related
contracts.
Note c
Note d
Affiliates are companies which have common Directors and shareholders as that of the subsidiaries. The amount is
unsecured, interest free and repayable on demand.
Note e
Included in accruals and other payables of the Group is interest on borrowings amounting to RM1,199,491 (2012:
RM731,433).
24. Revenue
Group Company
2013 2012 2013 2012
RM RM RM RM
Group Company
2013 2012 2013 2012
RM RM RM RM
Group Company
2013 2012 2013 2012
RM RM RM RM
Group Company
2013 2012 2013 2012
RM RM RM RM
Group Company
2013 2012 2013 2012
RM RM RM RM
Auditors’ remuneration
Audit fees
KPMG Malaysia 428,000 416,000 150,000 150,000
Over provision in prior year (7,000) - - -
Other auditors 118,860 63,030 6,159 4,052
Non-audit fees
KPMG Malaysia 30,000 40,000 30,000 30,000
Amortisation of prepaid lease payments 445,616 205,540 - -
Impairment loss on :
- investments in subsidiaries - - 12,034,610 -
- amount due from a subsidiary - - 3,911,500 -
Amortisation of biological assets 8,566,761 5,349,434 - -
Bad debts written off 11,980,978 26,733 11,159,305 -
Change in fair value of investment property - 500,000 - -
Depreciation of property, plant and equipment 9,904,692 9,913,158 814,644 762,653
Interest expense 13,221,707 9,385,557 4,138,794 4,738,407
Intangible assets written off 2,484,611 - - -
Loss on foreign exchange
- unrealised 2,945,698 411,834 114,108 411,848
Property, plant and equipment written off 6 10,845 - -
Rental of motor vehicles 120,729 90,719 159 -
Rental of premises 2,075,532 1,091,972 - 5,180
Rental and running cost of machinery and
equipment 20,538,208 19,101,021 - -
Employee benefits expense 60,934,552 47,250,872 7,956,209 6,934,322
Dividend income
- unquoted shares - (3,900) (13,176,692) (25,000,110)
(Gain)/Loss on disposal of property, plant and
equipment - net (1,283,942) (423,317) 1 (52,000)
Interest income (2,551,203) (1,946,763) (73,245) (84,451)
Rental income (202,765) (178,765) - -
Group Company
2013 2012 2013 2012
RM RM RM RM
Included in employee benefits expense of the Group and of the Company are Executive Directors’ remuneration
amounting to RM4,616,667 (2012: RM4,199,273) and RM2,322,741 (2012: RM2,088,305) respectively as further
disclosed in Note 29.
Group Company
2013 2012 2013 2012
RM RM RM RM
Executive Directors
- fees 419,000 419,000 - -
- emoluments 4,197,667 3,780,273 2,322,741 2,088,305
Total remuneration (excluding benefit-in-kind) 4,616,667 4,199,273 2,322,741 2,088,305
Estimated monetary value of benefit-in-kind 291,833 159,720 156,998 80,600
4,908,500 4,358,993 2,479,739 2,168,905
Non-Executive Directors
- fees 593,476 560,250 593,476 560,250
- emoluments 32,500 32,900 28,300 31,100
Total remuneration (excluding benefit-in-kind) 625,976 593,150 621,776 591,350
Estimated monetary value of benefit-in-kind 66,350 66,350 35,200 35,200
Total remuneration (including benefit-in-kind) 692,326 659,500 656,976 626,550
Group Company
2013 2012 2013 2012
Note RM RM RM RM
Group Company
2013 2012 2013 2012
RM RM RM RM
The calculation of basic earnings per ordinary share at 31 December 2013 was based on the profit attributable to
ordinary shareholders of RM5,525,874 (2012: RM18,678,564) and weighted average number of ordinary shares
outstanding during the year of 276,942,189 (2012: 276,880,222).
Group
2013 2012
32. Dividends
Dividends recognised and paid by the Company during the year was:
2013
Interim dividend 1.50 4,131,961 23 August 2013
The Group has three reportable segments, as described below, which are the Group’s strategic business units. The
strategic business units offer different products and services, and are managed separately because they require different
business strategies. For each of the strategic business units, the Managing Director (the chief operating decision maker)
reviews internal management reports at least on a quarterly basis. The following summary describes the operations in
each of the Group’s reportable segments:
Inter-segment transactions, if any, are entered in the ordinary course of business based on terms mutually agreed upon
by the parties concerned.
Performance is measured based on segment profit before tax, interest, depreciation and amortisation as included in
the internal management reports that are reviewed by the Managing Director (the chief operating decision maker).
Segment profit before tax is used to measure performance as management believes that such information is the most
relevant in evaluating the results of certain segments relative to other entities that operate within these industries.
Segment assets
The total of segment assets is measured based on all assets (including goodwill) of a segment, as included in the
internal management reports that are reviewed by the Managing Director. Segment total asset is used to measure the
return on assets of each segment.
Segment liabilities
Segment liabilities information is neither included in the internal management reports nor provided regularly to the
Managing Director. Hence, no disclosure is made on segment liability.
Segment capital expenditure is the total cost incurred during the financial year to acquire property, plant and
equipment, and intangible assets other than goodwill.
Geographical segments
(i) Malaysia - civil and structural works, dealing in marine fuels, lubricants and petroleum
based products, property development, investment holding and provision
of management services.
(ii) Republic of Indonesia - oil palm cultivation.
(iii) India - civil and structural works.
(iv) Kingdom of Saudi Arabia - civil and structural works.
Trading In
Oil & Gas
& Other
Related Other
Construction Products Cultivation Operations Eliminations Consolidated
Note RM RM RM RM RM RM
2013
Revenue
External revenue 523,828,255 53,726,884 4,076,852 12,601,389 - 594,233,380
Inter-segment revenue - 8,704,325 - 5,510,000 (14,214,325) -
Total revenue 523,828,255 62,431,209 4,076,852 18,111,389 (14,214,325) 594,233,380
Notes to the financial statements
Results
Segment results 49,100,454 20,175,034 (27,094,599) (9,399,989) (8,316,806) 24,464,094
Interest income 2,365,276 87,652 3,288 94,987 - 2,551,203
Interest expense (8,045,515) (71,512) (632,674) (4,472,006) - (13,221,707)
Share of profit of associates 1,770 - - - - 1,770
Other non-cash expenses (i) (11,609,605) (3,776) (12,699,582) (3,537,596) 3,911,500 (23,939,059)
Depreciation (7,068,311) (1,026,632) (908,352) (901,397) - (9,904,692)
Other Information
Segment assets 553,861,056 33,037,921 154,366,255 114,348,077 (4,586,982) 851,026,327
Additions to non-current assets (ii) 2,337,732 704,055 4,927,419 648,752 - 8,617,958
Investments in associates 160,885 - - - - 160,885
Trading In
page 138
AHMAD ZAKI RESOURCES BERHAD
Note RM RM RM RM RM RM
2012
Revenue
External revenue 596,987,181 69,505,668 2,472,340 5,684,397 - 674,649,586
Inter-segment revenue - 15,374,138 - 2,200,000 (17,574,138) -
Total revenue 596,987,181 84,879,806 2,472,340 7,884,397 (17,574,138) 674,649,586
Results
Notes to the financial statements
Other Information
Segment assets 431,952,259 11,271,321 146,300,047 141,588,587 (6,570,020) 724,542,194
Additions to non-current assets (ii) 29,280,826 1,756,846 10,175,031 925,094 - 42,137,797
Investments in associates 159,115 - - - - 159,115
33. Operating segments (cont’d) (Cont’d)
Republic of Kingdom of
Malaysia Indonesia India Saudi Arabia Eliminations Consolidated
RM RM RM RM RM RM
2013
Total revenue from external
customers 595,666,528 4,076,852 - - (5,510,000) 594,233,380
2012
Total revenue from external
Notes to the financial statements
(i) Other non-cash expenses consist of the following items as presented in the respective notes to the financial
statements:
Group
2013 2012
RM RM
Group
2013 2012
RM RM
Group Company
Carrying Carrying
amount L&R/(FL) AFS amount L&R/(FL) AFS
RM RM RM RM RM RM
2013
Financial assets
Club membership and unquoted
shares 115,500 - 115,500 68,000 - 68,000
Trade and other receivables,
excluding prepayments 459,930,510 459,930,510 - 225,326,240 225,326,240 -
Cash and cash equivalents 102,840,044 102,840,044 - 4,004,268 4,004,268 -
562,886,054 562,770,554 115,500 229,398,508 229,330,508 68,000
Notes to the financial statements
2012
Financial assets
Club membership and unquoted
shares 115,500 - 115,500 68,000 - 68,000
Trade and other receivables # 244,323,237 244,323,237 - 200,144,160 200,144,160 -
Cash and cash equivalents 98,101,075 98,101,075 - 3,995,049 3,995,049 -
342,539,812 342,424,312 115,500 204,207,209 204,139,209 68,000
2013
Financial liabilities
Trade and other payables (304,451,913) (304,451,913) - (277,376,716) (277,376,716) -
Loans and borrowings (290,879,920) (290,879,920) - (1,843,473) (1,843,473) -
(595,331,833) (595,331,833) - (279,220,189) (279,220,189) -
2012
Financial liabilities
page 141
AHMAD ZAKI RESOURCES BERHAD
# Excluded the amounts owing by a contract customer as disclosed in Note 14 to the financial statements and prepayments.
Notes to the financial statements
(Cont’d)
Group Company
2013 2012 2013 2012
RM RM RM RM
The Group has exposure to the following risks from its use of financial instruments:
• Credit risk
• Liquidity risk
• Market risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instruments
fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its trade
and other receivables, bank balances and deposits placed with licensed banks, amount due from joint venture
and advances to ultimate holding company, associate and affiliates. The Company’s exposure to credit risk
arises principally from trade and other receivables, bank balances and deposits placed with licensed banks and
advances to ultimate holding company, subsidiaries and affiliates.
Receivables
Risk management objectives, policies and processes for managing the risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.
As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented
by the carrying amounts in the statement of financial position.
Management has taken reasonable steps to ensure that trade receivables that are neither past due nor impaired
are stated at their realisable values. A significant portion of these trade receivables are regular customers that
have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the trade
receivables.
Receivables (cont’d)
Impairment losses
The Group maintains an ageing analysis in respect of trade receivables only. The ageing of trade receivables
(current and non-current) as at the end of the reporting period was:
Individual
Group Gross impairment Net
RM RM RM
2013
Not past due 33,008,386 - 33,008,386
Past due 0 – 30 days 7,123,007 - 7,123,007
Past due 31 – 120 days 5,723,340 - 5,723,340
Past due more than 120 days 1,680,418 - 1,680,418
47,535,151 - 47,535,151
2012
Not past due 23,077,726 - 23,077,726
Past due 0 – 30 days 4,185,212 - 4,185,212
Past due 31 – 120 days 976,881 - 976,881
Past due more than 120 days 6,074,664 - 6,074,664
34,314,483 # - 34,314,483
# The ageing of trade receivables (current and non-current) excludes the amounts owing by a contract customer
as disclosed in Note 14.
Individual
Company Gross impairment Net
RM RM RM
2013
Not past due 2,822,831 - 2,822,831
Past due 0 – 30 days - - -
Past due 31 – 120 days - - -
Past due more than 120 days - - -
2,822,831 - 2,822,831
Receivables (cont’d)
Individual
Company (Cont’d) Gross impairment Net
RM RM RM
2012
Not past due 2,822,831 - 2,822,831
Past due 0 – 30 days - - -
Past due 31 – 120 days - - -
Past due more than 120 days 3,644,992 - 3,644,992
6,467,823 - 6,467,823
There is no allowance made for impairment losses of trade receivables for the Group and the Company during
the financial year.
Financial guarantees
Risk management objectives, policies and processes for managing the risk
The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to
certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments
made by the subsidiaries.
The maximum exposure to credit risk amounts to RM559,436,003 (2012: RM511,711,685) representing the
outstanding banking facilities of the subsidiaries as at the end of the reporting period.
As at the end of the reporting period, there was no indication that any subsidiary would default on repayment.
The financial guarantees have not been recognised since the fair value on initial recognition was not material.
Inter-company balances
Risk management objectives, policies and processes for managing the risk
The Company makes payment on behalf of and/or provides advances to its ultimate holding company,
subsidiaries, associate, joint ventures and affiliates. The Company monitors the results of the subsidiaries
regularly except for the amounts due from ultimate holding company, associate, joint ventures and affiliates
which are not material.
As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying
amounts in the statement of financial position as shown in Note 14.
Impairment losses
As at the end of the reporting period, there was no indication that the amounts due from ultimate holding
company, subsidiaries, associate, joint ventures and affiliates are not recoverable, except for an amount due
from a subsidiary of RM3.9 million which has been fully impaired.
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.
The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the
management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall
due.
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at
significantly different amounts.
Maturity analysis
page 146
AHMAD ZAKI RESOURCES BERHAD
Carrying Contractual Contractual Under 1 1 to 2 2 to 5 More than
amount interest rate/ cash flows year years years 5 years
Group RM coupon RM RM RM RM RM
2013
Financial liabilities
Trade and other
payables 304,451,913 - 304,451,913 304,451,913 - - -
Bank overdrafts 17,564,069 6.65% - 8.10% 18,940,605 18,940,605 - - -
Trust receipts 1,168,602 7.40% - 7.90% 1,193,234 1,193,234 - - -
Notes to the financial statements
Finance lease liabilities 11,708,831 2.15% - 6.98% 12,695,191 4,876,650 3,783,593 3,736,576 298,372
Revolving credit/
Murabahah facilities 21,955,600 5.41% - 6.16% 22,221,783 22,221,783 - - -
Term loans 238,482,818 0% - 5.80% 318,107,902 28,563,990 28,557,210 106,066,726 154,919,976
595,331,833 677,610,628 380,248,175 32,340,803 109,803,302 155,218,348
2012
Financial liabilities
Trade and other
payables 304,052,901 - 304,052,901 304,052,901 - - -
Bank overdrafts 19,310,739 6.65% - 7.85% 20,715,528 20,715,528 - - -
Trust receipts 412,981 7.60% 414,528 414,528 - - -
Finance lease liabilities 14,362,128 2.15% - 6.98% 15,714,481 5,418,748 4,390,934 5,904,799 -
Term loans 151,357,657 4.80% - 6.70% 174,913,981 22,565,508 21,421,118 57,548,679 73,378,676
489,496,406 515,811,419 353,167,213 25,812,052 63,453,478 73,378,676
34. Financial instruments (cont’d) (Cont’d)
The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting
period based on undiscounted contractual payments: (Cont’d)
2013
Financial liabilities
Trade and other
payables 277,376,716 - 277,376,716 277,376,716 - - -
Finance lease
liabilities 1,843,473 2.29% - 3.50% 1,979,786 770,554 616,587 286,368 306,277
Notes to the financial statements
2012
Financial liabilities
Trade and other
payables 280,171,472 - 280,171,472 280,171,472 - - -
Finance lease
liabilities 2,023,357 2.15% - 3.50% 2,196,505 693,212 676,522 826,771 -
282,194,829 282,367,977 280,864,684 676,522 826,771 -
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other
prices that will affect the Group’s financial position or cash flows.
The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated
in a currency other than the respective functional currencies of Group entities. The currency giving rise
to this risk is primarily US Dollar (“USD”).
Risk management objectives, policies and processes for managing the risk
The Group presently does not hedge its foreign currency exposures. Nevertheless, the management
regularly monitor its exposure and keep this policy under review.
The Group’s exposure to foreign currency (a currency other than the functional currency of Group
entities) risk, based on carrying amounts as at the end of the reporting period was:
2013 2012
USD USD
Group
In RM
Loans and borrowings (22,583,011) (4,855,944)
Exposure in the statement of financial position (22,583,011) (4,855,944)
A 10% (2012: 10%) strengthening of RM against the following currency at the end of the reporting
period would have increased/(decreased) equity and post-tax profit or loss by the amounts shown
below. This analysis is based on foreign currency exchange rate variances that Group considered to be
reasonably possible at the end of the reporting period. This analysis assumes that all other variables, in
particular interest rates, remained constant and ignores any impact of forecasted sales and purchases.
2013 2012
Profit or Profit or
Equity loss Equity loss
A 10% (2012: 10%) weakening of RM against the above currency at the end of the reporting period
would have had equal but opposite effect on the above currency to the amounts shown above, on the
basis that all other variables remained constant.
The Group’s fixed-rate borrowings are exposed to a risk of change in their fair value due to changes in
interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to
changes in interest rates. Short term receivables and payables are not significantly exposed to interest
rate risk.
The Group’s excess cash is invested in fixed deposits with tenure of less than twelve (12) months,
hence exposure to risk of change in their fair values due to changes in interest rates is not significant.
Risk management objectives, policies and processes for managing the risk
The Company does not have a formal policy for managing interest rate risk. The exposure to interest
rate risk is monitored closely by the management.
The interest rate profile of the Group’s and the Company’s significant interest-bearing financial
instruments, based on carrying amounts as at the end of the reporting period was:
Group Company
2013 2012 2013 2012
RM RM RM RM
The Group only has fixed rate deposits placed with licensed banks with tenure of less than
twelve (12) months. The Group does not account for fixed rate financial assets and liabilities at
fair value through profit or loss. Therefore, a change in interest rates at the end of the reporting
period would not affect profit or loss.
A change of one (1) percent in interest rates at the end of the reporting period would have
increased/(decreased) equity and post-tax profit or loss by the amounts shown below. This
analysis assumes that all other variables, in particular foreign currency rates, remained
constant.
Group
Equity Profit or loss
1% 1% 1% 1%
increase decrease increase decrease
RM RM RM RM
2013
Floating rate instruments
Term loans (1,782,470) 1,782,470 (1,782,470) 1,782,470
Bank overdrafts (131,731) 131,731 (131,731) 131,731
Revolving credits/
Murabahah facilities (164,667) 164,667 (164,667) 164,667
Cash flow sensitivity (net) (2,078,868) 2,078,868 (2,078,868) 2,078,868
2012
Floating rate instruments
Term loans (1,135,183) 1,135,183 (1,135,183) 1,135,183
Bank overdrafts (144,830) 144,830 (144,830) 144,830
Cash flow sensitivity (net) (1,280,013) 1,280,013 (1,280,013) 1,280,013
The carrying amounts of cash and cash equivalents, short term receivables and payables and short term
borrowings approximate fair values due to the relatively short term nature of these financial instruments.
It was not practicable to estimate the fair value of the Group’s investment in unquoted shares due to the lack
of comparable quoted prices in an active market and the fair value cannot be reliably measured.
The table below analyses financial instruments not carried at fair value for which fair value is disclosed,
together with their carrying amounts shown in the statement of financial position.
Financial asset
Club membership - - 100,000 100,000 100,000 68,000
Financial liabilities
Term loans - - 235,814,268 235,814,268 235,814,268 238,482,818
Finance lease
liabilities - - 11,907,798 11,907,798 11,907,798 11,708,831
Financial asset
Club membership 68,000 68,000
Financial liabilities
Term loans 151,357,657 151,113,519
Finance lease liabilities 14,362,128 14,326,237
Financial asset
Club membership - - 100,000 100,000 100,000 68,000
Financial liabilities
Finance lease
liabilities - - 1,846,522 1,846,522 1,846,522 1,843,473
Financial asset
Club membership 68,000 68,000
Financial liabilities
Finance lease liabilities 2,023,357 2,030,373
* Comparative figures have not been analysed by levels, by virtue of transitional provision given in Appendix
C2 of FRS 13.
The fair value of an asset to be transferred between levels is determined as of the date of the event or change
in circumstances that caused the transfer.
Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical financial assets or
liabilities that the entity can access at the measurement date.
Level 2 fair value is estimated using inputs other than quoted prices included within Level 1 that are observable
for the financial assets or liabilities, either directly or indirectly.
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future
principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. For
other borrowings, the market rate of interest is determined by reference to similar borrowing arrangements.
There has been no transfer between Level 1 and 2 fair values during the financial year. (2012: no transfer in
either directions)
Level 3 fair value is estimated using unobservable inputs for the financial assets and liabilities.
The fair value of finance lease liabilities and term loans are estimated using discounted cash flows at the
following interest rates:
2013 2012
Group
Finance lease liabilities 2.56% 3.18%
Term loans 5.05% - 6.70% 4.80% - 6.70%
Company
Finance lease liabilities 2.56% 3.18%
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and
healthy capital ratio in order to support its business and maximise shareholders’ value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To
maintain or adjust capital structure, the Group may adjust the dividend payment to shareholders, return capital to
shareholders or issue new shares. There were no changes in the Group’s approach to capital management during the
year.
The Group monitors capital using a gearing ratio, which is computed by using total borrowings over shareholder’s
equity.
The net debt-to-capital ratio at 31 December 2013 and 31 December 2012 were as follows:
2013 2012
Note RM RM
Under the requirements of Bursa Malaysia Practice No. 17/2005, the Company is required to maintain a consolidated
shareholders’ equity equal or not less than 25% of the issued and paid-up capital (excluding treasury shares) and such
shareholders’ equity is not less than RM40 million. The Company has complied with this requirement.
Leases as lessee
Group
2013 2012
RM RM
This is in respect of lease rental payable for leasing of office equipment with lease tenure of five (5) years.
Leases as lessor
The Group leases out its investment property (see Note 7). The future minimum lease receivables under non-cancellable
leases are as follows:
Group
2013 2012
RM RM
Group
2013 2012
RM RM
Group
The Directors are of the opinion that provisions are not required as at the year end in respect of these matters, as it
is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable
measurement.
Company
2013 2012
RM RM
Unsecured
Corporate guarantees given to financial institutions and suppliers in respect of
credit facilities granted to subsidiaries 13,486,844 21,325,393
Secured
Corporate guarantee given to financial institutions in respect of credit facilities
granted to subsidiaries 546,504,169 499,755,280
559,991,013 521,080,673
For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the
Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in
making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject
to common control or common significant influence. Related parties may be individuals or other entities.
Related parties also include key management personnel defined as those persons having authority and responsibility
for planning, directing and controlling the activities of the Group either directly or indirectly. The key management
personnel include all the Directors of the Group.
The Group has related party relationship with its holding companies, significant investors, subsidiaries, associates,
joint ventures, affiliates, Directors and key management personnel.
The significant related party transactions of the Group and of the Company, other than key management personnel
compensation (see Note 29), are as follows:
Group Company
2013 2012 2013 2012
RM RM RM RM
Subsidiaries
Dividend income receivable - - (13,176,692) (25,000,110)
Management fees receivable - - (5,510,000) (2,200,000)
Ultimate holding company
Administrative service payable 120,000 120,000 - -
Insurance premium payable 894,863 855,975 55,306 61,429
The transactions with the Directors, parties connected to the Directors and companies in which the Directors have
substantial financial interests are as follows:
Group
2013 2012
RM RM
Rental income receivable from related company, Residence Inn & Motels Sdn. Bhd. 24,000 172,365
Rental premises paid to a Director, Dato’ Sri Haji Wan Zaki bin Haji Wan Muda 36,000 36,000
Sale of motor vehicle to a Director, Dato’ Sri Haji Wan Zaki bin Haji Wan Muda 1 -
Professional fees paid to a Director, Dato’ Haji Ismail@ Mansor bin Said 18,000 18,000
Professional fees paid to a Director, Dato’ Wan Ahmad Farid bin Wan Salleh 5,000 -
The outstanding balances arising from the above transactions have been disclosed in Note 14 and Note 23 to the
financial statements.
(i) On 13 February 2013, EKVE Sdn. Bhd., a wholly owned subsidiary of the Company signed a Concession
Agreement with the Government of Malaysia for the design, construction, completion, operation, management
and maintenance of the East Klang Valley Expressway for a concession period of fifty (50) years. Expenditure
incurred in relation to this concession as at 31 December 2013 is disclosed in Note 8.
(ii) On 30 May 2013, Inter-Century Sdn Bhd (“ICSB”), a wholly owned subsidiary of the Company entered into
a new Agreement with Petronas Dagangan Berhad to extend its provision of marine high speed bunkering
services at the Kemaman Supply Base in Terengganu Darul Iman.
(iii) On 11 July 2013, Ahmad Zaki Sdn. Bhd., a wholly owned subsidiary of the Company was awarded a project
with a total value of approximately RM172 million for the design and construction of students accommodation
complex in Kuala Lumpur.
(iv) The Group signed a contract agreement with a customer on 28 June 2005 for a development of university campus
- project phases 1 and 2 in Riyadh, Saudi Arabia. Although certain development work had been completed, the
overall progress of the development project was stalled due to various disputes over the work progress between
the Group and the said contract customer. Despite numerous attempts to resolve the disputes, the Group and
the customer failed to reach an amicable solution.
Pursuant to the arbitration clause stated in the contract agreement, the Group had initiated arbitration proceedings
in March 2011 against the said customer by claiming an amount of SAR170.2 million (equivalent to RM144.2
million). Included in this claim amount is RM53.2 million for contract revenue recognised in previous years
and RM44.7 million in respect of the performance and advance payments bonds as disclosed in Note 14 to the
financial statements.
In January 2012, the Group submitted its memorial claims to International Court of Arbitration under International
Chamber of Commerce (“ICC Court”).
In July 2013, the sole arbitrator appointed by the ICC Court to hear the arbitration issued the award of
SAR92,570,300 (equivalent to RM78.6 million) in favour of the Group, which is now included in other
receivables Note 14.
On 30 August 2013, Ahmad Zaki Sdn. Bhd. (“AZSB”), a wholly owned subsidiary of the Company acquired
2 ordinary shares of RM1.00 each representing the entire equity interest in Peninsular Precast Sdn. Bhd.
(“Peninsular Precast”) for a cash consideration of RM2.00. On 30 August 2013, Peninsular Precast
increased its issued and paid-up share capital to RM100,000 comprising of 100,000 ordinary shares of
RM1.00 each of which 79,998 ordinary shares were subscribed by AZSB for a total cash consideration
of RM79,998. Following the subscription of the new ordinary shares, Peninsular Precast became an 80%
owned subsidiary of the Company.
(b) Joint Venture with Malaysian Harvest Sdn. Bhd. (“MHSB”) and Primary Horizon Sdn. Bhd. (“PHSB”)
On 2 October 2013, the Company entered into a Joint Venture Agreement with MHSB and PHSB to
participate in a joint venture company named Peninsular IFM Sdn. Bhd. (“PIFM”) to provide integrated
facilities management services for buildings or facilities or projects undertaken by the joint venture parties.
Each of the joint venture parties shall participate in the equity of PIFM in the following percentage:
(b) Joint Venture with Malaysian Harvest Sdn. Bhd. (“MHSB”) and Primary Horizon Sdn. Bhd. (“PHSB”)
(Cont’d)
The acquisition of subsidiary and joint venture did not have any material impact to the financial statements
of the Group.
(vi) On 11 October 2013, Ahmad Zaki Sdn. Bhd., a wholly owned subsidiary of the Company was awarded a project
with a total value of approximately RM163 million for the construction of the base of the Royal Malaysian Air
Force in Shah Alam.
(vii) On 18 December 2013, EKVE Sdn. Bhd., a wholly owned subsidiary of the Company obtained the approval
from the Securities Commission (the “SC”) to establish the Proposed Guaranteed Sukuk Murabahah Facility
of up to RM1 billion. The proceeds from the Proposed Guaranteed Sukuk Murabahah Facility will be utilised
amongst others, to part-finance all costs associated with the design, construction, completion and operation of
the East Klang Valley Expressway.
The Proposed Guaranteed Sukuk Murabahah Facility will be jointly guaranteed by Bank Pembangunan Malaysia
Berhad (“BPMB”) and Maybank Islamic Berhad.
(a) On 15 January 2014, the Company announced the following corporate proposals (collectively referred to as the
“Proposals”):
(i) proposed reduction of the issued and paid-up share capital of the Company via the cancellation of RM0.25
of the par value of each existing ordinary share of RM0.50 each in the Company (“Proposed Par Value
Reduction”);
(ii) proposed renounceable rights issue of up to 207,706,641 new ordinary shares of RM0.25 each in the
Company (“Rights Shares”) together with up to 103,853,320 free detachable warrants (“Warrants”) at
an issue price of RM0.50 per Rights Share on the basis of six (6) Rights Shares together with three (3)
free Warrants for every eight (8) existing ordinary shares held after the Proposed Par Value Reduction
(“Proposed Rights Issue With Warrants”);
(iii) proposed establishment of an employees’ share scheme of up to fifteen percent (15%) of the issued and
paid-up share capital of the Company (excluding treasury shares) for the eligible employees and Directors
of companies within the Group which are not dormant at any point in time (“Proposed ESS”); and
(iv) proposed amendments to the Company’s Memorandum and Articles of Association to facilitate the
Proposed Par Value Reduction (“Proposed Amendments to M&A”).
(a) On 15 January 2014, the Company announced the following corporate proposals (collectively referred to as the
“Proposals”): (Cont’d)
(i) the admission of the Warrants to the Official List of Bursa Securities and for the listing of and
quotation for the Warrants; and
(ii) the listing of and quotation for the Rights Shares to be issued pursuant to the Proposed Rights Issue
With Warrants as well as the new shares to be issued pursuant to the Proposed ESS and the exercise
of the Warrants on the Main Market of Bursa Securities;
(b) the approval of shareholders of the Company at an Extraordinary General Meeting (“EGM”) for the
Proposals;
(c) the confirmation of the High Court of Malaya in respect of the Proposed Par Value Reduction; and
The Proposed Par Value Reduction and Proposed Amendments to M&A are inter-conditional upon one another
but not conditional or inter-conditional upon the Proposed Rights Issue With Warrants or Proposed ESS.
The Proposed ESS is not conditional or inter-conditional upon the Proposed Rights Issue With Warrants. The
Proposals are not conditional or inter-conditional upon any other corporate exercises being or proposed to be
undertaken by the Company.
The Company obtained approval from Bursa Securities on 19 February 2014 and shareholders on 17 March
2014.
On 15 April 2014, the Company obtained court order from the High Court of Malaya in relation to the Proposed
Par Value Reduction.
(b) On 2 February 2014, the Group, through its external legal counsels in Saudi Arabia, has filed the award with
the local Saudi court in order to obtain an enforcement order pursuant to event stated in Note 40 (iv).
(c) On 25 February 2014, the Company entered into a Sale of Shares Agreement to acquire 750,000 ordinary
shares of RM1.00 each representing the entire equity interest in Residence Inn & Motels Sdn Bhd (“RIM”) from
Zaki Holdings (M) Sdn Bhd at a purchase consideration of RM1,000,000.
(d) On 16 April 2014, the Consortium, whereby the Company is a joint venture partner, was awarded a project with
a total value of approximately RM994 million for the proposed development of Langat 2 water treatment plant
and water reticulation system in Selangor Darul Ehsan/Wilayah Persekutuan Kuala Lumpur.
The breakdown of the retained earnings and accumulated losses of the Group and of the Company at 31 December,
into realised and unrealised profits or losses, pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market
Listing Requirements, are as follows:
Group Company
2013 2012 2013 2012
RM RM RM RM
The determination of realised and unrealised profits or losses is based on the Guidance of Special Matter No. 1,
Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia
Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.
In the opinion of the Directors, the financial statements set out on pages 69 to 160 are drawn up in accordance with
Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and
fair view of the financial position of the Group and of the Company as of 31 December 2013 and of their financial
performance and cash flows for the financial year then ended.
In the opinion of the Directors, the information set out in Note 42 on page 161 has been properly compiled in accordance
with the Guidance of Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context
of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of
Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Raja Dato’ Seri Aman bin Raja Haji Ahmad Dato’ Wan Zakariah bin Haji Wan Muda
Kuala Lumpur,
Statutory declaration
pursuant to Section 169(16) of the Companies Act, 1965
I, Khairudin Bin Hj Mohd Ali, the officer primarily responsible for the financial management of Ahmad Zaki Resources
Berhad, do solemnly and sincerely declare that the financial statements set out on pages 69 to 161 are, to the best of my
knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by
virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the above named in Kuala Lumpur on 30 April 2014.
Before me: )
)
)
)
)
Khairudin Bin Hj Mohd Ali
We have audited the financial statements of Ahmad Zaki Resources Berhad, which comprise the statements of financial
position as at 31 December 2013 of the Group and of the Company, and the statements of profit or loss and other
comprehensive income, changes in equity and cash flows of the Group and of the Company for the year then ended,
and a summary of significant accounting policies and other explanatory information, as set out on pages 69 to 160.
The Directors of the Group and of the Company are responsible for the preparation of financial statements so as to give
a true and fair view in accordance with Financial Reporting Standards and the requirements of the Companies Act,
1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement
of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control
relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements of the Group and of the Company give a true and fair view of their financial
positions as of 31 December 2013 and of their financial performance and their cash flows for the year then ended in
accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965.
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company
and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions
of the Act.
(b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as
auditors, which are indicated in Note 10 to the financial statements.
(c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial
statements are in form and content appropriate and proper for the purposes of the preparation of the financial
statements of the Group and we have received satisfactory information and explanations required by us for those
purposes.
(d) The audit report on the accounts of the subsidiaries did not contain any qualification or any adverse comment
made under Section 174(3) of the Act.
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information
set out in Note 42 on page 161 to the financial statements has been compiled by the Company as required by the
Bursa Malaysia Securities Berhad Listing Requirements and is not required by the Financial Reporting Standards. We
have extended our audit procedures to report on the process of compilation of such information. In our opinion, the
information has been properly compiled, in all material respects, in accordance with the Guidance on Special Matter
No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa
Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based
on the format prescribed by Bursa Malaysia Securities Berhad.
Other Matters
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.
* shares held through Zaki Holdings (M) Sdn Bhd, spouse and children
** shares held through person connected to the Director
#
negligible
By virtue of Dato’ Sri Haji Wan Zaki bin Haji Wan Muda having an interest of more than 15% of the shares in Ahmad Zaki
Resources Berhad, he is deemed interested in the shares of its subsidiaries to the extent the Company has an interest.
Other than as disclosed above, none of the Directors held any shares or have any interest in the Company and its related
companies as at 30 April 2014.
DISTRIBUTION OF SHAREHOLDINGS
4. DATO’ SRI HAJI WAN ZAKI BIN HAJI WAN MUDA 2,069,660 0.75 164,141,136 * 59.59 *
* Shares held through Zaki Holdings (M) Sdn Bhd, spouse and children
HGU No. 5,
Desa Amboyo Selatan,
Leasehold
Kecamatan Ngabang, Land for
31.05.2005 expiring 7,740 hectares 8,323
Kabuputen Pontianak, cultivation
27.09.2033
Kalimantan Barat,
Republic of Indonesia.
of
NRIC No.
of
of
or failing *him/her/both, the Chairman of the Meeting as *my/our proxy to vote for *me/us on *my/our behalf at the 17th Annual
General Meeting of the Company to be held at Taming Sari 3, Ground Floor, The Royale Chulan Kuala Lumpur, Jalan Conlay,
50450 Kuala Lumpur on Thursday, 26 June 2014 at 10.00 am. and, at every adjournment thereof for/against* the resolution(s) to
be proposed thereat.
This day of 2014 4. The instrument appointing a proxy must be completed, signed
and deposited at the office of the Share Registrar, Mega Corporate
Services SdnBhd at Level 15-2, Bangunan Faber Imperial Court,
Jalan Sultan Ismail, 50250 Kuala Lumpur, not less than forty-eight
(48) hours before the time set for the meeting or at any adjournment
thereof.
Fold here