Value Chain Integration Partner
2013 Annual Report CONTENTS
Section One Section Two
Corporate Information Financial Statements
Five-Year Financial Summary 2 Directors’ Report 44 Financial Indicators 2 Independent Auditors’ Report 48 Group Corporate Structure 3 Statements of Profit or Loss and Lumut Port 4 Other Comprehensive Income 50 - Lekir Bulk Terminal 5 Statements of Financial Position 51 - Lumut Maritime Terminal 7 Statements of Changes in Equity 52 Profile of Directors 10 Statements of Cash Flow 53 Chairman’s Statement 16 Notes to the Financial Statements 55 Statement on Corporate Governance 20 Supplementary Information on the Breakdown of Realised and Unrealised Profits or Losses 97 Statement on Risk Management and Internal Control 31 Statement by Directors 98 Audit Comittee Report 34 Declaration by the Officer Primarily Responsible for the Financial Management of the Group and of the Company 99 Statement on Corporate Social Responsibility 38 Properties Owned by the Group 100 Corporate Calendar Analysis of Shareholdings 101 Integrax in the News 41 Section Three
Notice of Annual General Meeting 104
28th Annual General Meeting Venue : Junior Ballroom InterContinental Kuala Lumpur Hotel 165 Jalan Ampang, 50450 Kuala Lumpur Malaysia Date : Wednesday, 18th June 2014 Time : 10.00 a.m.
Proxy Form FIVE-YEAR FINANCIAL SUMMARY
100.0 92.9 90.7 90.0 87.9 85.3 88.1
80.0 76.1 71.9 70.0 69.2 68.5 67.0 60.2 60.7 60.0 59.2 57.1 55.8
52.0 50.3 50.0 49.5 47.2 47.7 47.5 44.1 43.8 42.9 41.7 40.9 RM Million 40.0 39.6 36.8 37.1 36.0
30.0
20.0
10.0
0 2009 2010 2011 2012 2013
2009 2010 2011 2012 2013 Revenue 85.3 88.1 87.9 90.7 92.9 EBITDA 68.5 76.1 71.9 69.2 67.0 Operating profit 47.2 36.0 44.1 39.6 36.8 Profit before tax 52.0 60.7 60.2 59.2 57.1 Profit after tax 42.9 55.8 49.5 47.7 47.5 Profit attributable to shareholders 37.1 50.3 43.8 41.7 40.9
FINANCIAL INDICATORS
2009 2010 2011 2012 2013 Total assets (RM million) 773.0 802.9 746.8 720.8 751.5 Total borrowings (RM million) 135.4 99.9 62.9 4.5 4.2 Shareholders' equity (RM million) 512.8 554.6 559.7 591.2 618.5 Return on equity (%) 7.2 9.1 7.8 7.0 6.6 Return on total assets (%) 5.5 6.9 6.6 6.6 6.3 Interest cover (times) 6.1 9.0 12.8 35.2 158.9 Net earnings per share (sen) 12.3 16.7 14.6 14.0 13.6 Net dividend per share (sen) - 2.3 12.0 3.1 4.5 Net dividend yield (%) - 1.4 9.0 2.2 2.2 Price earning (PE) Ratio (times) 7.3 9.9 9.1 9.5 15.2 Gearing ratio (times) 0.3 0.2 0.1 0.0 0.0 Net assets per share (RM) 1.70 1.84 1.86 1.97 2.06
2 INTEGRAX BERHAD Annual Report 2013 GROUP CORPORATE STRUCTURE
GROUP ORGANISATIONAL STRUCTURE
INTEGRAX BERHAD Annual Report 2013 3 LUMUT PORT
FACILITIES AND SERVICES
Lumut Port is located on the west coast of Peninsular Malaysia in the State of Perak directly off the Straits of Malacca. Lumut Port comprises two (2) terminals, Lekir Bulk Terminal (LBT) and Lumut Maritime Terminal (LMT). Strategically located to serve nearer trades within South-East Asia, Myanmar, Bangladesh, India, Sri Lanka, Pakistan, and farther trades with the Far East region, Australia / Pacific region, Africa/Mid East region and EU region.
TERMINAL LOCATION COORDINATES
Terminal Location Coordinates are as follows:
Terminal Location Coordinates Latitude Longitude LMT 04° 15.3’ N 100° 39.6’ E LBT 04° 08.7’ N 100° 37.3’ E
Pilot Station
Located at latitude 4° 10.5 minutes north and longitude 100° 35 minutes east (south of Pulau Pangkor). The Pilot Station is within 10.5 nautical miles of Lumut Maritime Terminal and within 3 nautical miles of Lekir Bulk Terminal.
4 INTEGRAX BERHAD Annual Report 2013 LEKIR BULK TERMINAL (LBT)
LBT DEVELOPMENT HISTORY
Consequent to the in-principle indicative approval of the State Government of Perak of the Lekir Coastal Development Project (“Lekir Coastal Project”) in 1996, two companies, Desa Kilat Sdn Bhd (DKSB) and Lekir Bulk Terminal Sdn Bhd (LBT) were formed by three partners who were Perbadanan Kemajuan Negeri Perak, Halim Rasip Holdings Sdn Bhd and Malakoff Berhad, to promote, develop and implement the Lekir Coastal Project which comprised two related developments.
• DKSB was responsible for the promotion and development of the Lekir Coastal Project comprising the reclamation of land from the sea in the form of islands and the sale of these islands. Total area available for reclamation was 20,000 acres. • LBT was responsible for the promotion and development of a very deep water bulk terminal, complementary in nature to LMT and the Lekir Coastal Project.
DKSB commenced reclamation of the First Island (of 325 hectares) in July 1997 in waters of depth 0.5m to 2.0m ACD. The scope of works included reclamation of land, slope protection and the construction of a bunded enclosed body of water. The First Island was completed on 31 August 1999, and was handed over to its purchasers, TNB Janamanjung Sdn. Bhd. for the purposes of construction and operation of a coal-fired 2,100 MW Power Station, and LBT, for the purposes of its very deep water bulk terminal, pursuant to Site Acquisition Agreements executed in January 1999. LBT executed a Jetty Terminal Usage Agreement with TNB Janamanjung Sdn. Bhd. in August 1999 for the provision of coal unloading and delivery services to the Power Station, thus securing an anchor customer. LBT commenced the construction of Phase I of the dry bulk terminal in May 2000, comprising berths able to accommodate Capemax and Panamax vessels with water depths alongside of 20m ACD, a 2,000m trestle, 2 grab discharge cranes, mechanised handling equipment and controls and appropriate onshore support facilities. In 30 June 2000, LBT achieved financial close with the issue of an RM445million Serial Bond rated AA3 by Rating Agency Malaysia Bhd. on a non-recourse project finance basis
INTEGRAX BERHAD Annual Report 2013 5 LEKIR BULK TERMINAL (LBT) (continued)
Nature of Terminal Common User Port designed to handle dry bulk and liquid bulk. Gazzetted Customs Port.
Port Operation Working Hours 3 Shifts, 24 Hours Per Day, 365 Days Per Year.
Administrative Working Hours Mondays to Fridays 08:30 am - 17:00 pm Saturdays 08:30 am - 12:00 noon Closed Sundays and Public Holidays
Navigable Channel Directly off the Straits of Malacca Minimum Depth - 20m at all times
Berths South Berths Length : 530m Draft : 20m ACD
North Berths Length : 250m Draft : 18m ACD
Vessel / Size / Parameters Vessels / Maximum 180,000 DWT Barges / Minimum 7,000 DWT
Services To Vessels Tuggage required, Pilotage compulsory Port Agency available
Dry Bulk Facilities Unloading Equipment 2 grab ship unloaders with 1,500 mt/hour rated capacities feeding 2 import conveyors, with each conveyor having 3,800 MT / hour rated capacity (inclusive of provision for extra grab unloader in future), integrated with a transfer station system with alternative routing capability.
A third grab ship unloader will be available by the third quarter of 2014.
Direct Transhipment Capability - Under Development Direct transhipment at berth possible using existing unloaders for direct ship / barge to ship / barge transfer between north and south berths, tied in with open and covered storage area of total 200,000 sq. metres to be equipped with appropriate stock piling and reclaiming equipment for integration into existing transfer station system. Estimated storage capacity up to 1.5 million MT.
Ship Loading Capability - Under Development Plans for future export berth for vessels / barges with 15m ACD water alongside, with export conveyors integrated with existing transfer station system. Loading rate of 2,500 MT / hour contemplated.
Mobile Equipment Wheel loaders, dozers, mobile feed / stacker, etc. to suit requirements.
Liquid Bulk Facilities Pipeline wayleaves and tank areas available for direct vessel-to-plant / tank transfer by negotiation.
6 INTEGRAX BERHAD Annual Report 2013 LUMUT MARITIME TERMINAL (LMT)
LMT DEVELOPMENT HISTORY
Subsequent to execution of the Privatisation Agreement with the State Government of Perak in February 1993, construction of LMT commenced in November 1993 on a turnkey design-build basis.
The scope of works included the filling of some 70 acres, a 200m marginal wharf, a 58m marginal barge berth, open and covered storage facilities, appropriate infrastructure and an administrative building for a value for RM60 million.
It was completed in July 1995 and was officially opened on 24 July 1995 by the then Prime Minister of Malaysia, Tun Dr. Mahathir Mohamad in the presence of the Chief Minister of Perak, Tan Sri Ramli Ngah Talib, many dignitaries, over 12,000 citizens, 4 helicopters, 1 float plane, a 100 foot yacht and the 12,000 DWT MV KOTA MAWAR being the first vessel alongside.
Since 1995 the LMT Terminal has improved and extended its facilities with additional open and covered storage, handling equipment and, in 2001, an extension to the Main Berth of 280m, with depth alongside of 12m ACD, resulting in a total overall straight-line berth length of 500m.
INTEGRAX BERHAD Annual Report 2013 7 LUMUT MARITIME TERMINAL (LMT) (continued)
Nature of Terminal Common User Port designed and equipped to handle dry bulk, liquid bulk, containers, all conventional cargo and project cargoes. Gazzetted Customs Port.
Port Operation Working Hours 3 Shifts, 24 Hours Per Day, 365 Days Per Year
Administrative Working Hours Mondays to Fridays : 08:30 am - 17:00 pm Saturdays : 08:30 am - 12:00 noon Sundays & Public Holidays : Closed
Navigable Channel Within Dindings River off the Straits of Malacca Minimum depth - 9m, maximum depth - 12m at high tide
Berths South Berths Length : 200m Draft : 10m ACD North Berths Length : 280m Draft : 12m ACD Barge Berths Two barges longitudinally moored Draft : 3.5m ACD
Vessel / Size / Parameters Vessels / maximum 35,000 DWT alongside > 35,000 DWT with lighterage Barges / maximum 8,000 DWT LOA / maximum 230m
Services to Vessels • Tuggage required • Pilotage compulsory • Port Agency available
Container Facilities Storage Container Yard storage of 6,000 sq. metres Reefer Points (by nego.)
Equipment High Stacker 1 Prime Movers 4 Trailers: 6 x 40 ft / 14 x 20 ft Mobile Crane 1
Dry Bulk Facilities Storage Mobile Equipment Covered Storage 8,000 sq. metres. Wheel Loaders / Excavators 11 Open Storage 100,000 sq. metres. Tipper Trucks 15 Leased areas for specialised cargo owner / Hoppers 38 cbm 4 operated facilities and conveyor way Mobile Conveyors 150 mt/hr 3 leaves by negotiation. 300 mt/hr 2 Grabs: 5 cbm 4 8 cbm 4 Liquid Bulk Facilities Pipeline way leaves and tank areas available for direct vessel-to-plant / tank transfer by negotiation
Northern Tank Farm 2 units of 1500m3 and 5 units of 750m3 mild steel storage tanks with loading bay and pump house, with import/ outgoing pipe line available since May 2014
Conventional Cargo Facilities Storage Covered storage 6,200 sq. metres.
Equipment Mobile Cranes Capacities on request Forklifts To suit Gear To suit
Dedicated Storage Leased areas available for specialised cargo storage / re-packing owner operated facilities by negotiation.
8 INTEGRAX BERHAD Annual Report 2013 INTEGRAX BERHAD Annual Report 2013 9 PROFILE OF DIRECTORS
Dato’ Seri Diraja Mohamad Tajol Rosli bin Mohd Ghazali Independent Non-Executive Chairman Malaysian, aged 69, appointed as an Independent Non-Executive Director on 24 May 2011 and subsequently as the Chairman of the Company on 21 June 2011. Dato’ Seri holds a Bachelor of Commerce Degree from the University of Melbourne. He was conferred the Doctor of Laws Honoris Causa, Honorary PhD by the University of Melbourne in 2003. Dato’ Seri had a long and distinguished career in politics until his retirement in 2013. From 1999 to 2008, Dato’ Seri was the Chief Minister of the State of Perak and was a member of the State Assembly of Perak from 1997 to 1998 and from 1999 to 2013. He was a Member of Parliament from 1978 to 1999. He had held various portfolios in the Government namely as Parliamentary Secretary of Rural Development in 1983, Deputy Minister of National and Rural Development in 1986, Deputy Minister of Energy, Telecommunications and Post in 1990, Deputy Minister of Housing and Local Government in 1995, Deputy Minister of Home Affairs in 1997 and Minister in the Prime Minister’s Department in January 1999. Apart from his extensive contribution to the public administration, Dato’ Seri has also played a very active role in the development and activities of youth within Malaysia and the Asian region. He was the President of the Malaysian Youth Council and the Secretary General of the Working Committee for ASEAN Youth Council from 1982 to 1986. From 1988 to 1991, he was the President of the Asian Youth Council. Besides his career in the public sector, Dato’ Seri had also served in the private sector in various capacities for 15 years. Amongst the position he had held are Director of Applied Management Consultant Sdn Bhd, an IT consultancy company and Managing Director of Rosli, Gan & Co., which specialized in outsourcing of accounting and company secretarial services. Dato’ Seri is currently the Chairman of Pengurusan Aset Air Berhad. He has no family relationship with any Director and/or major shareholders and he does not have any conflict of interest with the Company. Dato’ Seri attended all five (5) Board Meetings held during the financial year ended 31 December 2013.
Amin Halim Rasip Non-Independent Non-Executive Deputy Chairman Malaysian, aged 59, Non-Executive Deputy Chairman, appointed to the Board on 29 May 2001 and was re- designated as the Non-Independent Non-Executive Deputy Chairman of the Company on 14 February 2012. He graduated from the University of Newcastle, Australia in 1978 with a Bachelor of Engineering Degree in Naval Architecture. He also holds a Master of Science Degree from the Massachusetts Institute of Technology (MIT) in the United States of America where he specialised in Finance and Risk Analysis. His commercial, financial and business creation strengths have been involved in various business sectors for more than 20 years including ship owning, ship management, steel fabrication, plant maintenance, manufacturing services, oil and gas industry services, marine, logistics and port terminals. His core strengths include extensive engineering knowledge and ‘hands on’ practical operational experience in several engineering disciplines, acquired from over 20 years involvement in various sectors including ship design, ship building, ship management, steel fabrication, maintenance systems, control systems, quality assurance, manufacturing, integrated logistics systems, system reliability, subsea engineering, offshore oil and gas industry, bulk material systems, industrial plants and consultancy. He also has a thorough understanding and capability in respect of detailed financial analysis and risk assessment of projects, contract law,construction contracts, marine charter parties and legal documentation in industry. He is deemed a connected party to Golden Initiative Sdn Bhd, a major shareholder of Integrax. He does not hold directorships in any other public company. His indirect interest in the shares of Integrax is disclosed in the Director’s Shareholdings Report shown on page 103 of this Annual Report. Save as disclosed, he does not have any conflict of interest with the Company. He attended three (3) out of the five (5) Board of Directors’ meetings held during the financial year ended 31 December 2013.
10 INTEGRAX BERHAD Annual Report 2013 PROFILE OF DIRECTORS
Azman Shah bin Mohd Yusof Executive Director Malaysian, aged 45, Executive Director, appointed to the Board on 6 May 2011 as Independent Non-Executive Director and re-designated as Executive Director on 2 April 2012. Azman graduated with a Bachelor’s Degree in Economics from London School of Economics, UK in 1992 and completed an Executive Programme in Macroeconomic Policy and Management at Harvard University, USA in 1996. He has had more than 10 years of experience serving the Government, holding various senior positions at Bank Negara Malaysia and Pengurusan Danaharta Nasional Berhad. Subsequently in 2002, Azman became a corporate advisor and company director of various companies involved in property development, REIT management, hotel management, media, radio broadcasting, information technology and agriculture. Prior to taking the helm of the Company as Executive Director, Azman was the Head of Marketing and Corporate Services at Bolton Berhad (now known as Symphony Life Berhad), a property development company, overseeing the marketing and corporate services including corporate planning and strategy, communications, branding, marketing and customer relations. He has firm family roots in Ipoh, Perak and is active in socialwork, including alumni associations, Parent-Teachers’ Associations and residents association. He has no family relationship with any Director and/or major shareholder and he does not have any conflict of interest with the Company. He does not hold directorships in any other public company incorporated in Malaysia. His direct interests in the shares of Integrax is as disclosed in the Directors’ Shareholdings Report shown on page 103 of this Annual Report. En. Azman attended all five (5) Board Meetings held during the financial year ended 31 December 2013.
Paul Chan Wan Siew Senior Independent Non-Executive Director Malaysian, aged 63, Senior Independent Non-Executive Director, appointed to the Board on 6 May 2011. He is the Chairman of the Audit Committee of the Board and a member of the Governance and Nomination Committee, Risk Committee and Tender Committee. Professionally, Paul is a Chartered Accountant, a Fellow Member of the Association of Chartered Certified Accountants (UK), the Institute of Chartered Secretaries and Administrators (UK), and the CPA Australia. He is also a Certified Financial Planner and Chartered Financial Consultant (USA). Currently, he serves as an Independent Non-Executive Director in various capacities on the Audit, Risk Management, Nomination, and Remuneration Committees in several Public Company Boards namely Prestariang Berhad, Luxchem Corporation Berhad and Prudential Assurance Malaysia Berhad. Paul’s professional and business experience spans over three decades across areas of accounting, corporate, financial and business advisory services. He is the President of Business Transitions Asia Sdn Bhd, a company that provides business advisory services to businesses in transition, serving the business-owners as an independent advisor in managing the value of their business. He is active in serving various professional and Non-Governmental Organizations (NGO). He is the Founding Deputy President of the Malaysian Alliance of Corporate Directors (MACD) and serves on the Executive Committees of the Federation of Public Listed Companies (FPLC), Malaysian Institute of Accountants (MIA) and the Global Network of Director Institutes (GNDI). He is also a Governance Fellow and Board Leadership Fellow of the National Association of Corporate Directors, (NACD) USA. He had served as the President of the Association of Chartered Certified Accountants Malaysia (ACCA Malaysia), President of the Malaysian Institute of Chartered Secretaries & Administrators (MAICSA), Founding Board Member/Vice President of the Financial Planning Association of Malaysia (FPAM) and Secretary General of the Malaysian Institute of Corporate Governance (MICG). He has no family relationship with any Director and/or major shareholder and he does not have any conflict of interest with the Company.
Paul attended all five (5) Board Meetings held during the financial year ended 31 December 2013.
INTEGRAX BERHAD Annual Report 2013 11 PROFILE OF DIRECTORS
Datuk Shireen Ann Zaharah Binti Muhiudeen Independent Non-Executive Director Independent Non-Executive Director, appointed to the Board on 6 May 2011. She is the Chairman of the Governance and Nomination Committee and a member of the Tender Committee. Datuk Shireen founded Corston-Smith Asset Management, which emphasizes governance and responsible investments in the ASEAN region. Prior to Corston-Smith, she was the CEO of AIG Investment Corporation (Malaysia), and has over 25 years’ experience in managing funds. She formerly served on the Malaysian Tourism Board. Datuk Shireen authors the popular monthly column “Governance Matters”, which is published in the largest English Malaysian daily. In 2007, she authored a self-help financial handbook for young adults. Datuk Shireen accepts speaking engagements whenever she can to reinforce her commitments, such as the 6th Annual Corporate Governance Summit (2014), the Khazanah Megatrends Forum 2013, the 2013 Pacific Pension Institute’s Asia Dialogue in Partnership with the Asian Development Bank, International Women’s Forum Northern California & Women Corporate Directors (2013), the United Nations Entity for Gender Equality and Empowerment of Women (2012), 4th Asian World Corporate Governance Summit (2012), the Asian Corporate Governance Association Members’ Briefing (2012), the Securities Commission Malaysia panel discussion on the Malaysian Code on Corporate Governance 2012, Singapore Institute of Directors Global Conference On Women In The Boardroom (2012), John Hopkins University Global Conference On Women In The Boardroom (2012), the 2012 Annual Meetings of The Boards of Governors of The International Monetary Fund and The World Bank Group and the Ministry of Women, Family & Community Development’s Director Convention (2012). Datuk Shireen also co-chaired at the 2012 Pacific Pension Institute’s Asian Roundtable - “Managing Risk in a Rebalancing World” which was held in Jakarta in November 2012. In March 2014, Datuk Shireen was the only Malaysian honoured by Forbes Asia as one of the 50 Asia’s Power Businesswomen 2014. In June 2011, she was named one of the 25 most influential women in Asia Pacific for Asset Management by Asian Investor. Datuk Shireen was appointed as a member of the International Advisory Panel for Labuan International Business and Financial Centre in June 2013 and a director of HSBC Bank Malaysia Berhad in December 2013. She does not sit on the board of any public listed companies and has no family relationship with any Director and/or major shareholder nor does she have any conflict of interest with the Company. Datuk Shireen’s deemed interest in the shares of the Company is by virtue of her being the Managing Director of Corston- Smith Asset Management Sdn Bhd is disclosed in the Directors’ Shareholdings Report shown on page 103 of this Annual Report. Datuk Shireen attended four (4) out of the total five (5) Board Meetings held during the financial year ended 31 December 2013.
Loong Foo Ching Independent Non-Executive Director Malaysian, aged 64, Independent Non-Executive Director, appointed to the Board on 6 May 2011. He is the Chairman of the Remuneration Committee and a member of the Audit Committee and Governance and Nomination Committee. Mr. Loong is an advocate and solicitor and holds a Bachelor of Laws (LLB) - honours degree from University of London and a Master of Laws (LLM) degree from University of Malaya. He is also an associate member of the Chartered Institute of Bankers, London (now under the official brand name of Institute of Financial Services) and a member of Institut Bank- Bank Malaysia. Prior to legal practice, Mr Loong has served a total of 25 years in the banking and finance industry initially with HSBC Bank Group and later with Sabah Development Bank Group. For the period from July 2002 to June 2013, he served as an Independent and Non-Executive Director of Bertam Alliance Berhad and currently, Mr. Loong is also an Independent Non-Executive Director of ELK-Desa Resources Berhad. He has no family relationship with any Director and/or major shareholder and he does not have any conflict of interest with the Company. Mr. Loong attended all five (5) Board Meetings held during the financial year ended 31 December 2013.
12 INTEGRAX BERHAD Annual Report 2013 PROFILE OF DIRECTORS
Laksamana Tan Sri Dato’ Seri Ilyas Bin Hj. Din Non-Independent Non-Executive Director
Malaysian, aged 63, Non-Independent Non-Executive Director, appointed to the Board on 25 July 2011 and is the Chairman of the Risk Committee and the Tender Committee. He is also the Chairman of Lekir Bulk Terminal Sdn Bhd, an 80% subsidiary of the Company.
Laksamana Tan Sri Dato’ Seri Ilyas received his early education at Sultan Abdul Hamid College, Alor Setar. He then continued his studies at the Royal Military College, Sungai Besi. He joined Angkatan Tentera Laut DiRaja Malaysia (“TLDM”) in 1970 and was sent for training at Britannia Royal Naval College, Darmouth. He completed his training in January 1972. His highest academic qualification is Post Graduate Diploma in Engineering Business Management. Laksamana Tan Sri Dato’ Seri Ilyas is the 13th Chief of TLDM. He retired as a Four-Star Admiral, where his last position in TLDM was Chief of Navy, the highest ranking officer inTLDM.
During his service with TLDM since 1970, Laksamana Tan Sri Dato’ Seri Ilyas has had an extensive track record. He was the commanding officer of KD Sri Selangor, KD Ganas, KD Gempita and frigate KD Hang Tuah. He was also the commanding officer of Markas Pendidikan dan Latihan TLDM. He was appointed as Chief of Navy Region I in Kuantan before being promoted to Rear Admiral. In August 2003, he was appointed as Deputy Chief of Navy and then promoted to Chief of Navy in April 2005. Laksamana Tan Sri Dato’ Seri Ilyas was the Chairman of Perbadanan Hal Ehwal Bekas Tentera (PERHEBAT) from 2009 to 2013. He does not sit on the board of any other public listed companies.
He is the nominee Director of Perak Corporation Berhad, a major shareholder of the Company. Save as disclosed he has no family relationship with any Director and/or other major shareholder nor does he have any conflict of interest with the Company.
Laksamana Tan Sri Dato’ Seri Ilyas attended all five (5) Board Meetings held during the financial year ended 31 December 2013.
Dato’ Abd Manaf Bin Hashim Non-Independent Non-Executive Director
Malaysian, aged 58, Non-Independent Non-Executive Director, appointed to the Board on 25 July 2011. He is a member of the Company’s Risk Committee and Remuneration Committee.
Dato’ Abd Manaf bin Hashim holds a Higher National Diploma in Engineering from Thames Valley University (Slough Campus). Dato’ Abd Manaf was a member of the Suruhanjaya Perkhidmatan Awam Negeri Perak from 2009 to 2012 and has served as Chairman in several private companies involved in the construction, telecommunications and solar hybrid sectors since 1993. Prior to that, Dato’ Abd Manaf held various positions in Shapadu Decloedt Dredging Sdn Bhd (1990-1992), Industrial Boilers and Allied Equipment (1984-1986), Hakasa Sdn Bhd (1983-1984) and Asie Sdn Bhd (1982-1983).
Dato’ Manaf is a member of the Perak State Assembly subsequent to the Malaysian General Election 2013.
Dato’ Manaf also sits on the Board of Tenaga Nasional Berhad and several other private companies. Dato’ Manaf is the nominee Director of Tenaga Nasional Berhad, a major shareholder of the Company. Save as disclosed, Dato’ Manaf has no family relationship with any Director and/or other major shareholders and he does not have any conflict of interest with the Company.
Dato’ Manaf attended three (3) out of a total five (5) BoardMeetings held during the financialyear ended 31 December 2013.
INTEGRAX BERHAD Annual Report 2013 13 PROFILE OF DIRECTORS
Fazlur Rahman Bin Zainuddin Non-Independent Non-Executive Director
Malaysian, aged 45, Non-Independent Non-Executive Director, appointed to the Board on 21 November 2012. He is a member of the Audit Committee, Risk Committee and Tender Committee.
Fazlur was appointed as the Chief Financial Officer of Tenaga Nasional Berhad (“TNB”) on 11 June 2012.
Prior to joining TNB, Fazlur was Chief Financial Officer for the Naza Group of Companies since 2010, andwas formerly with the TM Berhad Group and Shell Malaysia. Fazlur is also a fellow of the Association of Chartered Certified Accountants (ACCA), United Kingdom.
Fazlur is the nominee Director of Tenaga Nasional Berhad, a major shareholder of the Company. Save as disclosed, Fazlur has no family relationship with any Director and/or other major shareholders and he does not have any conflict of interest with the Company.
Fazlur attended four (4) out of the five (5) BoardMeetings held during the financialyear ended 31 December 2013.
Ir. Abdul Manap Bin Ali Hassan Independent Non-Executive Director
Malaysian, aged 67, Independent Non-Executive Director, appointed to the Board on 6 May 2011. He is a member of the Company’s Audit Committee, Risk Committee, Remuneration Committee and Tender Committee. Ir. Abdul Manap holds a Bachelor of Science (Hons) from the University of Glasgow majoring in Ocean Engineering. He is also a Professional Engineer of Malaysia, a Fellow of Institute of Marine Engineering, Science and Technology (UK) and a member of the Royal Institution of Naval Architects (UK) and Chartered Engineer (UK). He has held professional positions as Chairman of the Joint Branch for Royal Institution of Naval Architects and The Institute of Marine Engineering Science and Technology (UK). He has more than 25 years’ experience in shipbuilding, ship repair, oil and gas production platform fabrication, crane fabrication and pressure vessel fabrication. Ir. Abdul Manap has also been involved in tug operations. In 1993-1995 he was responsible for the privatization of Naval Dockyard Sdn Bhd. As Vice President Special Projects at Penang Shipbuilding & Construction Sdn Bhd (“PSC”), he was responsible for the development of new business, joint ventures, acquisitions of companies related to the shipbuilding and marine engineering sector of the group. He also sat on the boards of companies such as Wave Master International Pty Ltd, Australia, Trencless Technology Sdn Bhd, VE Metal Building System Sdn Bhd, TC Gallaghan (M) Sdn Bhd, Naval Dockyard Sdn Bhd, Malaysia Maritime Academy and PSC Defense Technologies Sdn Bhd. In 1997 he left the PSC group of companies to pursue his own consultancy business. He has 5 years’ experience in consultancy work providing services related to the shipping, ports, leisure, fisheries and oil and gas sectors. In 2003-2004 he took up a position of Vice President – Fleet Management Division at KIC Oil & Gas Ltd a company which operates a VLCC as a Floating Fuel Oil Processing Terminal and a 30,000 dwt product tanker which trades internationally. In 2006 he joined MRR Consult as Senior Consultant and Chief Operating Officer and was with them until 2011. He does not sit on the board of any public listed companies and has no family relationship with any Director and/or major shareholder nor does he have any conflict of interest with the Company. Ir. Manap attended all five (5) Board Meetings held during the financial year ended 31 December 2013.
14 INTEGRAX BERHAD Annual Report 2013
CHAIRMAN’S STATEMENT
Dear Shareholders, For and on behalf of the Board of Directors, I am pleased to present to you our Annual Report for the financial year ended 31 December 2013. 2013 was a year of records as the Group recorded its highest ever revenue figures on the back of record-breaking cargo throughput recorded at Lekir Bulk Terminal. Integrax’s share price recorded new highs as investors began to take a keen interest on the strength of the company and its future prospects and growth possibilities.
Financial Performance Integrax continues to be a fundamentally strong company with a consistent revenue stream, attractive profitability and a solid balance sheet. Integrax’s revenue increased by 2.4% to reach a record-high of RM92.9 million in 2013 (RM90.7 million in 2012) on the back of yet another record-breaking year for cargo throughput of 7.66 million tonnes (7.02 million tonnes in 2012) at Lekir Bulk Terminal. However, due to the higher contractual rate of its cost of sales, higher depreciation charges and an increase in administrative expenses, profit from operations declined to RM36.8 million in 2013 (from RM39.6 million in 2012). Profit for the year declined marginally to RM47.5 million compared with RM47.7 million recorded in the previous year as the lower share of profit from our associate company Lumut Maritime Terminal Sdn Bhd offset the lower finance costs recorded in 2013. Our shareholders’ funds strengthened further to RM618.5 million, with a healthy cash position of RM151.3 million. The Net Assets of the Company stood at RM2.06 per share as at 31 December 2013 as compared with RM1.97 per share as of 31 December 2012.
Operational Performance
Dato’ Seri DiRaja Mohamad Tajol Rosli Lumut Port, which comprises of Lekir Bulk Terminal located at Pulau Lekir Satu, Manjung (“LBT”) and Lumut bin Mohd Ghazali Maritime Terminal located at Kg Acheh, Sitiawan (“LMT”) recorded its best ever performance by handling a total of 10.86 million tonnes in 013, an increase of 6.9% from 2012. Integrax owns 80% of LBT through its subsidiary Lekir INTEGRAX BERHAD CHAIRMAN Bulk Terminal Sdn Bhd (“LBTSB”) and 50% less 1 share in LMT through its associate company, Lumut Maritime Terminal Sdn Bhd (“LMTSB”). Lumut Port is managed by LMTSB and has continued to grow from strength to strength over the years to be amongst the most efficient ports in the country.
16 INTEGRAX BERHAD Annual Report 2013 CHAIRMAN’S STATEMENT (continued)
LBT, our deepwater terminal which handles the unloading and delivery of coal LMT achieved a cargo throughput of 3.20 million tonnes in 2013. Throughput to the Sultan Azlan Shah Power Station in Manjung, recorded its highest ever at LMT consisted of dry bulk (limestone, coal, cement, clinker, pet coke and cargo throughput of 7.66 million tonnes, an increase of 9.1% from 2012. LBT animal feed) which made up 71.8% of throughput and liquid bulk (palm oil and recorded a higher profit after tax of RM32.8 million in 2013 (RM30.4 million in petroleum products) which made up 19.8% of throughput. LMT recorded a 2012) on the back of RM92.9 million revenue (RM90.7 million in 2012). 4% decline in profit after tax to RM34.1 million compared with RM35.4 million recorded in 2012 on the back of a 11.3% decline in revenue. The decline in LBT and LMT Cargo Throughput LMT’s revenue to RM87.3 million (from RM98.3 million in 2012) was due to lower industrial land sales during 2013.
A Year of Progress
In my report to shareholders last year, I had said that after the strengthening of the governance structure of the company in the previous year, 2013 would be a year of consolidation and planning. I am pleased to report that we have made considerable progress in developing our strategies going forward and these efforts are beginning to come to fruition.
In February 2013, LBT recorded a significant event whereby we had successfully completed a ship-to-ship transfer operation of 90,000 tonnes of bauxite. This represents an additional service offering and source of revenue to the Group. Management is actively pursuing similar activities with companies with regional aspirations with a view of turning LBT into a major regional transhipment hub for dry bulk commodities.
Cargo Throughput Analysis
One of LBTSB’s obligations in the Jetty Terminal Usage Agreement No. 2 which was signed with TNB Janamanjung Sdn Bhd on 27th July 2012 (“JTUA No. 2”) is to provide a new additional grab ship unloader for the handling of coal for the Manjung 4 power plant which is scheduled to begin operations in the first quarter of 2015. On 13th March 2013, LBTSB entered into a construction contract with Mutiara Etnik Sdn Bhd as the Contractor and Jiangsu Hailong Heavy Machinery Co. Ltd as the Designated Sub-Contractor for the design, supply, erection, installation and hook-up, and the commissioning of a new grab ship unloader (“SUL 3”). I wish to highlight that both the Contractor and the Designated Sub-Contractor had signed the Code of Ethics document with LBTSB as a testament to the conduct of business between the three parties which covers the basic tenets of good corporate governance.
INTEGRAX BERHAD Annual Report 2013 17 CHAIRMAN’S STATEMENT (continued)
To satisfy the terms of the JTUA No. 2, LBTSB entered into a Facilities Agreement with Hong Leong Bank and Hong Leong Investment Bank Berhad on 28th March 2013 which comprises a term loan and revolving credit facility amounting to RM90 million.
I am pleased to report that the construction of SUL 3 was completed on schedule and the SUL 3 set sail from China to Lumut on 1st January 2014 and arrived safely at LBT on 3rd February 2014. SUL 3, is reportedly one of the region’s largest coal unloader, and at the time of writing this report, is currently undergoing performance testing prior to commissioning. I would like to take this opportunity to congratulate the Management, under the technical advice of our Deputy Chairman, Encik Amin Halim Rasip, and the contractors for the successful completion and safe delivery of the SUL 3 to LBT.
The concerted efforts to engage with shareholders and stakeholders of the Group are also showing signs of success. The Investor Relations programme and media awareness initiatives spearheaded by our Executive Director, Encik Azman Shah Mohd Yusof, have led to the initiation of research coverage on the Group by RHB Investment Bank Berhad and Kenanga Investment Bank Berhad. On 30th July 2013, Integrax was chosen by RHB Investment Bank Berhad as one of the Top Malaysian Small Companies 30 Jewels. The share price of Integrax has responded well to the growing interest of investors in the company, with record highs being achieved in 2013, with the highest share price being RM2.16 recorded on 20th November 2013.
Value Chain Integration Partner
As I had alluded in last year’s report, Integrax is positioning itself as a “Value Chain Integration Partner” and our growth strategy involves expanding our port facilities and integrating our operations along the value chains of the many raw materials which flow through our terminals and which pass through the Straits of Melaka. By espousing the concept of “Smart Partnership”, we hope to provide value added services to our current and future customers by studying the value chains of potential commodities and providing integration solutions on a “win-win basis”.
We intend to add value to the coal-handling services provided to our valued customer, Tenaga Nasional Berhad through value chain integration initiatives, as well as developing new business relationships with potential customers. Lumut Port has the potential to be a regional hub for commodities such as coal, iron ore, limestone and fertiliser due to its strategic location and scalable facilities and infrastructure.
It is to this end that Integrax had mooted the idea of the Lithuania-Perak Biomass Initiative whereby Integrax signed a Memorandum of Understanding (“MOU”) with local biomass pellet producer, Global Green Synergy Sdn Bhd (“GGS”) and Lithuanian industrial group, Nordic Industries UAB (“Nordic”) during the official visit of the Perak Chief Minister, Dato’ Seri DiRaja Dr. Zambry Abdul Kadir, to Lithuania in December 2013.
18 INTEGRAX BERHAD Annual Report 2013 CHAIRMAN’S STATEMENT (continued)
The Lithuania-Perak Biomass Initiative is in line with the Malaysian Government’s National Biomass Policy 2020 where Malaysia has become a leading biomass products manufacturer and supplier to the global market which is estimated to grow to 20 milion tonnes by 2020. Under this initiative, the objective is to market and promote Malaysian biomass pellets to Europe whilst establishing Perak as a biomass production and research and development hub for Malaysia with Lumut Port as the biomass logistics hub. We also hope that this initiative would lead to Port of Klaipeda and Lumut Port becoming the new gateways to the European and Asian markets respectively. Integrax has continued to engage with the Perak State Government as we believe that we have a long-term role to play to contribute in the sustainable development of the state economy, especially in the Lumut/Manjung area which is one of the fastest growing districts in Malaysia. Integrax has also been requested to participate in meetings between the State Government and trade delegations and economic missions from other countries.
In our efforts to build a business network with international players, Integrax has made courtesy calls and technical visits to the Sabah Port Authority and the Port of Rotterdam authority to learn more about the operations and best practices of other established international ports, as well as to explore possible strategic collaboration in the future. It is hoped that will all these efforts, Management’s internal target of “Vision 20:2020” which is to achieve cargo throughput of 20 million tonnes by the year 2020, will be realised. The team is hard at work trying to achieve this target, and together with the guidance of the Board of Directors, the cooperation of our stakeholders, the trust of our customers and the close partnership with the Perak State Government, we are confident that this vision will come true.
Acknowledgment I would like to record my sincere gratitude and appreciation to the directors, management and staff who have worked tirelessly and diligently throughout the year to further strengthen the group’s position and formulate and implement the strategic plans for our future growth. I would like to thank my fellow Board members who have without fail, provided guidance and insight to the Management team to resolve issues and formulate plans and advising on corporate governance matters which will prove invaluable as Integrax continues to grow from strength to strength. Overall, the achievements of the Company would not have been possible without the strong working relationship which we have with the Perak State Government under the leadership of the Chief Minister, Dato’ Seri DiRaja Dr. Zambry Abdul Kadir, especially Perbadanan Kemajuan Negeri Perak and its subsidiaries, as well as the Majlis Perbandaran Manjung, Jabatan Kastam, Jabatan Laut, Unit Perancang Ekonomi and Pejabat Tanah dan Galian. I wish to thank the Management team and staff of Integrax for their hard work, loyalty and dedication throughout the year, and I hope that they will continue to strive to achieve the targets set by the Board of Directors. To the shareholders of Integrax, I would like to record my gratitude to you for your unwavering support and encouragement, and hope that you will continue to remain with us in our journey of growth and God- willing, continuous success…..
Tajol Rosli Chairman 16 May 2014
INTEGRAX BERHAD Annual Report 2013 19 STATEMENT ON CORPORATE GOVERNANCE
A. INTRODUCTION
The Board of Directors is committed to ensuring that the highest standard of corporate governance is practiced throughout the Group. This is fundamental in discharging its fiduciary responsibilities to enhance the shareholders’ value and the Group’s financial performance.
To this end, the Board of Directors fully subscribes to and supports the recommendations of the Malaysian Code on Corporate Governance 2012 (“Code”). The Directors are pleased to set out below how the Company has applied the principles set out in the Code. Except for matters specifically identified, the Board of Directors has complied with the best practices set out in the Code.
The Code recommends that the Board assumes the following responsibilities:-
• To review and adopt strategic plans for the Company; • To oversee the conduct of the Company’s business to evaluate whether the business is properly managed; • To identify principal risks and ensure the appropriate systems to manage these risks; • To implement succession planning, including appointing, training, fixing the compensation of and where appropriate, replacing senior management; • To develop and implement an investor relations programme or shareholder communications policy for the Company; and • To review the adequacy and the integrity of the Company’s internal control system.
B. BOARD OF DIRECTORS
1. COMPOSITION AND BOARD BALANCE
As at 31 December 2013, the Board has a total of ten (10) members, comprising four (4) Non-Independent Non-Executive Directors, five (5) Independent Non-Executive Directors and one (1) Executive Director.
In the financial year under review, the Directors who have served on the Board of the Company were as follows:-
Name of Director Current Position Date of Appointment 1 En. Amin bin Halim Rasip Non-Independent Non-Executive Deputy Chairman 29 May 2001 2 Datuk Shireen Ann Zaharah bt Muhiudeen Independent Non-Executive Director 6 May 2011 3 Mr. Paul Chan Wan Siew Senior Independent Non-Executive Director 6 May 2011 4 Mr. Loong Foo Ching Independent Non-Executive Director 6 May 2011 5 En. Azman Shah bin Mohd Yusof Executive Director 6 May 2011 6 Ir. Abdul Manap bin Ali Hasan Independent Non-Executive Director 6 May 2011 7 Dato’ Seri DiRaja Mohamad Tajol Rosli bin Mohd Ghazali Independent Non-Executive Chairman 24 May 2011 8 Laksamana Tan Sri Dato’ Seri Ilyas bin Hj Din Non-Independent Non-Executive Director 25 July 2011 9 Dato’ Abd Manaf bin Hashim Non-Independent Non-Executive Director 25 July 2011 10 En. Fazlur Rahman bin Zainuddin Non-Independent Non-Executive Director 22 November 2012
The Directors, with their diverse skills, knowledge, business acumen, technical know-how and operational experience (local and international), ensure that the long term interest of the shareholders and other stakeholders of the Company are safeguarded. A brief profile of each Director is set out on pages 10 to 14 of the annual report.
As at the time of this report, the following Directors are Independent Non-Executive Directors of the Company:-
1. Dato’ Seri DiRaja Mohamad Tajol Rosli bin Mohd Ghazali; 2. Datuk Shireen Ann Zaharah bt Muhiudeen; 3. Mr. Paul Chan Wan Siew; 4. Mr. Loong Foo Ching; and 5. Ir. Abdul Manap bin Ali Hasan.
20 INTEGRAX BERHAD Annual Report 2013 STATEMENT ON CORPORATE GOVERNANCE (continued)
B. BOARD OF DIRECTORS (continued) 1. COMPOSITION AND BOARD BALANCE (continued) With the above-mentioned Independent Directors, the Board complies with paragraph 15.02 of the Listing Requirements which requires that at least two (2) directors or one-third (1/3) of the Board, whichever is the higher, are independent Directors. No individual or group of individuals dominates the Board’s decision making. The Board has consistently had non-executive directors constituting a majority. The Board has appointed Mr. Paul Chan Wan Siew as its Senior Independent Director to whom concerns of shareholders, Management and other stakeholders may be conveyed. The Board is confident that the strong independent character of its composition will ensure that the strategies, performance, conduct and policies are fully deliberated taking into consideration the interests of its various stakeholders. In addition, all decisions of the Board are based on the decision of the majority and no single director can make any decision on behalf of the Board, unless duly authorised by the Board of Directors. The Board through the process of an annual evaluation exercise, assesses the independence of its Independent Non-Executive Directors annually. Based on the assessment carried out for the year 2013, the Board is generally satisfied with the level of independence demonstrated by the Independent Non-Executive Directors and their ability to act in the best interest of the Company. Non-executive directors should be persons of calibre and credibility and possess the necessary skills and experience to form an independent judgment on issues of strategy, performance and resources, including key appointments and standards of conduct. The appointment of Directors is governed by a stringent evaluation process based on criteria such as leadership experience, business acumen, financial expertise, operational and technical skills, industry experience and regulatory experience, irrespective of gender, race or religion. The process involves the thorough evaluation of the candidates by the Governance and Nomination Committee using the Board Evaluation Matrix. The approved candidate(s) are then recommended to the Board for their consideration and approval for appointment.
The Board acknowledges the importance of gender diversity and recognises the benefits that it can bring. The Board considers diversity generally when making appointments to the Board, taking into account the relevant skills, experience, knowledge, personality and gender. Notwithstanding the challenges in achieving the appropriate level of gender diversity on the Board, the Company will work towards addressing this as and when vacancies arise and suitable candidates are identified. The Company’s prime responsibility however, is the strength and quality of the Board and the overriding aim in any new appointments must always be to select the best candidate available.
2. MEETINGS
During the financial year 2013, the Board held five (5) meetings. The attendance records of Directors at Board Meetings held during the financial year ended 31 December 2013 were as follows:-
No. of Meetings Attended / Held during Director office Dato’ Seri DiRaja Mohamad Tajol Rosli bin Mohd Ghazali 5/5 En. Amin bin Halim Rasip 3/5 En. Azman Shah bin Mohd Yusof 5/5 Datuk Shireen Ann Zaharah bt Muhiudeen 4/5 Mr. Paul Chan Wan Siew 5/5 Mr. Loong Foo Ching 5/5 Ir. Abdul Manap bin Ali Hasan 5/5 Laksamana Tan Sri Dato’ Seri Ilyas bin Hj Din 5/5 Dato’ Abd Manaf bin Hashim 3/5 En. Fazlur Rahman bin Zainuddin 4/5
INTEGRAX BERHAD Annual Report 2013 21 STATEMENT ON CORPORATE GOVERNANCE (continued)
B. BOARD OF DIRECTORS (continued)
3. SUPPLY OF INFORMATION TO THE BOARD MEMBERS
All Directors are provided with an Agenda and Board papers on a timely basis prior to the meeting to enable them to deliberate on an informed basis on the issues to be raised. The Board papers include, among others, the following details:-
• Confirmed minutes of meetings of all Committees of the Board • Operational and financial reporting of the Group • Business development of the Group • Audit Committee reporting • Regulatory and other administrative matters
All proceedings of Board Meetings are minuted and signed by the Chairman of the Meeting in accordance with the provision of Section 156 of the Companies Act, 1965.
The Directors have unrestricted access to all information within the Group whether as a full board or in their individual capacity, in furtherance of their duties.
The Directors also have access to the advice and services of the Company Secretary who ensures that all documentation is in place for the purpose of meeting statutory obligations. The Directors also have access to independent professionals’ advice and services should the need arise.
Newly-appointed Directors are provided a Directors’ On-Boarding Kit and a briefing session by the Executive Director and senior management upon appointment to the Board. The newly appointed Directors are encouraged to visit the Group’s operating sites to familiarize themselves with the operations of the Group.
Directors are also provided with analyst reports, industry research and newspaper articles on issues which may impact the Company’s prospects and the general economic and business environment.
4. DIRECTORS’ TRAINING
Directors are encouraged to attend continuous education programmes to keep them abreast of changes in legislation and regulation that affect the business operations. As at 31 December 2013, all the Directors on the Board of the Company had attended and completed the Mandatory Accreditation Programme (MAP).
Following the repeal of Practice Note No. 15/2003 on Continuing Education Programme (“CEP”) prescribed by Bursa Malaysia Securities Berhad (“BMSB”), the Board of Directors of each listed issuer has a duty to evaluate and determine the training needs of its Directors on a continuous basis. The training must be one that aids the Director in the discharge of his/her duties as a Director.
For the year under review as at 31 December 2013, the Directors attended the following conferences, dialogues and seminars:-
Directors Conference Attended
Dato’ Seri DiRaja Mohamad Tajol Rosli - bin Mohd Ghazali
• Advanced Storage Tanks, Tank Farms & Tank Terminal Lifecycle Integrity Management En. Amin bin Halim Rasip • Coal Gasification
22 INTEGRAX BERHAD Annual Report 2013 STATEMENT ON CORPORATE GOVERNANCE (continued)
B. BOARD OF DIRECTORS (continued)
4. DIRECTORS’ TRAINING (continued)
Directors Conference Attended • Statement On Risk Management And Internal Control – Guidelines For Directors Of Listed Issuers • Bursa Malaysia’s Dialog on the Revised Shariah Screening Methodology of Securities Commission • Audit Committee Conference 2013 • Director’s Remuneration Seminar 2013 • Practical and Legal Considerations to Investigate Allegations of Fraud En. Azman Shah bin Mohd Yusof • Biomass Asia Conference 2013 • Bursa Malaysia - ACCA (Malaysia) Forum “Future of Corporate Reporting” • Special Dialogue and Presentation Session on ASEAN Corporate Governance Scorecard 2013 (ASEAN CG Scorecard) • Director Duties, Business Ethics and Governance Seminar for Directors of PLCs 2013 • MAICSA Conference 2013 • Related Party Transaction - From Governance Challenges to Impactful Results • The Growing Importance of Women on Corporate Boards • 2013 San Francisco Roundtable - A Connected World, Capital Pools and the Future of Technology • Invest Malaysia 2013 Datuk Shireen Ann Zaharah bt • The Financial Institutions Directors Education (FIDE) Programme Muhiudeen • Khazanah Megatrends Forum 2013 • World Capital Markets Symposium 2013 - Redefining Markets: Sustaining Growth and Resilience • 2013 Beijing Roundtable - Defining Markets: Asia as Capital Source and Destination • 2013 Asia Dialogue In Partnership with the Asian Development Bank - Socially Responsible and Profitable Investing • MIA Workshop on Practical & Legal Considerations to Investigate Allegations of Fraud for Directors • FIDE Breakfast Forum : Personal Data Protection Act • BNM : Anti Money Laundering & Counter Financing of Terrorism (AML-CFT) Conference • FIDE Core Program : Module A • FIDE Forum: Successful Corporate Banking – Focus on Fundamentals • MAICSA Annual Conference 2013 • MIA-ACCA Forum : The Value of Quality Audit • ASLI-FPLC 17th Malaysian Banking Summit : Future Banking – Driving Growth, Prosperity & Transformation • National Association of Corporate Directors (NACD) Board Leadership Fellow Master Class, Laguna Beach, California Mr. Paul Chan Wan Siew • AIF (Asian Institute of Finance) International Symposium 2013 • FIDE Forum : Focus Group Session with BNM on “Corporate Governance Framework” • FIDE Core Program : Module B • Institute of Directors, UK, Annual Conference 2013, London • FIDE Forum : Managing Talent at Board and Management • ASLI : 5th World Chinese Economic Forum • NACD Board Leadership Conference, Washington, DC • BDO Tax Seminar 2013 • Bursa Focus Group : Proposed Amendment to the Main & ACE Market Listing Requirements • MIA Annual Conference 2013 • Emerging Market Multinationals Network for Sustainability (Germany) : CSR Retreat Asia, Bangkok
INTEGRAX BERHAD Annual Report 2013 23 STATEMENT ON CORPORATE GOVERNANCE (continued)
B. BOARD OF DIRECTORS (continued)
4. DIRECTORS’ TRAINING (continued)
Directors Conference Attended • Anti-Money Laundering & Anti-Terrorism Financing Act (Act 613) • Forensic Accounting for Non-Executive Directors • Practical & Legal Considerations to Investigating Allegations of Fraud from the Perspective of a Mr. Loong Foo Ching Board, CEO, CFO & Head of Audit • Audit Committee Seminar 2013 • Risk Management & Internal Control: Workshop for Audit Committee Members • Forensic Accounting for Non-Executive Directors MSWG Ir. Abdul Manap bin Ali Hasan • Audit Committee Seminar 2013 • Advocacy Sessions On Corporate Disclosure
Laksamana Tan Sri Dato’ Seri Ilyas bin - Hj Din
• 22nd International Conference and Exhibition on Electricity Distribution by CIRED Dato’ Abd Manaf bin Hashim • Renewable Energy World Conference and Expo-Asia “Advancing Asia’s Energy Future” • Board Development Program 2013: “Policy Governance”
• Accountant Conference En. Fazlur Rahman bin Zainuddin • Mandatory Accreditation Programme (“MAP”)
5. RE-ELECTION OF DIRECTORS
In accordance with Article 87 of the Company’s Articles of Association, all newly appointed Directors are subject to re-election by shareholders at the first Annual General Meeting (“AGM”) after their appointment. At every AGM one third (1/3) of the existing Directors retire from office in accordance with Article 80 of the Company’s Articles of Association and all Directors retire from office at least once every three (3) years shall be eligible for re- election. Directors who attain an age of over seventy (70) years retire at every AGM pursuant to Section 129(2) of the Companies Act, 1965.
The following Directors will be standing for re-election at the forthcoming Twenty-Eighth Annual General Meeting of the Company to be held on 18 June 2014:-
Directors retiring in accordance with Article 80 of the Company’s Articles of Association
1. Dato’ Seri DiRaja Mohamad Tajol Rosli bin Mohd Ghazali 2. Mr. Paul Chan Wan Siew 3. Mr. Loong Foo Ching
The relevant information of the retiring Directors can be found in the Profiles of Directors.
None of the Independent Directors have served on the Board of the Company for more than nine (9) years.
24 INTEGRAX BERHAD Annual Report 2013 STATEMENT ON CORPORATE GOVERNANCE (continued)
B. BOARD OF DIRECTORS (continued)
6. BOARD COMMITTEES
The Board has appointed a number of committees in order to effectively discharge its roles and responsibilities. These committees have the full authority and support of the Board to carry out its duties as stipulated under the respective Committee’s Terms of Reference and are required to report back to the Board with their recommendation and/or course of action.
6.1 Audit Committee
The composition and terms of reference of the Audit Committee together with its report are presented on page 34 to 37 of the annual report.
6.2 Governance and Nomination Committee
The Board formed the Governance Committee on 24 May 2011 to assist the Board to review the Company’s corporate governance system, process and guidelines. The Governance Committee was subsequently renamed as the Governance and Nomination Committee (“GNC”). GNC is also tasked with the review of the Charters of other Board Sub-Committees and to recommend to the Board any necessary changes to the Sub-Committee’s assignments.
The GNC has introduced a Board Charter which provides a concise overview of:-
• the roles, functions, responsibilities and powers of the Board and the senior management of the Group;
• the powers delegated to various Board Committees of the Group through their respective Terms of Reference; and
• the policies and practices of the Board in respect of matters such as corporate governance, code of conduct, conflicts and declaration of interest, board meeting procedures, the appointment of directors and performance evaluation of Board members.
The Board Charter is available for reference at the Company’s website at www.integrax.com.my
The GNC was also tasked with the evaluation of the performance of the Board as a whole, the Board Committees and the performance and contribution of each director to ensure that the board governance system of the Company is effective.
The GNC held a total of six (6) meetings in the financial year under review. The members of the GNC comprise of the following Independent Non-Executive Directors and their respective meeting attendance record are as follows:-
No. of Meetings Attended/ Director Held during office 1. Datuk Shireen Ann Zaharah bt Muhiudeen as Chairman 6/6 2. Mr. Paul Chan Wan Siew 6/6 3. Mr. Loong Foo Ching 6/6
Recommendation 2.1 of the Code states that the Chairman of the Nomination Committee should be the Senior Independent Director identified by the Board, whereas Datuk Shireen Ann Zaharah bt Muhiudeen who is the Chairman of the GNC, is not the Senior Independent Director. The Board was of the view that the current structure and composition of the GNC was working well and does not require any changes.
INTEGRAX BERHAD Annual Report 2013 25 STATEMENT ON CORPORATE GOVERNANCE (continued)
B. BOARD OF DIRECTORS (continued)
6. BOARD COMMITTEES (continued)
6.3 Remuneration Committee
The Remuneration Committee was formed on 7 June 2011. The primary objective of the Remuneration Committee (“RC”) is to recommend the necessary remuneration packages to attract, retain and motivate Senior Executives and Executive Directors with the required expertise to manage the Company’s business in alignment with the shareholders’ interests. The RC also assists the Board in assessing the Non-Executive Directors’ remuneration packages to reflect the responsibility and commitment undertaken by the Board members.
The RC held three (3) meetings in the financial year under review. The RC comprises of the following Directors and their respective meeting attendance record are as follows:-
No. of Meetings Attended/ Director Held during office 1. Mr. Loong Foo Ching as Chairman 3/3 2. Ir. Abdul Manap bin Ali Hasan 3/3 3. Dato’ Abd Manaf bin Hashim 0/3
6.4 Risk Committee
The Board is responsible for ensuring that business risks are properly managed and will require evidence that risks are being identified, assessed, measured and duly mitigated. For this purpose, the Risk Management Committee was established on 7 June 2011 with its primary objective to review the existing controls, evaluating the risk management strategies, policies and measures, and assessing the risk tolerance of the Group.
On 10 January 2012, the roles of the reconstituted Risk Management Committee (“RMC”) were expanded to include rendering assistance to the Board in the evaluation of project papers, business plans and budgets for the Group, assuming the role of the previous Investment Committee which was discontinued.
The RMC was subsequently renamed the Risk Committee to better reflect its roles and responsibilities. The Risk Committee has established a Risk Management Framework for the Company and has implemented a tracking method of any changes in the Company’s risk profile.
The Risk Committee held one (1) meeting in the financial year under review. The members of the Risk Committee comprise of the following Directors and their respective meeting attendance record are as follows:-
No. of Meetings Attended/ Director Held during office 1. Laksamana Tan Sri Dato’ Seri Ilyas bin Hj Din as Chairman 1/1 2. Dato’ Abd Manaf bin Hashim 1/1 3. Mr. Paul Chan Wan Siew 1/1 4. Ir. Abdul Manap bin Ali Hasan 1/1
26 INTEGRAX BERHAD Annual Report 2013 STATEMENT ON CORPORATE GOVERNANCE (continued)
B. BOARD OF DIRECTORS (continued) 6. BOARD COMMITTEES (continued) 6.5 Tender Committee The Tender Committee (“TC”) was formed by the Board on 10 January 2012 to assist the Board in establishing a framework and procedure for tender and procurement for the Group’s projects and to evaluate the tender bids for recommendation to the Board for approval. The TC had presided over the evaluation of bids for a new grab ship unloader which will be required under the Jetty Terminal Usage Agreement for Manjung 4 unit which was signed on 27 July 2012. The TC did not hold any meetings in the financial year under review. The members of the TC comprise of the following Directors:-
No. of Meetings Attended/ Director Held during office 1. Laksamana Tan Sri Dato’ Seri Ilyas bin Hj Din as Chairman Nil 2. Datuk Shireen Ann Zaharah bt Muhiudeen Nil 3. Mr. Paul Chan Wan Siew Nil 4. Ir. Abdul Manap bin Ali Hasan Nil
7. DIRECTORS’ REMUNERATION The Board as a whole determines the remuneration of Directors with the individual Directors abstaining from discussing their own remuneration. The Executive Director’s remuneration is linked to commitment, experience, service seniority, scope of responsibilities, individual performance and corporate performance. Non-Executive Directors do not receive any performance related remuneration. Non-Executive Directors are remunerated by way of fees based on the roles and level of responsibilities undertaken by the particular Non-Executive Director concerned. Directors are reimbursed reasonable expenses incurred by them in the course of carrying out their duties or behalf of the Company. Fees payable to Directors are subject to shareholders’ approval at the Annual General Meeting. Remuneration of all Directors who were on Board in 2013 is grouped into the respective bands as shown below:-
Band (RM) Executive Directors Non-Executive Directors Total 50,001 – 100,000 - 1 1 100,001 – 150,000 - 2 2 150,001 – 200,000 - 4 4 200,001 – 250,000 - 2 2 > RM1,000,000 1 - 1 The aggregate remuneration paid or payable to all Directors in respect of the financial year 2013 is further categorized into the following components: -
Executive Non-Executive Directors Total (RM) Directors Salaries and Bonuses 997,500 - 997,500 Defined Contribution Plan 119,700 - 119,700 Directors’ Fees - 1,186,345* 1,186,345* Other Emoluments and Benefits-in-kind 33,290 261,998 295,288 Total (RM) 1,150,490 1,446,343 2,596,833 *This includes the non-executive directors’ fees of a subsidiary company which amounted to RM113,000.
INTEGRAX BERHAD Annual Report 2013 27 STATEMENT ON CORPORATE GOVERNANCE (continued)
C. SHAREHOLDERS
1. COMMUNICATION BETWEEN THE COMPANY AND SHAREHOLDERS
The Board and Management convey information about the Company performance, and other matters affecting shareholders’ interests through corporate announcements released to BMSB and via the Company’s website at www.integrax.com.my. A copy of the Annual Report is sent to all our shareholders.
The website contains a Corporate Governance sub-section in which the public can view the following documents:-
• Board Charter • Terms of Reference of all the Board Committees • Code of Ethics • Code of Conduct and the Whistleblowing Policy • Corporate Communications Guidelines and Policies • Corporate Integrity Pledge
As part of the Company’s Investor Relations efforts, the Executive Director as the official spokesperson for the Company conducts briefings for analysts and fund managers on a periodic basis. Announcements of periodic reports which are made to BMSB and Press Releases issued by the Company are also emailed to the analysts, fund managers and shareholders who have provided Management with their email addresses.
Shareholders may contact the Executive Director for any enquiries at (email) [email protected] (tel) 603-21417728 or (fax) 603-21412995. Shareholders may also contact the Senior Independent Director at (email) [email protected] for any enquiries, or the Company Secretary at (email) [email protected] for information on the Company.
2. ANNUAL GENERAL MEETING
In accordance with the Company’s Articles of Association, Notice of the Annual General Meeting for each financial year end together with the related papers were sent out to shareholders at least 21 days before the date of the meeting.
At the Annual General Meeting, shareholders are encouraged to ask questions both about the resolutions being proposed or about the Group’s operations, plans and prospects in general. The Executive Director and, where appropriate, the Chairman, will respond to shareholders’ questions during the meeting. Where appropriate, the Chairman will undertake to provide a written response to any significant question that cannot be readily answered at the meeting.
Each item of special business included in the Notice of the Annual General Meeting will be accompanied by a full explanation of the effects of a proposed resolution. Separate resolutions are proposed for substantially separate issues at each meeting and the Chairman shall declare the number of proxy votes received both for and against each separate resolution.
The Board recognises that poll voting for related party transactions and substantive resolutions that require specific shareholders’ approval as per Recommendation 8.2 of the Code. Shareholders are reminded that they have the right to demand a poll vote at annual and extraordinary general meetings.
A press conference is held immediately after the Annual General Meeting where the Chairman and the Executive Director inform members of the media of the resolutions passed and answer any questions on the Company’s performance and operations posed by reporters.
The Company will provide shareholders, upon written request, with a summary of the discussions held at the Annual General Meeting.
During the Annual General Meeting, the questions submitted by the Minority Shareholders Watchdog Group are presented to the shareholders and the Executive Director will provide answers to these questions for the benefit of all shareholders present. A copy of the Company’s written replies to these questions are also available on the Company’s website.
28 INTEGRAX BERHAD Annual Report 2013 STATEMENT ON CORPORATE GOVERNANCE (continued)
D. ACCOUNTABILITY AND AUDIT
1. FINANCIAL REPORTING
The Board takes due care and responsibility for presenting a balanced and understandable assessment of the Group’s position and prospects each time it releases its quarterly and annual financial statements to shareholders. The Audit Committee will assist the Board to oversee the Group’s financial reporting processes and the quality of its financial reporting.
2. RISK MANAGEMENT AND INTERNAL CONTROL
The Group’s Statement on Risk Management and Internal Control is set out on page 31 to 33 of the annual report.
3. RELATIONSHIP WITH THE AUDITORS
The role of the Audit Committee in relation to the external auditors is stated on page 34 to 37 of the annual report.
4. DIRECTORS’ RESPONSIBILITY STATEMENT FOR PREPARING THE ANNUAL FINANCIAL STATEMENTS
The Directors are required by Part VI Division 1 of the Companies Act, 1965 to prepare financial statements for each financial year which are to be made out in accordance with the applicable approved accounting standards for entities other than private entities issued by the Malaysian Accounting Standards Board and to give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year and of the results and cash flows of the Group and Company for the financial year.
In preparing the financial statements for the financial year ended 31 December 2013, the Directors have used appropriate accounting policies and applied them consistently:-
• made judgments and estimates that are reasonable and prudent;
• stated whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
• prepared financial statements on the going concern basis as the Directors have a reasonable expectation, having made enquiries, that the Group and Company have adequate resources to continue in operational existence for the foreseeable future.
The Directors have responsibility for ensuring that the Company keeps proper accounting records which disclose with reasonable accuracy the financial position of the Group and Company, and which enable them to ensure that the financial statements comply with Part VI Division 1 of the Companies Act, 1965.
The Directors have the general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group, and to detect and prevent fraud and other irregularities.
E OTHER INFORMATION
1. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES
The Company did not issue/exercise any options or warrants and convertible securities during the financial year.
2. IMPOSITION OF SANCTIONS AND/OR PENALTIES
There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by any relevant regulatory bodies during the financial year.
INTEGRAX BERHAD Annual Report 2013 29 STATEMENT ON CORPORATE GOVERNANCE (continued)
E OTHER INFORMATION (continued)
3. NON-AUDIT FEES
During the financial year, non-audit fees paid to the external auditors amounted to RM5,000 (2012: RM42,500) as disclosed in Note 8 to the Financial Statements. These fees were in respect of the services rendered in connection with the review of financial statements for compliance with Financial Reporting Standards of the Company and the certification of net operating cash flows of a subsidiary company.
4. MATERIAL CONTRACTS
Other than those mentioned herein and disclosed in Note 35 to the Financial Statements, there were no material contracts entered into by the Company and its subsidiaries involving Directors’ and major shareholders’ interests during the financial year.
• On 13th March 2013, Lekir Bulk Terminal Sdn Bhd entered into a construction contract with Mutiara Etnik Sdn Bhd (“the Contractor”) and Jiangsu Hailong Heavy Machinery Co. Ltd (“the Designated Sub-contractor”) for the design, build and turnkey contract for the design, supply, erection, installation and hook up, and the commissioning of a New Additional Grab Ship Unloader (“SUL3”) by the Contractor and the Designated Sub- contractor.
• On 28th March 2013, Lekir Bulk Terminal Sdn Bhd (“LBTSB”) entered into a Facilities Agreement with Hong Leong Bank Berhad (“HLBB”) and Hong Leong Investment Bank Berhad (formerly known as MIMB Investment Bank Berhad”) (“HLIBB”) whereby HLBB and HLIBB have agreed to jointly arrange banking facilities comprising of a term loan and revolving credit facility amounting to RM90 million for LBTSB.
5. LITIGATION
There were no ongoing or discontinued litigation cases during the financial year under review.
6. SHARE BUY-BACKS
There were no share buy-backs during the financial year in review.
7. DEPOSITORY RECEIPT PROGRAMME
There were no Depository Receipt Programmes sponsored by the Company during the financial year in review.
8. VARIATION IN RESULTS
There was no material variances between the result for the financial year and unaudited result previously announced.
9. PROFIT GUARANTEE
There were no profit guarantees given by the Company during the financial year in review.
10. RECURRENT RELATED PARTY TRANSACTIONS
Other than those disclosed in Note 17 to the Financial Statements, there were no material recurrent related party transactions of revenue in nature during the financial year in review.
This Statement on Corporate Governance is made in accordance with the resolution of the Board of Directors passed on 15th May 2014.
30 INTEGRAX BERHAD Annual Report 2013 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
Board Responsibility
The Board of Directors recognises its responsibility for the Group’s system of risk management and internal control for reviewing its adequacy and integrity in order to safeguard shareholders’ interests and the assets of the Group as prescribed by the Malaysian Code of Corporate Governance.
The Board has established on-going processes for identifying, evaluating and managing the significant risks encountered by the Group and periodically reviews these processes. The Board has also established procedures to implement the recommendations of the “Statement on Internal Controls Guidance for Directors of Public Listed Companies”.
The Board has adopted a Board Charter which provides a concise overview of:-
• the roles, functions, responsibilities and powers of the Board and the senior management of the Group;
• the powers delegated to various Board Committees of the Group through their respective Terms of Reference; and
• the policies and practices of the Board in respect of matters such as corporate governance, code of conduct, conflicts and declaration of interest, board meeting procedures, the appointment of directors and performance evaluation of Board members.
The Board places great importance on governance and intends that the Group complies and adopts the best practice principles and all applicable laws, including but not limited to the requirements of the Securities Commission, the Bursa Malaysia Listing Guidelines and the Companies Act 1965.
On 17th July 2012, the Group signed the “Corporate Integrity Pledge and Anti-Corruption Principles for Corporations in Malaysia” (“CIP”) in Ipoh, Perak, along with 16 other Perak State Government-Linked Companies. The Group is one of the first 200 corporations in Malaysia to have executed the CIP. The CIP is a unilateral pledge made by companies in collaboration with the Corporate Integrity Roundtable Members who are Institut Integriti Malaysia, Bursa Malaysia, Securities Commission, Malaysian Anti-Corruption Commission, Transparency International, Suruhanjaya Syarikat Malaysia and PEMANDU. The Group is further enhancing its internal controls and level of integrity through continuous assessment of its corporate integrity using the tools recommended under the CIP.
The Board is of the opinion that the implementation of best practice corporate governance is a performance enhancement opportunity for effective implementation rather than just an act of compliance.
While acknowledging its responsibility to maintain a sound system of risk management and internal control to safeguard the Group’s interests, the Board is aware that such a system is designed to manage rather than eliminate risks and therefore cannot provide absolute assurance against material misstatement, fraud or loss.
Risk Management
The Board is responsible for ensuring that business risks are properly managed and that risks are being identified, assessed, measured and duly mitigated. The Board has assigned the Risk Committee (RiC) with the duty of reviewing the existing controls, evaluating the risk management strategies, policies and measures and assessing the risk tolerance levels of the Group. During the financial year, the role of the RiC was expanded to include rendering assistance to the Board in the evaluation of project papers and business plans for the Group.
The Group has in place a Risk Management Framework for its operating companies which is a tool to assess the various types of risk namely business and commercial risk, operational risk, marketing and reputational risk, environmental risk, safety and security risk, financial risk, human resource risk and information technology risk. The Framework is used to identify the risk parameters, to assess the impact of these risks and the likelihood of occurrence, and to formulate risk mitigation steps. The Framework is discussed and deliberated at the management level and is reviewed by the RiC.
Internal Control
The Board has assigned the Audit Committee (AC) with the duty of reviewing and monitoring the effectiveness of the Group’s system of internal control. The AC reviews the Internal Audit Department’s work which is currently outsourced to a firm of professional service providers, which adopts a risk-based and process life cycle approach, in accordance with an agreed frequency.
During the year 2013, an internal audit review was conducted on the “Inventory Management Framework and Operations” of associate company, Lumut Maritime Terminal Sdn Bhd (LMTSB) and the main operating subsidiary company, Lekir Bulk Terminal Sdn Bhd (LBTSB). Apart from the internal auditors of the group, the operations of associate company, LMTSB, are also audited by the major shareholder’s internal auditors.
INTEGRAX BERHAD Annual Report 2013 31 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (continued)
Internal Control (continued)
The External Auditors form an opinion on the financial statements of the Group based on their annual statutory audit. Any significant errors and misstatements identified during the course of the statutory audit by External Auditors are brought to the attention of the AC through management letters or are articulated at the AC meetings. The AC also holds two (2) meetings with the External Auditors without the presence of the Executive Director or management. Minutes and/ or matters arising from the AC meetings are brought to the attention of the Board.
The Report of the AC is set out on pages 34 to 37 of the Annual Report.
Other Key Elements of Risk Management and Internal Control
The other key elements of the Group’s risk management and internal control systems are as follows:-
Policies and Procedures
• The Group has defined procedures and controls, to ensure the reporting of complete and accurate financial information. These procedures and controls include obtaining authority for major transactions and ensuring compliance with laws and regulations that have significant financial implications. Procedures are also in place to ensure that assets are subject to proper physical controls and that the organisation remains structured to ensure appropriate segregation of duties.
• Documented internal policies and procedures are set out in several manuals and are implemented throughout the Group. The following policies have been approved and implemented:-
- Corporate Communications Guidelines and Policies;
- Code of Ethics document (an Integrity Pact signed by business partners of the Group as a guideline for doing business with the Group);
- Code of Conduct for employees of the Group which includes policies on Whistle-Blowing; and
- Delegated Authority Limits.
• These policy and procedural documents are subject to periodic review and continuous improvement.
Organisational Structure
• There is in place an organisation structure, which clearly defines the lines of responsibility and delegation of authority.
Limits of Authority
• The Group has clearly defined delegated limits of authority which determines the approving authorities and authority limits for various transactions.
• Major capital expenditure, acquisition and disposal of investment interests are approved by the Board after thorough deliberation by the various Board Committees (Risk and Audit) and/or by the Board of Directors of the major operating subsidiary company, LBTSB, before being carried out.
Planning and Monitoring
• There is a strategic planning, annual budgeting and target setting process, which includes forecasts for each area of business with detailed reviews at all levels of operations.
• There is a management reporting system whereby comprehensive management reports are prepared and reviewed on a regular basis. Performance and results are monitored on a regular basis ensuring all major variances and critical operational issues are being followed up with actions taken thereon.
32 INTEGRAX BERHAD Annual Report 2013 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (continued)
Conclusion
The Board has received assurance from the Executive Director and Chief Financial Officer that with the exception of its associate companies, the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects, based on the risk management and internal control system of the Group.
The Board believes that the existing level of system of risk management and internal control is reasonable to enable the Group to achieve its business objectives. Nonetheless, the Board recognises that the system of internal control should be continuously improved and conducts periodic reviews on the adequacy and effectiveness of the risk management and internal control so as to be in line with the evolving business development.
Review of the Statement by External Auditors
The External Auditors have reviewed this Statement on Risk Management and Internal Control for inclusion in the Annual Report of the Group for the financial year ended 31 December 2013 and reported to the Board that nothing has come to their attention that causes them to believe that the Statement is inconsistent with their understanding of the process that the Board has adopted in the review of the adequacy and integrity of the system of risk management and internal control within the Group.
This statement is made in accordance with the resolution of the Board of Directors dated 15th May 2014.
INTEGRAX BERHAD Annual Report 2013 33 AUDIT COMMITTEE REPORT
1. ESTABLISHMENT AND MEMBERSHIP
The Audit Committee is appointed by the Board of Directors (Board) from amongst its members and comprises non-executive directors, a majority of whom are independent directors.
The members of the Audit Committee during the financial year ended 31 December 2013 were as follows:
Mr. Paul Chan Wan Siew, Chairman appointed on 6 May 2011 [Senior Independent Non-Executive Director] Mr. Loong Foo Ching [Independent Non-Executive Director] appointed on 6 May 2011 Ir. Abdul Manap bin Ali Hasan appointed on 14 February 2012 [Independent Non-Executive Director] En. Fazlur Rahman bin Zainuddin appointed on 21 February 2013 (Non-Independent Non-Executive Director)
At the time of this report, the Audit Committee comprises the following members:-
1. Mr. Paul Chan Wan Siew, Chairman (Senior Independent Non-Executive Director); 2. Mr. Loong Foo Ching (Independent Non-Executive Director); 3. Ir. Abdul Manap bin Ali Hasan (Independent Non-Executive Director); and 4. En. Fazlur Rahman bin Zainuddin (Non-Independent Non-Executive Director)
2. TERMS OF REFERENCE
The policy of the Audit Committee is to ensure that internal and external audit functions are properly conducted and that audit recommendations are being carried out effectively by the Group. The Audit Committee’s functions include:-
a. to assist the Board to fulfill its fiduciary responsibilities relating to internal controls, financial and accounting records and policies, as well as financial reporting practices of the Group, and will report to the Board on the nature and extent of the functions performed by it. All findings by the Audit Committee will be reported to the Board.
b. to assure the shareholders of the Company that the Directors of the Company have complied with Malaysian financial standards and required disclosure policies developed and administered by Bursa Malaysia Securities Berhad (“Bursa Securities”).
c. to ensure consistency with Bursa Securities’ commitment to encourage high standards of corporate disclosure and to adopt best practices aimed at maintaining appropriate standards of corporate responsibility, integrity and accountability to all the Company’s shareholders.
d. to relieve the full Board from detailed involvement in the review of the results of internal and external audit activities and yet ensure that audit findings are brought to the highest level for consideration.
3. MEMBERSHIP
The Audit Committee shall be appointed by the Board from amongst the Directors of the Company except Alternate Directors. The Audit Committee shall comprise of at least three [3] non-executive directors the majority of whom, including the Chairman, shall be independent directors. All members of the Audit Committee shall be financially literate with at least one member being a member of the Malaysian Institute of Accountants or fulfills such other requirements as prescribed or approved by Bursa Malaysia Securities.
The Board shall review the term of office and performance of the Audit Committee and each of its members at least once every three (3) years to determine whether such Audit Committee and members have carried out their duties in accordance with their terms of reference.
34 INTEGRAX BERHAD Annual Report 2013 AUDIT COMMITTEE REPORT (continued)
4. MEETINGS 4.1 The Committee shall meet at least four (4) times a year and such additional meetings as the Chairman shall decide. The Chairman may call a meeting of the Audit Committee if a request is made by any Audit Committee member or the internal auditors if they consider it necessary. In addition, the Chairman shall convene a meeting with the External Auditors to consider any matter which the External Auditors believe should be brought to the attention of the Directors or Shareholders.
4.2 Meetings will be attended by the members of the Audit Committee and the Company Secretary who shall act as the Secretary of the Audit Committee and record the proceedings of the meeting thereat. 4.3 Participants may be invited from time to time to attend the meeting depending on the nature of the subject under review. These participants may include the Directors, General Managers, Division Heads, representatives from the Finance Department, Internal Audit Departments and/or the External Auditors. 4.4 The Audit Committee shall meet with the External Auditors at least twice a year, without the presence of Executive Directors or Management. 4.5 The quorum for each meeting shall consist of at least two (2) members, both of whom shall be Independent Directors. 4.6 Recommendations of the Audit Committee are submitted to the Board for adoption.
5. RIGHTS AND AUTHORITY 5.1 In carrying out its duties and responsibilities, the Audit Committee will have the following rights:- (a) explicit authority to investigate any matter within its terms of reference; (b) the resources which are required to perform its duties; (c) full, free and unrestricted access to any information, records, properties and personnel of the Company and of any other company within its Group; (d) direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity; (e) be able to obtain independent professional or other advice and to invite outsiders with relevant experience to attend the Audit Committee’s meetings (if required) and to brief the Audit Committee; (f) be able to convene meetings with the External Auditors, the internal auditors or both, excluding the attendance of other Directors and employees of the Company, whenever deemed necessary; and (g) regulate the manner of proceedings of its meetings, having regard to normal conventions on such matter. 5.2 The attendance at any particular Audit Committee meeting by other Directors and employees of the Company shall be at the Audit Committee’s invitation and discretion, and must be for the specific agenda to the relevant meeting. 5.3 Where the Audit Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Listing Requirements of Bursa Securities, the Audit Committee has the responsibility to promptly report such matter to Bursa Securities.
6. DUTIES AND RESPONSIBILITIES The main duties and responsibilities of the Audit Committee include:- (a) To discuss and liaise with External Auditors before the audit commences, the nature and scope of their audit plan to ensure smooth implementation of the audit of the Group, to discuss problems and reservations arising from the audits and any matter the auditors may wish to discuss and to review and evaluate their findings on the internal control system and the audit reports on the financial statements of the Company and the Group; (b) To review the quarterly and year-end financial statements and prior to the approval by the Board of Directors. The review will include an assessment on changes in or implementation of major accounting policies and practices, significant and unusual events, significant audit adjustments arising from an audit, the going concern assumption and compliance with accounting standards and other legal requirements; (c) To review the External Auditors’ management letter and Management’s response and to discuss problems and reservations arising from the interim and final audits and any matter the auditors may wish to raise, in the absence of management where necessary;
(d) To review with the External Auditors the draft statement to be made by the Board with regard to the state of internal control of the Company and its Group, and report the results thereof to the Board;
INTEGRAX BERHAD Annual Report 2013 35 AUDIT COMMITTEE REPORT (continued)
6. DUTIES AND RESPONSIBILITIES (continued) (e) To review the assistance given by the employees of the Company and the Group to the External Auditors; (f) To review and assess the appropriateness of the Group’s accounting policies and the adequacy of management reporting requirements; (g) To establish an internal audit function which is independent of the activities it audits. Where the internal audit function is undertaken by external consultants: -
• review the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work; • review the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; • review any appraisal or assessment of the performance of the internal audit function; and • approve any appointment or termination of the internal auditors. (h) To review any related party transactions and conflict of interest situation that may arise within the Company and the Group including any transaction, procedure or course of conduct that raises questions of management integrity; (i) To review the Group’s business ethics and compliance with the law; (j) To consider the major findings of internal investigations and management’s response; (k) To consider the resignation, appointment and annual reappointment of the External Auditors, audit fees and any questions of resignation or dismissal; (l) To recommend the nomination of a person or persons as External Auditors; (m) To review the Audit Committee’s terms of reference as conditions dictate; and (n) To perform any other such functions as may be agreed by the Audit Committee and the Board.
7. PROCEDURES OF THE AUDIT COMMITTEE 7.1 Calling of meetings
The members may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit, provided that they shall have a minimum of four (4) meetings in a financial year. The Secretary shall on the requisition of a member summon a meeting of the Audit Committee.
7.2 Notice of Meeting
Notice of a meeting of the Audit Committee shall be given to all the members in writing. Unless otherwise determined by the Board of Directors from time to time, seven (7) days’ notice shall be given, except in the case of an emergency, shorter notice may be given.
7.3 Voting and proceeding of meeting
The decision of the Audit Committee shall be by a majority of votes and the determination by a majority of the members shall for all purposes be deemed a determination of the Audit Committee. In case of an equality of votes, the Chairman of the meeting shall have a second or casting vote.
Circular Resolutions signed by all the members shall be valid and effective as if it had been passed at a meeting of the Audit Committee.
7.4 Keeping of minutes
The Secretary shall maintain minutes of the proceedings of the meetings and circulate such minutes to all members of the Audit Committee. Such minutes shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting.
The minutes of proceedings of the Audit Committee shall be kept by the Secretary at the registered office of the Company, and shall be circulated with the papers of the next Board meeting and the Audit Committee chairman will provide an update to the Board on their contents.
36 INTEGRAX BERHAD Annual Report 2013 AUDIT COMMITTEE REPORT (continued)
8. SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE DURING THE FINANCIAL YEAR 8.1 During the financial year ended 31 December 2013, six [6] Audit Committee meetings were held. A record of the attendance to these meeting is as follows:
Name of Audit Committee Member No. of Meetings Attended / Held Mr. Paul Chan Wan Siew, Chairman 6/6 Mr. Loong Foo Ching 6/6 Ir. Abdul Manap bin Ali Hasan 6/6 En. Fazlur Rahman bin Zainuddin 5/6 Appointed on 21 February 2013
The Executive Director, senior management staff, External and Internal Auditors were in attendance at the meetings, where appropriate. 8.2 The activities undertaken by the Audit Committee for the financial year were as follows:- (a) Reviewed the group’s financial management, assessment measures and made recommendations to the Board in relation thereto; (b) Reviewed the adequacy and relevance of the scope, functions, resources, risk based internal audit plan and results of the internal audit processes with the external consultant for internal audit services; (c) Considered the appointment of the External Auditors and audit fees; (d) Reviewed with the External Auditors, the audit plan of the Company and of the Group for the year (inclusive of risk and audit approach, system evaluation, issues raised and management responses) prior to the commencement of the annual audit; (e) Discussed and reviewed with External Auditors their evaluation of internal control systems of the Group; (f) Reviewed the extent of assistance rendered by management and issues and reservations arising from audits with the External Auditors without the presence of management staff and the Executive Directors; (g) Reviewed the results of each quarter with management and reviewed the financial statements for the financial year ended 31 December 2013 with management and the External Auditors before recommending them to the Board of Directors for approval and release to Bursa Securities; (h) Reviewed the related party transactions and conflict of interest situation that may arise within the Company and the Group including any transaction, procedure or course of conduct that raises questions of management integrity; (i) Reported to the Board on significant issues and concerns discussed during the Audit Committee’s meetings together with applicable recommendations for substantive action to be taken. Minutes of meetings were also tabled to the Board; and (j) Reviewed and approved the Audit Committee Report for inclusion in the Company’s 2013 Annual Report.
9. TRAINING Training courses attended by Audit Committee members during the financial year are reported in the Statement on Corporate Governance on pages 22 to 24 of the Annual Report.
10. INTERNAL AUDIT FUNCTION The Company outsourced its internal audit function to an external consultancy firm which has adequate resources and appropriate standing to undertake its activities independently and objectively to assist the Audit Committee in discharging its duties and responsibilities more effectively. The external consultant responsible for the internal audit function reports directly to the Audit Committee. As at 31 December 2013, the fees for the internal audit function is RM42,500 (2012: RM45,700). The internal audit approach, scope of work and plans of the external consultant are submitted to the Audit Committee for approval before the commencement of any reviews. The reports of the external consultant are presented to the Audit Committee together with presentations at the appropriate meetings. Further details of the activities of the internal audit function are set out in the Statement on Risk Management and Internal Control on pages 31 to 33 of the Annual Report.
INTEGRAX BERHAD Annual Report 2013 37 STATEMENT ON CORPORATE SOCIAL RESPONSIBILITY
STATEMENT ON CORPORATE SOCIAL RESPONSIBILITY
Integrax is committed towards its role as a socially-responsible corporate citizen, and has embedded the principles of corporate social responsibility (“CSR”) into our day-to-day operations. Sustainable and ethical ways of doing business are at the core of our Group’s initiatives. In order to achieve business success and growth in the long term, we recognise that we must continue to foster and nurture meaningful relationships with our stakeholders.
During the year under review, our initiatives were focused on four key areas – Community Services, Human Capital Development and Staff Well-Being, Marketplace and Communication and Engagement.
Community Services
At the heart of our CSR initiatives is our sense of responsibility in contributing towards the community in which we operate, as well as towards deserving or under-served causes. The Group has throughout the year, contributed to the community through corporate sponsorships, donations to charitable causes, and participation in community events such as sports.
The Group contributed towards community programmes such as the “Majlis Korban Perdana Hari Raya Aidiladha 2013” organised by the Yayasan Kemajuan Islam Perak Darul Ridzuan in aid of the poor citizens of Perak, and the Janamanjung Fellowship Ride 2013 organised by Tenaga Nasional Berhad. The Group also made donations to the Badan Kebajikan Thalassaemia Malaysia and the Malaysian Harbour Pilots Association. At the national level, the Group were one of the sponsors of the “Kejohanan Hoki Piala Asia 2013” which was held in Ipoh in August 2013.
In July 2013, the Group made a donation to the family of the late Mohammad Darwisy Rahman, who was tragically killed in an accident in front of his home at Kg Dato’ Kamaruddin, on the road leading to Teluk Rubiah where Lekir Bulk Terminal is located. What made the incident more tragic was that he died at the same spot where his eldest brother died in a road accident, 13 years ago. This tragedy triggered reaction from the corporate community as there have been other tragedies, accidents and complaints involving the movement of lorries and vehicles to the Lekir area through the main arterial road of the predominantly residential area.
Together with fellow like-minded corporate citizens, Integrax answered the Perak State Government’s call for assistance to build a new alternative road connecting Lekir to Kg Pundut. Integrax donated RM210,000 to part finance the construction of this 1.9km road which was completed late last year and has reduced considerably the traffic in the affected residential area.
Human Capital Development and Staff Well-Being
Integrax’s employees are important stakeholders in ensuring the sustainability of the Group’s business. Our staff are invaluable assets to the Group, and we firmly believe in adding value to our assets by nurturing their talents and developing their potential, hence we continuously invest in human capital development. Staff participation in external training, seminars and courses are encouraged and their participation is factored into the annual staff performance appraisal exercise. Management is also currently working on identifying and developing career paths for its staff.
On 7th December 2013, the Group organised its first ever Family Day where staff members and their respective families got to know each other to foster a deeper sense of camaraderie. Academic excellence awards were also presented to the children of Integrax staff to further strengthen employer-employee ties.
38 INTEGRAX BERHAD Annual Report 2013 STATEMENT ON CORPORATE SOCIAL RESPONSIBILITY (continued)
Marketplace
Our business is centred on our customers and our goal is to offer them value- added services across the product value chain, in line with our tagline of becoming a “Value Chain Integration Partner”. By conducting our business responsibly and building sustainable working relationships in the marketplace with customers, suppliers and contractors as well as the business community at large, we believe that we will be well-positioned to achieve our business objectives.
Integrax endeavours to nurture and cultivate a culture of compliance with all the requirements of the laws, rules, regulations and corporate governance best practices. To this end, we have introduced the Code of Ethics of doing business with Integrax for our suppliers, customers and contractors, who are asked to sign a declaration to comply with this code before doing business with us.
The Group has also introduced the Code of Conduct for employees of the Group which also incorporates a Whistleblowing Policy to ensure that our employees continue to uphold exemplary corporate conduct whilst we pursue sustainable business growth.
Integrax looks upon itself as more than just a logistics service provider. We are firm in our belief that there exist ways of adding value to our customers and our business community by analysing the respective value chains of our customers and introducing or initiating innovative methods and strategies to create and build value. To this end, Management has bolstered its business development personnel who are tasked with studying the respective value chains of our customers to propose value creation through areas such as renewable energy, energy efficiency and technological innovation.
In December 2013, Integrax was part of the official delegation led by Perak Chief Minister Dato’ Seri DiRaja Dr. Zambry Abdul Kadir to Lithuania. In line with our vision to be a Value Chain Integration Partner, Integrax had mooted the idea of the Lithuania-Perak Biomass Initiative with the hope that this would lead to Port of Klaipeda and Lumut Port becoming the new gateways to the European and Asian markets respectively. The objective of the initiative is to explore potential opportunities for the development of strategic alliances and joint ventures between the parties in the area of the production and marketing of biomass pellets to Lithuania and other countries in Europe with Lumut Port as the Biomass Logistics Hub. Biomass pellets are becoming an important and viable alternative source of renewable energy with global demand expected to reach 20 million tonnes by the year 2020.
INTEGRAX BERHAD Annual Report 2013 39 STATEMENT ON CORPORATE SOCIAL RESPONSIBILITY (continued)
Communication and Engagement
As a public-listed company and as a Federal and State Government investee company, Integrax realises the importance of engaging and communicating with all of its stakeholders, including our 2,419 shareholders and investors, the regulatory authorities and policy-makers, our customers, suppliers and service providers. Integrax participates actively in seminars and forums organised by the State Government agencies particularly on matters of public policy. Integrax has also been requested to represent the Perak State Government during meetings with trade delegations from other countries. This is in line with our objective of partnering the Perak State Government in promoting sustainable development in the Lumut / Manjung area.
Integrax has also made courtesy calls and official technical visits to the Sabah Port Authority and Port of Rotterdam Authority to learn more about the operations and best practices of other ports, as well as to establish a network for possible strategic collaboration in the future.
We also communicate with our shareholders and conduct briefings to fund managers and research analysts who are keen to learn about our company. At the same time, we promote the potential growth opportunities in Lumut and Perak through active investor relations and media awareness initiatives.
Going Forward
The Group is working on long-term CSR initiatives focusing specifically in areas such as education and the environment for the benefit of all our stakeholders to be implemented in the future.
This Statement on Corporate Social Responsibility is made in accordance with the resolution of the Board of Directors passed on 15th May 2014.
40 INTEGRAX BERHAD Annual Report 2013
FINANCIAL STATEMENTS
Contents
Directors’ report 44
Independent auditors’ report 48
Statements of profit or loss and other comprehensive income 50
Statements of financial position 51
Statements of changes in equity 52
Statements of cash flows 53
Notes to the financial statements 55
Supplementary Information on the Breakdown of Realised and Unrealised Profits or Losses 97
Statement by directors 98
Declaration by the officer primarily responsible for the financial management of the Group and of the Company 99 DIRECTORS’ REPORT
The directors of INTEGRAX BERHAD, have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended December 31, 2013.
PRINCIPAL ACTIVITIES
The Company is an investment holding company and the principal activities of the subsidiary companies are stated in Note 17 to the Financial Statements.
There have been no significant changes in the nature of the principal activities of the Company and its subsidiary companies during the financial year.
RESULTS OF OPERATIONS
The results of operations of the Group and of the Company for the financial year are as follows:
The The Group Company RM RM
Profit for the year 47,477,599 22,652,794
Profit attributable to: Equity holders of the Company 40,913,308 22,652,794 Non-controlling interest 6,564,291 -
47,477,599 22,652,794
In the opinion of the directors, the results of operations of the Group and of the Company during the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature.
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements.
DIVIDENDS
Since the end of the previous financial year, an interim single tier tax exempt dividend of 4.5 sen per share, amounting to RM13,536,267 in respect of the financial year ended December 31, 2013 was paid on June 18, 2013.
No further dividends have been recommended by the directors for the financial year ended December 31, 2013.
ISSUE OF SHARES AND DEBENTURES
There were no changes in the authorised, issued and paid-up capital of the Company during the financial year. The Company did not issue any debentures during the financial year.
SHARE OPTIONS
No options were granted to any person to take up unissued shares of the Company during the financial year.
44 INTEGRAX BERHAD Annual Report 2013 DIRECTORS’ REPORT (Continued)
OTHER STATUTORY INFORMATION
Before the statements of profit or loss and other comprehensive income and the statements of financial position of the Group and of the Company were made out, the directors took reasonable steps:
(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and had satisfied themselves that no known bad debts need to be written off and that no allowance for doubtful debts was necessary; and
(b) to ensure that any current assets which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values.
At the date of this report, the directors are not aware of any circumstances:
(a) which would require the writing off of bad debts or the setting up of allowance for doubful debts in the financial statements of the Group and the Company; or
(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or
(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or
(d) not otherwise dealt with in this report or financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading.
At the date of this report, there does not exist:
(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liability of any other person; or
(b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.
No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.
In the opinion of the directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of operations of the Group and of the Company for the financial year in which this report is made.
DIRECTORS
The following directors served on the Board of the Company since the date of the last report:
Dato’ Seri DiRaja Mohamad Tajol Rosli Bin Mohd Ghazali Amin Bin Halim Rasip Datuk Shireen Ann Zaharah Binti Muhiudeen Chan Wan Siew Loong Foo Ching Azman Shah Bin Mohd Yusof Abdul Manap Bin Ali Hasan Laksamana Tan Sri Dato’ Seri Ilyas Bin Hj. Din Dato’ Abd Manaf Bin Hashim Fazlur Rahman Bin Zainuddin
In accordance with Article 80 of the Company’s Articles of Association, Dato’ Seri DiRaja Mohamad Tajol Rosli Bin Mohd Ghazali, Chan Wan Siew and Loong Foo Ching shall retire by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.
INTEGRAX BERHAD Annual Report 2013 45 DIRECTORS’ REPORT (Continued)
DIRECTORS’ INTERESTS
The shareholdings in the Company and its related companies of those who were directors at the end of the financial year, as recorded in the Register of Directors’ Shareholdings kept by the Company under Section 134 of the Companies Act, 1965, are as follows:
Number of ordinary shares of RM1.00 each Balance Balance as at as at 1.1.2013 Bought Sold 31.12.2013 Direct interest
Company Azman Shah Bin Mohd Yusof 1,000 - - 1,000
Deemed interest
Company Amin Bin Halim Rasip (i) 67,744,135 - - 67,744,135
Datuk Shireen Ann Zaharah Binti Muhiudeen (ii) 16,048,700 380,700 - 16,429,400
Number of LBT RCCPS (iii) of RM0.01 each Balance Balance as at as at 1.1.2013 Bought Sold 31.12.2013 Deemed interest
Lekir Bulk Terminal Sdn Bhd [“LBTSB”]
Amin Bin Halim Rasip (i) 16,000,000 - - 16,000,000
(i) Deemed interest, in accordance with Section 134(12)(c) of the Companies Act, 1965, by virtue of shares held by the spouse of Amin Bin Halim Rasip and entities under the control of Amin Bin Halim Rasip and/or his spouse and children.
(ii) Deemed interest in the shares of the Company by virtue of Datuk Shireen Ann Zaharah Binti Muhiudeen, being the Managing Director of Corston-Smith Asset Management Sdn Bhd, the fund manager for the ordinary shares of the Company held on behalf of client’s mandate - ASIF, British Columbia Investment Management Corporation (bcIMC) and Corston-Smith ASEAN Corporate Governance Fund.
(iii) Redeemable cumulative convertible preference shares of RM0.01 each in LBTSB issued at a premium of RM0.99 each.
By virtue of the above directors’ interest in the shares of the Company, they are deemed to have an interest in the shares of subsidiary companies to the extent that the Company has interest.
DIRECTORS’ BENEFITS
Since the end of the previous financial year, none of the directors of the Company has received or become entitled to receive any benefits (other than the benefits included in the aggregate of emoluments received or due and receivable by directors as shown in the financial statements of the Group and of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for the transactions with a Director as disclosed in Note 17 to the Financial Statements.
During and at the end of the financial year, no arrangement subsisted to which the Company was a party whereby the directors of the Company might acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
46 INTEGRAX BERHAD Annual Report 2013 DIRECTORS’ REPORT (Continued)
SIGNIFICANT EVENTS
The significant events during the financial year are disclosed in Note 35 to the financial statements.
SUBSEQUENT EVENTS
There were no material significant events subsequent to the reporting date.
AUDITORS
The auditors, Messrs. Deloitte & Touche, have indicated their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the Directors,
(Signed) (Signed)
DATO’ SERI DIRAJA MOHAMAD AZMAN SHAH BIN MOHD YUSOF TAJOL ROSLI BIN MOHD GHAZALI
Kuala Lumpur, April 21, 2014
INTEGRAX BERHAD Annual Report 2013 47 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF INTEGRAX BERHAD (Incorporated in Malaysia)
Report on the Financial Statements
We have audited the financial statements of INTEGRAX BERHAD, which comprise the statements of financial position of the Group and of the Company as at December 31, 2013 and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 50 to 96.
Directors’ Responsibility for the Financial Statements
The directors of the Company are responsible for the preparation of these financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of December 31, 2013 and its financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
48 INTEGRAX BERHAD Annual Report 2013 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF INTEGRAX BERHAD (Incorporated in Malaysia) (Continued)
Report on Other Legal and Regulatory Requirements
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiary companies have been properly kept in accordance with the provisions of the Act;
(b) We are satisfied that the accounts of the subsidiary companies that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements, and we have received satisfactory information and explanations as required by us for these purposes; and
(c) Our auditors’ report on the accounts of the subsidiary companies were not subject to any qualification and did not include any adverse comment made under Section 174(3) of the Act.
Other Reporting Responsibilities
The supplementary information set out in Note 38 to the financial statements has been compiled by the Group and the Company as required by Bursa Malaysia Securities Berhad Listing Requirements and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with guidance on Special Matter No.1 “Determination of Realised and Unrealised Profit or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements” as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
Other Matter
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility towards any other person for the contents of this report.
(Signed) (Signed)
DELOITTE & TOUCHE KAMARUL BAHARIN BIN TENGKU ZAINAL ABIDIN AF 0834 Partner - 2903/11/15 (J) Chartered Accountants Chartered Accountant
April 21, 2014
INTEGRAX BERHAD Annual Report 2013 49 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2013 STATEMENTS OF FINANCIAL POSITION AS AT DECEMBER 31, 2013
The Group The Company 2013 2012 2013 2012 Note RM RM RM RM
Revenue 7 92,928,393 90,706,908 26,600,000 28,650,000 Cost of services - Contracted services (34,648,296) (32,131,702) - - - Depreciation of property, plant and equipment (12,704,095) (11,870,928) - -
Gross profit 45,576,002 46,704,278 26,600,000 28,650,000 Administrative expenses (9,726,873) (8,233,063) (6,276,544) (4,710,504) Other operating expenses (110,109) (261,664) - (333,552) Other operating income 1,107,425 1,421,182 246,348 238,073
Profit from operations 8 36,846,445 39,630,733 20,569,804 23,844,017 Interest income 3,035,931 3,763,120 2,113,703 2,184,183 Other gains 10 566,953 - 296,924 - Finance costs 11 (421,883) (1,968,559) (21,883) (29,621) Share of profit after tax of equity accounted associates 17,030,561 17,732,040 - -
Profit before tax 57,058,007 59,157,334 22,958,548 25,998,579 Income tax expense 12 (9,580,408) (11,441,635) (305,754) (470,326)
PROFIT FOR THE YEAR 47,477,599 47,715,699 22,652,794 25,528,253 Other comprehensive income Item that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations - (1,068,857) - -
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 47,477,599 46,646,842 22,652,794 25,528,253
Profit attributable to: Equity holders of the Company 40,913,308 41,668,324 Non-controlling interest 6,564,291 6,047,375
Profit for the year 47,477,599 47,715,699
Total comprehensive income attributable to: Equity holders of the Company 40,913,308 40,598,632 Non-controlling interest 6,564,291 6,048,210 47,477,599 46,646,842
Basic Earnings per share (sen) 13 13.6 13.9
The accompanying Notes form an integral part of these Financial Statements.
50 INTEGRAX BERHAD Annual Report 2013 STATEMENTS OF FINANCIAL POSITION AS AT DECEMBER 31, 2013
The Group The Company 2013 2012 2013 2012 Note RM RM RM RM ASSETS Non-current Assets Property, plant and equipment 15 351,073,757 337,555,679 1,196,225 834,425 Goodwill on consolidation 16 128,029,993 128,029,993 - - Investment in subsidiary companies 17 - - 272,074,080 272,074,080 Investment in associates 18 100,910,454 108,879,891 - - Other investment 19 10,029,999 10,029,999 16,000,000 16,000,000
Total Non-current Assets 590,044,203 584,495,562 289,270,305 288,908,505 Current Assets Trade receivable 20 9,368,286 9,366,448 - - Other receivables and prepaid expenses 20 696,580 2,103,181 291,854 1,166,630 Amount owing by subsidiary companies 17 - - 26,600,365 17,652,834 Amount owing by associate 18 9,360 - 9,360 - Tax recoverable - 732,329 150,887 67,065 Deposits, cash and bank balances 21 151,349,282 124,140,076 71,831,004 71,038,770
Total Current Assets 161,423,508 136,342,034 98,883,470 89,925,299 Total Assets 751,467,711 720,837,596 388,153,775 378,833,804 EQUITY AND LIABILITIES Capital and reserves Share capital 22 300,805,917 300,805,917 300,805,917 300,805,917 Reserves 23 46,891,043 46,891,043 46,705,593 46,705,593 Retained earnings 24 270,852,927 243,475,886 37,353,289 28,236,762
Equity attributable to equity holders of the Company 618,549,887 591,172,846 384,864,799 375,748,272 Non-controlling interest 25 66,339,499 59,775,208 - -
Total Equity 684,889,386 650,948,054 384,864,799 375,748,272 Non-current Liabilities Deferred tax liabilities 26 48,967,000 52,097,000 - - Preference share capital 27 40,000 40,000 - - Preference share premium 28 3,960,000 3,960,000 - - Hire-purchase payables 31 102,513 364,423 102,513 364,423
Total Non-current Liabilities 53,069,513 56,461,423 102,513 364,423
Current Liabilities Trade payable 29 10,402,900 9,618,142 - - Other payables and accrued expenses 30 2,818,341 3,630,938 1,705,500 1,114,703 Amount owing to subsidiary companies - - 1,411,619 1,427,367 Current tax liabilities 218,227 - - - Hire-purchase payables 31 69,344 179,039 69,344 179,039
Total Current Liabilities 13,508,812 13,428,119 3,186,463 2,721,109 Total Liabilities 66,578,325 69,889,542 3,288,976 3,085,532
Total Equity and Liabilities 751,467,711 720,837,596 388,153,775 378,833,804
The accompanying Notes form an integral part of these Financial Statements.
INTEGRAX BERHAD Annual Report 2013 51 STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2013 STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2013
Non-distributable Distributable Capital Share Share redemption Translation Retained Non-controlling Total Note capital premium reserve reserve earnings Total interests equity The Group RM RM RM RM RM RM RM RM
Balance as of January 1, 2012 300,805,917 46,705,593 185,450 959,309 211,057,343 559,713,612 56,765,549 616,479,161
Profit for the year - - - - 41,668,324 41,668,324 6,047,375 47,715,699 Other comprehensive income - - - (1,069,692) - (1,069,692) 835 (1,068,857) Total comprehensive income for the year - - - (1,069,692) 41,668,324 40,598,632 6,048,210 46,646,842 Liquidation of subsidiary companies - - - 110,383 - 110,383 (38,551) 71,832 Dividend to owners of the Company 14 - - - - (9,249,781) (9,249,781) - (9,249,781) Dividend to non-controlling interests ------(3,000,000) (3,000,000)
Balance as of December 31, 2012 300,805,917 46,705,593 185,450 - 243,475,886 591,172,846 59,775,208 650,948,054
The Group
Balance as of January 1, 2013 300,805,917 46,705,593 185,450 - 243,475,886 591,172,846 59,775,208 650,948,054
Profit for the year - - - - 40,913,308 40,913,308 6,564,291 47,477,599 Other comprehensive income ------Total comprehensive income for the year - - - - 40,913,308 40,913,308 6,564,291 47,477,599 Dividend to owners of the Company 14 - - - - (13,536,267) (13,536,267) - (13,536,267)
Balance as of December 31, 2013 300,805,917 46,705,593 185,450 - 270,852,927 618,549,887 66,339,499 684,889,386
Non-distributable Distributable Total Note Share capital Share premium Retained earnings equity The Company RM RM RM RM
Balance as of January 1, 2012 300,805,917 46,705,593 11,958,290 359,469,800 Total comprehensive income for the year - - 25,528,253 25,528,253 Dividend paid 14 - - (9,249,781) (9,249,781)
Balance as of December 31, 2012 300,805,917 46,705,593 28,236,762 375,748,272
Balance as of January 1, 2013 300,805,917 46,705,593 28,236,762 375,748,272 Total comprehensive income for the year - - 22,652,794 22,652,794 Dividend paid 14 - - (13,536,267) (13,536,267)
Balance as of December 31, 2013 300,805,917 46,705,593 37,353,289 384,864,799
The accompanying Notes form an integral part of these Financial Statements.
52 INTEGRAX BERHAD Annual Report 2013 STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2013 STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2013
The Group The Company 2013 2012 2013 2012 Note RM RM RM RM
CASH FLOWS FROM / (USED IN) OPERATING ACTIVITIES
Profit before tax 57,058,007 59,157,334 22,958,548 25,998,579 Adjustments for: Depreciation of property, plant and equipment 13,144,623 12,123,742 440,528 252,814 Dividend income - - (26,600,000) (28,650,000) Finance costs 421,883 1,968,559 21,883 29,621 Interest income (3,035,931) (3,763,120) (2,113,703) (2,184,183) (Gain)/loss on liquidation of subsidiary company - (669,257) - 333,552 Net gains arising from financial assets designated at fair value through profit or loss (566,953) - (296,924) - Property, plant and equipment written off 29,880 - 29,880 Loss on disposal of property, plant and equipment 29,356 - 29,356 - Share of profit after tax of equity accounted associates (17,030,561) (17,732,040) - - 50,020,424 51,115,098 (5,560,312) (4,189,737) Movement in working capital: Decrease / (Increase) in: Trade receivable, other receivables and prepaid expenses 1,404,763 11,203,332 874,776 (711,713) (Decrease)/Increase in: Trade payables, other payables and accrued expenses (27,839) 1,360,130 590,797 (106,214)
Cash From / (Used In) Operations 51,397,348 63,678,560 (4,094,739) (5,007,664) Tax paid (11,769,852) (13,626,973) (389,576) (624,662) Tax refunded 10,000 2,002 - 2,002
Net Cash From/(Used In) Operating Activities 39,637,496 50,053,589 (4,484,315) (5,630,324)
CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES
Acquisition of property, plant and equipment (ii) (26,893,107) (17,607,502) (1,032,734) (203,227) Proceeds from disposal of plant and equipment 201,050 - 201,050 - Proceeds from liquidation of subsidiary companies - (157,250) - 1,514,286 Interest received 3,035,931 3,763,120 2,113,703 2,184,183 Other gains received 566,953 - 296,924 - (Increase)/Decrease in advances to subsidiary companies - - (13,279) 621,507 Increase in advances to associate (9,360) - (9,360) - Dividend received 24,999,998 14,999,999 17,650,000 12,600,000
Net Cash From Investing Activities 1,901,465 998,367 19,206,304 16,716,749
INTEGRAX BERHAD Annual Report 2013 53 STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2013 (Continued)
The Group The Company 2013 2012 2013 2012 Note RM RM RM RM
CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES
Decrease in debt service reserve account 714 27,314,405 - - Dividend paid to shareholders (13,536,267) (9,249,781) (13,536,267) (9,249,781) Dividend paid to non-controlling interests - (3,000,000) - - Redemption of serial bonds - (60,000,000) - - Redeemable cumulative convertible preference share dividends paid (400,000) (400,000) - - Repayment of hire-purchase (371,605) (154,504) (371,605) (154,504) Hire-purchase interest paid (21,883) (29,621) (21,883) (29,621)
Net Cash Used In Financing Activities (14,329,041) (45,519,501) (13,929,755) (9,433,906)
Net increase in cash and cash equivalents 27,209,920 5,532,455 792,234 1,652,519
Effect of foreign currency translation in consolidation - (1,068,857) - -
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 124,134,362 119,670,764 71,038,770 69,386,251
CASH AND CASH EQUIVALENTS AT END OF YEAR (i) 151,344,282 124,134,362 71,831,004 71,038,770
(i) Cash and cash equivalents
Cash and cash equivalents included in the statements of cash flows comprise the following amounts as disclosed in Note 21:
The Group The Company 2013 2012 2013 2012 RM RM RM RM
Cash and bank balances 8,613,907 735,076 437,121 538,770 Deposits with licensed banks 69,205,000 123,405,000 22,900,000 70,500,000 Short term investment funds 73,530,375 - 48,493,883 -
151,349,282 124,140,076 71,831,004 71,038,770 Less: Amounts held in a Bond Redemption account: - Cash and bank balances - (714) - - Deposits pledged (5,000) (5,000) - -
151,344,282 124,134,362 71,831,004 71,038,770
(ii) Acquisition of property, plant and equipment
During the year, the Group and the Company acquired property, plant and equipment with an aggregate cost of RM26,893,107 (2012: RM17,807,502) and RM1,032,734 (2012: RM403,227) respectively of which RMNil (2012: RM200,000), were acquired by the Group and the Company by means of hire- purchase plans.
The accompanying Notes form an integral part of these Financial Statements.
54 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL INFORMATION
The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad.
The principal activity of the Company is investment holding. The principal activities of the subsidiary companies are stated in Note 17.
There have been no significant changes in the nature of the principal activities of the Company and its subsidiary companies during the financial year.
The principal place of business and the registered office of the Company is located at #36.01, Level 36, Cap Square Tower, No. 10, Jalan Munshi Abdullah, 50100 Kuala Lumpur.
The financial statements of the Group and the Company were authorised for issuance by the Board of Directors in accordance with a resolution of the directors on April 21, 2014.
2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
The financial statements of the Group and the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia.
3. CHANGES IN ACCOUNTING POLICIES RESULTING FROM ADOPTION OF NEW AND REVISED MALAYSIAN FINANCIAL REPORTING STANDARDS
In the current year, the Group and the Company have applied a number of new and revised MFRSs issued by the Malaysian Accounting Standards Board (“MASB”) that are mandatorily effective for an accounting period that begins on or after January 1, 2013.
Amendments to MFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities
The Group and the Company have applied the amendments to MFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities for the first time in the current year. The amendments to MFRS 7 require entities to disclose information about rights of offset and related arrangements (such as collateral posting requirements) for financial instruments under an enforceable master netting agreement or similar arrangement.
As the Group and the Company does not have any offsetting arrangements in place, the application of the amendments has had no material impact on the disclosures or on the amounts recognised in these financial statements.
MFRS 13 Fair Value Measurement
The Group and the Company have applied MFRS 13 for the first time in the current year. MFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The scope of MFRS 13 is broad; the fair value measurement requirements of MFRS 13 apply to both financial instrument items and non-financial instrument items for which other MFRSs require or permit fair value measurements and disclosures about fair value measurements, except for share-based payment transactions that are within the scope of MFRS 2 Share-based Payment, leasing transactions that are within the scope of MFRS 117 Leases, and measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring inventories or value in use for impairment assessment purposes).
MFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under MFRS 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, MFRS 13 includes extensive disclosure requirements.
MFRS 13 requires prospective application from January 1, 2013. In addition, specific transitional provisions were given to entities such that they need not apply the disclosure requirements set out in the Standard in comparative information provided for periods before initial application of the Standard. In accordance with these transitional provisions, the Group and the Company has not made any new disclosures required by MFRS 13 for the 2012 comparative period. Other than the additional disclosures, the application of MFRS 13 has not had any material impact on the amounts recognised in these financial statements. INTEGRAX BERHAD Annual Report 2013 55 NOTES TO THE FINANCIAL STATEMENTS (Continued)
3. CHANGES IN ACCOUNTING POLICIES RESULTING FROM ADOPTION OF NEW AND REVISED MALAYSIAN FINANCIAL REPORTING STANDARDS (Continued)
Amendments to MFRS 101: Presentation of Items of Other Comprehensive Income
The amendments to MFRS 101 retain the option to present profit or loss and other comprehensive income in either a single statement or in separate but consecutive statements. However, the amendments to MFRS 101 require additional disclosures to be made in the other comprehensive income section such that items of other comprehensive income are grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss; and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis - the amendments do not change the option to present items of other comprehensive income either before tax or net of tax.
The amendments also introduce new terminology for the statement of comprehensive income and income statement. Under the amendments to MFRS 101, the “statement of comprehensive income” is renamed “statement of profit or loss and other comprehensive income” and the “income statement” is renamed the “statement of profit or loss”.
Other than the abovementioned presentation changes, the application of the amendments to MFRS 101 did not result in any impact on profit or loss, other comprehensive income and total comprehensive income.
Amendments to MFRS 101 Presentation of Financial Statements (as part of the Annual Improvements to MFRSs 2009 - 2011 Cycle issued in July 2012)
The Annual Improvements to MFRSs 2009 - 2011 have made a number of amendments to MFRSs. The amendments that are relevant to the Group and the Company are the amendments to MFRS 101 regarding when a statement of financial position as at the beginning of the preceding period (third statement of financial position) and the related notes are required to be presented. The amendments specify that a third statement of financial position is required when (a) an entity applies an accounting policy retrospectively, or makes a retrospective restatement or reclassification of items in its financial statements, and (b) the retrospective application, restatement or reclassification has a material effect on the information in the third statement of financial position. The amendments specify that related notes are not required to accompany the third statement of financial position.
As the Group and the Company does not have any amendments that require a third statement of financial position to be presented, the application of the amendments has had no material impact on the disclosures or on the amounts recognised in these financial statements.
MFRSs and IC Interpretations in Issue But Not Yet Effective
At the date of authorisation for issue of this financial statements, the new and revised Standards and IC Interpretations which were in issue but not yet effective and not early adopted by the Group and the Company are listed below:
MFRS 9 Financial Instruments (IFRS 9 issued by IASB in November 2009)1 MFRS 9 Financial Instruments (IFRS 9 issued by IASB in October 2010)1 MFRS 9 Financial Instruments (Hedge Accounting and amendments to MFRS 9, MFRS 7 and MFRS 139) 1 IC Int. 21 Levies2 Amendments to MFRS 9 and MFRS 7 Mandatory Effective Date of MFRS 9 (IFRS 9 issued by IASB in November 2009 and October 2010 respectively) and Transition Disclosures1 Amendments to MFRS 10, MFRS 12 and MFRS 127 Investment Entities2 Amendments to MFRS 119 Employee Benefits (Amendments relating to Defined Benefit Plans: Employee Contributions) 3 Amendments to MFRS 132 Financial Instruments: Presentation (Amendments relating to Offsetting Financial Assets and Financial Liabilities)2 Amendments to MFRS 136 Impairment of Assets (Amendments relating to Recoverable Amounts Disclosures for Non-Financial Assets)2 Amendments to MFRS 139 Financial Instruments: Recognition and Measurement (Amendments relating to Novation of Derivatives and Continuation of Hedge Accounting)2
56 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
3. CHANGES IN ACCOUNTING POLICIES RESULTING FROM ADOPTION OF NEW AND REVISED MALAYSIAN FINANCIAL REPORTING STANDARDS (Continued)
MFRSs and IC Interpretations in Issue But Not Yet Effective (Continued)
Amendments to MFRSs contained in the document entitled Annual Improvements to MFRSs 2010 - 2012 Cycle Amendments to MFRSs contained in the document entitled Annual Improvements to MFRSs 2011 – 2013 Cycle
1 The mandatory effective date of MFRS 9 (IFRS 9 issued by IASB in November 2009 and October 2010 respectively) which was for annual periods on or after January 1, 2015 has been removed with the issuance of MFRS 9 Financial Instruments: Hedge Accounting and amendments to MFRS 9, MFRS 7 and MFRS 139. The effective date of MFRS 9 will be decided when IASB’s IFRS 9 project is closer to completion. However, each version of the MFRS 9 is available for early adoption. 2 Effective for annual periods beginning on or after January 1, 2014 3 Effective for annual periods beginning on or after July 1, 2014
The directors anticipate that the abovementioned Standards and IC Interpretations will be adopted in the annual financial statements of the Company when they become effective and that the adoption of these Standards and IC Interpretations will not have a material impact on the financial statements of the Company in the period of initial application, except as discussed below.
MFRS 9 and Amendments relating to the Mandatory Effective Date of MFRS 9 and Transition Disclosures
MFRS 9 (IFRS 9 issued by IASB in November 2009) introduces new requirements for the classification and measurement of financial assets. MFRS 9 (IFRS 9 issued by IASB in October 2010) includes the requirements for the classification and measurement of financial liabilities and for derecognition.
The amendments to MFRS 9 (IFRS 9 issued by IASB in November 2009 and October 2010 respectively) (“MFRS 9”) relating to “Mandatory Effective Date of MFRS 9 and Transition Disclosures” which became immediately effective on the issuance date of March 1, 2012 amended the mandatory effective date of MFRS 9 to annual periods beginning on or after January 1, 2015 instead of on or after January 1, 2013, with earlier application still permitted as well as modified the relief from restating prior periods. However, this mandatory effective date has been removed with the issuance of MFRS 9 Financial Instruments: Hedge Accounting and Amendments to MFRS 9, MFRS 7 and MFRS 139 (see below). MFRS 7 which was also amended in tandem with the issuance of the aforementioned amendments introduces new disclosure requirements that are either permitted or required on the basis of the entity’s date of adoption and whether the entity chooses to restate prior periods.
Key requirements of MFRS 9 are described as follows:
• All recognised financial assets that are within the scope of MFRS 139 Financial Instruments: Recognition and Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held with a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting periods. In addition, under MFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of equity instrument (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.
• With regard to the measurement of financial liabilities designated as at fair value through profit or loss. MFRS 9 requires that the amount of changes in the fair value of financial liabilities that are attributable to changes in the credit risk of these liabilities, be presented in other comprehensive income, unless the recognition of the effects of changes in these liabilities’ credit risks in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are subsequently reclassified to profit or loss. Previously, under FRS 139, the entire amount of the change in the fair value of financial liabilities designated as at fair value through profit or loss was presented in profit or loss.
The directors anticipate that the application of MFRS 9 will not have a material impact on amounts reported in respect of the Group and the Company’s financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of the effect of MFRS 9 until a detailed review has been completed.
INTEGRAX BERHAD Annual Report 2013 57 NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Group and the Company have been prepared on the basis of historical cost convention other than as disclosed in the summary of accounting policies. Historical cost is generally based on the fair value of the consideration given in exchange for assets.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group and the Company take into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for the measurement and/or disclosure purposes in these consolidated financial statements is determined on such basis, except for share-based payment transactions that are within the scope of MFRS 2, leasing transactions that are within the scope of MFRS 117, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in MFRS 102 or value in use in MFRS 136.
Basis of Consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiary companies. Control is achieved when the Company:
(i) has power over the investee;
(ii) is exposed, or has rights, to variable retuns from its involvement with the trustee; and
(iii) has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of the investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power, including:
(i) the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;
(ii) potential voting rights held by the Company, other vote holders or other parties;
(iii) rights arising from other contractual arrangements; and
(iv) any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that the decisions need to be made, including voting patterns at previous shareholders’ meetings.
Consolidation of a subsidiary company begins when the Company obtains control over the subsidiary company and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary company.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interest. Total comprehensive income of subsidiary companies is attributed to the owners of the Company and to non-controlling interest even if this results in the non- controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiary companies to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
58 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Changes in the Group’s ownership interest in existing subsidiary companies
Changes in the Group’s ownership interest in subsidiaries that do not result in the Group losing control are accounted for as equity transactions. The carrying amounts of the Group’s interest and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary companies. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary company, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary company and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary company are accounted for as if the Group had directly disposed of the relevant assets or liabilities of the subsidiary company (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable MFRSs). The fair value of any investment retained in the former subsidiary company at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under MFRS 139 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or joint venture.
Subsidiary companies
Investment in subsidiary companies which are eliminated on consolidation, are stated at cost less impairment losses, if any, in the Company’s separate financial statements.
Business combinations
Acquisitions of subsidiary companies and businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
At acquisition date, the identifiable assets acquired and liabilities assumed are recognised at their fair value, except that:
(i) Deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with MFRS 112 Income Taxes and MFRS 119 Employee Benefits respectively;
(ii) Liabilities or equity instruments related to the share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with MFRS 2 Share-based Payments at the acquisition date; and
(iii) Assets (or disposal groups) that are classified as held for sale in accordance with MFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another MFRSs.
INTEGRAX BERHAD Annual Report 2013 59 NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. SIGNIFICANT ACCOUNTING POLICIES (Continued) Business combinations (Continued) Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is remeasured at subsequent reporting dates in accordance with MFRS 139 or MFRS 137 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss. Where a business combination is achieved in stages, the Group’s previously held equity interests in the acquiree is remeasured to its acquisition date fair value and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if those interests were disposed of. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised at that date. The policy described above is applied to all business combinations that take place on or after January 1, 2011. Revenue Recognition Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable and represents amounts received or receivable for services provided in the normal course of business. The following specific recognition criteria must also be met before revenue is recognised: (i) Port Services Income from port services is recognised in profit or loss once the service is rendered. Revenue arising from the fixed portion of the port service revenue is recognised on an accrual basis. (ii) Dividend Income Dividend income is recognised when the shareholder’s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Group and the Company and the amount of revenue can be measured realiably). (iii) Interest income Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Group and the Company and the amount of revenue can be measured reliably. Interest income is earned on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. (iv) Office Facility Fees Office facility fees are recognised in profit or loss upon the provision of the facility. Office facility fees are recognised on an accrual basis. (v) Rental Income The Group’s policy for recognition of revenue from operating leases is described in Note 4, Leases below.
60 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessary take a substantial period of time to get ready for their intended use, are added to the cost of these assets, until such time as the assets are substantially ready for their intended use. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
(i) Bond interest
This was the discount on the Serial Bonds comprising 19 series of zero coupon bonds up to an aggregate nominal value of RM445,000,000, which were issued by the Company to finance the development of the dry bulk terminal.These Serial Bonds were fully repaid in the year 2012.
(ii) During construction period
All interest on the Serial Bonds that were directly attributable to the project development during the period of construction up to December 27, 2002 were capitalised as Project Development Costs and subsequently allocated appropriately towards property, plant and equipment for amortisation.
(iii) Post construction period
All interest on the Serial Bonds that were incurred and were directly attributed to the project development after completion of the construction of the dry bulk terminal were recognised as an expense in the period in which it was incurred.
(iv) Preference share dividend
Preference share dividends are payable to preference shareholders and are recognised in the profit or loss as interest expense.
Foreign Currency
(i) Functional and Presentation Currencies
The individual financial statements of each entity in the Group are presented in the currency of the primary economic environment in which the entity operates (“the functional currency”). For the purposes of the consolidated financial statements, the results and the financial position of each group entity are expressed in Ringgit Malaysia (“RM”) which is the functional currency of the Company and the presentation currency for the consolidated financial statements.
(ii) Foreign Currency Transactions
In preparing the financial statements of the individual entities, transactions in foreign currencies other than the entity’s functional currency (i.e. foreign currencies) are recorded at the rates prevailing on the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing on that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise except for:
• Exchange differences arising on the retranslation of non-monetary items carried at their fair value in respect of which gain and losses are recognised in other comprehensive income. For such non-monetary items, the exchange component of that gain or loss is also recognised in other comprehensive income;
• Exchange diffferences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
• Exchange differences on transactions entered into in order to hedge certain foreign currency risks; and
INTEGRAX BERHAD Annual Report 2013 61 NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Foreign Currency (Continued)
(ii) Foreign Currency Transactions (continued)
• Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore, forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated in RM using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate).
On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the company are reclassified to profit or loss.
In addition, in relation to a partial disposal of a subsidiary company that does not result in the Group losing control over the subsidiary company, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. of associates or joint arrangements that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.
Goodwill and fair value adjustments on identifiable assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognised in other comprehensive income and accumulated in equity.
Employee Benefits
(i) Short-Term Employee Benefits
Salaries, wages, paid annual leave, bonuses and social security contributions are accrued in the period in which the associated services are rendered by the employees of the Group. Short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur.
(ii) Defined Contribution Plan
The Group and its eligible employees are required by law to make monthly contributions to the Employees Provident Fund (“EPF”), a local statutory defined contribution plan, at certain prescribed rates based on the employees’ salaries. Such contributions are recognised as an expense in the profit or loss as and when employees have rendered service entitling them to the contributions. The Company has no further payment obligations once these contributions have been paid. The Group’s contributions to EPF are included under personnel expenses as disclosed in Note 8.
Income Taxes
Income tax expense represents the sum of the tax currently payable and deferred tax.
(i) Current tax
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from profit as reported in the statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
62 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes (Continued)
(ii) Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profits will be available against which those deductible temporary differences, unused tax losses and unused tax credits can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiary companies and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
(iii) Current and deferred tax for the year
Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items that are recognised outside the profit or loss (whether in other comprehensive income or directly in equity), in which case the tax is also recognised in other comprehensive income or directly in equity respectively. Where current or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
Property, Plant and Equipment and Depreciation
(i) Recognition and Measurement
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset and any other costs directly 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 and, for qualifying assets, borrowing costs are capitalised in accordance with the Group’s accounting policy. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
When significant parts of property, plant and equipment are required to be replaced in intervals, such parts are recognised as individual items of property, plant and equipment with specific useful lives and depreciation is charged respectively.
INTEGRAX BERHAD Annual Report 2013 63 NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property, Plant and Equipment and Depreciation (Continued)
(ii) Subsequent Cost The cost of replacing part 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 part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the profit or loss as incurred.
(iii) Depreciation
Leasehold land is amortised in equal instalments over the period of the lease of ninety-nine years.
Buildings and renovations are depreciated over a period of 50 years and 3 years respectively.
The estimated useful lives and depreciation methods of other items of property, plant and equipment for current and comparative periods are as follows:
Industrial building, civil works and infrastructure Gross Post Construction dry bulk cargo and infrastructure throughput expressed in metric tonnes to-date allocated over a prudent estimate of the total gross post construction throughput capacity expressed in metric tonnes over 50 years. Plant and machinery, tools, office equipment and furniture Gross Post Construction dry bulk cargo and infrastructure throughput expressed in metric tonnes to-date allocated over a prudent estimate of the total gross post construction throughput capacity expressed in metric tonnes over 10 to 30 years.
The estimation of the total gross post construction throughput capacity is based on the historical actual throughput and the estimated throughput over the estimated useful lives. As such, this involves estimation uncertainty and critical judgement as the actual throughput in the future might differ from the estimated future throughput capacity.
Other property, plant and equipment, other than asset under construction which is not depreciated, are depreciated on a straight-line basis to write off the cost of each asset to their residual value over their estimated useful life, at the following annual rates:
Furniture and fittings 10% Motor vehicles 20% Office equipment 20%
Depreciation methods, useful lives and residual values are reassessed at each reporting date, with the effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Impairment of Tangible Assets
At the end of each reporting period, the Group and the Company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group and the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash- generating units for which a reasonable and consistent allocation basis can be identified.
64 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of Tangible Assets (Continued)
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the assets for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior year. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried out at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Goodwill on Consolidation
Goodwill arising on an acquisition of a business is carried at cost as established at the date of the business less accumulated impairment loss, if any.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (for group of cash-generating units) that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of profit or loss on disposal.
The Group’s policy for goodwill arising on the acquisition of associate is described in Note 4, Investment in Associates below.
Investment in Associates
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with MFRS 5:Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, an investment in associate is initially recognised in the consolidated statements of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate. When the Group’s share of losses of an associate exceeds the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognising its share of future losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligation or made payments on behalf of that associate.
An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilites of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.
The requirements of MFRS 139 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with MFRS 136 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with MFRS 136 to the extent that the recoverable amount of the investment subsequently increases.
INTEGRAX BERHAD Annual Report 2013 65 NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investment in Associates (Continued)
The Group discontinues the use of the equity method from the date when the investment ceases to be an associate, or when the investment is classified as held for sale. When the Group retains an interest in the former associate and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with MFRS 139. The difference between the carrying amount of the associate at the date the equity method was discontinued, the fair value of any retained interest and any proceeds from disposing of a part interest in the associate is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as reclassification adjustment) when the equity method is discontinued.
The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests.
When the Group reduces its ownership interest in an associate but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.
When a group entity transacts with an associate of the Group, profits and losses resulting from the transactions with the associate or joint venture are recognised in the Group’s consolidated financial statements only to the extent of the Group’s interest in the associate that are not related to the Group.
Other Investment
Other investment in unquoted shares is stated at cost less any impairment loss.
Compound Financial Instruments
A compound financial instrument is a non-derivative financial instrument that contains both a liability and an equity component.
The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially as the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition.
Contingent Liabilities
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is 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.
Provisions
Provisions are recognised when the Group and the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group and the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (where the effect of time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
66 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are initialy recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.
The Group as lessee
Lease payments are apportioned between finance expenses and reduction of lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability The aggregate benefit of incentives is recognised as a reduction of rental expenses on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Financial Instruments
Financial assets and financial liabilities are recognised when, and only when, the Group and the Company becomes a party to the contractual provisions of the financial instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of the financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs that are directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
(a) Financial Assets
Financial assets are classified into the following specified categories: financial assets at ‘fair value through profit or loss’ (FVTPL), ‘held-to-maturity’ investment, ‘available for sales’ (AFS) financial assets and ‘loan and receivable’. The classification depends on the nature and the purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of financial assets are recognised and derecognised on trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
(i) Effective Interest Method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all transaction costs and other premiums or discounts) through the expected life of the financial asset, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
INTEGRAX BERHAD Annual Report 2013 67 NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial Instruments (Continued)
(a) Financial Assets (Continued)
(ii) Financial Assets at FVTPL
Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL.
A financial asset is classified as held for trading if:
• It has been acquired principally for the purpose of selling in the near term; or • On initial recognition it is part of a portfolio of identified financial instruments that the Group and Company manages together and has a recent actual pattern of short-term profit-taking; or • It is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading may be designated as FVTPL upon initial recognition if:
• Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or • The financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and itsperformanceis evaluated on a fair value basis, in accordance with the Group and the Company’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or • It forms part of a contract containing one or more embedded derivatives, and MFRS 139 Financial Instruments: Recognition and Measurement permit the entire combined contract (assets or liability) to be designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ‘other gains and losses’ line term. Fair value is determined in the manner described in Note 33.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Group and the Company has the positive intent and ability to hold to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method less any impairment.
(iv) AFS Financial Assets
AFS financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held- to-maturity investments or financial assets as FVTPL. All AFS assets are measured at fair value at the end of each reporting period. Fair value is determined in the manner described in Note 33. Changes in the carrying amount of AFS monetary financial assets relating to changes in foreign currency rates, interest calculated using the effective interest method and dividends on AFS equity investments are recognised in profit or loss. Other changes in the carrying amount of AFS financial assets are recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is classified to profit or loss.
AFS equity investments that do not have quoted market prices in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment losses at the end of each reporting period.
The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. The foreign exchange gains and losses that are recognised in profit or loss are determined based on the amortised cost of the monetary asset. Other foreign exchange gains and losses are recognised in other comprehensive income.
68 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial Instruments (Continued)
(a) Financial Assets (Continued)
(v) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest is immaterial.
(vi) Impairment of Financial Assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been fected.af
For equity investments classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.
For all other financial assets, objective evidence of impairment could include:
• Significant financial difficulty of the issuer or counterparty; or • Breach of contract, such as default or delinquency in interest or principal payments; or • It becoming probable that the borrower will enter bankruptcy or financial re-organisation; or • The disappearance of an active market for that financial asset because of financial difficulty.
For certain categories of financial assets, such as trade receivables, assets are assessed for the impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivable could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.
For financial assets carried at cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period.
For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
INTEGRAX BERHAD Annual Report 2013 69 NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial Instruments (Continued)
(a) Financial Assets (Continued)
(vi) Impairment of Financial Assets (Continued)
In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increases in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. In respect of AFS debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.
(vii) Derecognition of Financial Assets
The Group and the Company derecognise a financial asset only when the contractual rights to the cash flows from the asset expire, or when they transfer the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group and the Company neither transfer nor retain substantially all the risks and rewards of ownership and continue to control the transferred asset, the Group and the Company recognise its retained interest in the asset and an associated liability for amounts they may have to pay. If the Group and the Company retain substantially all the risks and rewards of ownership of a transferred financial asset, the Group and the Company continue to recognise the financial asset and also recognise a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.
(b) Financial Liabilities and Equity Instruments issued by the Group and the Company
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definition of a financial liability and equity instrument.
(i) Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group and the Company are recognised at the proceeds received, net of direct issue costs.
Repurchase of the Group and the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group and the Company’s own equity instruments.
(ii) Financial Liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.
(iii) Financial Liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
• it has been acquired principally for the purpose of repurchasing it in the near term; or • on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or • it is a derivative that is not designated and effective as a hedging instrument.
70 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
4. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Financial Instruments (Continued)
(b) Financial Liabilities and Equity Instruments issued by the Group and the Company (Continued)
Classification as debt or equity (Continued)
(iii) Financial Liabilities at FVTPL (Continued)
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or • the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or • it forms part of a contract containing one or more embedded derivatives, and MFRS 139 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVPTL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised incorporates any interest paid on the financial liability and is included in the ‘other gains or loss’ line item. Fair value is determined in the manner described in Note 33.
(iv) Other Financial Liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
(v) Derecognition of Financial Liabilities
The Group and the Company derecognises financial liabilities when and only when the Group’s and the Company‘s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid or payable is recognised in profit or loss.
Cash and Cash Equivalents
The Group and the Company adopt the indirect method in the preparation of the statements of cash flows.
Cash equivalents are short-term, highly liquid investments that are readily convertible to cash without significant risks of changes in value.
5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, which are described in Note 4, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
INTEGRAX BERHAD Annual Report 2013 71 NOTES TO THE FINANCIAL STATEMENTS (Continued)
5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued)
Critical judgements in applying accounting policies
In the process of applying the Group’s and the Company’s accounting policies, which are described in Note 4, management is of the opinion that there are no instances of application of judgement which are expected to have a significant effect on the amounts recognised in the financial statements.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year.
(i) Depreciation of property, plant and equipment
The depreciation of property, plant and equipment is based on the estimation of the total gross post construction throughput capacity. This is based on the historical actual throughput and the estimated throughput over the estimated remaining useful lives. As such, this involves estimation uncertainty as the actual throughput in the future might differ from the estimated future throughput capacity.
(ii) Valuation of the recoverable amount for cash-generating unit
The value in use of the cash generating units is based on management’s cash flow projections covering a period of 27 years. Discount rates of 4.5% per annum and 7.5% per annum were applied over the period of the cash flow projections. Management believes that a period of 27 years used for the cash flow projections is justified as income derived from the extended period can be supported by Jetty Terminal Usage Agreements which expire in the year 2040.
6. SEGMENTAL REPORTING
Segment information is presented in respect of the Group’s business segments. No segment information on the basis of geographic segments is presented as all of the external customers and segment assets are located in Malaysia. The primary format using business segments is based on the Group’s management and internal reporting structure. Inter-segment pricing is determined based on negotiated terms.
For the purposes of monitoring segment performance and allocating resources between segments: • All assets are allocated to reportable segments • All liabilities are allocated to reportable segments
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.
The Group comprises the following main business segments:
Port operations Ownership and operation of 2 port facilities, Lekir Bulk Terminal (“LBT”) (port facility for dry bulk) and Lumut Maritime Terminal (“LMT”) (port facility for dry and liquid bulk, break bulk and containers) collectively known as Lumut Port
Investment holding Investment in ordinary shares of subsidiary companies, LBT Redeemable Cumulative Convertible Preference Shares (“RCCPS”), LMT Redeemable Preference Shares (“RPS”) and other unquoted shares
Industrial property Sale of industrial property
72 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
6. SEGMENTAL REPORTING (Continued)
The Group Port Investment Industrial December 31, 2013 operations holding property Elimination Consolidated RM RM RM RM RM
Business segments Revenue from external customers 92,928,393 - - - 92,928,393 Inter-segment revenue - 26,600,000 - (26,600,000) - Share of revenue of associate 42,158,552 - 1,458,536 - 43,617,088
135,086,945 26,600,000 1,458,536 (26,600,000) 136,545,481 Gross segment revenue Share of revenue of associate (42,158,552) - (1,458,536) - (43,617,088)
Total segment revenue 92,928,393 26,600,000 - (26,600,000) 92,928,393
Segment results 43,158,599 20,287,846 - (26,600,000) 36,846,445
Results from operations 43,158,599 20,287,846 - (26,600,000) 36,846,445 Interest income 911,028 2,124,903 - - 3,035,931 Other gains 270,029 296,924 - - 566,953 Finance costs (2,000,000) (21,883) - 1,600,000 (421,883)
Operating profit 42,339,656 22,687,790 - (25,000,000) 40,027,446 Share of profit after tax of equity accounted associate 16,071,866 - 958,695 - 17,030,561
Profit before tax 58,411,522 22,687,790 958,695 (25,000,000) 57,058,007 Tax expense (9,271,854) (308,554) - - (9,580,408)
Net profit for the year 49,139,668 22,379,236 958,695 (25,000,000) 47,477,599
Business segments Segment assets 414,137,603 236,419,654 - - 650,557,257 Investment in associates 60,990,278 - 39,920,176 - 100,910,454
Total assets 475,127,881 236,419,654 39,920,176 - 751,467,711
Total liabilities 64,682,368 1,895,957 - - 66,578,325
Depreciation of property, plant and equipment 12,704,095 440,528 - - 13,144,623
INTEGRAX BERHAD Annual Report 2013 73 NOTES TO THE FINANCIAL STATEMENTS (Continued)
6. SEGMENTAL REPORTING (Continued)
The Group Port Investment Industrial December 31, 2012 operations holding property Elimination Consolidated RM RM RM RM RM
Business segments Revenue from external customers 90,706,908 - - - 90,706,908 Inter-segment revenue - 28,650,000 - (28,650,000) - Share of revenue of associate 37,659,233 - 11,493,713 - 49,152,946
Gross segment revenue 128,366,141 28,650,000 11,493,713 (28,650,000) 139,859,854 Share of revenue of associate (37,659,233) - (11,493,713) - (49,152,946)
Total segment revenue 90,706,908 28,650,000 - (28,650,000) 90,706,908
Segment results 43,652,800 24,627,933 - (28,650,000) 39,630,733
Results from operations 43,652,800 24,627,933 - (28,650,000) 39,630,733 Interest income 1,493,173 2,269,947 - - 3,763,120 Finance costs (3,538,938) (29,621) - 1,600,000 (1,968,559)
Operating profit 41,607,035 26,868,259 - (27,050,000) 41,425,294 Share of profit after tax of equity accounted associate 12,499,204 - 5,232,836 - 17,732,040
Profit before tax 54,106,239 26,868,259 5,232,836 (27,050,000) 59,157,334 Tax expense (10,951,892) (489,743) - - (11,441,635)
Net profit for the year 43,154,347 26,378,516 5,232,836 (27,050,000) 47,715,699
Business segments Segment assets 384,691,657 227,266,048 - - 611,957,705 Investment in associates 71,185,673 - 37,694,218 - 108,879,891
Total assets 455,877,330 227,266,048 37,694,218 - 720,837,596
Total liabilities 68,212,777 1,676,765 - - 69,889,542
Depreciation of property, plant and equipment 11,870,928 252,814 - - 12,123,742
74 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
7. REVENUE
Revenue of the Group and the Company consist of the following:
The Group The Company 2013 2012 2013 2012 RM RM RM RM
Port operations income 92,928,393 90,706,908 - - Single tier tax exempt dividend income from subsidiary companies - - 26,600,000 28,650,000 92,928,393 90,706,908 26,600,000 28,650,000
8. PROFIT FROM OPERATIONS
Profit from operations is stated after charging/(crediting):
The Group The Company 2013 2012 2013 2012 RM RM RM RM Audit fee: Current year 120,600 110,600 70,000 70,000 Other services 5,000 42,500 5,000 40,000 Depreciation of property, plant, and equipment (Note 15) 13,144,623 12,123,742 440,528 252,814 Personnel expenses: Salaries and allowances 1,145,006 960,288 1,145,006 960,288 Contributions to EPF 132,907 116,885 132,907 116,885 (Gain)/Loss on liquidation of subsidiary companies - (669,257) - 333,552 Rental income (882,689) (643,112) - - Property, plant and equipment written off - 29,880 - 29,880 Loss on disposal of property, plant and equipment 29,356 - 29,356 - Realised loss/(gain) on foreign exchange - 4,127 - (61,960)
Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group and of the Company either directly or indirectly. The key management personnel of the Group and the Company includes the Executive Director and Non- Executive Directors of the Group and of the Company.
INTEGRAX BERHAD Annual Report 2013 75 NOTES TO THE FINANCIAL STATEMENTS (Continued)
9. DIRECTORS’ REMUNERATION
The Group The Company 2013 2012 2013 2012 RM RM RM RM
Executive: Salaries and allowances 997,500 623,968 997,500 623,968 Contributions to EPF 119,700 74,877 119,700 74,877 1,117,200 698,845 1,117,200 698,845
Non-Executive: Fees: Current year 1,070,485 700,000 930,485 700,000 Underprovision in prior year 212,500 - 212,500 - 1,282,985 700,000 1,142,985 700,000
Allowances 258,500 312,500 228,500 296,000 1,541,485 1,012,500 1,371,485 996,000
Total 2,658,685 1,711,345 2,488,685 1,694,845
The estimated monetary value of benefits-in-kind received by the directors of the Group and of the Company amounted to RM46,788 (2012: RM48,915).
10. OTHER GAINS
The Group The Company 2013 2012 2013 2012 RM RM RM RM
Net gain arising on financial assets designated as at fair value through profit and loss, short-term investment funds 566,953 - 296,924 -
11. FINANCE COSTS
The Group The Company 2013 2012 2013 2012 RM RM RM RM
Interest: LBT Serial Bonds interest expense - 1,538,938 - - Finance lease 21,883 29,621 21,883 29,621 Share of LBT RCCPS dividend to non-controlling interest 400,000 400,000 - - 421,883 1,968,559 21,883 29,621
76 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
12. INCOME TAX EXPENSE
The Group The Company 2013 2012 2013 2012 RM RM RM RM
Income tax payable: Malaysian 12,727,595 11,778,695 349,114 432,936 Foreign - 8,085 - - (Over)/Underprovision in prior years (17,187) (232,145) (43,360) 37,390
12,710,408 11,554,635 305,754 470,326 Deferred tax (Note 26): Recognised in profit or loss (3,130,000) (113,000) - -
Income tax expense 9,580,408 11,441,635 305,754 470,326
A numerical reconciliation of income tax expense applicable to profit before tax at the applicable statutory income tax rates to income tax expense at the effective income tax rates of the Group and of the Company is as follows:
The Group The Company 2013 2012 2013 2012 RM RM RM RM
Profit before tax 57,058,007 59,157,334 22,958,548 25,998,579
Taxation at applicable rate of 25% 14,264,502 14,789,334 5,739,637 6,499,645 Effect of tax rates in foreign jurisdictions - 8,085 - - Tax of equity accounted associates (4,257,640) (4,433,010) - - Tax effects of: Non-deductible expenses 1,772,471 1,309,371 1,333,708 1,095,791 Tax exempt income (141,738) - (6,724,231) (7,162,500) Effect on deferred tax balances due to the change in income tax rate from 25% to 24% (effective from 2016) (2,040,000) - - - (Over)/Underprovision in prior years (17,187) (232,145) (43,360) 37,390
9,580,408 11,441,635 305,754 470,326
13. EARNINGS PER ORDINARY SHARE
The calculation of basic earnings per share is based on the consolidated profit attributable to equity holders of the Company and the weighted average number of ordinary shares outstanding during the year as follows:
The Group 2013 2012
Earnings used in the calculation of basic earnings per share (RM) 40,913,308 41,668,324
Number of ordinary shares in issue (Units) 300,805,917 300,805,917
Basic earnings per ordinary share (Sen) 13.6 13.9
INTEGRAX BERHAD Annual Report 2013 77 NOTES TO THE FINANCIAL STATEMENTS (Continued)
14. DIVIDENDS
The Group 2013 2012 Interim single tier tax exempt dividend of 4.5 sen per share paid on June 18, 2013 13,536,267 - Interim dividend of 4.1 sen per share less 25% income tax - 9,249,781
No further dividends have been recommended by the directors for the financial year ended December 31, 2013.
15. PROPERTY, PLANT AND EQUIPMENT
Industrial Plant and buildings, civil equipment, Asset Leasehold Buildings and works and Motor furniture under The Group land renovations infrastructure vehicles and fittings construction Total Cost RM RM RM RM RM RM RM
Balance as at January 1, 2012 18,758,729 550,682 155,424,105 788,718 221,574,860 - 397,097,094 Additions - - 65,000 366,944 17,375,558 - 17,807,502 Written off - (408,458) - - (142,048) - (550,506) Liquidation of subsidiary company - (67,224) - - (43,982) - (111,206)
Balance as at December 31, 2012 18,758,729 75,000 155,489,105 1,155,662 238,764,388 - 414,242,884
Balance as at January 1, 2013 18,758,729 75,000 155,489,105 1,155,662 238,764,388 - 414,242,884 Additions - 419,800 - - 1,405,053 25,068,254 26,893,107 Disposals - (8,232) - (609,823) - - (618,055)
Balance as at December 31, 2013 18,758,729 486,568 155,489,105 545,839 240,169,441 25,068,254 440,517,936
Balance as at January 1, 2012 1,863,431 500,681 18,050,805 263,451 44,516,927 - 65,195,295 Depreciation for the year 189,480 1,500 3,159,014 206,669 8,567,079 - 12,123,742 Written off - (408,458) - - (112,168) - (520,626) Liquidation of subsidiary company - (67,224) - - (43,982) - (111,206)
Balance as at December 31, 2012 2,052,911 26,499 21,209,819 470,120 52,927,856 - 76,687,205
Balance at January 1, 2013 2,052,911 26,499 21,209,819 470,120 52,927,856 - 76,687,205 Depreciation for the year 189,480 138,400 2,813,802 190,477 9,812,464 - 13,144,623 Disposals - (1,428) - (386,221) - - (387,649)
Balance as at December 31, 2013 2,242,391 163,471 24,023,621 274,376 62,740,320 - 89,444,179
Balance as at December 31, 2012 16,705,818 48,501 134,279,286 685,542 185,836,532 - 337,555,679
Balance as at December 31, 2013 16,516,338 323,097 131,465,484 271,463 177,429,121 25,068,254 351,073,757
As at December 31, 2013, the leasehold land had an unexpired lease period of 87 years (December 31, 2012: 88 years).
78 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
15. PROPERTY, PLANT AND EQUIPMENT (Continued)
Motor Furniture Office The Company Buildings Renovation vehicles and fittings equipment Total Cost RM RM RM RM RM RM
Balance as at January 1, 2012 75,000 408,458 788,718 162,195 220,657 1,655,028 Additions - - 366,944 1,380 34,903 403,227 Written off - (408,458) - (56,779) (85,269) (550,506)
Balance as at December 31, 2012 75,000 - 1,155,662 106,796 170,291 1,507,749
Balance as at January 1, 2013 75,000 - 1,155,662 106,796 170,291 1,507,749 Additions - 419,800 - 337,120 275,814 1,032,734 Disposals - (8,232) (609,823) - - (618,055)
Balance as at December 31, 2013 75,000 411,568 545,839 443,916 446,105 1,922,428
The Company Accumulated Depreciation
Balance as at January 1, 2012 24,999 408,458 263,451 88,541 155,687 941,136 Depreciation for the year 1,500 - 206,669 15,838 28,807 252,814 Written off - (408,458) - (41,566) (70,602) (520,626)
Balance as at December 31, 2012 26,499 - 470,120 62,813 113,892 673,324
Balance as at January 1, 2013 26,499 - 470,120 62,813 113,892 673,324 Depreciation for the year 1,500 136,900 190,476 40,695 70,957 440,528 Disposals - (1,428) (386,221) - - (387,649)
Balance as at December 31, 2013 27,999 135,472 274,375 103,508 184,849 726,203
Net Book Value Balance at December 31, 2012 48,501 - 685,542 43,983 56,399 834,425
Balance at December 31, 2013 47,001 276,096 271,463 340,409 261,256 1,196,225
INTEGRAX BERHAD Annual Report 2013 79 NOTES TO THE FINANCIAL STATEMENTS (Continued)
16. GOODWILL ON CONSOLIDATION The Group 2013 2012
Cost 128,029,993 128,029,993 The carrying amount of goodwill is attributable to cash-generating units as follows:
The Group 2013 2012
Lekir Bulk Terminal Sdn Bhd (“LBTSB”) 90,208,779 90,208,779 Lumut Maritime Terminal Sdn Bhd (“LMTSB”) 37,821,214 37,821,214
128,029,993 128,029,993
Key assumptions used in value in use calculations The value in use of the cash generating units is based on management’s cash flow projections covering a period of 27 years. Discount rates of 4.5% per annum and 7.5% per annum were applied over the period of the cash flow projections. Management believes that a period of 27 years used for the cash flow projections is justified as income derived from the extended period can be supported by Jetty Terminal Usage Agreements which expire in the year 2040. An independent qualified valuer was employed to determine the fair value of the relevant fixed assets as at December 31, 2040. This terminal value was determined to be RM385,500,000, and was derived using the market comparable approach, the cost approach and the declining balance method.
17. INVESTMENT IN SUBSIDIARY COMPANIES The Group 2013 2012
Unquoted shares at cost 137,503,632 137,503,632 Advances to subsidiary companies 134,570,448 134,570,448
272,074,080 272,074,080 Details of the Company’s subsidiary companies at December 31, 2013 are as follows:
Proportion of ownership interest Name of subsidiary company Country of incorporation 2013 2012 Principal activity % % Pelabuhan Lumut Sdn Bhd (“PLSB”) Malaysia 100 100 Investment holding Segmen Kembara Sdn Bhd (“SKSB”) Malaysia 100 100 Dormant Trek Kembara Sdn Bhd (“TKSB”) Malaysia 100 100 Dormant LBT Two Sdn Bhd (“LBT2”) Malaysia 100 100 Dormant
Subsidiary of PLSB Lekir Bulk Terminal Sdn Bhd (“LBTSB”) Malaysia 80 80 Development, ownership and management of a dry bulk terminal
The amount owing by/(to) subsidiary companies, which are non-trade in nature, are unsecured, interest free and repayable on demand.
80 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
17. INVESTMENT IN SUBSIDIARY COMPANIES (Continued)
For the purposes of these financial statements, parties are considered to be related to the Company if 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 Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.
Controlling related party relationships are in respect of:
(i) The Company’s subsidiary companies as disclosed above.
(ii) A director of the Company, Amin Bin Halim Rasip by virtue of shares held by his spouse and entities under the control of him and/or his spouse and children.
Set out below are the significant related party transactions entered into in the normal course of business for the financial year (in addition to related party disclosures mentioned elsewhere in the financial statements).
Significant inter-company transactions between the Company and its subsidiary companies were as follows:
The Company 2013 2012
Ordinary dividend received from PLSB 25,000,000 27,050,000 Preference dividend receivable from LBTSB 1,600,000 1,600,000 Administrative fee received LBTSB 246,348 236,868
A significant related party transaction between LBTSB and a Director of the Company was as follows:
The Group 2013 2012
Employer’s representative cost 1,344,400* -
*Included here is an amount of RM454,000 which has been capitalised as part of the cost of asset under construction.
Significant transactions of a subsidiary, LBTSB with TNB Janamanjung Sdn Bhd (TNBJ), a subsidiary of a substantial shareholder of the Company, Tenaga Nasional Berhad (TNB), were as follows:
The Group 2013 2012
Revenue in respect of port services provided 92,760,043 90,706,908
Significant transactions with an associate, LMTSB were as follows:
The Group 2013 2012
Fees in respect of operations and maintenance services payable 34,648,296 32,131,702 Revenue in respect of port services provided 168,350 - Dividend received 24,999,998 14,999,999
The above transactions with TNBJ and LMTSB were based on contracted terms and conditions.
INTEGRAX BERHAD Annual Report 2013 81 NOTES TO THE FINANCIAL STATEMENTS (Continued)
17. INVESTMENT IN SUBSIDIARY COMPANIES (Continued)
The following balances were outstanding at the end of the reporting period:
The Group 2013 2012
Owing by TNBJ 9,368,286 9,366,448 Owing to LMTSB 10,402,900 9,618,142
All the above amounts outstanding as at December 31, 2013 were unsecured and have been fully settled subsequent to the year end.
18. INVESTMENT IN ASSOCIATES
The Group 2013 2012
At cost: Unquoted shares - LMTSB 70,590,502 70,590,502 Group’s share of post-acquisition reserves 127,569,787 110,539,226
198,160,289 181,129,728 Less: Dividends (97,249,835) (72,249,837)
100,910,454 108,879,891
Details of the Company’s associates as at December 31, 2013 are as follows:
Proportion of ownership interest Name of associates Country of incorporation 2013 2012 Principal activity % %
LMTSB (held through PLSB) Malaysia 50% less 50% less Development of an one (1) share one (1) share integrated privatised project encompassing ownership and operations of multi-purpose port facilities, operation and maintenance of a bulk terminal, sales and rental of port related land and other ancillary activities
LMTC (held through LMTSB) Malaysia 50% less 50% less Dormant one (1) share one (1) share
The amount owing by the associate, LMTSB as at December 31, 2013 is unsecured, interest free and repayable on demand.
82 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
18. INVESTMENT IN ASSOCIATES (Continued)
A summary of financial information of the Company’s associates as at the end of the reporting period is as follows:
Revenue for Profit for Total Total the year ended the year ended assets liabilities (100%) (100%) (100%) (100%) December 31, 2013 RM RM RM RM
LMTSB 87,251,625 34,067,937 192,037,628 65,799,664* LMTC # # # #
87,261,625 34,067,937 192,037,628 65,799,664*
December 31, 2012 LMTSB 98,325,558 35,471,173 212,987,324 70,817,297* LMTC # # # #
98,325,558 35,471,173 212,987,324 70,817,297*
# LMTC is held as an associate through LMTSB. Its financial information is consolidated with LMTSB.
* Included in total liabilities is preference share premium of RM19,800,000.
The carrying amount of the Group’s investment in LMTSB is represented by:
2013 2012 RM RM
Share of net assets 63,089,240 71,058,677 Goodwill 37,821,214 37,821,214
Carrying amount of the Group’s interest in LMTSB 100,910,454 108,879,891
19. OTHER INVESTMENT
The Group The Company 2013 2012 2013 2012 RM RM RM RM
Non-current LMT Redeemable Preference Shares (“RPS”) 10,029,999 10,029,999 - - LBT Redeemable Cumulative Convertible Preference Shares (“RCCPS”) - - 16,000,000 16,000,000
10,029,999 10,029,999 16,000,000 16,000,000
INTEGRAX BERHAD Annual Report 2013 83 NOTES TO THE FINANCIAL STATEMENTS (Continued)
20. TRADE RECEIVABLE, OTHER RECEIVABLES AND PREPAID EXPENSES
Trade receivable is measured at amortised cost, less impairment losses.
No interest is charged on trade receivable for the first 60 days from the date of invoices. Thereafter, interest is charged at 2% per annum above the prevailing base lending rate as quoted by a local bank on the outstanding balance. They are recognised at their original invoiced amounts which represent their fair values on initial recognition.
Receivables that are neither past due nor impaired
The Group’s trade receivable is owed by TNBJ which has a good collection track record with the Group. The Group’s trade receivable that is neither past due nor impaired has not been renegotiated during the financial year.
The Group does not hold any collateral or other credit enhancements over these balances nor do they have a legal right to offset against any amounts owed by the Group to the counterparty.
An analysis of the trade receivable is as follows:
The Group 2013 2012 RM RM
Neither past due nor impaired 9,368,286 9,366,448 Past due but not impaired - -
Total trade receivable, net 9,368,286 9,366,448
Other receivables and prepaid expenses consist of the following:
The Group The Company 2013 2012 2013 2012 RM RM RM RM
Prepaid expenses 341,307 327,366 67,026 38,086 Interest receivable 36,026 406,226 14,999 327,611 Refundable deposits 229,829 298,317 209,829 278,317 Deposits for property, plant and equipment - 521,753 - 521,753 Other receivables 89,418 549,519 - 863
696,580 2,103,181 291,854 1,166,630
21. DEPOSITS, CASH AND BANK BALANCES
The Group The Company 2013 2012 2013 2012 RM RM RM RM
Cash and bank balances 8,613,907 735,076 437,121 538,770 Deposits with licensed banks 69,205,000 123,405,000 22,900,000 70,500,000 Short-term investment funds 73,530,375 - 48,493,883 -
Cash and cash equivalents 151,349,282 124,140,076 71,831,004 71,038,770
84 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
21. DEPOSITS, CASH AND BANK BALANCES (Continued)
Short-term investment funds represent investments in highly liquid money market instruments. These investments are readily convertible to cash and have insignificant risk of changes in value.
Included in fixed deposits of the Group is an amount of RM5,000 (2012: RM5,000) which has been pledged by LBTSB with a bank for guarantee facilities for the purpose of a bond required by Kastam Diraja Malaysia in respect of its dry bulk terminal’s customs legal landing point status.
22. SHARE CAPITAL
The Group and The Company 2013 2012 RM RM Authorised: 470,000,000 ordinary shares of RM1.00 each 470,000,000 470,000,000 300,000,000 Irredeemable Convertible Preference Shares (“ICPS”) of RM0.10 each 30,000,000 30,000,000
Issued and fully paid: 300,805,917 ordinary shares of RM1.00 each 300,805,917 300,805,917
23. RESERVES
The Group The Company 2013 2012 2013 2012 RM RM RM RM
Non-distributable: Share premium 46,705,593 46,705,593 46,705,593 46,705,593 Capital redemption reserve 185,450 185,450 - -
46,891,043 46,891,043 46,705,593 46,705,593
Capital redemption reserve
The capital redemption reserve was created as a consequence of the redemption of the LBT Redeemable Non-Cumulative Preference Shares (“RNCPS”) by a transfer of the required nominal amount redeemed from retained earnings.
Translation reserve
Exchange differences relating to the translation of the net assets of the Group’s foreign operations from their functional currencies to the Group’s presentation currency were recognised directly in other comprehensive income and accumulated in the translation reserve. Exchange differences previously accumulated in the translation reserve were reclassified to profit or loss on the disposal or partial disposal of the foreign operation.
The Group 2013 2012 RM RM
Balance as at January 1 - 959,309 Exchange differences arising on translating the net assets of foreign operations - (1,069,692) Liquidation of subsidiary companies - 110,383
Balance as at December 31 - -
INTEGRAX BERHAD Annual Report 2013 85 NOTES TO THE FINANCIAL STATEMENTS (Continued)
24. RETAINED EARNINGS
Distributable reserves are those available for distribution by way of cash dividends.
In accordance with the Finance Act 2007, the single tier income tax system became effective from year of assessment 2008. Under this new system, tax on a company’s profit is a final tax, and dividends paid are exempted from tax in the hands of the shareholders. Unlike the previous imputation system, the recipient of the dividend would no longer be able to claim any tax credit.
During the year, the Company elected to disregard its Section 108 tax credits of RM21,804 and moved on to the single tier tax system. Accordingly, the entire retained earnings of the Company as of December 31, 2013 is available for distribution as cash dividends under the single tier system.
25. NON-CONTROLLING INTERESTS
The Group 2013 2012 RM RM
As at January 1 59,775,208 56,765,549 Share of profit for the year 6,564,291 6,047,375 Share of other comprehensive income for the year - 835 Liquidation of subsidiary companies - (38,551) Dividend paid - (3,000,000)
As at December 31 66,339,499 59,775,208
26. DEFERRED TAX LIABILITIES
The Group 2013 2012 RM RM
As at January 1 52,097,000 52,210,000 Recognised in profit or loss (Note 12) (3,130,000) (113,000)
As at December 31 48,967,000 52,097,000
Deferred tax liabilities are attributable to the following:
2013 2012 RM RM
Temporary differences arising on property, plant and equipment 48,967,000 52,097,000
86 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
27. PREFERENCE SHARE CAPITAL
The Group 2013 2012 RM RM Authorised: Redeemable Non-cumulative Convertible Preference Shares of RM0.01 each (LBT RNCPS) 1,000,000 1,000,000 Redeemable Cumulative Convertible Preference Shares of RM0.01 each (LBT RCCPS) 1,000,000 1,000,000
2,000,000 2,000,000
Issued and fully paid: LBT RCCPS 40,000 40,000
The LBT RCCPS have the following rights:
(i) As to income
LBTSB shall pay to the holders of the RCCPS out of profits of LBTSB resolved under the Articles of Association of the Company to be distributed in respect of each financial year in priority to all dividends declared on Ordinary Shares in issue, a fixed cumulative preferential dividend at the rate of ten percent (10%) per annum on the RCCPS then in issue.
(ii) As to redemption
LBTSB shall have the right, at any time after the allotment of any RCCPS (provided it is fully paid) to redeem such shares and in the case of a partial redemption proportionately in respect of each holding of RCCPS but in any event, LBTSB shall be obliged to redeem all of the RCCPS which are then in issue not later than fourteen (14) days prior to a proposed listing of, merger or amalgamation of or reconstruction exercise undertaken by LBTSB unless otherwise agreed by the holders of the Preference Shares then in issue in the case of a merger, amalgamation or other reconstruction exercise; and redeem all of the RCCPS which are then in issue on the date expiring fifteen (15) years from May 21, 2002 (“Redemption Date”).
Any such redemption shall include the nominal amount and a premium of Sen Ninety-Nine (RM0.99) per share payable to the holder.
(iii) As to conversion
(a) If LBTSB fails to redeem the RCCPS in accordance with its Articles of Association; or
(b) Fails to redeem all of the RCCPS on the Redemption Date;
whichever is the earlier, then on the date of such failure, the holders of the RCCPS may convert any of the RCCPS into Ordinary Shares on the basis of one (1) RCCPS for one (1) Ordinary Share provided that if the Ordinary Shares are consolidated or sub-divided at any time prior to the Conversion Date, the number of Ordinary Shares into which the RCCPS are converted shall be adjusted accordingly.
28. PREFERENCE SHARE PREMIUM
The preference share premium account arose from the following:
The Group 2013 2012 RM RM
4,000,000 LBTSB RCCPS at a premium of RM0.99 each 3,960,000 3,960,000
INTEGRAX BERHAD Annual Report 2013 87 NOTES TO THE FINANCIAL STATEMENTS (Continued)
29. TRADE PAYABLE
The Group’s trade payable is owed to LMTSB. The credit period granted is 60 days. No interest is charged by the trade creditor for the first 60 days from the date of invoices. Thereafter, interest is charged at 2% per annum above the prevailing base lending rate as quoted by a local bank on the outstanding balance. The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.
30. OTHER PAYABLES AND ACCRUED EXPENSES
Other payables and accrued expenses comprise the following:
The Group The Company 2013 2012 2013 2012 RM RM RM RM
Other payables 522,522 2,078,469 - - Accrued expenses 1,895,819 1,152,469 1,705,500 1,114,703 Dividend payable 400,000 400,000 - -
2,818,341 3,630,938 1,705,500 1,114,703
Included in other payables of the Group is an amount of RM469,400 (2012: RM65,600) representing amount payable to LMTSB.
31. HIRE-PURCHASE PAYABLES
The Group and The Company 2013 2012 RM RM
Total outstanding 183,780 588,177 Less: Interest-in-suspense (11,923) (44,715)
Principal outstanding 171,857 543,462 Less: Portion due within the next 12 months (shown under current liabilities) (69,344) (179,039)
Non-current portion 102,513 364,423
The hire-purchase are repayable as follows:
The Group and The Company 2013 2012 RM RM
Not later than 1 year 69,344 179,039 Later than 1 year and not more than 5 years 102,513 364,423
171,857 543,462
The interest rates are fixed at the inception of the hire-purchase arrangement. It is the Group’s policy to acquire certain of its property, plant and equipment under hire-purchase agreement. The average hire-purchase term is 5 years. For the year ended December 31, 2013, the average effective borrowing rate was 2.5% p.a. (2012: 2.8% p.a.)
88 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
32. COMPARATIVE FIGURES
Certain comparative figures in the financial statements have been reclassified to conform with current year’s presentation as follows:
As previously As The Group stated Reclassification reclassified RM RM RM December 31, 2012
Statements of financial position: Current assets Trade receivable 9,281,768 84,680 9,366,448
Current liabilities Trade payable 9,533,462 84,680 9,618,142
As previously As stated Reclassification reclassified RM RM RM December 31, 2012
Statements of Cash Flows: Cash flows from/(used in) operating activities Decrease in trade receivable, other receivables and prepaid expenses 11,288,012 (84,680) 11,203,332 Increase in trade payable, other payables and accrued expenses 1,275,450 84,680 1,360,130
33. FINANCIAL INSTRUMENTS
Capital Risk Management
The objective of the Group’s capital management is to safeguard the Group’s ability to continue as a going concern while maximising the return to shareholders through the optimisation of debt and equity balance. The Group’s overall strategy remains unchanged from prior year.
The capital structure of the Group consists of equity of the Group comprising share capital, reserves, retained earnings and non-controlling interest as detailed in Notes 23 to 25. The Group is not subject to any externally imposed capital requirements.
Significant Accounting Policies
Details of the significant accounting policies and methods adopted (including the criteria for recognition, the bases of measurement, and the bases for recognition of income and expenses), for each class of financial asset, financial liability and equity instrument are disclosed in Note 4.
INTEGRAX BERHAD Annual Report 2013 89 NOTES TO THE FINANCIAL STATEMENTS (Continued)
33. FINANCIAL INSTRUMENTS (continued)
Categories of financial instruments
The table below provides an analysis of financial instruments categorised as follows:
(i) Available-for-sale financial assets (ii) Loans and receivables (iii) Held-to-maturity (iv) Other financial liabilities measured at amortised cost
The Group The Company 2013 2012 2013 2012 RM RM RM RM
Financial assets Available-for-sale financial assets Other investment 10,029,999 10,029,999 16,000,000 16,000,000
Loan and receivables: Trade receivable 9,368,286 9,366,448 - - Other receivables 355,273 1,775,815 224,828 1,128,544 Amount owing by subsidiary companies - - 161,170,813 152,223,282 Amount owing by associates 9,360 - 9,360 - Deposits, cash and bank balances 151,349,282 124,140,076 71,831,004 71,038,770
Financial liabilities At amortised cost: Preference share capital 40,000 40,000 - - Preference share capital premium 3,960,000 3,960,000 - - Trade payable 10,402,900 9,618,142 - - Other payables and accrued expenses 2,818,341 3,630,938 1,705,500 1,114,703 Hire-purchase payables 171,857 543,462 171,857 543,462 Amount owing to subsidiary companies - - 1,411,619 1,427,367
Financial Risk Management Objectives
The Group’s corporate treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group. These risks include credit risk, liquidity risk, market risk, foreign currency risk and interest rate risk.
The Group seeks to minimise the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Group’s policies approved by the board of directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and the investment of excess liquidity. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.
Credit risk
The Group’s primary exposure to credit risk arises through its trade receivable. Appropriate informal credit evaluations were performed on customers prior to entering into contractual agreements with them or with customers requiring credit over a certain amount. The exposure to credit risk is monitored by management on an on-going basis.
At the end of the reporting period, 100% (December 31, 2012: 100%) of the trade receivable is owed by TNBJ which is the current sole customer of LBTSB. The maximum exposure to credit risk is represented by the carrying amount of each financial asset presented on the statement of financial position.
90 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
33. FINANCIAL INSTRUMENTS (Continued)
Liquidity Risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities.
The Group and the Company practice prudent liquidity risk management by maintaining adequate reserves, by continuously monitoring forecast and actual cash flows. The Group’s and the Company’s operations are financed mainly through capital and retained earnings.
The table below analyses the maturity profile of the Group’s and the Company’s financial liabilities at the end of the reporting period based on contractual undiscounted repayment obligations.
The Group Contractual On demand interest rate Total or within 1 year 1 to 5 years December 31, 2013 % RM RM RM Preference share capital - 40,000 - 40,000 Preference share premium - 3,960,000 - 3,960,000 Trade payable - 10,402,900 10,402,900 - Other payables and accrued expenses - 2,818,341 2,818,341 - Hire purchase payables 2.5% 183,780 75,610 108,170
17,405,021 13,296,851 4,108,170
December 31, 2012 Preference share capital - 40,000 - 40,000 Preference share premium - 3,960,000 - 3,960,000 Trade payable - 9,618,142 9,618,142 - Other payables and accrued expenses - 3,630,938 3,630,938 - Hire purchase payables 2.8% 588,177 202,776 385,401
17,837,257 13,451,856 4,385,401
The Company
December 31, 2013 Other payables and accrued expenses - 1,705,500 1,705,500 - Amount owing to subsidiary companies - 1,411,619 1,411,619 - Hire purchase payables 2.5% 183,780 75,610 108,170
3,300,899 3,192,729 108,170
December 31, 2012 Other payables and accrued expenses - 1,114,703 1,114,703 - Amount owing to subsidiary companies - 1,427,367 1,427,367 - Hire purchase payables 2.8% 588,177 202,776 385,401
3,130,247 2,744,846 385,401
INTEGRAX BERHAD Annual Report 2013 91 NOTES TO THE FINANCIAL STATEMENTS (Continued)
33. FINANCIAL INSTRUMENTS (Continued)
Market Risk
The Group’s and the Company’s activities expose them primarily to the financial risks of changes in interest rates.
Foreign Currency Risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The carrying amounts of the Group and the Company’s monetary assets and liabilities are denominated in Ringgit Malaysia, which is also the functional and presentation currency of the Group and the Company. As such, the Group and the Company are not exposed to any significant foreign currency risk.
No sensitivity analysis is prepared as the Group and the Company did not have significant foreign currency denominated monetary assets nor monetary liabilities at the end of this reporting period.
Interest rate risk
The Group and the Company place cash balances with reputable licensed banks to generate interest income for the Group and the Company. The Group and the Company manage their interest rate risk by placing such balances in deposits with maturities ranging from 1 week to 6 months at interest rates ranging from 2.30% to 3.15% per annum. The Group and the Company also place cash balances with reputable short-term investment funds to earn tax exempt interest income. The tax exempt interest rates ranged from 2.21% to 3.27% per annum.
Effective interest rate analysis
In respect of interest-earning financial assets and interest-bearing financial liabilities, the following table indicates their average effective interest rates at the end of the reporting period and the periods in which they mature:
Effective Less than The Group interest rate Total 1 year 1 to 5 years % RM RM RM
December 31, 2013 Variable rate instruments Short-term investment funds 2.74 73,530,375 73,530,375 -
Fixed rate instruments Deposits with licensed banks 3.08 69,205,000 69,205,000 - Preference share capital 10.00 (40,000) - (40,000) Preference share premium 10.00 (3,960,000) - (3,960,000)
138,735,375 142,735,375 (4,000,000)
December 31, 2012 Fixed rate instruments Deposits with licensed banks 2.90 123,405,000 123,405,000 - Preference share capital 10.00 (40,000) - (40,000) Preference share premium 10.00 (3,960,000) - (3,960,000)
119,405,000 123,405,000 (4,000,000)
92 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
33. FINANCIAL INSTRUMENTS (Continued) Effective interest rate analysis(Continued) Effective Less than interest rate Total 1 year 1 to 5 years % RM RM RM The Company December 31, 2013 Variable rate instruments Short-term investment funds 2.75 48,493,883 48,493,883 - Fixed rate instruments Deposits with licensed banks 3.37 22,900,000 22,900,000 - 71,393,883 71,393,883 - December 31, 2012 Fixed rate instruments Deposits with licensed banks 3.09 70,500,000 70,500,000 -
Fair values of financial instruments The carrying amounts of cash and cash equivalents, trade and other current receivables and payables, and other liabilities and amounts payable approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair values of other classes of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:
2013 2012 Carrying Fair Carrying Fair Amount value Amount value RM RM RM RM The Group Financial assets Available-for-sale financial assets: Other investment 10,029,999 See (i) below 10,029,999 See (i) below
Loan and receivables: At amortised cost: Trade receivable 9,368,286 9,368,286 9,366,448 9,366,448 Other receivables 355,273 355,273 1,775,815 1,775,815 Amount owing by associate 9,360 9,360 - - Deposits, cash and bank balances 77,818,907 77,818,907 124,140,076 124,140,076
At fair value through profit or loss: Short-term investment funds 73,530,375 73,530,375 - -
Financial liabilities At amortised cost: Trade payable 10,402,900 10,402,900 9,618,142 9,618,142 Other payables and accrued expenses 2,818,341 2,818,341 3,630,938 3,630,938 Hire purchase payables 171,857 171,857 543,462 543,462 Preference share capital 40,000 See (ii) below 40,000 See (ii) below Preference share premium 3,960,000 See (ii) below 3,960,000 See (ii) below
INTEGRAX BERHAD Annual Report 2013 93 NOTES TO THE FINANCIAL STATEMENTS (Continued)
33. FINANCIAL INSTRUMENTS (Continued) Fair values of financial instruments (Continued) 2013 2012 Carrying Fair Carrying Fair Amount value Amount value RM RM RM RM The Company Financial assets Available-for-sale financial assets: Other investment 16,000,000 See (iii) below 16,000,000 See (iii) below
Loan and receivables: At amortised cost: Other receivables 224,828 224,828 1,128,544 1,128,544 Amount owing by subsidiary companies 161,170,813 161,170,813 152,223,282 152,223,282 Amount owing by associate 9,360 9,360 - - Deposits, cash and bank balances 23,337,121 23,337,121 71,038,770 71,038,770
At fair value through profit or loss: Short-term investment funds 48,493,883 48,493,883 - -
Financial liabilities At amortised cost: Other payables and accrued expenses 1,705,500 1,705,500 1,114,703 1,114,703 Amount owing to subsidiary companies 1,411,619 1,411,619 1,427,367 1,427,367 Hire purchase payables 171,857 171,857 543,462 543,462
The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices. Significant assumptions used in determining the fair value of other financial assets and liabilities are as follows:
(i) LMTSB RPS It is not practicable to estimate the fair value of this investment representing 50% less one (1) share of the issued and paid-up LMTSB RPS capital of this unquoted company. This investment is carried at its original cost of RM10,029,999 (December 31, 2012: RM10,029,999) in the statement of financial position. The LMTSB RPS are non-cumulative and may be redeemed out of the retained earnings of LMTSB at LMTSB’s shareholders’ option.
(ii) Preference share capital and share premium held by minority shareholders It is not practicable to estimate the fair value of this financial liability representing 20% of the issued and paid-up LBTSB RCCPS capital. This financial liability is carried at its original cost in the statement of financial position. The principal terms of the LBTSB RCCPS are disclosed in Note 27 and 28.
(iii) LBTSB RCCPS It is not practicable to estimate the fair value of this investment representing 80% of the issued and paid-up LBTSB RCCPS capital. This investment is carried at its original cost of RM16,000,000 (December 31, 2012: RM16,000,000) in the statement of financial position. As at December 31, 2013, the net tangible assets reported by LBTSB were RM331,697,500 (December 31, 2012: RM298,876,046). The principal terms of the LBTSB RCCPS are disclosed in Notes 27 and 28 to these financial statements. There were no unrecognised financial instruments as at the end of the reporting period.
94 INTEGRAX BERHAD Annual Report 2013 NOTES TO THE FINANCIAL STATEMENTS (Continued)
33. FINANCIAL INSTRUMENTS (Continued)
Fair value measurements recognised in the statements of financial position
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, group into Levels 1 to 3 based on the degree to which the fair value is observable.
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Level 1 Level 2 Level 3 Total RM RM RM RM
The Group
December 31, 2013 Financial assets at fair value through profit or loss Short-term investment funds - 73,530,375 - 73,530,375
The Company
December 31, 2013 Financial assets at fair value through profit or loss Short-term investment funds - 48,493,883 - 48,493,883
There were no transfers between Levels 1 and 2 during the financial year. The fair value of investments is determined using the “short-term investment funds” net asset value per unit as the end of the reporting period.
34. COMMITMENTS
(i) Capital Commitment
As at the end of the reporting period, the Group and the Company have the following capital commitment in respect of the acquisition of property, plant and equipment:
The Group The Company 2013 2012 2013 2012 RM RM RM RM
Approved and contracted for 19,084,547 800,000 - 800,000 Approved but not contracted for 4,380,000 200,000 - 200,000
23,464,547 1,000,000 - 1,000,000
INTEGRAX BERHAD Annual Report 2013 95 NOTES TO THE FINANCIAL STATEMENTS (Continued)
34. COMMITMENTS (Continued)
(ii) Operating lease arrangement
In 2012, the Company entered into a non-cancellable operating lease agreement for the use of certain office premises. This lease term is for 9 years which expires in November 2022. The future minimum lease payments under a non-cancellable operating lease contracted for as at the balance sheet date but not recognised as liabilities are as follows:
The Group and The Company 2013 2012 RM RM
Not later than 1 year 627,666 313,833 Later than 1 year and not more than 5 years 2,876,803 2,876,803 Later than 5 years 1,830,692 2,458,358
5,335,161 5,648,994
35. SIGNIFICANT EVENTS
(i) On March 13, 2013, LBTSB entered into a construction contract for the design, supply, erection, installation and hook up, and the commissioning of a new Additional Grab Ship Unloader (“SUL 3”). The contract price is RM37.75 million and a performance security bond of 10% of the contract price has been provided by the contractor to LBTSB. A design bond of 1.5% of the contract price will also be provided by the contractor to LBTSB. The construction of SUL 3 was completed and delivered to LBTSB on February 3, 2014.
(ii) On March 28, 2013, LBTSB entered into a Facilities Agreement with Hong Leong Bank Berhad and Hong Leong Investment Bank Berhad for facilities totalling RM90 million to finance the capital expenditure of LBTSB for the purposes of expanding the infrastructure and facilities of LBTSB deep water bulk terminal.
36. PUT OPTION
A right has been granted to the single minority shareholder of LBTSB to sell (put) to the Company its 20% stake of 13,600,000 ordinary shares of RM1.00 each in LBTSB at fair value upon the redemption of all classes of preference shares issued by LBTSB after 15 years from May 21, 2002 provided it remains the sole beneficial owner of the 20% stake. The Directors are of the opinion that the value of this put option cannot be reliably measured.
37. SUBSEQUENT EVENTS
There were no material significant events subsequent to the reporting date.
96 INTEGRAX BERHAD Annual Report 2013 SUPPLEMENTARY INFORMATION ON THE BREAKDOWN OF REALISED AND UNREALISED PROFITS OR LOSSES
38. On March 25, 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed issuers pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements. This directive requires all listed issuers to disclose the breakdown of the unappropriated profits or accumulated losses as at the end of the reporting period, into realised and unrealised profits or losses.
On December 20, 2010, Bursa Malaysia further issued another directive on the disclosure and the prescribed format of presentation.
The breakdown of the retained earnings of the Group and of the Company as at December 31, 2013, into realised and unrealised profits, pursuant to the directive, is as follows:
2013 2012 The The The The Group Company Group Company RM RM RM RM Total retained earnings of the Company and its subsidiary companies: Realised 340,346,310 37,353,289 300,939,541 28,236,762 Unrealised (39,173,600) - (41,677,600) -
301,172,710 37,353,289 259,261,941 28,236,762
Total share of retained earnings from associates: Realised 129,983,794 - 113,066,306 - Unrealised (2,414,007) - (2,527,080) -
127,569,787 - 110,539,226 -
Less: Consolidation Adjustments (157,889,570) - (126,325,281) -
Total retained earnings as per statement of financial position 270,852,927 37,353,289 243,475,886 28,236,762
The determination of realised and unrealised profits or losses is based on Guidance of Special Matter No. 1 “Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Securities Listing Requirements” as issued by the Malaysian Institute of Accountants on December 20, 2010. A charge or credit to the profit or loss of a legal entity is deemed realised when it resulted from the consumption of resource of all types and form, regardless of whether is the recovery consumed in the ordinary course of business or otherwise. Resources may be consumed through sale or use. Where a credit or a charge to the profit or loss upon initial recognition or subsequent measurement of an asset or a liability is not attributed to the consumption of resources, such credit or charge should not be deemed as realised until the consumption of resources could be demonstrated.
This supplementary information has been made solely for complying with the disclosure requirements as stipulated in the directive of Bursa Malaysia Securities Berhad and is not made for any other purposes.
INTEGRAX BERHAD Annual Report 2013 97 STATEMENT BY DIRECTORS
The directors of INTEGRAX BERHAD, state that, in their opinion, the accompanying financial statements are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of December 31, 2013 and of the financial performance and the cash flows of the Group and of the Company for the year ended on that date.
The information set out in Note 38 to the financial statements has been compiled 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 Malaysia Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.
Signed on behalf of the Board in accordance with resolution of the Directors,
(Signed) (Signed)
DATO’ SERI DIRAJA MOHAMAD AZMAN SHAH BIN MOHD YUSOF TAJOL ROSLI BIN MOHD GHAZALI
Kuala Lumpur, April 21, 2014
98 INTEGRAX BERHAD Annual Report 2013 DECLARATION BY THE OFFICER PRIMARILY RESPONSIBLE FOR THE FINANCIAL MANAGEMENT OF THE GROUP AND OF THE COMPANY
I, THERESA KONG LYE FUN, the officer primarily responsible for the financial management ofINTEGRAX BERHAD, do solemnly and sincerely declare that the accompanying financial statements are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declaration Act, 1960.
(Signed)
THERESA KONG LYE FUN
Subscribed and solemnly declared by the abovenamed THERESA KONG LYE FUN at KUALA LUMPUR this 21st day of April, 2014.
Before me,
(Signed)
COMMISSIONER FOR OATHS
INTEGRAX BERHAD Annual Report 2013 99 PROPERTIES OWNED BY THE GROUP AS AT 31 DECEMBER 2013
Land area / (built- up area) Tenure / (Age of Net book value No. Lot No./Location Description Date of Acquisition sq metres building) RM 1. H.S. (D) 17396 Bulk terminal, berths, trestle and 25 February 2002 1,088,866.73 99 years Leasehold 147,981,822 P.T. 24776 mechanical handling equipment (4,662) expiring 24/2/2101 Mukim of Sitiawan and structures, office and (11 years) District of Manjung maintenance buildings, land and Perak Darul Ridzuan waterbody
2. H.S. (D) 75362 3 units of low cost flats 19 May 1995 190 Freehold 47,001 P.T. 2193 (190) (18 years) Mukim of Setul District of Seremban Negeri Sembilan
Notes:
(1) No revaluation was done on the abovementioned properties.
(2) Property No. 1 is being utilised for bulk terminal activities.
(3) Property No. 2 is currently not being utilised for any purpose.
(4) The list excludes industrial properties on which are located the port facilities of Lumut Maritime Terminal owned by Lumut Maritime Terminal Sdn Bhd, an associate company as set out below:-
Approximate Land Area No. Description of Title/Mukim Description (acres) Tenure / (Age of Building) 1. H.S. (D) Dgs 7105, PT 6973 Wharfs, Open Storage Areas, 72.54 Leasehold – 99 years Mukim Lumut Warehouses and Office Building Expiring on 21 December 2094 Perak Darul Ridzuan (19 years) 2. H.S. (D) Dgs 6247, PT 2273 Waterbody 27.46 Leasehold – 99 years Mukim Lumut Expiring on 18 December 2093 Perak Darul Ridzuan
100 INTEGRAX BERHAD Annual Report 2013 ANALYSIS OF SHAREHOLDINGS AS AT 30 April 2014
Authorized share capital : RM470,000,000 Issued and paid-up share capital : RM300,805,917 Class of share : Ordinary shares of RM1.00 each Voting rights : One vote per ordinary share on a poll One vote per shareholder on a show of hands
BREAKDOWN OF SHAREHOLDINGS
1. Analysis by Size of Shareholdings
Size of Holdings No. of Holders % No. of Holdings % 1 – 99 83 3.43 2,857 0.00 100 – 1,000 767 31.71 710,795 0.24 1,001 – 10,000 1,111 45.93 4,861,595 1.61 10,001 – 100,000 333 13.76 10,680,890 3.55 100,001 – less than 5% of issued shares 121 5.00 135,919,699 45.19 5% and above of issued shares 4 0.17 148,630,081 49.41 Total 2,419 100 300,805,917 100
2. List of Top 30 Shareholders as at 30 April 2014
No. Name Holdings % 1. Tenaga Nasional Berhad 66,538,269 22.12 2. Golden Initiative Sdn Bhd 37,146,595 12.35 3. CIMB Group Nominees (Tempatan) Sdn Bhd CIMB Bank Bhd for Taipan Merit Sdn Bhd 24,945,217 8.29 4. CIMB Group Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Taipan Merit Sdn Bhd 20,000,000 6.65 5. TSM Global Berhad 12,000,000 3.99 6. Amanahraya Trustees Berhad Public Smallcap Fund 11,854,200 3.94 7. Cartaban Nominees (Tempatan) Sdn Bhd Corston-Smith Asset Management Sdn Bhd for Corston-Smith Asean Corporate Governance Fund 11,222,100 3.73 8. Jurukapal Marine Services Sdn Bhd 10,640,000 3.54 9. HSBC Nominees (Asing) Sdn Bhd Exempt An For Credit Suisse 6,100,000 2.03 10. HSBC Nominees (Asing) Sdn Bhd Shafston Group Limited 5,980,065 1.99 11. HSBC Nominees (Asing) Sdn Bhd Rakewood Enterprises Ltd 5,907,302 1.96 12. Cartaban Nominees (Asing) Sdn Bhd Exempt An For RBC Investor Services Trust (Clients Account) 4,826,600 1.60 13. Nor’aini binti Hashim 4,347,826 1.45
INTEGRAX BERHAD Annual Report 2013 101 ANALYSIS OF SHAREHOLDINGS AS AT 30 April 2014 (continued)
BREAKDOWN OF SHAREHOLDINGS (Continued)
2. List of Top 30 Shareholders as at 30 April 2014 (continued)
No. Name Holdings % 14. Golden Initiative Sdn Bhd 3,722,347 1.24 15. Maybank Nominees (Tempatan) Sdn Bhd Maybank Trustees Berhad for MAAKL-HW Flexi Fund 3,229,000 1.07 16. Lim Gaik Bway @ Lim Chiew Ah 2,761,000 0.92 17. Taipan Merit Sdn Bhd 2,396,426 0.80 18. Kenanga Nominees (Asing) Sdn Bhd Cantal Capital Inc. 2,200,000 0.73 19. Amanahraya Trustees Berhad Public Strategic Smallcap Fund 2,054,000 0.68 20. Citigroup Nominees (Tempatan) Sdn Bhd Kumpulan Wang Persaraaan (Diperbadankan) (Kenanga) 1,969,300 0.65 21. HSBC Nominees (Tempatan) Sdn Bhd HSBC (M) Trustee Bhd For Hwang Aiiman Growth Fund 1,825,000 0.61 22. HSBC Nominees (Asing) Sdn Bhd Exempt An For JP Morgan Chase Bank, National Association (Norges BK) 1,631,700 0.54 23. Marathon Capital Sdn Bhd 1,600,000 0.53 24. Cartaban Nominees (Tempatan) Sdn Bhd RHB Trustees Berhad for MAAKL-HW Shariah Progress Fund 1,584,600 0.53 25. HSBC Nominees (Asing) Sdn Bhd Exempt An For The Hongkong And Shanghai Banking Corporation Limited 1,500,000 0.50 26. CIMB Group Nominees (Tempatan) Sdn Bhd CIMB Islamic Trustee Berhad for Hwang Select Dividend Fund 1,344,500 0.45 27. HSBC Nominees (Asing) Sdn Bhd Exempt An For Coutts & Co. Ltd (HK Branch) 1,200,000 0.40 28. Kenanga Nominees (Asing) Sdn Bhd Emmel Inc. 1,000,000 0.33 29. Tan Suan Huat 1,000,000 0.33 30. Citigroup Nominees (Asing) Sdn Bhd CBNY For Dimensional Emerging Markets Value Fund 974,800 0.32
102 INTEGRAX BERHAD Annual Report 2013 ANALYSIS OF SHAREHOLDINGS AS AT 30 April 2014
BREAKDOWN OF SHAREHOLDINGS (Continued)
3. List of Substantial Shareholders
Name of Substantial Shareholder Direct Indirect No. of Shares % No. of Shares % Tenaga Nasional Berhad 66,538,269 22.12 - - Khazanah Nasional Berhad - - 66,538,269 1 22.12 Amin bin Halim Rasip - - 64,269,409 2 21.37 Golden Initiative Sdn Bhd 40,868,942 13.59 - - Nor’aini binti Hashim 4,347,826 1.45 51,508,942 3 17.12 Taipan Merit Sdn Bhd 47,341,643 15.74 - - Perak Corporation Berhad - - 47,341,643 4 15.74 Perbadanan Kemajuan Negeri Perak - - 47,341,643 5 15.74
Notes:- 1. Deemed interested by virtue of its shareholding in Tenaga Nasional Berhad. 2. Deemed interested by virtue of his shareholding in Golden Initiative Sdn Bhd, Jurukapal Marine Services Sdn Bhd, Shafston Group Limited and Rakewood Enterprises Ltd. 3. Deemed interested by virtue of her shareholding in Golden Initiative Sdn Bhd and Jurukapal Marine Services Sdn Bhd. 4. Deemed interested by virtue of its shareholding in Taipan Merit Sdn Bhd. 5. Deemed interested by virtue of its indirect shareholding in Taipan Merit Sdn Bhd via Perak Corporation Berhad.
4. Directors’ Shareholdings
Name of Director Direct Indirect No. of Shares % No. of Shares % Dato’ Seri DiRaja Mohamad Tajol Rosli bin Mohd. - - - - Ghazali En. Amin bin Halim Rasip - - 68,617,235 1 22.81 En. Azman Shah bin Mohd. Yusof 1,000 0.0 - - Datuk Shireen Ann Zaharah bt Muhiudeen - - 16,429,400 2 5.46 Mr. Paul Chan Wan Siew - - - - Mr. Loong Foo Ching - - - - Ir. Abdul Manap bin Ali Hasan - - - - Laksamana Tan Sri Dato’ Seri Ilyas bin Hj. Din - - - - Dato’ Abdul Manaf bin Hashim - - - - En. Fazlur Rahman bin Zainuddin - - - -
Notes: 1. Deemed interested by virtue of his shareholding in Golden Initiative Sdn Bhd, Jurukapal Marine Services Sdn Bhd, Shafston Group Limited, Rakewood Enterprises Ltd and shares held through nominees and by spouse. 2. Deemed interested by virtue of her being the Managing Director of Corston-Smith Asset Management Sdn Bhd, the fund manager for the ordinary shares of the Company held on behalf of British Columbia Investment Management Corporation (bcIMC) and Corston-Smith ASEAN Corporate Governance Fund.
INTEGRAX BERHAD Annual Report 2013 103 NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Twenty-Eighth Annual General Meeting of the Company will be held at Junior Ballroom, InterContinental Kuala Lumpur Hotel, 165 Jalan Ampang, 50450 Kuala Lumpur, Malaysia on Wednesday, 18 June 2014 at 10.00 a.m. for the following purposes:-
1) To receive and consider the Audited Financial Statements for the financial year ended 31 December 2013 together with the Reports of the Directors and Auditors thereon. [Please refer to Note (1)]
2) To re-elect the following Directors retiring in accordance with Article 80 of the Company’s Articles of Association:-
2.1 Dato’ Seri DiRaja Mohamad Tajol Rosli bin Mohd Ghazali Ordinary Resolution 1
2.2 Mr. Chan Wan Siew Ordinary Resolution 2
2.3 Mr. Loong Foo Ching Ordinary Resolution 3
3) To approve the Directors’ fees of RM1,073,345 for the financial year ended 31 December 2013. [2012: RM912,500] Ordinary Resolution 4
4) To re-appoint Messrs Deloitte & Touche as Auditors of the Company and to authorise the Directors to fix their remuneration. Ordinary Resolution 5
5) As special business, to consider and if thought fit, to pass, with or without any modifications, the following resolutions:-
5.1 PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR SHARE BUY-BACK BY THE COMPANY [Please refer to Resolution Note A] Ordinary Resolution 6
5.2 PROPOSED AMENDMENT TO THE ARTICLES OF ASSOCIATION OF THE COMPANY Special Resolution 1 [Please refer to Resolution Note B]
6) To transact any other business of which due notice shall have been given.
By Order of the Board
Lim Hooi Mooi [MAICSA 0799764] Wong Wai Foong [MAICSA 7001358] Joint Secretaries Kuala Lumpur 27 May 2014
Ordinary Resolution 6 – Resolution Note A
PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR SHARE BUY-BACK BY THE COMPANY
“THAT subject to the Company’s compliance with all applicable rules, regulations, orders and guidelines made pursuant to the Companies Act, 1965, the provisions of the Company’s Memorandum and Articles of Association and the requirements of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad [“BMSB”] and other applicable laws, rules, regulations and approvals of all relevant regulatory authorities, authority be given to the Directors for the Company to buy back such amount of ordinary share of RM1.00 each in the Company (“Authority to Buy-Back Shares”) as may be determined by the Directors of the Company from time to time through the BMSB upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company provided that:
(a) the maximum number of shares which may be purchased and/or held by the Company at any point of time pursuant to this resolution shall not exceed ten percent (10%) of the total issued and paid-up share capital of the Company for the time being quoted on BMSB;
(b) the maximum amount of funds to be allocated for the Authority to Buy-Back Shares shall not exceed the sum of retained profits and the share premium account of the Company based on its latest audited financial statements available up to the date of a transaction pursuant to the Authority to Buy-Back Shares;
104 INTEGRAX BERHAD Annual Report 2013 NOTICE OF ANNUAL GENERAL MEETING (continued)
PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR SHARE BUY-BACK BY THE COMPANY (continued)
THAT at the discretion of the Directors of the Company, the shares purchased by the Company pursuant to the Authority to Buy-Back Shares may be dealt with in all or any of the following manner:
(i) the shares so purchased maybe cancelled; and/or (ii) the shares so purchased may be retained as treasury shares in accordance with the relevant rules of BMSB for distribution as dividend to the shareholders and/or resell through BMSB and/or subsequently cancelled; and/or (ii) part of the shares so purchased may be retained as treasury shares with the remainder being cancelled;
THAT such authority shall commence upon the passing of this resolution, until the conclusion of the next Annual General Meeting of the Company or the expiry of the period within which the next Annual General Meeting is required by law to be held unless revoked or varied by ordinary resolution of the shareholders of the Company in general meeting but so as not to prejudice the completion of a purchase made before such expiry date;
AND THAT the Directors of the Company be and are hereby authorized to take all steps as are necessary or expedient to implement or to give effect the Authority to Buy-Back Shares with full powers to amend and/or assent to any conditions, modifications, variations or amendments (if any) as may be imposed by the relevant governmental/regulatory authorities from time to time and with full power to do all such acts and things thereafter in accordance with the Companies Act, 1965, the provisions of the Company’s Memorandum and Articles of Association and the requirements of the BMSB and all other relevant governmental/regulatory authorities.”
Special Resolution 1 – Resolution Note B
PROPOSED AMENDMENT TO THE ARTICLES OF ASSOCIATION OF THE COMPANY
“THAT the proposed amendment to the Articles of Association of the Company as set out below be and is hereby approved and adopted AND THAT the Directors of the Company be and are hereby authorized to assent to any modifications, variations and/or amendments as may be required by the relevant authorities and to do all acts and things and take all such steps as may be considered necessary to give full effect to the proposed amendment to the Company’s Articles of Association.
Article No Existing Provision Amended Provision 132 The Directors shall from time to time in accordance with Section The Directors shall from time to time in accordance with Section 169 of the Act cause to be prepared and laid before the Company 169 of the Act cause to be prepared and laid before the Company in general meeting such profit and loss accounts, balance sheets in general meeting such profit and loss accounts, balance sheets and report as are referred to in the Section. The interval between and report as are referred to in the Section. The interval between the close of a financial year of the Company and the issue of the the close of a financial year of the Company and the issue of the annual audited accounts, the Directors’ and the Auditors’ reports annual audited accounts, the Directors’ and the Auditors’ reports relating to it shall not exceed four (4) months. A copy of each such relating to it shall not exceed four (4) months. A copy of each such documents shall not less than fourteen (14) days before the date documents shall not less than fourteen (14) days before the date of the meeting (or such shorter period as may be agreed in any of the meeting (or such shorter period as may be agreed in any year for the receipt of notice of the meeting pursuant to Article 57) year for the receipt of notice of the meeting pursuant to Article be sent to every member of, and to every holder of debentures of 57) be sent to every member of, and to every holder of debentures the Company under the provisions of the Act or of these Articles. of the Company under the provisions of the Act or of these Articles. The requisite number of copies of each such documents as may The requisite number of copies of each such documents as may be be required by the stock exchange and/or other stock exchange(s), required by the stock exchange and/or other stock exchange(s), if any, upon which the Company’s share may be listed shall at the if any, upon which the Company’s share may be listed shall at the same time be likewise sent to each stock exchange and/or other same time be likewise sent to each stock exchange and/or other stock exchange(s) PROVIDED that this Article shall not require a stock exchange(s) PROVIDED that this Article shall not require a copy of these documents to be sent to any person of whose address copy of these documents to be sent to any person of whose address the Company is not aware but any member to whom a copy of these the Company is not aware but any member to whom a copy of these documents has not been sent shall be entitled to receive a copy free documents has not been sent shall be entitled to receive a copy free of charge on application at the Company’s registered office. Such of charge on application at the Company’s registered office. Such document may be in printed form or in CD-ROM or in such other form document may be in printed form or in CD-ROM or in such other form of electronic media. of electronic media.
INTEGRAX BERHAD Annual Report 2013 105 NOTICE OF ANNUAL GENERAL MEETING (continued)
Notes:
1. The proposed Agenda 1 above is meant for discussion only. The provisions of Section 169 of the Companies Act, 1965 [“the Act”] and the Articles of Association of the Company require that the Audited Financial Statements and the Reports of the Directors and Auditors thereon be laid before the Company at its Annual General Meeting. As such, this Agenda item is not a business which requires a resolution to be put to vote by shareholders.
2. With respect to deposited securities, only members whose names appear in the Record of Depositors on 13 June 2014 [General Meeting Record of Depositors] shall be eligible to attend the meeting or to appoint proxy[ies] to attend and/or vote on his behalf.
3. A proxy may but does not need to be a member of the Company and Section 149(1)(b) of the Companies Act, 1965 (“the Act”) shall not apply.
4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at #36.01, Level 36, Cap Square Tower, No 10 Jalan Munshi Abdullah, 50100 Kuala Lumpur, Malaysia not less than 48 hours before the time appointed for holding the meeting.
5. A member shall be entitled to appoint more than one proxy to attend and vote at the same meeting. Where a member of the Company is an authorized nominee, as defined under the Central Depositories Act 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Where a member of the Company is an exempt authorized nominee which holds the ordinary shares of the Company for multiple beneficial owners in one securities account (“omnibus account”) there is no limit to the number of proxies it may appoint in respect to the omnibus account.
6. Where a member, or an authorised nominee or an exempt authorized nominee appoints more than one proxy the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.
7. If the appointor is a corporation, the proxy form must be executed under its common seal or under the hand of its attorney.
8. Explanatory Notes on Special Business –
8.1 Ordinary Resolution 6 – Proposed Renewal of Shareholders’ Mandate for Share Buy-Back Authority
The Ordinary Resolution proposed in Agenda 5.1 above, if passed, will empower the Directors of the Company to purchase up to ten percent (10%) of the issued and paid-up share capital of the Company by utilising the funds allocated which shall not exceed the total retained profits and share premium of the Company. This authority will, unless revoked or varied at a General Meeting, expire at the conclusion of the next AGM of the Company.
Further information on the Proposed Renewal of Shareholders’ Mandate for Share Buy-Back Authority is set out in the Circular to Shareholders of the Company which is despatched together with the Company’s 2013 Annual Report.
8.2 Special Resolution 1 – Proposed Amendment to the Articles of Association of the Company
The Special Resolution proposed in Agenda 5.2 above, if passed, will bring the Company’s Articles of Association in line with the amendments to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING
There is no person seeking election as director at the Annual General Meeting.
106 INTEGRAX BERHAD Annual Report 2013 INTEGRAX BERHAD PROXY FORM Company No. 49317-W I/We [name of shareholder as per NRIC/ passport/ certificate of incorporation in capital letters] with (NEW NRIC NO.) (OLD NRIC NO.) (PASSPORT NO.) (COMPANY NO.) of (full address) being a member(s) of abovementioned Company, hereby appoint (name of proxy as per NRIC/ passport in capital letters) with (NEW NRIC No.) (OLD NRIC NO.) (PASSPORT NO.) of (full address) or failing him/her (name of proxy as per NRIC/ passport in capital letters) with (NEW NRIC No.) (OLD NRIC NO.) (PASSPORT NO.) of (full address) or failing him/her, the Chairman of the Meeting as my/ our proxy to vote for me/ us on my/ our behalf at Twenty-Eighth (28th) Annual General Meeting of the Company to be held at Junior Ballroom, InterContinental Kuala Lumpur Hotel, 165 Jalan Ampang, 50450 Kuala Lumpur, Malaysia on Wednesday, 18 June 2014 at 10.00 am and at any adjournment thereof. My/Our proxy is to vote as indicated below: Please indicate with an “X” in the spaces as provided below how you wish to cast your votes. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his /her discretion.
No. Resolutions For Against 1. Re-election of Dato’ Seri DiRaja Mohamad Tajol Rosli bin Mohd Ghazali 2. Re-election of Mr. Chan Wan Siew 3. Re-election of Mr. Loong Foo Ching 4. To approve the payment of Directors’ Fees 5. Re-appointment of Messrs Deloitte & Touche as Auditors 6. Proposed Renewal of Shareholders’ Mandate for Share Buy-Back Authority 7. Proposed Amendment to the Articles of Association of the Company
For appointment of two (2) proxies, percentage of shareholdings to be represented by the proxies: Signature(s) / Common Seal of Member(s) No of shares Percentage Proxy 1 % Date: : CDS Account No. : Proxy 2 % No. of Shares : Total 100%
Notes: 1. With respect to deposited securities, only members whose names appear in the Record of Depositors on 13 June 2014 [General Meeting Record of Depositors] shall be eligible to attend the meeting or to appoint proxy[ies] to attend and/or vote on his behalf. 2. A proxy may but does not need to be a member of the Company and Section 149(1)(b) of the Companies Act, 1965 (“the Act”) shall not apply. 3. The instrument appointing a proxy must be deposited at the Registered Office of the Company at #36.01, Level 36, Cap Square Tower, No 10 Jalan Munshi Abdullah, 50100 Kuala Lumpur, Malaysia not less than 48 hours before the time appointed for holding the meeting. 4. A member shall be entitled to appoint more than one proxy to attend and vote at the same meeting. Where a member of the Company is an authorized nominee, as defined under the Central Depositories Act 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Where a member of the Company is an exempt authorized nominee which holds the ordinary shares of the Company for multiple beneficial owners in one securities account (“omnibus account”) there is no limit to the number of proxies it may appoint in respect to the omnibus account. 5. Where a member, or an authorized nominee or an exempt authorized nominee appoints more than one proxy the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. 6. If the appointor is a corporation, the proxy form must be executed under its common seal or under the hand of its attorney. IMPORTANT NOTICE
With regard to the TWENTY-EIGHTH ANNUAL GENERAL MEETING OF INTEGRAX BERHAD Registration will start from 9.00 am onwards The meeting will start punctually at 10.00 am Late-comers will not be entertained
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The Company Secretary INTEGRAX BERHAD (48317-W) #36.01, Level 36 Cap Square Tower No. 10, Jalan Munshi Abdullah 50100 Kuala Lumpur
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