MTD ACPI ENGINEERING BERHAD
MTD
MTD ACPI ENGINEERING BERHAD(258836-V) MTD ACPIRegistration ENGINEERING No. 199301004099 BERHAD (258836-V)
Registration No. 199301004099 (258836-V)
www.mtdacpi.com
MTD ACPI ENGINEERING BERHAD Registration No. 199301004099 (258836-V) Menara MTD, 1, Jalan Batu Caves 68100 Batu Caves, ANNUAL REPORT Selangor Darul Ehsan, Malaysia 20 Tel : 603-6195 1111 Fax : 603-6188 0101 20 ANNUAL REPORT 2020
A Member of MTD Group A member of the MTD Group, MTD ACPI Engineering Berhad (“MTD ACPI” or “the Group”) is one of Malaysia’s Corporate Profile foremost infrastructure companies Manufacturing Among the IBS precast products supplied involved in privatised infrastructure by the Group included: development, construction and The Group’s Manufacturing arm has Universiti Sultan Zainal Abidin Hospital engineering, property development the capability to produce a full range (UniSZA) in Kuala Terengganu and manufacturing activities. MTD of precast concrete products for Multi-storey car park project for ACPI is listed on the Main Market infrastructure such as bridge crossings, UKM Medical Center Cheras in Kuala segmental box girders, tunnel segments Lumpur of Bursa Malaysia Securities Berhad across the ASEAN region and buildings Mass Rapid Transit (MRT) 2 Station since 3 January 1995. including Industrialised Building System for Mass Rapid Transit Corporation (IBS). Sdn Bhd Civil Engineering & Construction i-City Shopping Mall in Shah Alam, The Group’s accomplishments amongst Selangor The Group’s Civil Engineering & others included: Construction arm has extensive experience Malaysia-Singapore Second Crossing In Singapore, the group supplied IBS in the development of mountain Kuala Lumpur SMART Tunnel products for the Sengkang and River Front roads, highways, and bridges, building Penang 2nd Bridge Crossing Residential Apartment. It also provided geotechnical works, erosion control and Kuantan-Kerteh Railway Project precast tunnel segments for Singapore’s highway maintenance. (Package 1) MRT and Deep Tunnel Sewerage systems Sprint Highway – Kerinchi & Duta and precast sleepers to the Singapore The Group had successfully completed interchanges and One Utama MRT Circle Line. It is currently supplying the construction of the following projects: Extension Phase II. the precast walkway components and Kuala Lumpur-Karak Highway level crossings to the MRT Thompson East Coast Expressway On- going projects include: Line. (Phases 1 and 2) Sungai Besi-Ulu Kelang Elevated Fourth Lane Widening project for the Expressway Beyond the ASEAN Region, the Group Sg. Buloh to Rawang stretch of the Damansara-Shah Alam Expressway had supplied tunnel linings to the North South Expressway; and Petronas Marine Jetty, Pengerang. Dubai Metro Rail Project and Abu Klang Valley Mass Rapid Transit Dhabi Sewerage Tunnel System Project (KVMRT) System Package V7 of Sg. (STEP T-01) and pre-cast segmental box Buloh-Kajang Line girder for the Delhi Metro Rail Project.
Meanwhile, the KVMRT Package V208 Sg. Buloh-Serdang-Putrajaya Line is currently undergoing construction.
The Group also recently secured a contract • A high performance company delivering and achieving sustainable values for the construction and completion of VISION earthworks and infrastructure works for the Chuping Valley Industrial Area Phase 1 in Chuping, Perlis, worth a total of RM184.2 million. The contract is for two • To become a sustainable-driven business operations years from 1 June 2020 to 31 May 2022. • To strengthen branding within industries / business activities Its overseas accomplishments include the MISSION construction of the 36-km South Luzon Expressway in the Philippines; and the • Respect - Embrace and acknowledge diverse workforce improvements to the six-storey Jamarat and ideas irrespective of gender, race and religion Bridge and its surrounding areas in Mina, • Integrity - Conduct honest and ethical day-to-day Saudi Arabia. SHARED business and operations VALUES • Trust - Create a reliable environment which in turn R.I.T.E provides confidence and leads to business growth • Excellence - Embrace innovation and constantly providing platforms for knowledge and talent enhancements What’s Inside 02 32 – 34 148 – 149 Corporate Information IRF and GRI Content Index List of Properties 03 35 – 44 150 – 155 Corporate Structure Corporate Governance Notice of Annual General Overview Statement Meeting 04 – 07 Board of Directors’ Profile 45 155 Additional Compliance Statement Accompanying 08 – 09 Statement Notice of Annual General Key Senior Management’s Meeting Profile 46 Directors’ Responsibility Statement • Proxy Form 10 Group 5-Year Financial 47 – 52 Highlights Report of the Audit Committee
11 – 21 53 – 55 FOR MORE INFORMATION Management Discussion Statement on Risk Management VISIT OUR WEBSITE & Analysis and Internal Control 22 – 31 56 – 58 Sustainability Report Analysis of Shareholdings 59 – 147 Financial Statements www.mtdacpi.com
A Message to Our Frontliners WE SALUTE YOU
We at MTD Group of Companies would like to dedicate this message of gratitude to our frontliners who work tirelessly in battling against the COVID-19 pandemic, both in Malaysia and across the globe.
The COVID-19 pandemic is unprecedented, changing our lives drastically and affecting us in ways that many could not have imagined. You heeded the call to fight this pandemic, courageously dedicating your blood, sweat and tears while making sacrifices so that the rest of us can stay home and flatten the curve.
Thank you for giving us the strength and inspiration to rise above this challenging times. Your courage and altruism affirm our belief that Malaysia will emerge from this soon.
You are our true heroes and we stand by you!
You will always be in our thoughts and prayers. Corporate Information
BOARD OF DIRECTORS
Dato’ Ir. Kalid bin Alias Keith George Cowling Chairman / Independent Non-Executive Director Non-Independent Executive Director
Dato’ Ir. Wan Razali bin Wan Muda Nik Faeruz binti Tan Sri Nik Hussain Independent Non-Executive Director Non-Independent Non-Executive Director
Nik Din bin Nik Sulaiman Senior Independent Non-Executive Director
CHIEF EXECUTIVE OFFICER COMPANY SECRETARIES AUDITORS
Tee Kim Siew Chan Bee Kuan (MAICSA 7003851) BDO PLT (LLP0018825-LCA & AF0206) SSM PC No. 202008001959 Chartered Accountants Cheong Wei Ling (MAICSA 7009208) Level 8, BDO @ Menara CenTARa AUDIT COMMITTEE SSM PC No. 202008001285 360, Jalan Tuanku Abdul Rahman 50100 Kuala Lumpur, Malaysia Nik Din bin Nik Sulaiman, Chairman COMPANY WEBSITE Dato’ Ir. Kalid bin Alias PRINCIPAL BANKERS Nik Faeruz binti Tan Sri Nik Hussain www.mtdacpi.com CIMB Bank Berhad Malayan Banking Berhad NOMINATION AND REGISTERED OFFICE AmBank (M) Berhad REMUNERATION COMMITTEE RHB Bank Berhad Menara MTD Nik Din bin Nik Sulaiman, 1, Jalan Batu Caves Chairman 68100 Batu Caves STOCK EXCHANGE LISTING Dato’ Ir. Kalid bin Alias Selangor Darul Ehsan, Malaysia Nik Faeruz binti Tan Sri Nik Hussain Tel : +603-6195 1111 Main Market of Bursa Malaysia Fax : +603-6188 0101 Securities Berhad Email : [email protected] Sector : Construction RISK MANAGEMENT COMMITTEE Stock Name : MTDACPI Stock Code : 5924 Dato’ Ir. Wan Razali bin Wan Muda, SHARE REGISTRAR Chairman Mega Corporate Services Sdn Bhd Dato’ Ir. Kalid bin Alias Level 15-2, Faber Imperial Court Nik Din bin Nik Sulaiman Jalan Sultan Ismail 50250 Kuala Lumpur, Malaysia Tel : +603-2692 4271 Fax : +603-2732 5388 Email : [email protected]
02 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Corporate Structure As at 30 July 2020
INVESTMENT/ CIVIL ENGINEERING MANUFACTURING PROPERTY & CONSTRUCTION DEVELOPMENT
100% 100% 100% MTD CONSTRUCTION SDN BHD ACP (TRACKS) SDN BHD MAKIN PERMATA SDN BHD
60% 100% 100% MTD CONSTRUCTION ASC TILES SDN BHD GANDAAN UNIK SDN BHD (PHILIPPINES), INC. 100% 49% 40% ASSOCIATED CONCRETE MODAL EHSAN SDN BHD INTRAXIS ENGINEERING PRODUCTS (MALAYSIA) SDN BHD SDN BHD
100% ACP MARKETING SDN BHD
- Operating companies only - Shareholding percentage is based on ordinary share capital only
MTD ACPI ENGINEERING BERHAD 03 ANNUAL REPORT 2020 Board of Directors’ Profile
KEITH GEORGE DATO’ IR. KALID NIK DIN COWLING BIN ALIAS BIN NIK (Chairman) SULAIMAN
DATO’ IR. WAN NIK FAERUZ RAZALI BIN BINTI TAN SRI NIK WAN MUDA HUSSAIN
04 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Board of Directors’ Profile
DATO’ IR. KALID BIN ALIAS Past Experiences Dato’ Ir. Kalid joined the Public Works Department (PWD) in Chairman / Independent Non-Executive Director 1975 where he served for 29 years in various capacities including holding the position of Civil Engineer in the National Housing Malaysian 72 Male Department, Ministry of Housing (1976-1981), District Engineer, Petaling, Selangor (1983-1986) Assistant Director (Roads) PWD, Date of Appointment Length of Service Selangor (1986-1988), Deputy Director of PWD, Terengganu 15 August 2006 14 years (1988-1991), Director of PWD, Negeri Sembilan (1991-1993), Deputy Director, Jabatan Pembangunan Persekutuan Kelantan Academic / Professional Qualifications (1993-1996) and Director, PWD, Pahang (1996-2004), which • Bachelor in Civil Engineering from the University of was his last posting before retiring in November 2004. Glasgow, Scotland, United Kingdom • Master in Public Health Engineering from the University of Directorship Strathclyde, Glasgow, Scotland, United Kingdom Listed Issuer Public Company • Registered Professional Engineer with the Board of • MTD ACPI Engineering Berhad • None Engineers Malaysia • Fellow of The Institution of Engineers, Malaysia Membership of Board Committees • Life Member of the Road Engineering Association of • Member of the Audit Committee Malaysia • Member of the Nomination and Remuneration Committee • Member of the Risk Management Committee
Attendance at Board Meeting for financial year ended 31 March 2020 • 9 of 9 meetings
NIK DIN BIN NIK SULAIMAN Directorships Listed Issuer Public Company Senior Independent Non-Executive Director • MTD ACPI Engineering Berhad • MTD Capital Bhd • Reach Energy Berhad
Malaysian 72 Male Membership of Board Committees • Chairman of the Audit Committee Date of Appointment Length of Service • Chairman of the Nomination and Remuneration 31 October 2008 12 years Committee • Member of the Risk Management Committee Academic / Professional Qualifications • Member of the Malaysian Institute of Accountants (MIA), Attendance at Board Meeting for financial year ended CA(M) 31 March 2020 • Fellow member of the Association of Chartered Certified • 9 of 9 meetings Accountants (FCCA)
Past Experiences Mr. Nik Din has extensive experience in accounting, auditing and finance. He served in Sime Darby Group from 1992 to 2004, where he held positions as Group Chief Internal Audit Manager and Finance Director. He also worked in Promet Berhad from 1982 to 1992 as Financial Controller and later as Finance Director.
MTD ACPI ENGINEERING BERHAD 05 ANNUAL REPORT 2020 Board of Directors’ Profile
KEITH GEORGE COWLING Auscon Consultants (1979) and Petroleum Development Oman (1980-1981), in the Sultanate of Oman and Maunsell Non-Independent Executive Director Consultants Asia (1980-1984) in Hong Kong. British Citizen with Malaysian Permanent Resident Status 70 Male Mr. Keith Cowling joined MTD Capital Bhd (“MTD Group”) since 1984 serving in various capacities; from Engineer to Chief Engineer, General Manager, Head of Business Development, Date of Appointment Length of Service Executive Vice President, Head, Business Development & 15 August 2006 14 years Manufacturing Division, Executive Vice President, Head, Manufacturing Division and his current position as Adviser, Academic / Professional Qualifications Business Development. • Bachelor of Science in Civil Engineering from Dundee University, Scotland, United Kingdom Directorship • Member of the Institution of Civil Engineers, United Listed Issuer Public Company Kingdom • MTD ACPI Engineering Berhad • None • Fellow of The Institution of Engineers, Malaysia, where he served on committees including being the Chairman of the Membership of Board Committees Tunnelling and Underground Space Technical Division • Member of the Management Committee
Past Experiences Attendance at Board Meeting for financial year ended Mr. Keith Cowling’s experiences include service with the City of 31 March 2020 Dundee District Council (1972-1976) in Dundee, Scotland, Mason • 7 of 9 meetings Pittendrigh & Partners (1976-1977) in Edinburgh, Scotland,
DATO’ IR. WAN RAZALI BIN WAN MUDA Tollways Division, namely Kuala Lumpur-Karak Highway, East Coast Expressway Phase 1, the East-West Link Expressway and Independent Non-Executive Director Kuala Lumpur-Seremban Expressway for 6 years until 2014. He was also the Director of ANIH Berhad between 2011 and Malaysian 66 Male 2014. During his involvement with highway concessions, he was appointed as the Honorary Secretary for Persatuan Syarikat- Syarikat Konsesi Lebuh Raya Malaysia. He retired in April Date of Appointment Length of Service 2014, after having served MTD Group for 20 years in various 2 May 2018 2 years capacities. He has vast experience in aircraft engineering, highway engineering, building maintenance and gold mining. Academic / Professional Qualifications • Degree in Mechanical Engineering from the University of Dato’ Ir. Wan Razali also sits as Director in several engineering Technology Malaysia companies and engineering consultancy firms. • Registered Professional Engineer with the Board of Engineers Malaysia Directorships • Fellow Member with The Institution of Engineers, Malaysia Listed Issuer Public Company • Council Member of Road Engineering Association of • MTD ACPI Engineering Berhad • None Malaysia • Lysaght Galvanized Steel Berhad • ASEAN Chartered Professional Engineer Membership of Board Committee Past Experiences • Chairman of the Risk Management Committee Dato’ Ir. Wan Razali started his career in 1977 as an officer with the Royal Malaysian Air Force and was with Senior Attendance at Board Meeting for financial year ended Management Team in several semi-government bodies. He 31 March 2020 joined MTD Group in 1994 and headed the fleet operation in • 9 of 9 meetings heavy machineries and highway consultancy services. In 2008, he became Executive Vice President to oversee MTD Group’s
06 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Board of Directors’ Profile
NIK FAERUZ BINTI TAN SRI NIK HUSSAIN Mdm Nik Faeruz joined MTD Group in November 2003 as Deputy Fixed Assets Manager and was promoted to Manager Non-Independent Non-Executive Director in 2006 to oversee the fixed assets matters of MTD Group. Mdm Nik Faeruz was a Director of MTD Capital Bhd from May Malaysian 55 Female 2017 to March 2018 and assumed the post of Chief Operating Officer II of MTD Group from March 2017 to August 2017. She Date of Appointment Length of Service sits on the board of several private limited companies within 18 February 2019 1 year MTD Group. In March 2019, Nik Faeruz was re-appointed as Director of MTD Capital Bhd. Academic / Professional Qualifications • Advanced Diploma in Business Administration majoring in Directorship Transport from MARA Institute of Technology, Shah Alam Listed Issuer Public Company • MTD ACPI Engineering Berhad • MTD Capital Bhd Past Experiences Mdm Nik Faeruz began her career in 1989 with Mayban Membership of Board Committees Finance Berhad. In 1994, she was promoted as Assistant • Member of the Audit Committee Branch Manager, Petaling Jaya Branch. At Maybank Group, • Member of the Nomination and Remuneration she was involved in the enhancement of business processes Committee and procedures of the bank’s various departments nationwide and prepared the blueprint of new banking concept i.e. one Attendance at Board Meeting for financial year ended stop financial service that are in used in all Maybank branches 31 March 2020 throughout the country until today. • 9 of 9 meetings
Notes:
Family relationship with Director and/or major shareholders Interest in securities Nik Faeruz binti Tan Sri Nik Hussain is the daughter of Tan Sri Dr. None of the Directors have any interest in the securities of the Nik Hussain bin Abdul Rahman, an indirect major shareholder of Company. the Company. Conflict of interest Nik Faeruz binti Tan Sri Nik Hussain is also sibling of Dato’ Nik None of the Directors have any conflict of interest with the Faizul bin Tan Sri Nik Hussain, an indirect major shareholder of Company. the Company. Conviction of offences Saved as disclosed herein, none of the other Directors have any None of the Directors have any convictions of offences within the family relationship with any Director and/or major shareholder past five (5) years. of the Company.
MTD ACPI ENGINEERING BERHAD 07 ANNUAL REPORT 2020 Key Senior Management’s Profile
TEE KIM SIEW VIJAYARAJ A/L MAHADZIR (Chief Executive GOVINDARAJOO BIN HASSAN Officer) @ MD HASSAN
AHMAD AZIAH BINTI TARMIZI MUSTAPA BIN ISMAIL
TEE KIM SIEW Mr. Tee also heads the International Real He returned to Malaysia and joined Estate & Property Development Division Metacorp Berhad in May 1996 as Head Chief Executive Officer of MTD Group. He is instrumental in of Finance. Subsequently, he was shaping the development of MTD Group’s appointed as Financial Controller of Malaysian 60 Male overseas’ real estate & property business Metacorp Berhad in 2001. Due to his in Australia and United Kingdom. He extensive experience in finance, he was is the Chairman of the Management promoted to Chief Financial Officer of Mr. Tee Kim Siew was appointed as Committee of MTD ACPI Group. MTD Group in 2005, and was responsible Acting Chief Executive Officer of MTD for two other previously public listed ACPI Engineering Berhad (“MTD ACPI Mr. Tee began his professional accounting companies namely, MTD InfraPerdana Group”) on 5 September 2017. On 2 May career at BSG Valentine, Simlers and Bhd and Metacorp Berhad. 2018, he was re-designated as Chief Casson Beckman Chartered Accountants, Executive Officer and appointed as Group London. He is a Fellow Member of Mr. Tee was also the Director of MTD Chief Financial Officer of MTD Capital the Association of Chartered Certified Walkers PLC, a foreign subsidiary of Bhd (“MTD Group”) from 2018 to 2019. Accountant, United Kingdom and the MTD Group listed on the Colombo Stock Malaysian Institute of Accountants. Exchange in the Republic of Sri Lanka. He sits on the board of several other private limited companies. He holds 8,700 ordinary shares of MTD ACPI Engineering Berhad.
08 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Key Senior Management’s Profile
AHMAD TARMIZI BIN ISMAIL Engineers, Malaysia and a member of MAHADZIR BIN HASSAN the Institution of Engineers, Malaysia. @ MD HASSAN General Manager, Head, Prior to joining MTD Group, he served Construction Division Pengurusan Lebuhraya Bhd. in 1989 Assistant General Manager, and Kumpulan Jurutera Maju Sdn Bhd Head, Manufacturing Division Malaysian 60 Male in 1993, where he held position as the Highway Design Engineer. He holds Malaysian 48 Male 50,000 ordinary shares of MTD ACPI Mr. Ahmad Tarmizi bin Ismail is the Engineering Berhad. General Manager, Head, Construction Mr. Mahadzir bin Hassan @ Md Hassan Division of MTD ACPI since 1 July 2015. is the Assistant General Manager, Head, He joined MTD Group on 15 August 1990 AZIAH BINTI MUSTAPA Manufacturing Division of MTD ACPI. He as Senior Civil Engineer. He is a member joined the Group on 10 November 1997 as General Manager, Head, of the Management Committee of MTD Production Engineer and was promoted Finance & Treasury Division ACPI Group. He also sits on the board of to current position on 1 October 2016. He several other local and overseas private is also a member of the Management limited companies within MTD ACPI Malaysian 50 Female Committee of MTD ACPI Group. Group and MTD Group. He graduated with a Bachelor of Mdm Aziah binti Mustapa is the General Mr. Ahmad Tarmizi holds a Bachelor Mechanical Engineering from University Manager, Head, Finance & Treasury in Civil Engineering from University of of Malaya in 1996. He has wide Division of MTD ACPI Group and Hartford, USA. Prior to joining MTD knowledge of the industry, both locally MTD Group. She joined the Group on Group, Mr. Ahmad Tarmizi served and overseas, with more than 22 years 12 November 2019. Malaysian Highway Authority from of working experience in manufacturing.
October 1989 to August 1990 as Project She holds a Bachelor Degree in Engineer. Accounting (Hons) from International His last position before joining MTD Islamic University, Malaysia. She is a ACPI was as a Process Engineer with member of CPA Australia, Malaysian Samsung Electronics, Senawang. He VIJAYARAJ A/L GOVINDARAJOO Institute of Accountants (MIA) and holds 9,000 ordinary shares of MTD General Manager, an Associate member of Malaysian ACPI Engineering Berhad. Busines Development Institute of Chartered Secretaries and Administrators (MAICSA).
Malaysian 53 Male She has more than 27 years of working ADDITIONAL INFORMATION: experience in treasury, financial Directorship in public companies Mr. Vijayaraj A/L Govindarajoo is the reporting, tax and strategic financial Save as disclosed therein, none of the key General Manager, Business Development management in various sectors including senior management held any directorship in of MTD Group. Prior to this, he was the telecommunication, education, oil palm public companies and listed issuers. Senior Vice President, Project Director plantation, manufacturing and service (Indonesia) for the Business Development sectors. She also possesses experience Family relationship with Director and/or major shareholders & Overseas Business Division of MTD in crafting financial strategies and None of the key senior management has Group since 1 January 2015. He is a managing accounting teams. any family relationship with Director and/or member of the Management Committee major shareholder of the Company. of MTD ACPI Group. He also sits on the She started her career with Telekom board of several other local and overseas Malaysia Berhad in 1993 and later Conflict of interest private limited companies within MTD joined KUB Malaysia Berhad with the None of the key senior management has Group. last position held as General Manager, any conflict of interest with the Company. Group Finance & Strategic Management. Conviction of offences Mr. Vijayaraj holds a Bachelor in She then joined Puncak Niaga Holdings None of the key senior management has Civil Engineering from University of Berhad in 2017. Her last position before any convictions of offences within the past Newcastle, Australia. A registered joining MTD ACPI Group was as a Chief five (5) years. Professional Engineer with the Board of Financial Officer of Taiace Engineering Sdn Bhd.
MTD ACPI ENGINEERING BERHAD 09 ANNUAL REPORT 2020 Group 5-Year Financial Highlights
REVENUE PRE-TAX PROFIT/ (RM Million) 226.31 Mil (LOSS) (RM Million) (20.31) Mil
400 14
7 300
0 5.24 (8.55) 9.00 (1.38) (20.31) 200 -7
100 -14 249.54 250.79 274.16 249.82 226.31 0 -21 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
(LOSS)/EARNINGS NET ASSETS PER SHARE (Sen) (9.0) sen PER SHARE (RM) 0.34
4 0.8
0 0.6 3.0 (3.0) (2.0) (2.0) (9.0)
(4) 0.4
(8) 0.2 0.46 0.43 0.41 0.40 0.34 (12) 0.0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
SHAREHOLDERS’ FUND (RM Million) 65.28 Mil
120
90
60
30 91.40 82.11 80.24 78.34 65.28 0 2016 2017 2018 2019 2020
10 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Management Discussion & Analysis
ABOUT THIS REPORT
MTD ACPI’s Annual Report is guided by the principles of Integrated Reporting (“
This report covers the Group’s financial and operating results, • Management Discussion and Analysis Guide (MD&A); environmental and social aspects as well as corporate • The Sustainable Reporting Guide by Bursa Malaysia; governance and statement of internal control and risk • Malaysian Code of Corporate Governance 2017 by management that affect our business and stakeholders. Securities Commission; Subsequent to the operating results and the assessment of • International Financial Reporting Standards (IFRS); aspects impacting the Group, the report covers each Division • Malaysian Financial Reporting Standard (MFRS); of the Group, namely, Civil Engineering & Construction, and • Global Reporting Initiative (“GRI”) Guidelines 4.0; and Manufacturing in the Management Discussion and Analysis. • International Integrated Reporting Council (IIRC) Integrated Reporting Framework. As we continue to adopt
The annual integrated report is targeted primarily at providers BASIS OF PREPARATION of investment and our shareholders. However, we endeavour to have sufficient information available for all our stakeholders – Scope and Boundary customers, employees, business associates and regulators who are interested in how we create value for them. We first adopted the principles in the International Integrated Reporting framework issued by International Integrated Reporting Council (“IIRC”) in the annual report for Financial SUMMARY OF OPERATIONAL PERFORMANCE Year Ended (“FYE”) 2017, and this transformed our approach in reporting.
The following reporting frameworks and guidelines were considered when preparing this report:
• Companies Act 2016; • Listing Requirements (LR) by Bursa Malaysia;
MTD ACPI ENGINEERING BERHAD 11 ANNUAL REPORT 2020 Management Discussion & Analysis
SUMMARY OF OPERATIONAL PERFORMANCE Staying Relevant (CONT’D) MTD ACPI recognises good corporate practices within its Civil Engineering & Construction Division local and overseas operations will create greater value for our stakeholders. The relevance and quality of our products and The Malaysia economy is expected to see a contraction of services will always be part of our commitment by incorporating 2% or at best, growth of 0.5% in 2020. Unprecedented events work ethics into the work culture. from the last quarter 2019 up to first half of 2020 ranging from implementation of Movement Control Order (“MCO”), COVID-19 Nurturing our People pandemic to US-China trade war and the sudden collapse of oil prices, exacerbated the delays to revive mega infrastructure We continue to strive to cultivate an environment that is projects announced in Budget 2020. In the financial year under conducive for professional growth, as realising the potential review, the Civil Engineering & Construction business generated of our employees will enhance productivity, which in turn, will a revenue of RM172.4 million, representing 8% lower than the drive our business objectives. We focus on promoting equality previous year revenue of RM187.3 million. and diversity at work, offering ample of opportunities for our employees to learn and grow professionally. The Group’s Civil Engineering & Construction Division is expediting all delayed projects and actively pursuing any Committed towards the Stakeholders opportunities and project tenders to achieve our long-term sustainable earnings. While exploring for business opportunities, MTD ACPI continues to play its role to attend to all the Division will also closely monitor the progress of existing stakeholders’ concerns while delivering value created through projects to meet our stakeholder’s requirement. its business operations. This supports the Group in developing the right approach to value creation in improving its business Manufacturing Division development and prospect.
The Manufacturing Division principal activities include While our emphasis and drive are to achieve the Group’s aim in manufacture and supply of precast concrete products for the increasing revenue streams, we will always strive to perform our construction industry for use in earthwork, civil, underground, duty as responsible corporate citizen to our people, community, structural, infrastructure, railway, environmental work appliances and environment. The Group will continue to build long-term and other non-custom designs. The Division also specialised relationships and gain trust with its stakeholders through in Industrialised Building System (“IBS”) methodology. The various initiatives and approaches to align with the Group’s Manufacturing Division factories are strategically located vision, mission and values. in Peninsular Malaysia, covering the Central, Eastern and Southern regions, to cater to various clients. Strategic Workshop (Business Transformation)
The Manufacturing Division recorded a revenue of RM53.9 MTD ACPI, through its holding entity, MTD Group had organised million in FYE 2020, lower by 14% compared to RM62.5 million a series of Strategic Workshop Sessions for our Managers reported in the previous year due to slow customer demand. together with the Senior Management team.
In response, the Division reviewed its strategic plan refocusing its The objectives of these workshops were to study the efforts on management activities, marketing strategy, resource effectiveness of current organisation processes by reviewing allocation, cost optimisation, and business opportunity to current Vision, Mission and Shared Values as well as the roles ensure that all planned initiatives will be achieved successfully of each respective business unit and support services towards and ensuring all parties work towards achieving the desired the attainment of MTD ACPI’s long-term strategic objectives. common goals. The collective review consequently led to the realignment of individual objectives to the organisational goals, through the development of high level KPIs and standards of measurements. The outcomes of these strategic workshops include enhancement to our strategic focus and the respective business units’ action plans.
12 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Management Discussion & Analysis
Future Outlook Value Creation
The business outlook remains challenging globally. While the Nurture - Human capital strategy “Attract, world is still grappling to contain the spread of COVID-19, global cultivate skilled Develop, Retain” - embedding the economies are also facing increasing risk of a US-China trade workforce “right talent” with the “right attitude” war. Coupled with political changes in Malaysia, the country and develop will do the “right things” at the “right is facing one of the toughest moments in time. As a result, we innovative work time”. expect both the construction and manufacturing sectors to be culture impacted to a certain degree. To buffer the potential downside Work as one - promote equal risks, we have established appropriate action plans to ensure opportunities as well as encourage continuity of our business operation in a sustainable way. diversified workforces (different ethnicity, gender and age). MTD ACPI will continue its efforts in managing the factors Innovate - Industrial Collaboration Programme contributing to the operating challenges by reinforcing resources on-going (“ICP”) - participate in ICP and that boost production efficiency and innovation capabilities, transformational benefiting the local industries’ while optimising overall costs and improving cash flow and research development i.e. subcontracting, generation. In the medium term, our segmental strategies will initiatives capability development programme, enable us to provide value to our stakeholder in the respective green technology adoption program operating markets in order to achieve future growth. and the IBS. Innovative partnership - Our innovative STRATEGIC BUSINESS MODEL partnership programme is dedicated to generate new business model and Our strategic business model is derived from our strategies, vision, approach, sharing knowledge for mission and shared values that are focused on construction, improving work methods and systems. civil engineering and manufacturing of its precast concrete Conserve - Waste Management Policy and products for infrastructure and buildings. The Group draws reduce resource Hazardouse Waste Management on the expertise of its people, with vast technical knowledge consumption, Policy - implementation of 3Rs and experience in local and overseas projects and form the waste generation initiative “Reduce, Reuse, Recycle” and building blocks of our reputation within the construction and and create a disposal of waste materials. infrastructure industry. recycling-oriented Digitalising Internal Processes - society The Group’s Civil Engineering & Construction Division’s principal digitalising administration and human activities are in construction of mountain roads, highways, resources internal processes to drive bridges, building geotechnical works, erosion control and operational efficiency beginning 2017. highway maintenance. The remarkable accomplishments to Civil Engineering & Construction - date include completion of the 36-km South Luzon Expressway Build - strong drawing on its extensive experience (“SLEX”) in the Philippines, Kuala Lumpur – Karak Highway reputation and building complex infrastructure and (“KLK”), East Coast Expressway, the improvement of the relationship civil engineering solutions Jamarat Bridge and its surrounding areas in Mina, Saudi Arabia; the Penang Second Bridge, and the recent completion of the Manufacturing - The brand is well- Klang Valley Mass Rapid Transit (“KVMRT”) Line Package V7 known and trusted by customers as (“MRT V7”) in year 2017. it provides quality assurance through certifications by regulators and Meanwhile, our Manufacturing Division offers a full range of accredited bodies. precast concrete products for various infrastructure and building projects by using the IBS methodology. We have completed 31 projects nationwide during the financial year under review.
MTD ACPI ENGINEERING BERHAD 13 ANNUAL REPORT 2020 Management Discussion & Analysis
STAKEHOLDER ENGAGEMENT
We continue to review IIRC’s
We are aware that our business decisions impact the concerns, needs and objectives of multiple stakeholder groups. Thus, we focus on sharing key information, improving new and existing relationships; and creating understanding of any impact to our projects and activities relevant to our stakeholders. Our form of engagement initiatives vary from providing conventional documents, electronic documents, web-based media platforms to face-to-face communications, as outlined below:
Stakeholders Value Added Engagement Investor Provide greater transparency of business · Annual General Meeting information for analysis when making · CEO Briefing investment decision. · Circular / Notice · Annual Report · Website Client / Customer Provide excellent customer experience with · After-sales service (Purchaser) upmost quality products and services and · Monthly Progress Report strengthen relationship with clientele. · Exhibitions and Roadshows · Gallery displays Industry Peers including Create business opportunity, workforce · Networking session Supplier and Business upskilling and development of technologies · Contract negotiation Partner via joint venture initiatives. · Site visits · Supplier evaluation Employee • Career development and training · Events and activities opportunities while providing a safe · Management and employee meetings working environment within the · Circulation of policy organisation. · Internship programme • Promote work-life balance. · Training and development programmes Regulator Embrace transparency within the daily · Inspection by local authority operation and compliance with the industry’s · Annual licences renewals regulatory standard to attain corporate sustainability. Government Participate and support Government’s plan · Consultation on regulatory matters for nation development. · Compliance reporting · Site inspections and visits Community / General Continuous support and fund Corporate · Community development programme Public Social Responsibility activities. · Corporate social events Non-Governmental Continuous support to Non-Governmental · Events and activities Organisation Organisation’s activities. Media Keep pace with Company’s events and · Update on corporate development and key prospect. events on Group’s social media platform · Develop relationship with press agencies
14 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Management Discussion & Analysis
CIVIL ENGINEERING & CONSTRUCTION DIVISION In recognition of the Civil Engineering & Construction Division’s abilities and capabilities, the Construction Industry Development Introduction Board (“CIDB”) has awarded the Division a 5-star rating up to year 2020. The Civil Engineering and Construction Division is undertaken by MTD Construction Sdn Bhd, a subsidiary of MTD ACPI. It has Operational Financial Performance over 30 years of experience and track record in the construction of mountain roads, highways, bridges, building geotechnical The Civil Engineering & Construction Division remains the key works, erosion control and highway maintenance. contributor to the Group, achieving 76% of the Group’s total revenue or RM172.4 million for FYE 31 March 2020. The revenue Overview on Business was derived mainly from civil and building works, representing 72% and 28% respectively. In year 2019, Malaysia’s construction sector grew at a significantly slower pace as its newly established government continues implementing several measures to trim down Civil Engineering & Construction Division’s government debt and expenditures by suspending large-scale Revenue and Profit/(Loss) in RM Million infrastructure projects across the country. Despite slow pace of growth in construction sector, the civil engineering business 200 remains key revenue driver and contributing 45.4% of value of construction works. Contributions were largely from Pan 150 Borneo Highway in Sabah and Sarawak; Central Spine Road 100 in the East Coast as well as KVMRT Sungai Buloh-Serdang
Putrajaya (SSP) Line and Light Rail Transit Line 3 (“LRT3”) in 50 Klang Valley. 158.5 182.4 186.4 187.3 172.4 0 6.4 11.8 15.4 The current civil engineering works worth RM687.4 million 19.9 (2.7) consist of KVMRT Line 2 Package V208 from Taman Pinggiran (50) to Persiaran Alpina and construction of two MRT stations for 2016 2017 2018 2019 2020 Equine Park (“EQP”) and Taman Putra Permai (“TPP”), plus a Revenue Profit/(Loss) multi-storey car park. In addition, the Division was awarded the contract of Pavement Rehabilitation and Associated Works at East Coast Expressway from Lebuhraya Pantai Timur 2 Sdn Bhd, which commenced in November 2019. Civil Engineering & Construction Division’s Revenue by Segment for FYE 31 March 2020 For building works, the Division is constructing residential properties at Taman Sutera Kajang and Taman Tasik Utama, Ayer Keroh, worth RM122.7 million. 28% Building works The Division’s Quality Management System has been certified by Lloyd’s Register Quality Assurance and in compliance with ISO 9001:2015 Quality Management System. The scope of this certification covers design, management and implementation of 72% civil engineering and building works including turnkey projects. Civil works The Group has a dedicated team to progressively improve its product quality to maintain the accreditation of ISO 9001:2015 Quality Management System and regularly review its Quality Management System to ensure its relevance. This is in line with our Group’s vision of delivering the best product quality to our clients.
MTD ACPI ENGINEERING BERHAD 15 ANNUAL REPORT 2020 Management Discussion & Analysis
CIVIL ENGINEERING & CONSTRUCTION DIVISION (CONT’D)
Review of Operating Activities and Initiatives
The core businesses of Civil Engineering & Construction Division mainly are civil engineering and infrastructure construction and building construction.
The current outstanding order book is valued at RM406.7 million, comprising civil & infrastructure works (85%) and building works (15%). The on-going projects are KVMRT Package V208, Pavement Rehabilitation and Associated Works for East Coast Expressway, residential construction for Taman Sutera Kajang, Selangor and Taman Tasik Utama in Ayer Keroh, Melaka.
For civil and infrastructure works, KVMRT Package V208 is expected to complete in year 2021. In FYE 2020, MTD Construction Sdn Bhd was successfully awarded the contract of Pavement Rehabilitation and Associated Works for East Coast Expressway valued at RM8.7 million. The project commenced in November 2019 and is expected to complete by July 2020.
On building works, our two projects are in Taman Sutera, Kajang and Taman Tasik Utama, Ayer Keroh, Melaka. The Taman Sutera Kajang project is expected to complete by December 2020. The Division completed the construction of Phase 19C & 19D of Taman Tasik Utama, Melaka, comprising 93 units of single storey terrace house in March 2019. The Phase 20A for the construction of 54 units of single storey semi-detached house project commenced in November 2018 and is expected to complete by July 2020.
In the coming financial year, the Division strives to replenish its order book through bidding new projects in both civil & infrastructure works and building works; keep on-going project compliance to specifications and clients’ requirement and operational efficiency for timely completion. Our strategic focus initiatives include:
Monitor closely on-going projects progress to meet timeline and optimise interim claims for cashflow management
Participate and secure new projects by forming strategic partnership with trustworthy business partners
Optimise operating cost for better profit margin
16 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Management Discussion & Analysis
Risk and Measures
MTD ACPI has a robust risk management framework in place to guide us in responding to any potential risks and to effectively manage those risks. All the key risks identified, and measures taken by the Division in mitigating these risks are summarised below:
Key Risk Description Mitigation Measures Delay in project • Certain projects that are unable • Project progress is monitored closely by project teams with completion to meet the agreed delivery status of projects reported to management on a periodic timeline as stated in the contract. basis. • Liquidated Ascertained Delivery • Continuous effort in addressing non-conformance cases and (LAD) may turn the project from project deliverables. profit to loss making and tarnish • Regular quality checks to meet project quality specification. the reputation of the Group. • Organise frequent awareness sessions and trainings to upskill project management, maintain motivation and leadership. Inability to secure Inability to secure projects due to • Maintain good public relationship with the Government, project/order/ intense competition, shortage of existing and potential clients to secure new contracts. business projects to tender in the market and • Joint ventures with other companies to actively participate in unfavourable economy environment overseas construction works. may affect the business growth and • Participate in tender advertisement and invitation to explore sustainability of the Civil Engineering business opportunities. & Construction Division. Non-performing The Civil Engineering & Construction • Establish sub-contractor selection and evaluation processes. contractor/ Division operates as Project • Implement due diligence verification on sub-contractors. sub-contractor Manager for certain projects. Non- • Conduct sub-contractor performance evaluation. performing sub-contractor may have • Regular meetings with sub-contractors for project progress direct adverse impact on the Group’s and work quality monitoring. reputation and profit margin. • Establish detailed project recovery plan and distribute work packages to sub-contractors. Worker without Workers without permit would result • Issuance of letter of acceptance for sub-contractors includes permit in stop work order by regulators and compliance with the regulatory requirement clauses i.e. work criminal prosecution against the permits. Directors in the worst case scenario. • Sub-contractor is required to submit a list of foreign workers employed with supporting work permit details to headquarters. • Random inspection / audit on workers permits at sites. Safety, Health & SHE hazard could lead to penalty • Engage experienced environmental consultant to monitor Environment (SHE) by authorities and stop work order and advise on the overall environmental aspect. risk in the worst case scenario may • Establish SHE policy and procedures, and conduct safety have a significant impact on project trainings to promote a safe working environment. timeline. • Regular inspections and reports on unsafe practices by Safety Officer for rectification. Shortage of Shortage of raw materials would • Establish minimum stock level for raw materials. construction affect the production schedule and • Establish Material Requisition Planning for projects and carry material product delivery. out regular updates. • Identification of pool of suppliers. Increase in Prices of raw materials, such as • Review pricing from suppliers through quarterly forecast and construction sand, cement and steel, on an pricing comparison. material cost uptrend basis will increase project • Sign fixed rate contracts with construction material suppliers. cost and affect the profitability of the project.
MTD ACPI ENGINEERING BERHAD 17 ANNUAL REPORT 2020 Management Discussion & Analysis
CIVIL ENGINEERING & CONSTRUCTION DIVISION MANUFACTURING DIVISION (CONT’D) Introduction Outlook MTD ACPI’s Manufacturing Division consists of Associated Malaysia’s economy is forecasted to experience a contraction Concrete Products (Malaysia) Sdn. Bhd. (ACPM) and ASC of 2% to growth of 0.5% in 2020 versus a growth of 4.3% in Tiles Sdn. Bhd. (ASC Tiles). Their principal activities include 2019, from the impact of temporary halt of economic and social manufacturing and supply of precast concrete products to the activities during the MCO, coupled with on-going trade tensions construction industry for use in earthwork, civil, underground, between the US and China; and the sharp decline in oil prices. structural, infrastructure, railway, environmental work appliances and other non-custom designs. Despite that, the Economic Outlook issued by Ministry of Finance, expects construction sector to grow at 3.7% from the The Manufacturing Division of MTD ACPI is one of the pioneers on-going and revival of large-scale infrastructure projects which in the manufacturing precast concrete products and adoption include East Coast Rail Link (ECRL), Mass Rapid Transit Line of IBS methodology. With more than 30 years of experience, 2 (MRT 2), Light Rail Transit Line 3 (LRT 3), electrified double the Division is well-known in the market for its high-quality track Gemas-Johor Bahru, Klang Valley Double Track (KVDT2) products and services, and recognised as the most dominant rehabilitation project, Central Spine Road, Pan Borneo Highway manufacturing specialists in roads and highway products and and Coastal Highway in Sarawak. Although the revival of mega services in Malaysia. In FYE 2020, the Division completed the projects outlined in Economic Outlook may provide growth to the Projek Penswastaan Lebuhraya Bertingkat Damansara – Shah construction industry, given the substantial uncertainties ahead Alam (DASH CB3), Hospital Balik Pulau, Pulau Pinang, Pusat and that global economies are not yet showing sustained signs Perubatan Universiti Kebangsaan Malaysia (PPUKM) Car Park, of recovery, it would be prudent for MTD ACPI to conservatively Pengerang Deepwater Jetty Terminal Phase 3, Ilaj Home, Kuala manage its costs and earnings during this period. Lumpur and Bangunan Commercial Manjalara, Kuala Lumpur with a total value of RM22 million. MTD ACPI has hastened its efforts to mitigate the impact by putting more emphasis on ensuring our on-going projects meet Overview on Business respective timelines, while deferring any capital expenditure investments and major expenditures to ensure the Group has Over the last several years, Manufacturing Division has been sufficient and sustainable liquidity to weather the current utilising IBS or known as Pre-fabricated / Pre-fab Construction situation. for its projects. This methodology is a technique of construction whereby components are manufactured in a controlled MTD ACPI will continue to pursue opportunities arising from environment, either at site or off site, placed and assembled at the country’s infrastructure development plan and is confident the construction sites. This is in line with Construction Industry that the Group can achieve a sustainable growth in FYE 2021. Development Board (CIDB) plan to increase the adoption of The Civil Engineering & Construction Division has identified IBS in driving the industry towards efficiency. several potential infrastructure projects and in-house property pipeline to replenish its order book. The Division will remain To acquire competitive advantage over other market players, selective and plans to form strategic partnership with reputable the Manufacturing Division will continue to utilise IBS partners during tender participation and project execution to methodology for its projects. With increasing interest in IBS augment its book replenishment efforts. products in Malaysia, the strong demand for IBS product will be key to growth for the Division.
The Division has three (3) active operating factories located at strategic locations throughout Peninsular Malaysia covering central, southern and eastern regions, namely ACPM Seremban, ACPM Pontian and ACPM Kuala Terengganu, to meet customer’s requirements. Most of the plants are equipped with the latest automated machinery and technologies. The Manufacturing Division is capable of producing 500,000 metrics tonne of concrete products annually.
18 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Management Discussion & Analysis
There are five (5) categories of products manufactured under ACPM is a listed service provider of Suruhanjaya Perkhidmatan Manufacturing Division namely, standard products; special / Air Negara (“SPAN”) for Precast Concrete Water Tank for water customised products; IBS products; licensed products and block storage system. The listing enables the Company to secure & tiles. more jobs in the water services industry in Peninsular Malaysia, including the Federal Territory of Putrajaya and Labuan.
Prestressed Sheet Piles Operational Financial Performance Prestressed Beams Standard Pipes & Manholes Products Box Culvert & U-Drain Manufacturing Division’s Revenue and Profit/(Loss) RC Piles in RM Million L- Shape Retaining Wall 120
100 Hollowcore Slab 80 IBS Half-Slab Products Columns & Beams 60 Staircase 40
Fast Wall 20 105.0 71.2 87.8 62.5 53.9 0 8.5 15.0 (26.9)
Jetty Components - Pilecaps, (20) (6.9)
Trenches, Slabs & Walls (16.0) Special/ (40) Railway Components - Plinth, Customized 2016 2017 2018 2019 2020 Products Walkway Components, Level Crossings & Cable Troughs Revenue Profit/(Loss) Tunnel Segment Bleachers Parapets In FYE 2020, the Manufacturing Division achieved a revenue of Licensed Matiere RM53.9 million, lower by 14% from RM62.5 million in FYE 2019. Products Acontank The Division’s loss narrowed to RM6.9 million in FYE 2020, an Railway Sleepers improvement of 74% from a loss of RM26.9 million in FYE 2019, due to better cost containment and cost control.
Review of Operating Activities and Initiatives ASC Paver Blocks Blocks The current on-going projects include SUKE CBS, Privatisation Roof Tiles & Tiles of Lebuhraya Persisiran Pantai Barat (Taiping – Banting) for West Coast Expressway Sdn Bhd, Trackworks for Thomson Line – East Coast, Projek Tebatan Banjir Baroh Tok Jiring / Batu Rakit, Terengganu and others. Our balance order book totalling The Division adopts a stringent quality control and regular RM108.4 million are expected to contribute to our revenue in performance tests are carried out on all precast concrete the next 3 years. products in conformance to the relevant standards. The Division was certified by IQ Net and SIRIM QAS International that complies with ISO 9001:2015 Quality Management System.
The Group has a dedicated team to improve its product quality and maintain the ISO 9001:2015 Quality Management System accreditation. Delivering best product quality to our clients is our upmost priority and aligned to MTD ACPI’s vision.
MTD ACPI ENGINEERING BERHAD 19 ANNUAL REPORT 2020 Management Discussion & Analysis
MANUFACTURING DIVISION (CONT’D)
During the financial year, Manufacturing Division, both ACPM and ASC Tiles, recorded a revenue of RM53.9 million mainly contributed by the following contracts: i) SUKE Package CB5, CA2 and CA1 (prestressed beam and parapet) ii) DASH Package CA1, CB1, CB2, CB3, and CB4 (prestressed beam, parapet and matiere) iii) West Coast Expressway iv) Thompson Line Package T250 Singapore (walkway components/cable trough) v) IBS Singapore (Sengkang, Riverfront) vi) Pengerang Jetty (prestressed beam) vii) Sg Tok Jiring, Terengganu (Sheet piles and prestressed beam).
The Division has established action plans for the year 2021 with the strategy to primarily focus on improving operational activities and efficiencies. These initiatives include identifying new construction technologies and manufacturing processes to further improve and manage our operational costs.
• To embark on Prefabricated Prefinished Volumetric Construction (PPVC) using modular system and replacing conventional system Action Plan for financial year • To embark supply and install basis for IBS project especially in East Coast Region ending 2021 • To implement strategy in cost saving and time reduction • To invest on capital expenditure for higher production capacity and efficiency
Risk and Measures
The following are the key risks faced by the Manufacturing Division and the measures we take to mitigate them.
Key Risk Description Initiative Measure Inability to secure Intense competition, and volatile • Develop business plan and review business strategy for new project/order/ changes to global economy would business opportunities. business have an impact to the sustainability • Engage and maintain close relationship with existing and of the Division leading to under- potential customers. utilisation of plant capacity and • Diversify product portfolio. efficiency rate. Untimely delivery to In the competitive business • Monitor production planning, manufacturing processes and customer environment, timeliness in product delivery schedule. delivery is the key driver to customer • Identification, evaluation and appointment of alternative satisfaction and confidence. suppliers and sub-contractors / fabricators. • Customers engagements on new delivery schedule for any potential delays. Shortage of raw Availability of raw materials is key • Maintain minimum stock level for raw materials. material to meet production schedule and • Advance production forecast and procurement planning. delivery of products to customers. • Continuous effort to identify pools of suppliers. Safety, Health & SHE hazards such as dust and • Personal protective equipment is provided to workers. Environmental (SHE) noise exposure and work place • Periodic environmental monitoring and audit on safety and risk incidents could result in penalties by health are carried out by Department of Occupational Safety authorities and production delays. and Health (“DOSH”), and internally by SHE Officer of MTD Group. • Disciplinary actions are taken on staff and/or sub-contractors who do not adhere to safety procedures.
20 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Management Discussion & Analysis
Key Risk Description Initiative Measure Non-performing Delay in production schedule and • Monitor sub-contractors’ performance. contractor/ quality issues from low quality • Conduct project and site meeting to monitor project sub-contractor labour sub-contractor at factory and management’s shortcoming and issues. site. Increase in labour Increasing labour cost may affect • Review workers’ basic pay and commission structure. cost the Division’s profit margin and ability to offer competitive pricing to customers. Risk of theft (stock/ Stock pilferage, including stealing of • Establish security measures such as security guards and asset pilferage) Division assets i.e. scrap metals and perimeter fencing. stock, for personal gain. • Periodic physical verification and reconciliation. Increase in raw Profitability of the Manufacturing • Sign a fixed rate contract with material supplier for a period material cost Division can be affected arising from of time. price hike of construction materials • Establish procurement planning and review on a periodic such as sand, cement and steel. basis. Worker without Illegal workers would result in stop • Inclusion of compulsory foreign workers’ permit clauses in permit work order by authorities. Letter of Acceptance. Operating without Operating without CF could result in • Monitor application progress required to obtain CF. Certificate of Fitness penalties or ceased operations in the (“CF”) worst-case scenario. Quality of product Quality of product can impact • Stringent monitoring on product quality. reputation of the Division leading to • Regular quality briefings and conduct trainings on possible loss of key customers. Performance Management System. • Adopt rigorous quality assurance and quality control procedures.
Outlook
For the year 2020, Malaysian economy is expected to see a contraction of 2% to a low growth of 0.5% on the back of a highly challenging global economic outlook from COVID-19 pandemic, low oil prices and US-China trade wars.
Amidst the slow economic recovery expected in 2020/2021, MTD ACPI’s Manufacturing Division projected revenue will come from its balance order book. For ACPM, 68% of its revenue is expected to derive from its core products namely, prestressed beams, sheet pile, RC and RC piles and spun pipes whilst the remaining 32% is expected from its IBS products.
Apart from securing revenue from its on-going projects, the Division is eyeing potential new projects with estimated contract value amounting to RM120 million.
In addition, the Division is also looking to bid for major projects, namely, the tunnel segment for Changi Airport, the Cross-Island line in Singapore, ECRL project (beam) and local projects for its IBS product totalling RM444 million.
Barring any unforeseen circumstances, the Division anticipates it will be able to secure more jobs and replenish its order book. The Division has intensified its cost optimisation efforts through reducing wastages, adoption of new manufacturing technologies, encouraging innovations and improving the quality of precast concrete products. In addition, the Division continues to invest in improving its manufacturing efficiency while maintaining high safety, health and environmental requirements at its plants.
MTD ACPI ENGINEERING BERHAD 21 ANNUAL REPORT 2020 Sustainability Report
OUR COMMITMENT TO BUSINESS SUSTAINABILITY
We are pleased to share our FYE 2020 MTD ACPI Sustainability Report, describing our sustainability efforts as we strive towards meeting our economic, environmental and social goals.
The Group acknowledges that the principles of responsible Whistle Blowing Policy business and sustainability are key business drivers that will secure MTD ACPI Group’s future and create long-term value We established the whistle blowing policy with the aim to for our shareholders. Sustainability initiatives are not new, as provide a mechanism for all employees and other stakeholders they have been part and parcel of the business for years, even to report any concerns on any suspected or wrongful activities or before we presented our first report on Group Corporate Social wrongdoings. These refer to any potential violations or concerns Responsibility (“CSR”) in 2014. In the report, we outlined our relating to any laws, rules, regulations, acts, ethics, integrity and commitment and responsibility towards serving the community, business conducts, including any violation or concerns relating enhancing workplace practices, guarding our environment and to malpractice, illegal, immoral, embezzlement and fraudulent building our sustainability reputation in the marketplace. activities that will affect the business and image of the Group. This policy safeguards the safety of the whistle blowers’ identity and protects them from harassment or victimisation In support of Bursa Malaysia Securities Berhad’s effort to for reporting in good faith. improve sustainability disclosure, this Sustainability Report has been prepared with reference to International Reporting Kindly refer to the Corporate Governance Report for an overview Frameworks including the Global Reporting Initiative (“GRI”) on the policy and procedures on Whistle Blowing which is Guidelines 4.0. This Report describes our governance, available in the Corporate Governance Section on MTD ACPI’s environment and social performance for the financial year website at http://www.mtdacpi.com/. ended 31 March 2020. Our performance in these areas is reported throughout the four (4) sections of this Statement: Code of Conduct and Business Ethics / Anti-Bribery and Marketplace, Environment, Workplace and Community. Corruption (“ABC”) policy
Section 17A (1) of the MACC (Amendment) Act 2018 addresses SUSTAINABILITY GOVERNANCE corporate liability for corruption where directors and senior management will be held personally liable for acts of MTD ACPI continues to uphold our commitment to sustainability, corruption committed by the organisation, either by personnel ensuring we create economic value and operate in an or parties acting on behalf of the organisation. Penalties environmentally responsible business conduct as a responsible include fines up to RM1 million and/or prison sentences of up corporate citizen. Our sustainability efforts are governed by to 20 years for those in charge of the company. Additionally, our corporate structure with ultimate responsibility from Section 17A allows a defence for the organisation, by proving our Board who oversees the Group’s corporate sustainability it had in place “adequate procedures” designed to prevent performance. The Chief Executive Officer (“CEO”) oversees the person(s) associated with it from undertaking such a conduct. implementation of the organisation’s sustainability approach A Ministerial Guidelines on Adequate Procedures issued laid out and ensures that key targets are being met with support of the five (5) key principles on how Adequate Procedures maybe developed as lines of defence for commercial organisations as Senior Management. well as those in charge with governance and management of the organisation.
In view of this new act, the Group enhances its Anti-Bribery and Corruption policies to include adequate procedures and implemented several programmes based on the ministerial guidelines.
The ABC policy is available on MTD ACPI’s website at http:// www.mtdacpi.com.
22 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Sustainability Report
Customer Privacy
A Personal Data Protection Policy (“PDPP”) was established by the Group with the aim to provide and ensure internal guidance is applied to all business units, divisions, departments and personnel within the Group. PDPP describes the process for clarifying and assessing any data protection or confidentiality issues to ensure that necessary data protection steps have been taken and appropriately assessed in line with the Personal Data Protection Act 2010 (“PDPA”).
Due to the wide-ranging nature of the Group’s business, the Group processes significant quantities of personal and sensitive data. Therefore, we ensure that all employees under the Group are required to adhere to and comply with guidelines, The Civil Engineering & Construction Division signed a policies, directives and standard operating procedures issued by memorandum of understanding on Industrial Collaboration the Group from time to time. Failure to abide by and comply Programme with Technology Depository Agency. Upholding with the PDPA is subjected to disciplinary action, including the Group’s commitment to the Government to benefit termination. the industry and enhance the country’s socio economic development, this collaboration aims to give back to higher The PDPP policy is available on MTD ACPI website at http:// learning institution namely, University Kuala Lumpur (“UniKL”) www.mtdacpi.com/. to carry out industrial research. The ceremony was witnessed by Yang Berhormat Maszlee Malik, Minister of Education.
This project is recognised as a CSR initiative although the MARKET PLACE funding came under the contract package.
Industrial Collaboration Programme (ICP) International Organization for Standardisation (“ISO”)
The Civil Engineering & Construction Division remains as a The Civil Engineering & Construction and Manufacturing package contractor in the Industrial Collaboration Programme Divisions are both certified with ISO 9001:2015 as of the date (“ICP”) of the MRT project namely KVMRT SSP Line (Sungai of this report. The Group recognises that good customer Buloh-Serdang-Putrajaya), involving exercises that value-add relationship is key to the success and sustainability of the to any procurement made using the funds contributed by the Group and it has established, implemented and maintained the Quality Management System (“QMS”) to ensure that the quality Government of Malaysia. of its products and services meet international standards and efficiency. The Civil Engineering & Construction Division executes a subcontracting project on an ICP Credit Value (“ICV”) under Corporate Briefing to Shareholders the direct offset of the Economic Enhancement Programme (“EEP”). The projects include activities such as pilling works, Chief Executive Officer, Mr. Tee Kim Siew held a corporate RC structural works and installation of segmental box girders, briefing to shareholders at the 26th Annual General Meeting as which are expected to generate a total of RM152.1 million an initiative to keep the shareholders abreast on the Group’s worth of ICV. In FYE 2020, the Division has conducted various financial performance and activities. trainings, estimated to be valued at RM4.2 million, including the Safety, Health and Environmental Training, Concrete Quality Product Exhibition Training and BIM trainings. The Group participated in CIDB’s IBS Component Gallery to showcase the Group’s IBS modules. The gallery aims to provide avenue for organizations to make visible their products to the stakeholders namely industry players, contractors and government agencies.
MTD ACPI ENGINEERING BERHAD 23 ANNUAL REPORT 2020 Sustainability Report
ENVIRONMENTAL • Malaysia’s Environment Quality Act 1974 • The Planning Guidelines for Environmental Noise Limits Environmental Commitments and Controls, Second Edition, 2007 • The Planning Guidelines for Vibration Limits and Control in The Group recognises the potential impact of our business the Environment, 2nd Edition, August 2007 operation on the natural environment and is committed to • Standard Method for the Examination of Water and minimising the environmental impact and impact on the Wastewater (2005), 23rd Edition by APHA, AWWA and communities in which we operate, by adopting sustainable WEF practices. We actively upskill our employees to increase awareness and understanding on environmental issues, Periodic monitoring for water quality, air quality, and noise regulations and control measures, by providing trainings level at projects sites are carried out by our Civil Engineering and awareness programmes on matters related to waste & Construction Division to ensure that the activities conducted management, emergency response plan and evacuation, cranes and gears lifting. comply with the DOE’s requirements. Apart from monitoring efforts, we also strictly prohibit open burning within our project Our Facilities sites to prevent emission of hazardous gases, smoke and particles. The Group promotes green culture and responsible use of resources. We strive to achieve these goals throughout our Water Quality operations. Initiatives such as water efficiency, energy efficiency and circular economy through Reduce, Reuse and Recycle (“3R”) We strictly monitor and keep track of the water quality within programmes are being implemented across our facilities to our operation areas throughout our project period to prevent improve our waste management, air quality, and environmental our precious water resource from being polluted. We performed protection. Policies included Waste Management Policy and the Ammoniacal Nitrogen (AN) reading to ensure the water Hazardous Waste Management Policy were established to quality does not exceed the safety level required by the DOE. ensure our environment and facilities are kept clean and safe and in compliance with the legal requirements from the The water quality may exceed the permissible limit authorities. In response to COVID-19 pandemic, we initiated occasionally, mainly due to non-construction activities, such strict safety and health policies and procedures in line with as decomposition by organic and inorganic matter as well as the Standard Operating Procedures (“SOP”) from the National sullage from the nearby residential areas and other waste such Security Council of Malaysia. These SOPs include visitor’s as soil particulate from soil runoff, accompanied by rainwater registration, temperature taking, as well as implementing strict flowing to the surrounding area. With the exception ofthe social distancing measures. We monitor these SOPs from time above, the water quality is kept within limits. to time and will enhance as and when new SOPs are introduced. Noise Level Waste Disposal
Licensed external contractors were engaged to collect The noise in our construction activities mainly originates from wastes such as scrap iron, scheduled waste, metals from our structure works, piling work activities, and other on-going construction sites, and disposed at approved facilities under the construction activities. Measures taken by MTD ACPI to minimize supervision of our respective representatives from factories and noise levels during our operations include strict adherence to headquarters. As part of our efforts to protect the environment, allowable operating time, installation of noise barriers and reusable waste such as bitumen emulsion is recycled to reduce noise level monitoring. We strictly arrange the operating time waste, while non-reusable chemical waste are collected by in accordance with the legal requirements. Temporary noise authorised parties and disposed in accordance with the legal and sound barriers were installed at some construction areas requirements by the Department of Environmental. to prevent noise disturbance to nearby neighbourhoods. Noise level readings are carried out regularly at our construction Mitigating Pollution sites during the day, evening and night-time. The average environmental noise level from our construction sites does not As part of the Group’s commitment to mitigate environmental exceed 80 decibels as required by the DOE. pollution, our Civil Engineering & Construction Division has formulated the Environmental Management Plan (“EMP”) to ensure all of our projects comply with the standards and guidelines required by the Department of Environment (“DOE”) including:
24 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Sustainability Report
WORKPLACE Gender & Age
Our People In today’s workplace, women are equally capable and successful, and yet the gender gap is still a widespread problem. We The Group recognises that our employees are our important recognise the importance of gender equality and we encourage asset and the main driving force in contributing and making gender and age diversity across our workplace. Due to the the company successful, and ensuring the business is on a nature of the industry, the proportion of male employees is still sustainable growth path. higher than female employees, and we will strive to achieve gender balance. As mentioned earlier, we do not discriminate between age and gender, and we employ candidates based on We recognise that a harmonious and inspiring working their capabilities. environment enable our employees to realise their potential. We provide equal employment, promotion and development The gender and age balance of the workforce is tabulated in opportunities for all our candidates and employees regardless the infographic below: of gender, age, ethnicity, cultural background, skills and experience in the workplace.
Communication is one of the core values of the group. We by Gender actively communicate with employees to understand their needs and ensure that their goals are aligned with the Group’s clear direction.
Workforce Male 76% Female 24% As at 31 March 2020, we have a total of 383 employees (2019: 437); illustrated as below:
100 by Age 82% 82% 77% 76% 80
60 Male < 26 6% Female 26 - 35 28% Male 77% 40 36 - 45 19% Female 23% 23% 24% 46 - 55 31% 18% 18% 20 > 55 16%
0 2019 2020 2019 2020 No. of employees by gender Employees leaving employment by gender
MTD ACPI ENGINEERING BERHAD 25 ANNUAL REPORT 2020 Sustainability Report
Ethnic Diversity In FYE 2020, we recruited a total of 28 employees. We believe that the employees we hired have extensive knowledge and We believe that a diverse workforce and an open and caring professional skills to perform their duties. organisational culture are the principal factors for our business success. We welcome talented people with different perspectives and different social and cultural backgrounds, and promise New Hire Breakdown by Age Group and Gender to actively recruit and retain talents to ensure the continued Campositions success of the Group.
by Ethnic Composition < 26 46% 26 - 35 18% 36 - 45 7% Age (%) 46 - 55 7% > 55 22% Malay 77% Ethnicity Chinese 7% (%) Indian 3% Others 13%
Male 89% Employee Turnover Rate Gender (%) Female 11%
The Group recorded an employee turnover rate of 16% for the FYE 2020 (2019: 12%). Higher employee turnover rate was mainly contributed by resignations, expiration and termination of employment contracts.
Attracting Talents
We believe the right recruitment will induce stable and TALENT DEVELOPMENT sustainable growth for the company and our employees’ career. We actively recruit the right talents through the Group’s Performance Driven Culture website, recruitment agencies, media advertisements, career fairs and internal employee recommendations. Creating a performance driven culture requires a systematic approach to managing the performance of MTD ACPI Group, We aim to attract and retain our talent through attractive both the teams and individuals. We offer various programmes remuneration, enhancing employees’ welfare, and providing that support our employees’ skills development and knowledge career development opportunities. We understand that enhancement. These programmes range from on-boarding employees’ wellbeing and career development opportunities sessions to technical specific trainings such as health, safety, are the main factors that attract and retain the best talents. and environment. We encourage our leaders to discuss and In addition, we also provide various types of training and formulate top down strategy for continuous people and education support for our employees to learn and expand their business development. knowledge. We will expand our compensation and benefits to ensure consistency with the market and to maintain our employees’ positive experience.
26 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Sustainability Report
Training & Development Succession Planning
We continue to promote a learning culture with the aim towards We design our succession planning within the Group with the operational excellence for the Group and for employees’ main objective of ensuring the Group is prepared with a plan continuous development. Leadership development will unlock to support operational and service continuity in the event that better leadership skills, decision making and focus through a Senior Management team, key business leaders, Heads of series of strategic programmes in line with Group’s corporate Division or critical position holders leave their positions. We initiatives. completed our succession planning framework in 2019 and the activities are being implemented in stages. We conducted in-house trainings, maximising our conducive learning facilities and environment, organised induction programme for newcomers, safety and health courses for our MTD ACPI Group Training Programs employees at head office and sites, as well as performance April 2019 - March 2020 enhancement courses to improve communication skills. All our internal training programmes are delivered by our in-house trainers or appointed training providers.
External programmes allow exposure to new technologies and enhance technical knowledge for our people and the business. Types of These external training programmes help to ensure that every Training In-House 84% employee has the right skills to support our operational and (%) External 16% strategic objectives, while furthering their own professional development.
We develop a diverse pipeline of talents and provide our employees the opportunities to learn and grow, overcome challenges, take on new roles and adopt greater responsibilities. Capable employees possessing the right skills with the right culture building, drive the Group to achieve its performance driven aspiration. Internship Programme
As a Group, we have organised a total of 103 training sessions The Group established an Internship Programme providing (2019: 122 sessions) including internal, external and on-the- opportunity to candidates with real life experience in job trainings, from April 2019 to March 2020. These training construction and manufacturing industries. We accept sessions covered a wide range of topics from technical skills, candidates from various higher educational institutions, safety awareness, training programmes for MTD Security ranging from universities to technical colleges, irrespective of Officers, ISO 9001:2015 Quality Management System trainings, their gender and background. In FYE 2020, 9 students (2019: 6 new employee induction trainings, strategic planning workshops students) successfully joined our internship programme. to corporate liability trainings.
MTD ACPI ENGINEERING BERHAD 27 ANNUAL REPORT 2020 Sustainability Report
EMPLOYEE WELFARE Parental Leave
Employee Benefits The Group promotes a work-life balance culture that caters to employees’ physical and emotional needs, as we believe We offer attractive benefits in addition to basic salary to that a work-life balance culture leads to greater recruitment enhance employee wellness and retain the best talent possible. and retention of qualified employees and ultimately, enhance These benefits cover medical, group personal accident, dental, employees’ morale and productivity. fleet card and mobile subsidy. To empower and support our employees’ work-life balance needs and preferences, the Group provides all male and female Internship Breakdown by Gender Composition employees two (2) days of paternity leave and sixty (60) days and Division of maternity leave respectively.
Lifestyle Care
We place great importance on the health of our employees and we constantly promote a healthy lifestyle. Free fitness facilities Gender (%) Male 33% are provided at our headquarters such as the gym and various Female 67% fitness programmes like monthly Zumba class. In addition, up to RM500 is also provided for dental care to our employees across the Group.
Kelab MTD
We recognise healthy work-life balance is crucial to our employees and recreation helps to build a healthy and happy workforce. We have organised recreational outdoor activities such as water rafting and pool competition, to stimulate Manufacturing 33% employees’ motivation and build their confidence, while Group Finance & Division Treasury 33% strengthening teamwork among each other. In addition, such (%) Contract & activities help connect our people and strengthen mutual 22% Procurement cohesion. Technical & Operations 11% Kelab MTD (previously known as “Kelab Kita”) was established in 2015 as a platform for greater communication and strengthening of ties amongst employees, through sports, recreation, and welfare activities.
We conducted 24 employee engagement activities (2019: 18) during the financial year. These activities vary and are based on the responses and feedbacks from our valued employees.
28 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Sustainability Report
Activities Objective of Activities
Pool Competition New talent scouting. Grand Finale Gempak Superstar To enable talented members a platform to demonstrate their singing skills. Karaoke Explore the uniqueness of Pahang state and encourage creative and “out of the box” Kembara LPT 2019 thinking among club members. Provision of Meals for Breaking Fast A gesture of appreciation to Security Department staff who were on duty during the (Iftar) During Ramadhan month of Ramadhan 1440H. Ramadhan Weekly Talks An open platform for our Muslim members to widen their Islamic knowledge. Distribution of Dates To promote the spirit of unity amongst club members. Provision of Small Feast on 1st & 2nd A gesture of appreciation to the Security Department staff who were on duty during Syawal 1st and 2nd Syawal 1440H. Scout for potential players among the club members and foster teamwork spirit Inter-floor Futsal League among staff. Water Rafting Build confidence and enhance teamwork. A gesture of appreciation to club members who were selected to perform hajj for Provision of Hajj Token the year. Aidil Adha Feast Celebration of Aidil Adha as a gesture of appreciation to Club members. Zumba Class Promote healthy lifestyle among club members. National Sports Day Run Promote healthy lifestyle and foster family spirit among participating members. Quran Recitation Class Raise the standard of Quran Recitals among female club members. Educate club members’ children on problem solving skills through group activities IRIS Student Camp and applying the skills in real-life situation. Assist selected club members by providing their children with full set of school Back to School Assistance uniform supplied by an established supplier i.e. Canggih. Compete in fun-filled sports carnival which involves six (6) traditional games Sports Carnival – Traditional Games including Boling Kelapa, Baling Selipar, Galah Panjang, Takraw Bulatan, Lari Dalam Guni and Teng Teng. MTD Fun Ride Foster good relationship among club members. Promote a healthy lifestyle and strengthen the bond among participating members Kuala Lumpur New Year Run and their families. Health Awareness Day Raise awareness on the importance of maintaining a healthy lifestyle. Sport Carnival – Indoor & Outdoor Build team spirit through 11 different games and scout for potential talents. Games
MTD ACPI ENGINEERING BERHAD 29 ANNUAL REPORT 2020 Sustainability Report
Achieving Employee Wellbeing Safety and Health Policy
We understand that the interests of employees and the The Group recognises Occupational SHE and welfare of company are complementary. In order to achieve our employee our employees are paramount to the Group. The Group is well-being objectives, we strive to create a caring culture in committed to provide a healthy and safe work environment for the workplace to ensure that our employees can confidently our employees, contractors and visitors, as well as maintain an pursue their careers. We recognise and value the hard work of acceptable standard of procedure to safeguard safety, health our employees. The Group has established programmes that and welfare of all employees. focus on physical, emotional, and environmental well-being, to provide employees with incentives, tools, social support, and strategies to maintain a healthy lifestyle. Ensure compliance with MTD ACPI standards, codes, policies and Breastfeeding Room guidelines.
We honour women at the workplace and understand the need Ensure compliance with all local to cater to their well-being. We provided a private, comfortable regulations and industry codes of practices. and hygienic space in the office in support of breastfeeding amongst mothers. Ensure that policies, procedures and resources are in place and made Health Awareness Day available.
We place great importance on the health of employees, and we Encourage individual accountability believe that encouraging employees to improve their health will and personal responsibility for safety and health at the workplace. be a win-win situation for both the Company and employees. We organised the “Health Awareness Day” to create health work Safe Ensure that occupational safety and Environment awareness among employees and educate them on the health objectives and programmes importance of maintaining a healthy lifestyle. are established, implemented and maintained.
SAFETY AND HEALTH The Group has established its Safety and Health Committee A Safer Working Environment (“SHC”) at every division – Civil Engineering & Construction, Manufacturing Division, and Headquarters. These Divisional Health and safety of our employees, customers and Safety and Health Committees are responsible to provide communities are our utmost priority and are embedded in recommendation and advice on Health and Safety matters our corporate culture. Our objective is to have zero fatality. to all workplaces. The SHC is responsible for monitoring SHE To ensure that, we have in place many programmes to Performance at our project sites. SHC meetings are carried promote safety awareness to our employees and contractors out quarterly to ensure the implementation of SHE processes and we implement workplace improvements regularly. We are effective across the workplace. In addition, the Group SHC are committed to ensure the best working environment and reviews the overall policy and SHE Programmes for the Group. continue to uphold stringent Safety, Health and Environment Group SHC meetings are conducted twice a year to ensure (“SHE”) standard through our operations. adequacy and effectiveness of SHE system, programmes, and activities. We will maintain our focus in providing a safe and healthy work environment for our employees and enhance our occupational safety and health management system.
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The governance structure of the SH Committees within the COMMUNITY Group is outlined below. Social Engagement
Group SH Committee As a member of MTD Group, MTD ACPI also participated in various activities organised on the Group level, in areas we operate in. We constantly engaged with the community to understand their needs, and where possible, provide aid and Divisional SH Committee support.
We are committed to safeguarding the well-being of the communities where we operate in, and the Group is dedicated Civil to maintaining a high standard of CSR. We initiated several Engineering Manufacturing MTD Group programmes to meet the needs of our customers, intensifying & Construction Division - HQ Building our CSR capabilities and embedding CSR into our business Division processes, while maintaining unwavering commitment to our employees, local communities, and other stakeholders. During the year, the Group continued to enhance the CSR performance Site SH Factory SH within the Group via various initiatives with the stakeholders. Committee Committee
Health and Safety Performance Indicators
During the financial year under review, the Group recorded an incident rate of 2.2 (2019:8.9) and 2.5 (2019: 9.8) for the Civil Engineering & Construction and Manufacturing Divisions respectively. The decrease in incident rates for both Divisions were a result of the increase in safety awareness at the workplace which include the efficiency of incident reporting, data recording and close monitoring by our safety personnel. We will continue to monitor and improve the processes of Safety, Health and Environment, and minimize the possibility of accidents in near future.
MTD ACPI ENGINEERING BERHAD 31 ANNUAL REPORT 2020 IRF and GRI Content Index a. Mapping to Integrated Reporting Framework
INTEGRATED REPORTING STANDARD REFERENCE 7 Content Elements Organizational overview and Corporate profile external environment Management Discussion & Analysis, Pages 11 – 21 Governance Corporate Information Corporate Structure, Page 3 Corporate Governance Overview Statement, Pages 34 – 43 Business Model Strategic Business Model, Page 13 Risks and Opportunities Civil Engineering & Construction Division, Page 17 Manufacturing Division, Pages 20 – 21 Statement on Risk Management and Internal Control, Pages 51 – 53 Strategy and Resource Allocation Summary of Operational Performance under Management Discussion & Analysis, Pages 11 – 12 Performance Group 5-Year Financial Highlights, Page 10 Summary of Operational Performance under Management Discussion & Analysis, Pages 11 – 12 Financial Statements Outlook Future Outlook, Page 13 Civil Engineering & Construction Division, Page 18 Manufacturing Division, Page 21 Basis of Preparation Basis of Preparation, Page 11 b. Mapping GRI Content Index – Core Option
GRI STANDARD DISCLOSURE REFERENCE 102-1 Name of the organisation MTD ACPI Engineering Berhad 102-2 Activities, bands, products and • Corporate Profile services • Civil Engineering & Construction Division, Pages 12 and 15 • Manufacturing Division, Pages 12, 18 – 19 102-3 Location of headquarters Corporate Profile Corporate Information, Page 2 102-4 Locations of operations Corporate Profile Corporate Information, Page 2 GENERAL 102-5 Ownership and legal form Corporate Information, Page 2 DISCLOSURES Corporate Structure, Page 3 Analysis of shareholdings, Pages 54 – 56 Notes to Financial Statement, Note 16, Page 116 102-6 Markets served Corporate Profile • Civil Engineering & Construction Division, Pages 15 – 18 Manufacturing Division, Pages 18 – 21 102-7 Scale of the organisation Pages 11 – 21 102-8 Information on employees and Sustainabilility – Workplace, Pages 25 – 30 other workers
32 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 IRF and GRI Content Index
b. Mapping GRI Content Index – Core Option (Cont’d)
GRI STANDARD DISCLOSURE REFERENCE 102-9 Supply chain Stakeholders Engagement – Industry Peers, Page 14 Market Place – Industrial Collaboration, Page 23 102-10 Significant changes to the Not applicable organisation and its supply chain 102-11 Precautionary principle or Not applicable approach 102-12 External initiatives Pages 11 – 21 102-13 Membership of associations Pages 11 – 21 102-14 Statement from senior Assurance from Management, Page 53 decision maker 102-18 Governance structure Corporate Information, Page 2 Corporate Structure, Page 3 Corporate Governance Overview Statement, Pages 34 – 43 102-40 List of stakeholder groups Stakeholders Engagement, Page 14 102-42 Identifying and selecting Stakeholders Engagement, Page 14 stakeholders 102-43 Approach to stakeholder Stakeholders Engagement, Page 14 engagements GENERAL 102-44 Key topic and concerns raised Stakeholders Engagement, Pages 14 – 21 DISCLOSURES 102-45 Entities included in the Corporate Structure, Page 3 consolidated financial About This report and Scope and Boundary, Page 11 statements 102-46 Defining report content and Scope and Boundary, Page 11 topic boundaries 102-47 List of material topics Pages 11 – 21 102-48 Restatements of information Not applicable 102-49 Changes in reporting Not applicable 102-50 Reporting period Scope and Boundary, Page 11 102-51 Date of most recent report Page 11 Page 22 102-52 Reporting cycle Scope and Boundary, Page 11 102-53 Contact point for questions Corporate Information, Page 2 regarding the report 102-54 Claims of reporting in Pages 11 and 22 accordance with the GRI This report is guided by GRI Standards (Core Option) Standards 102-55 GRI content index Pages 32 – 34 102-56 External assurance The Company may consider seeking external assurance in the future.
MTD ACPI ENGINEERING BERHAD 33 ANNUAL REPORT 2020 c. Mapping GRI Content Index – Specific Topics
GRI STANDARD DISCLOSURE REFERENCE Economic Performance 201-1 Direct economic value generated and distributed Pages 11 – 31 Energy 302-1 Energy consumption within the organisation Our Facilities, Page 24 302-3 Energy intensity Our Facilities, Page 24 Emissions 305-2 Energy indirect (Scope 2) GHG emissions Environmental, Page 24
MATERIAL Employment TOPICS 401-1 New employee hires and employee turnover Attracting Talents, Page 26 Occupational Health And Safety Types of injury and rates of injury, lost days, Safety and Health, 403-2 absenteeism and no of work related fatalities Pages 30 – 31 Training & Education 401-1 Average hours of training per year per employee Disclosed number of trainings, Page 27 Diversity & Equal Opportunity 405-1 Diversity of governance bodies and employees Workplace, Pages 25 – 26
34 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Corporate Governance Overview Statement
Our Board of Directors (“Board”) and the management of MTD • Step Up Practice is not applicable to MTD ACPI considering ACPI Engineering Berhad (“MTD ACPI” or “Company”) are it does not fall under Large Companies as defined under committed to the maintenance of good corporate governance the MCCG as at 1 April 2019. across MTD ACPI and its group of companies (“the Group”) in • Practice 4.5 (The board discloses in its annual report the attaining effective management and corporate sustainability, company’s policies on gender diversity, its targets and to enhance shareholders’ value and safeguard the interest of measures to meet those targets. For Large Companies, the stakeholders of the Company. board must have at least 30% women directors). • Practice 4.6 (In identifying candidates for appointment This Corporate Governance Overview Statement (“Statement”) of directors, the board does not solely rely on is prepared to report compliance with Bursa Malaysia Securities recommendations from existing board members, Berhad (“Bursa Securities”) Main Market Listing Requirements management or major shareholders. The board utilises (“MMLR”) under paragraph 15.25(1) and to provide an overview independent sources to identify suitably qualified of how the Company has applied the following three (3) candidates). Principles of the Malaysian Code on Corporate Governance • Practice 7.3 (Step Up - Companies are encouraged to fully (“MCCG”), set out in the table below. disclose the detailed remuneration of each member of senior management on a named basis). Principle A Principle B Principle C • Practice 8.4 (Step Up – The Audit Committee should comprise solely of Independent Directors). Board Leadership Effective Audit Integrity in • Practice 8.5 (All Audit Committee should undertake and Effectiveness and Risk Corporate continuous professional development to keep themselves Management Reporting and abreast of relevant developments in accounting and Meaningful auditing standards, practices and rules). Relationship with • Practice 11.2 (Large companies are encouraged to adopt Stakeholders integrated reporting based on a globally recognised framework). This Statement should be read together with MTD ACPI’s • Practice 12.3 (Listed companies with a large number of Corporate Governance Report for financial year ended 31 March shareholders or which have meetings in remote locations 2020 (“CG Report”), which provide detailed disclosure of the should leverage technology to facilitate voting in absentia). application of each practice of the MCCG within the Group during the financial year ended 31 March 2020Financial (“ Year”) or where it has not, explanation has been provided. The CG Report is announced to Bursa Securities together with PRINCIPLE A : the Annual Report 2020 and a copy is available through the BOARD LEADERSHIP AND EFFECTIVENESS Corporate Governance Section of MTD ACPI’s website www.mtdacpi.com. 1. Board Responsibilities Our Board is collectively responsible for overseeing and This Statement should also be read together with the following monitoring the overall management of the business corporate governance related statements / reports set out in and performance of the Group, towards achieving this Annual Report: organisational objectives, growth and sustainability of the Group. Our Board drives the conduct of the Group’s (a) Additional Compliance Statement; businesses and overall strategic direction in tandem (b) Directors’ Responsibility Statement For Preparing the with challenging business environment and economic Audited Financial Statements; uncertainties which are likely to impact the performance (c) Management Discussion & Analysis; of the Group. (d) Sustainability Report; (e) Report of the Audit Committee; and The key strategies are to continue with tendering efforts to (f) Statement on Risk Management and Internal Control. increase its order book, leveraging on its vast experience and track record in the industry in which the Group operates, MTD ACPI has complied with the practices set out in the CG enhance profit margin by undertaking measures to lower Report during the Financial Year except the following: operating costs, implementation of key performance indicators and set high level objectives and targets for • Practice 4.3 - Step Up (The board has a policy which limits the Management to achieve as well as to monitor their the tenure of its independent directors to nine years). progress in attaining the objective and targets.
MTD ACPI ENGINEERING BERHAD 35 ANNUAL REPORT 2020 Corporate Governance Overview Statement
PRINCIPLE A : • Reviewed and approved the Group’s quarterly BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D) report on unaudited consolidated results, unaudited and audited financial statements and 1. Board Responsibilities (Cont’d) reports, for release to Bursa Securities; • Reviewed and approved banking facilities; The key activities undertaken by the Board during Financial • Reviewed and approved participation in Year were in relation to: construction tender exercises and development updates and monitor progress of projects (a) Strategic Planning and Review undertaken; and • Reviewed and approved the Strategic Business • Reviewed operating performance and updates Plans and Annual Operating Budget for the on Group’s core businesses. Group, for three (3) financial years ending 31 March 2020 to 2022 including the objectives; Our Board discharged its responsibilities on corporate • Continuously monitored the achievement of governance matters either by itself or through its Board Strategic Business Plans; and Committees. Strategies, Policies and Terms of Reference • Considered and approved acquisitions and are approved by the Board for each Board Committee to corporate restructuring exercise. carry out their respective duties and responsibilities. Our Board annually assess the effectiveness of the Policies and (b) Risk Management and Internal Control Terms of Reference to ensure the terms are relevant and • Reviewed Enterprise Risk Management viable to meet the needs of the Company and updated Framework of the Group’s including the risk to meet changes in MMLR and guidelines of MCCG. Any profiles, determine the risk appetite of the Group requirement for amendment shall be deliberated by the and action plans to mitigate the risks identified; respective Board Committee and recommendation for • Monitored compliance with regulatory and revisions shall be submitted to the Board for consideration statutory requirements and good corporate and approval. governance practices; and • Reviewed the Group corporate structure to Our Board is the ultimate decision-making body for a list enhance efficiency. of matters of the Group as set out in the Board Charter of the Company. A copy of the Board Charter is available on (c) Corporate Governance the Company’s website www.mtdacpi.com. • Reviewed and approved the Constitution of the Company, Board Charter, Code of Ethics for 2. The Role of Chairman Directors and Policies and Terms of Reference of Board Committees; The Chairman of MTD ACPI (“Chairman”) namely, • Assessment of the Board, the Board structure Dato’ Ir. Kalid bin Alias is an Independent Non-Executive not limited to the size, composition and diversity; Director who leads the Board and together with the Board • Assessment of the performance of the Board, members carry out the duties of the Board as detailed Board Committees and individual Directors as in the Board Charter and pursuant to fiduciary duties as well as independence of Directors; stipulated in the Companies Act 2016 or Constitution of • Reviewed and approved annual report and the Company. The Chairman also chaired the Twenty- inclusion of corporate governance report; Sixth Annual General Meeting of the Company held on • Reviewed developments in corporate governance 5 September 2019 (“Twenty-Sixth AGM”). and received legal and regulatory updates; • Reviewed and approved the fees and allowances Dato’ Ir. Kalid bin Alias has demonstrated effective for Directors; and leadership in the Board, allowed open discussion by • Reviewed and approved remuneration of Senior members on matters involving the Group to ensure Management. effective decision-making process.
(d) Financial and Operational Performance The positions of Chairman and Chief Executive Officer • Reviewed the Group’s performance versus (“CEO”) are always held by different individuals with clear budgets; and distinct roles for both positions as set out in the Board Charter.
36 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Corporate Governance Overview Statement
Our Chairman and Board delegated to the CEO to lead the Our Board is mindful of the challenges in the competitive Management Committee and Senior Management staff market with low profit margin achieved and had of the Group (collectively referred to as “Management”) continuously emphasized to the Management on the to run the daily operations of the business and oversee implementation of initiatives to increase productivity, the implementation of the organisation’s sustainability efficiency and bottom line of the Group, not limited to the approaches and initiatives, to ensure that business following: objectives and key targets established are being met. (a) Replenish the existing job order book of Construction The CEO maintained dialogue with the Chairman and the Divison by capitalising on potential projects Board on important and strategic issues facing the Group announced by the Government and property projects and ensured they are alerted to forthcoming complex, offered under the Property and Real Estate Division contentious or sensitive issues and challenges faced by the of the holding company and its group, to increase Group. revenue streams; (b) Provide quality products and services to its At the Twenty-Sixth AGM, the CEO was delegated to stakeholders within the local operations; present “MTD ACPI Group’s highlights for financial year ended (“FYE”) 2019” to the Shareholder. The presentation (c) Focus on resource allocation, minimise material provided an overview of the Group’s performance for the wastages and cost optimisation to deliver high past five (5) financial years including, FYE 2019, status quality products and services on schedule; updates on projects pursued, potential, on-going and (d) Develop innovative measures for cost cutting completed projects in FYE 2019 for project value of RM5 approach in project management and implement million and above. “value engineering” to achieve and maintain forecast profit margins; 3. Overall Management (e) Incorporate work ethics into the work culture and move towards better corporate practices; and The Board delegated to the Management, the authority and responsibility for the day-to-day management and (f) Identify areas of improvement required by employees operations of business of the Group while, the Board in and provide suitable training to enhance their its oversight responsibility of the Management maintained performance. appropriate levels of review, provided guidance and challenged the Management in running the business of Our Board considered employees as valuable assets to the the Group. Group and continuously emphasized on investing in people by providing employees with various training courses It is the obligation of the Management to provide the conducted either externally or internally, to enhance their Board with all information they need for their oversight professional skills, knowledge and communication skills. responsibility. The information consisted of all matters The objective is to facilitate enhancement of employees’ materially affecting the Group and its performance contribution and commitment regardless of position, including any potential strategic, underperforming which is intended ultimately to lead to high productivity businesses / activities of the Group. The Board shared their and commitment from employees, and effective insights and experience to complement that of the CEO communication within the Group, vital to the achievement and the Management. of the goals and objectives of the Group.
The Management composed Heads of Operation and During the Financial Year, a series of Strategic Workshop Support Divisions across the Group engaging in leadership sessions were organised for Managers together with across business and operational units, providing oversight the Management staff. The objective was to study the and strategic guidance and mobilising employees to effectiveness of the current organisation processes by implement strategies established. An organisational reviewing the Vision, Mission and Shared Values of the structure is in place with defined lines of authority, Group as well as, the roles of each respective business control responsibilities and accountability of each level of unit and support services towards the attainment of the management, to ensure smooth operation and running Group’s short-term and long-term strategic objectives. of business in line with the Strategic Business Plans and Annual Operating Budget of the Group and high level objectives established and approved by the Board.
MTD ACPI ENGINEERING BERHAD 37 ANNUAL REPORT 2020 Corporate Governance Overview Statement
PRINCIPLE A : Our Board has adequate resources to carry out its oversight BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D) duties and could engage independent professional advice at the Company’s expense in furtherance of its duties, 3. Overall Management whether as a Board or in their individual capacity as Director. Our Board has the support and services of the The collective review consequently led to the realignment Company Secretaries in discharge of its functions. The of individual objectives to the organisational goals Company Secretaries ensured that the Board members through the development of high level key performance received notifications and briefings on changes in regulation indicators (KPI) and standards of measurements, to ensure or law and implementation thereof, keep abreast with the setting the right target critical in facilitating the intended relevant changes and ensured the Group is compliant with outcome in line with the Group’s strategic objectives. Apart the regulation or law. from facilitating continuous performance improvement, employees are encouraged to be more engaged 5. Board Composition and focused towards achieving the communicated organisational goals. As at the date of this Statement, the Board was made up of three (3) Independent Non-Executive Directors The sustainability efforts and initiatives undertaken (“INED”), one (1) Non-Independent Non-Executive Director by our Board are in line with our commitment and (“NINED”) and one (1) Executive Director (“ED”). responsibility towards serving the community, enhancing workplace practices, guarding our environment and Reference to the table below, the number of INEDs building our sustainability reputation in the marketplace. represent 60% of the Board members, which is well above The sustainability management is governed through our the MMLR requirement of having one-third of a board corporate structure that extend from our Board, through made up of INED. the Management to the working levels in each of the business units. Percentage of the Board Information on our sustainability strategy, goals and Board Composition (%) initiatives within the Group are detailed in the Sustainability Independent Non- 3 60 Report in this Annual Report. Executive Directors Dato’ Ir. Kalid bin Alias 4. Information and Support (Chairman) Dato’ Ir. Wan Razali bin Quarterly progress report on business / projects undertaken Wan Muda by the Group were presented to the Board at quarterly Nik Din bin Nik Sulaiman Board meeting, followed by briefing or clarification by the (Senior Independent Management to enable the Board to have understandable Director) assessment of the direction and performance of the Group. Updates on prospective projects being pursued by Non-Independent Non- 1 20 the Group and other additional information were provided Executive Director to our Board either upon request or whenever, there is any Nik Faeruz binti Tan Sri Nik material development pertaining to the Group’s business Hussain or operation or when decision of the Board is required. Executive Director 1 20 Keith George Cowling Total 5 100
A brief profile of each of the Directors is set out in this Annual Report.
38 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Corporate Governance Overview Statement
On an annual basis, the Board through the Nomination and The record of attendance of each Director at Board Remuneration Committee (“NRC”) reviewed the size and Meetings and Twenty-Sixth AGM are set out in the table composition of the Board in considering the effectiveness below: of the Board in discharging its roles and responsibilities, and is of the opinion that its composition is well-balanced Attendance comprising: Board Meeting Twenty- (a) Diverse professional backgrounds with an appropriate Regular Special Sixth mix of skills, knowledge and experience in the field Meeting Meeting AGM of engineering, accounting, financial, technical, Total numbers of 5 4 1 management and business development to enable Meetings the Board to discharge its roles and responsibilities Dato’ Ir. Kalid bin 5 4 1 effectively in dealing with the businesses of the Alias Group; and Nik Din bin Nik 5 4 1 (b) Independence elements which support the Group’s Sulaiman objectives through independent deliberation and Dato’ Ir. Wan Razali 5 4 1 review in the decision-making process and with a bin Wan Muda majority Independent Directors on the Board and Nik Faeruz binti 5 4 1 that: Tan Sri Nik Hussain • The independence of the Independent Directors Keith George Cowling 4 3 1 was reviewed and confirmed that they act independently of the Management; and All Directors complied with the minimum attendance of at least 50% of the total Board meetings held during the • The retention of Independent Directors, namely Financial Year pursuant to the MMLR and attended the Dato’ Ir. Kalid bin Alias and Nik Din bin Nik Twenty-Sixth AGM. Sulaiman, whose aggregate term of service as Independent Director exceeded twelve (12) years Mr. Keith George Cowling was unable to attend one (1) and nine (9) years respectively, do not affect Regular Meeting and one (1) Special Meeting during the their independence. Financial Year as he was required to attend to ad-hoc overseas assignments. 6. Board Meetings 7. Board Diversity A total of nine (9) Board meetings were held during the Financial Year, as follows: Our Company adopted a Board Diversity Policy which sets out the approach to achieve diversity on the Board including (a) Five (5) scheduled meetings to discuss and decide gender, age, educational background, professional on strategic matters, risk management, quarterly qualifications, skills, knowledge and experience to be financial results, operational performance and various considered in determining the composition of the Board, other matters based on predetermined agendas; so as to ensure that our Board has the appropriate perspectives that are required to support the execution (b) One (1) scheduled Special Board meetings for of its business strategy and to maximise the Board’s presentation of the Strategic Business Plan and effectiveness. Annual Operating Budget of the Group for the financial years 2020 to 2022; and
(c) Three (3) Special Board meetings to deliberate the Proposed Restructuring Exercise involving the proposed acquisitions of Orangebeam Construction Sdn Bhd and Orangebeam Development Sdn Bhd.
MTD ACPI ENGINEERING BERHAD 39 ANNUAL REPORT 2020 Corporate Governance Overview Statement
PRINCIPLE A : Directors are required to notify the Company Secretaries BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D) on their appointment and directorships in other public companies for disclosure to the Board and reporting under 7. Board Diversity the Companies Act. A summary record of directorships of each Director in public companies notified to the Company As at the end of the Financial Year and up to the date was presented at every quarterly Board meeting, for of this Statement, there is only one (1) woman Director notation and confirmation by the Board that every representing 20% of the Board. Our Board shall pursuant Director complied with the requirement of MMLR on the to the Board Diversity Policy undertake initiatives to restriction on the number of directorships in public listed identify and appoint more women on the Board in the company. event of any further recruitment of Director, to achieve 30% women representation on the Board. However, 9. Senior Independent Director selection is also subject to availability of appropriate and suitable candidate at the relevant time, to meet the Nik Din bin Nik Sulaiman (“Nik Din”), an Independent necessary requisites of the position. Director was appointed as Senior Independent Non- Executive Director on 1 May 2018.
8. Time Commitment The Board through the assessment of the NRC, determined that Nik Din’s long service as Independent The Board Meetings and AGM dates were planned and Director exceeding nine (9) years since 2017, do not affect scheduled prior to the commencement of the Financial his independence on the Board and his retention as Year in consultation with the Directors and confirmed by Independent Director was approved by the shareholders the Board in November 2019. If necessary, the meeting of the Company (“Shareholders”) at the Twenty-Sixth dates would be changed with prior consensus of the Board AGM pursuant to Practice 4.2 of the MCCG. to ensure their attendance and time commitment. Nik Din maintained independence of character and On an annual basis, the Board through the NRC reviewed judgement as well as being free of any connections that the attendance of Directors and confirmed that each and may lead to potential conflict of interest. He has vast every Director: working experience and interpersonal skill to interact well and lead as spokesman for the Independent Directors, act (a) Complied with the minimum attendance requirement as a designated contact to whom Shareholders’ concerns of at least 50% of the total Board meetings held or queries relating to the Company may be raised, as an during the Financial Year pursuant to the MMLR; and alternative to the formal channel of communication with Shareholders. (b) Spent sufficient time in Board meetings, were committed and positively contributed to the Board The roles of the Senior Independent Director are detailed through their participation in the Company’s affairs, in the Board Charter and the profile of Nik Din is set out in discussions and decisions making process. this Annual Report.
In conjunction with the scheduled meeting dates, the 10. Directors’ Continuing Training Board has drawn up a list of key activities to be carried All Directors complied with the requirements to attend out by the Board and Board Committees. The list of key the Mandatory Accreditation Program as prescribed activities is helpful to the Company Secretaries in planning under practice note 5 of the MMLR and attended relevant the Board agenda of each meeting, meeting files and seminars and courses, to comply with paragraph 15.08 of served as a checklist. Additional activities / agenda may the MMLR. be included as the need arises. Directors are encouraged to continuously attend training The Board would ensure to obtain commitment from at the cost of the Company and an in-house training new Director at the time of any appointment on his / her program will be arranged every year. The selection of topic resource and time contributions to focus on the affairs of or guideline recommended by the NRC are for the purpose the Group, towards discharging their duties effectively. of having better understanding of new developments or key amendments to rules or regulations and best practices of MCCG.
40 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Corporate Governance Overview Statement
During the Financial Year, the NRC recommended the in-house training program related to Corporate Liability Provision (Section 17A) of the Malaysian Anti-Corruption Commission Act 2009 and the enforcement of Section 17A effective 1 June 2020. The training was also extended to the Management staff for purpose of creating awareness and understanding the processes in implementation of Section 17A within the Group.
During the Financial Year, all Directors attended training as prescribed under paragraph 15.08 of the MMLR and the individual training record are as set out in the table below:
Directors Training programmes • PowerTalk on ‘Say On Pay : What do Boards Need To Know?’ Dato’ Ir. Kalid bin Alias • Corporate Liability under the New Section 17A of the MACC Act - What Directors and Top-Level Management Need to Know • Directors’ Dialogue with Jonathan Labrey on Integrated Reporting • MIA International Accountants Conference 2019 Nik Din bin Nik Sulaiman • SC Audit Oversight Board Conversation with Audit Committees • Corporate Liability under the New Section 17A of the MACC Act - What Directors and Top-Level Management Need to Know • Corporate Liability under the New Section 17A of the MACC Act Keith George Cowling - What Directors and Top-Level Management Need to Know • Demystifying The Diversity Conundrum : The Road to Business Excellence • Avoiding Competition Law Violations – Formulating an Effective Compliance Policy • Directors’ Dialogue with Jonathan Labrey on Integrated Reporting Dato’ Ir. Wan Razali bin Wan Muda • Workshop on Corporate Liability Provision (Section 17A) of the MACC Act 2009 • Integrated Reporting : Communicating Value Creation • Corporate Liability under the New Section 17A of the MACC Act - What Directors and Top-Level Management Need to Know • PowerTalk on ‘Say On Pay : What do Boards Need To Know?’ Nik Faeruz binti Tan Sri Nik Hussain • Corporate Liability under the New Section 17A of the MACC Act - What Directors and Top-Level Management Need to Know
11. Board Committees
The Board established Audit Committee, NRC and Risk Management Committee. The Committees assist the Board to operate effectively and ensure strong governance framework for decision-making. The composition of each Committee is guided by MMLR and recommendations of the MCCG.
Each Board Committee meet regularly under its Terms of Reference established by the Board and a copy each is available through the Corporate Governance section of the Company’s website www.mtdacpi.com.
MTD ACPI ENGINEERING BERHAD 41 ANNUAL REPORT 2020 Corporate Governance Overview Statement
PRINCIPLE A : Summary of Key Activities BOARD LEADERSHIP AND EFFECTIVENESS (CONT’D) The NRC is accountable to the Board and shall make 12. NRC recommendations to the Board on all matters relating to nomination and remuneration of Directors and The Nomination Committee and Remuneration Committee Management staff under the ambit of the Board. Each merged on 1 May 2018, under the name “NRC”. The NRC member of the NRC or Board abstained from deliberation assists the Board in its effective discharge of duties and and participation in decision of his / her own assessment, responsibilities, and recommend to the Board strategies nomination or remuneration package. and policies in relation to nomination and remuneration of Directors and Management staff of the Group, for the During the Financial Year, the NRC also carried out the key purpose of strengthening the Board and Management in activities, summarised as follows. meeting the Group’s present and future needs, as well as ensuring compliance with the relevant requirements of (a) Reviewed and formalised policy on nomination MMLR and MCCG. to govern the nomination of Directors and Management staff for both new appointments and The role of NRC is guided by the NRC Policies, Board re-appointments, and succession planning. Diversity Policy and Terms of Reference of the NRC established by the Board, a copy of each is available (b) Carried out annual review of the effectiveness of the through the Corporate Governance section of the Board and Board Committee as a whole, and the Company’s website www.mtdacpi.com. competency of each individual Director to ensure they are able to meet the challenges faced by the Composition Company or Group.
The NRC comprised three (3) members, all of whom are (c) Conducted annual assessment to determine the Non-Executive Directors appointed by the Board with a “independence” of Independent Directors, to majority of whom are independent. give assurance to the Board that they qualify as ‘independent’ and they have: The Chairman of the NRC is the Senior Independent Non- Executive Director namely, Nik Din bin Nik Sulaiman who • ‘No material relationship’ with the Group, either is not the Chairman of the Board. directly or as a partner, shareholder or officer of an organisation that has a relationship with the Meetings Group; • No involvement in the day-to-day operation of The NRC convened two (2) meetings during the Financial the Group nor is part of management team; Year and the record of attendance of each member is set • Exercised independent judgement in carrying out in the table below: out their responsibilities and in the decision- making process, without undue influence from Number of the Management; and NRC Meetings • Fulfilled the requirements of the definition of Attended / “independent director” under MMLR. Held during Member Financial Year (d) Reviewed and recommended to the Board the re-election / retention of Directors who retired at Nik Din bin Nik Sulaiman (Chairman) 2/2 the Twenty-Sixth AGM in accordance with the Dato’ Ir. Kalid bin Alias 2/2 Constitution of the Company. Nik Faeruz binti Tan Sri Nik Hussain 2/2
42 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Corporate Governance Overview Statement
(e) Affirmed the detailed remuneration of the Directors PRINCIPLE B : for FYE 2019, on a named basis for disclosure in the EFFECTIVE AUDIT AND RISK MANAGEMENT Annual Report 2019, under Corporate Governance Overview Statement and CG Report under Practice 7.1. 1. Audit Committee
(f) Recommended to the Board, disclosure on The Audit Committee met with the external auditors twice remuneration package of the top six (6) Senior during the Financial Year without the presence of the Management on named basis in bands of RM50,000 Executive Directors and Management staff, to encourage in the CG Report under Practice 7.2. free and honest exchange of view and opinion between both parties, on matters of governance, significant audit (g) Reviewed and recommended to the Board, offer / and accounting issues, differences in internal control as renewal of new contract of service of Management a result of performance of audit by the external auditors staff. and their recommendations for improvement thereof.
13. Remuneration Based on the performance evaluation of the Audit Committee for the Financial Year, the Board was satisfied The Directors’ fees and allowances paid to Directors by the that the Chairman and members of the Audit Committee Company for the Financial Year, are set out in the table have discharged their responsibilities effectively. below: The Terms of Reference and summary of activities of the Audit Committee are presented in the Report of the Audit Non-Executive Fee Allowance Total Committee in this Annual Report. Director (RM) (RM) (RM) Dato’ Ir. Kalid bin Alias 48,000 11,000 59,000 2. Risk Management Nik Din bin Nik 42,000 17,000 59,000 The Risk Management Committee (“RMC”) was established Sulaiman to oversee the Group’s Enterprise Risk Management Dato’ Ir. Wan Razali 36,000 4,000 40,000 (“ERM”) framework and policies implemented within the bin Wan Muda Group. RMC identifies key enterprise risks which could Nik Faeruz binti impact the Group’s business objectives, to safeguard 36,000 7,000 43,000 Tan Sri Nik Hussain shareholders’ investments as well as the Group’s interest and assets. Executive Director Keith George Cowling* 36,000 24,000 60,000 The processes of the RMC is guided by its Terms of Total 198,000 63,000 261,000 Reference established by the Board, including composition of the RMC, scope of functions and authority in relation to Notes: its risk governance role. A copy of the Terms of Reference * Save as disclosed above, Keith George Cowling did of RMC is available through the Corporate Governance not receive salary and benefits from MTD ACPI as section of the Company’s website www.mtdacpi.com. he was remunerated under MTD Capital Bhd. MTD Capital Bhd is the holding company of MTD ACPI. The RMC comprised three (3) Independent Non-Executive Directors and held two (2) meetings during the Financial Year. The record of attendance is set out in the table below:
Number of RMC Meetings Attended / Held during the Member Financial Year Dato’ Ir. Wan Razali bin 2/2 Wan Muda (Chairman) Dato’ Ir. Kalid bin Alias 2/2 Nik Din bin Nik Sulaiman 2/2
MTD ACPI ENGINEERING BERHAD 43 ANNUAL REPORT 2020 Corporate Governance Overview Statement
PRINCIPLE B : The Company maintains a dedicated website EFFECTIVE AUDIT AND RISK MANAGEMENT www.mtdacpi.com which provides access to the Group’s operating businesses, latest developments, 2. Risk Management (Cont’d) announcements to Bursa Securities and other corporate information. Shareholders may raise queries regarding the The Board together with the RMC reviewed the ERM Group via email addressed to [email protected]. Reporting Structure and Report on Risk Profile of the Group, and determined the risk appetite, acceptable level 2. AGM of key risks identified and action plans to be implemented to mitigate the risks identified. The approach to ERM are The AGM is the principal forum for open communication as follows: with shareholders concerning matters affecting the value of shareholders’ investment in the Company and vice (a) Look into ways of analysing and evaluating the risk versa, the Company would understand the shareholders’ profiles, and implementing solutions to manage and perspective and respond to their feedback. minimise the effect of extreme high risks of the Group to an acceptable level; At the Twenty-Sixth AGM, all five (5) Directors were present at the meeting. The Chairman of the Board chaired (b) Review the risk action plans for critical risks of the AGM in an orderly manner and allowed shareholders the Group implemented or to be implemented to or proxies the opportunity to speak. mitigate the risks, to ensure effective achievement of the strategic objectives of the Group; The CEO presented to the meeting, the Group’s (c) Continuously promote risk knowledge, awareness and performance, key highlights for construction and understanding of the concept of risk management by manufacturing, updates on projects undertaken, completed Head of Department / Division involved; and and potential projects being pursued. The review was supported by visual and graphic presentation of the key (d) Set Key Performance Indicators of the Head of points and financial figures. The presentation was posted Department / Division to include the measurement on the Company’s website upon conclusion of the AGM. of implementation of risk action plan to ensure the application of concept of risk management and The Board encouraged active participation by shareholders responsibility in managing the risks identified. or proxies during the AGM. Upon commencement of the AGM, the Chairman explained the rules of the meeting including voting procedures. The Chairman highlighted The report on the adequacy and effectiveness of the the interested parties who should abstain from voting on Group’s risk management and internal control in all particular proposals, prior to the voting process. material aspects are disclosed in the Statement on Risk Management and Internal Control in this Annual Report. Voting for the resolutions tabled at the Twenty-Sixth AGM was conducted by electronic polling. The Company PRINCIPLE C : engaged independent scrutineers, Mega Business INTEGRITY IN CORPORATE REPORTING AND Consultancy Division of Mega Corporate Services Sdn Bhd MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS to audit and validate the votes for each proposal cast by shareholders or proxies. The voting results were declared 1. Communication with the Shareholders by the Chairman and published on Bursa Securities’ website www.bursamalaysia.com and the Company’s MTD ACPI disseminated relevant and material information website www.mtdacpi.com, subsequent to the close of the on the Group pursuant to disclosure requirements under the AGM. MMLR, for shareholders and stakeholders of the Company to make informed decision regarding their investments or The questions raised by the shareholders and answers to safeguard their interests. The same information is also given by the Chairman and CEO were recorded in the available through the Company’s website. minutes. The summary of key matters discussed at the AGM is posted on the Company’s website www.mtdacpi.com.
This Statement was approved by the Board on 12 August 2020.
44 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Additional Compliance Statement
Utilisation of Proceeds Material Contracts
During the financial year under review, there were no proceeds There were no material contracts entered into by the Company raised from any corporate proposal. and/or its subsidiaries involving the interests of Directors and major shareholders, which subsisted at the end of the financial year ended 31 March 2020 or, if not then subsisting, entered Audit and Non-Audit Fees into since the end of the previous financial year.
The amount of audit and non-audit fees paid to external auditors by the Company and by the Group respectively for the Recurrent Related Party Transactions (“RRPT”) financial year ended 31 March 2020 were as follows: The information on RRPT for the financial year ended 31 March Company Group 2020 is disclosed in the Audited Financial Statements of this (RM) (RM) Annual Report.
Audit fees 80,000 357,636 Non-audit fees 3,000 19,522
MTD ACPI ENGINEERING BERHAD 45 ANNUAL REPORT 2020 Directors’ Responsibility Statement For Preparing the Audited Financial Statements
The Directors are responsible for ensuring that the annual In presenting the annual audited financial statements, the audited financial statements of the Company and the Group Directors have applied appropriate and relevant accounting are drawn up in accordance with the Malaysian Financial policies on consistent basis; made judgements and estimates Reporting Standards, International Financial Reporting that are reasonable and prudent; and prepared the annual Standards, the requirements of the Malaysian Companies Act audited financial statements on a going concern basis. 2016 and the Bursa Malaysia Securities Berhad Main Market Listing Requirements. The Directors has overall responsibility for taking reasonable steps to safeguard the assets of the Company and the Group to The Directors are also responsible for ensuring that the annual prevent and detect fraud and other irregularities. audited financial statements of the Company and the Group are prepared with reasonable accuracy from the accounting records of the Company and the Group so as to give a true and fair view of the state of affairs of the Company and the Group as at 31 March 2020.
46 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Report of the Audit Committee
1. MEMBERSHIP AND MEETINGS
The Audit Committee (“AC”) comprises the following members and details of attendance of each member at meetings held during the financial year ended 31 March 2020 are as follows:
Number of Meetings Members Held Attendance
Nik Din bin Nik Sulaiman 5 5 Chairman / Independent Non-Executive Director Dato’ Ir. Kalid bin Alias 5 5 Member / Senior Independent Non-Executive Director Puan Nik Faeruz binti Tan Sri Nik Hussain 5 5 Member / Non-Independent Non-Executive Director
2. COMPOSITION
Composition
The AC shall be appointed by the Board of Directors of the Company (“Board”) from among the Board members and shall comprise not fewer than three (3) members, all of whom shall be non-executive directors. The majority of the AC shall be independent directors.
At least one (1) member of the AC:-
a. must be a member of the Malaysian Institute of Accountants (“MIA”); or
b. if he is not a member of the MIA, he must have at least three (3) years of working experience and: i. he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or ii. he must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act 1967; or
c. fulfils such other requirements* as prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa Securities”).
The members of the AC shall elect a Chairman from amongst themselves who is an Independent Director. No alternate Director of the Board shall be appointed as a member of the AC.
* (a) a degree/masters/doctorate in accounting or finance and at least three (3) years’ post qualification experience in accounting or finance; or (b) at least seven (7) years’ experience being a chief financial officer of a corporation or having the function of being primarily responsible for the management of the financial affairs of a corporation.
MTD ACPI ENGINEERING BERHAD 47 ANNUAL REPORT 2020 Report of the Audit Committee
2. COMPOSITION (CONT’D) 3.3 Secretary
Composition (Cont’d) The Secretary of the AC shall be the Company Secretary. The Chairman of AC is responsible for ensuring that AC meetings run efficiently and each agenda item is The Secretary shall be responsible for drawing up thoroughly and thoughtfully discussed by all members of the notice and agenda of meetings in consultation the AC. The responsibilities of the AC Chairman, are as with the Chairman and circulating it, supported by follows:- explanatory documentation to members of the AC prior to each meeting. a) Planning and conducting meetings; b) Overseeing reporting to the Board; The Secretary shall also prepare the written minutes c) Encouraging open discussion during meetings; and of the AC meetings and distribute to each member d) Develop and maintain active on-going dialogue with for confirmation. The minutes of AC meetings shall management and both internal and external auditors. be kept under the custody of the Secretary.
The Chairman of the AC shall assess the performance of 3.4 Authority individual committee members on annual basis. The AC shall, in accordance with a procedure to be In the event of any vacancy in the AC resulting in non- determined by the Board and at the expense of the compliance of Bursa Securities Main Market Listing Company:- Requirements (“Listing Requirements”), the Board shall ensure that the vacancy is filled within three (3) months. a. be authorised to investigate any activity within its terms of reference; The Board shall review the term of office and performance of an AC and each of its members at least once every b. have direct communication channels with both three (3) years. the external auditors and internal auditors as well as employees of the Group;
3. TERMS OF REFERENCE c. have full and unrestricted access to any information pertaining to the Company or the 3.1 Meetings Group;
The AC shall meet at least four (4) times a year. d. obtain outside legal or other independent In addition, the Chairman may call for additional professional advice and secure the attendance of meetings at any time at the Chairman’s discretion. outsiders with relevant experience and expertise The AC may also invite any officer or employee of the if it deems necessary; Group to be in attendance to assist in its deliberations. The AC shall meet with the external auditors without e. be able to convene meetings with the external any executive board member and management auditors, the internal auditors or both, present at least twice a year and whenever deemed excluding the attendance of other directors and necessary. management, if necessary; and
3.2 Quorum f. be able to make relevant reports when necessary to the relevant authorities if a breach of the The meetings shall have a quorum of two (2) Listing Requirements occurs. members who are independent directors.
48 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Report of the Audit Committee
3.5 Duties and Responsibilities c. External Audit
a. Risk Management & Internal Control • to review with the external auditors the nature and scope of the audit plan; • to review the adequacy and effectiveness of the risk management, Group’s • to assess the performance and internal control system and management effectiveness of the external auditors and information system; make recommendations to the Board on their appointment and removal; • to review the extent of compliance with established internal policies, standards, • to review and monitor the suitability and plans, procedures, laws and regulations; independence of the external auditors and their services, including non-audit services; • to recommend to the Board steps to improve the system of internal control • to carry out an annual review of the derived from the findings of the internal performance of the external auditors, and external auditors and as recommended including assessment of their independence by the AC itself; in the performance of their obligations as external auditors; b. Financial Reporting Review • to review external auditors’ findings arising To review the quarterly and annual financial from audits, particularly any comments and statements prior to the approval by the Board, responses in management letters as well focusing particularly on:- as the assistance given by the employees of the Group in order to be satisfied that • any changes in or implementation of new appropriate action is being taken; accounting policies and practices; • to review with the external auditors the • significant matters highlighted including Statement on Risk Management and financial reporting issues, significant Internal Control of the Group for inclusion judgments made by management, in the annual report; significant and unusual events or transactions, and how these matters are d. Internal Audit addressed; • to review with the internal auditors the • compliance with the applicable approved nature and scope of the audit plan; accounting standards, other statutory and legal requirements; • to review the competency and resources of the internal audit function, and that it • the going concern assumption; has the necessary authority to carry out its work; • whether finance function is carried out by the right personnel, and its functions are • to review and evaluate factors related equipped with adequate resources and the to the independence of internal auditors right infrastructure to support the financial and assist them in preserving their reporting process; independence;
• to review internal audit programmes and findings arising from audits;
• to review the performance of the internal audit function and report to the Board when necessary;
MTD ACPI ENGINEERING BERHAD 49 ANNUAL REPORT 2020 Report of the Audit Committee
3. TERMS OF REFERENCE (CONT’D) 4. POLICY ON APPOINTMENT OF FORMER KEY AUDIT PARTNER AS MEMBER OF AUDIT 3.5 Duties and Responsibilities (Cont’d) COMMITTEE
d. Internal Audit (Cont’d) It is the Group’s policy that require a former key audit partner to observe a cooling-off period of at least two (2) • to carry out a formal evaluation to review years before being appointed as a member of the AC, if any appraisal or assessment of the any. performance of members of the internal audit function; 5. SUMMARY OF ACTIVITIES • to approve annual audit plan and Internal Audit Charter; During the financial year under review, the AC carried out its duties as set out in the terms of reference and the e. Audit Reports activities are summarised as follows:-
To review the internal and external audit reports a. Risk Management & Internal Control to ensure that appropriate and adequate remedial actions are taken by management i) Deliberated on the Directors’ Statement on Risk on significant lapses in controls and procedures Management and Internal Control (“SRMIC”), that are identified; which was reviewed by the external auditor, for publication in the Annual Report. f. Related Party Transactions The SRMIC was supported by assurance To review any related party transaction and statement by the Chief Executive Officer (“CEO”) conflict of interest situation that may arise within and the General Manager, Head, Finance & the Group including any transaction, procedure Treasury Division on effectiveness of Risk or course of conduct that raises questions of Management and Internal Control. management integrity; ii) Deliberated on the quarterly reports, on actions g. Other Matters taken by Management to resolve significant internal control and accounting issues highlighted • to prepare the annual AC report to the by the internal and external auditors. Board which includes the composition of the AC, its terms of reference, number of iii) Updates and development on corporate meetings held, a summary of its activities governance and best business practices, and the existence of an internal audit statutory and regulatory requirements, function and a summary of the activities of compliance with accounting standards and internal audit function for inclusion in the other business guidelines. annual report; and
• to carry out any other function that may be assigned by the Board when deemed necessary and appropriate.
50 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Report of the Audit Committee
b. Financial Reporting v) Reviewed the independence status of the external auditor and recommended that they The following matters were reviewed by the AC before be appointed for the ensuing year. AC secures being recommended to the Board for approval:- written assurance from the external auditor confirming their independence throughout their i) Reviewed the unaudited quarterly financial term of engagement for the financial year. statements of the Group, among others, any change in accounting policies, significant matters vi) The External Auditors policies and procedures highlighted, the going concern assumption, and was approved for adoption in February 2015. It compliance with accounting standards and outlines the guidelines and procedures for the regulatory requirements. AC also reviewed the AC to assess and monitor the external auditors. draft announcements of the unaudited financial statements to Bursa Securities, to ensure vii) The assessment of the performance and compliance with regulatory requirements. independence of the external auditor was conducted by AC annually. In the assessment, the ii) Reviewed the annual audited financial calibre of external audit firm, quality processes/ statements of the Group for the financial performance, audit team, independence & year and concluded that the financial reports objectivity, audit scope & planning, audit presented a true and fair view of the Group’s communications and audit fees were assessed. and Company’s financial performance for the financial year and was in compliance with the viii) AC also exercised its right to hold meetings with Financial Reporting Standards. the external auditor without the Management’s presence. During the financial year, two private sessions were held on 29 May 2019 and 4 July iii) Reviewed the significant matters highlighted 2019. by the auditors in the financial statements and significant judgements made by Management. d. Internal Audit
c. External Audit i) Reviewed and approved the Annual Internal Audit Plan to ensure adequate scope and i) Reviewed the external auditor’s report for the comprehensive coverage of the Group’s activities. financial year ended 31 March 2019 and SRMIC before recommending to the Board for approval. ii) Deliberated on the internal audit reports, audit recommendations and Management’s action ii) Reviewed the external auditor’s audit plan for plan regarding these recommendations. the Group, encompassing the proposed work blueprint, nature and scope for the financial iii) Kept updated on Management’s implementation year’s audit and engagement strategy prior to of the internal audit recommendations on its implementation. outstanding issues on a quarterly basis via Audit Findings Tracking Register. iii) Reviewed the terms of engagement of the external auditor for the statutory audit. iv) Reviewed and approved the proposed revision of the Internal Audit Charter in order to align the iv) Reviewed the overall performance and, upon Charter with the Institute of Internal Auditors’ satisfactory assessment of the effectiveness of requirements involving areas of responsibility, the external auditor for the Group, recommended audit business plan and quality assessment their re-appointment and fees payable in respect review. of the scope of work performed for the Board’s v) Performed annual evaluation on the Internal approval. Audit function.
vi) Head of Internal Audit confirmed the organisational independence of the internal audit activity to the AC.
MTD ACPI ENGINEERING BERHAD 51 ANNUAL REPORT 2020 Report of the Audit Committee
5. SUMMARY OF ACTIVITIES (CONT’D) Internal audit reports, incorporating audit recommendations and management’s responses were e. Related Party Transactions (“RPTs”) issued to the AC and the management of the respective operations. The Management is responsible for ensuring i) Reviewed the RPTs or Recurrent Related Party that corrective actions are taken within the required time Transactions (“RRPTs”) during each quarter. frame. All findings identified by Group IAD are tracked and followed up on a quarterly basis and the status of the ii) Reviewed the estimated RRPT Mandate for implementation is reported to the AC accordingly. the ensuing year and Circular to Shareholders on the Renewal of Shareholders’ Mandate for The total cost incurred for the internal audit function of RRPT, and recommended the same for Board’s the Group in respect of the financial year ended 31 March approval. 2020 amounted to RM244,012 (included SST).
6. INTERNAL AUDIT FUNCTION
The Internal Audit Function is carried out by Group Internal Audit Department (“Group IAD”) of MTD Group. Group IAD assists the AC in discharging its duties and responsibilities, and is independent of the activities they audit.
The purpose, authority and responsibility of the Group IAD as well as the nature of the assurance and consultancy activities provided by the function are articulated in the internal audit charter.
Group IAD reports directly to the AC who reviews and approves the IAD’s annual plan, and reports administratively to the Chief Operating Officer to allow an appropriate degree of independence from the operations.
During the financial year, the Group IAD had carried out audits according to the internal audit plan which had been approved by the AC using risk based approach. The annual plan was developed through a comprehensive planning process that identifies and prioritizes possible auditable areas to be part of the audit coverage for the year. The Group IAD evaluated the adequacy and effectiveness of key controls in responding to risks within the organisation’s governance, operations and information systems regarding the:-
• Reliability and integrity of financial and operational information; • Effectiveness and efficiency of operations; • Safeguarding of assets; and • Compliance with relevant laws, regulations and contractual obligations.
52 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Statement on Risk Management and Internal Control
The Board of Directors of the Company (“Board”) is committed KEY RISK MANAGEMENT AND INTERNAL CONTROL in maintaining a sound risk management framework and PROCESSES internal control system and is pleased to provide the following statement on the scope and nature of risk management and Enterprise Risk Management Statement internal control for the Company and its subsidiaries (“Group”) for the financial year ended 31 March 2020. The Group has established an Enterprise Risk Management (“ERM”) framework to proactively identify, evaluate and manage key risks to safeguard shareholder’s investment and BOARD RESPONSIBILITY the assets of the Group. In line with the Group’s commitment to deliver sustainable value, this framework aims to provide The Board acknowledges that it is responsible for the Group’s an integrated and organised approach entity-wide whilst Risk Management and Internal Control system (“Group RMIC providing reasonable assurance in ensuring the effectiveness System”) to safeguard shareholder’s investments and the and efficiency of operations, reliability of financial reporting Group’s assets and for reviewing the adequacy and integrity and compliance with applicable laws and regulations. of the system. The Group RMIC System is for the purpose of managing the risk of the Group but does not eliminate MTD ACPI Engineering Berhad (“MTD ACPI”) has implemented the risk of failure to achieve business objectives. It provides and enhanced its ERM framework and processes which clearly only reasonable but not absolute assurance against material defines the authority and accountability in implementing the risk misstatement, loss or fraud. management process and internal control system throughout the Group. The enhanced ERM framework was conducted The Board has implemented an ongoing process, for identifying, in line with the Principles and Guidelines of ISO31000: Risk evaluating, monitoring and managing the significant risks Management has incorporated a well-structured systematic affecting the achievement of its business objectives throughout process to identify, analyse and manage risks to an acceptable the period. The process is regularly reviewed by the Board and level for the achievement of MTD ACPI’s strategic objectives. accords with the Statement on Risk Management & Internal Control: Guidelines for Directors of Public Listed Companies. The Management Committee of MTD ACPI has assumed the role of the Risk Management Committee (“RMC”) to oversee Management assists the Board in the implementation of the and facilitate the Group’s risk management initiatives. The Board’s policies and procedures on risk and control by identifying principal responsibilities of the RMC include the following: and assessing the risks faced, and in the design, operation and monitoring of suitable internal controls to mitigate and control • Communicate requirements of the ERM Policy and ensure these risks. continuous enhancement of ERM; • Formulate and implement ERM mechanism to accomplish The Board is of the view that the risk management and internal requirements of the ERM Policy; control system in place for the year under review and up to • Articulate and challenge risk ratings, control effectiveness, the date of issuance of the financial statements is adequate risk treatment options and risk action plans identified by and effective to safeguard the shareholders’ investment, the Risk Owners; and interest of customers, employees and other stakeholders, and • Ensure that the ERM reports prepared are submitted to the the Group’s assets. Board in a timely manner, and flash reports are submitted in the event of any risk(s) that require urgent attention.
The RMC is assisted by the Head of the Group Strategic Planning and Investment who facilitates the risk assessment process, by performing independent enquiry on risk identification and risk ratings determination by the respective process owners (line managers). Heads of Divisions are responsible for identifying, analysing and evaluating risks, as well as developing, implementing and monitoring all possible risks that can affect their achievement, taking into consideration the effectiveness of controls that are capable of mitigating such risks risk action plans and reporting all major risks to the RMC.
MTD ACPI ENGINEERING BERHAD 53 ANNUAL REPORT 2020 Statement on Risk Management and Internal Control
KEY RISK MANAGEMENT AND INTERNAL CONTROL Other Key Elements of Internal Control PROCESSES (CONT’D) Apart from the above, the other key elements of the Group Enterprise Risk Management Statement (Cont’d) RMIC System include:
Adequacy and effectiveness of the mitigation measures will be • Limits of authority are established to govern the assessed and further enhanced where necessary. In addition, management of financial and non-financial approval any identified emerging critical risk factors will be incorporated limits; into the risk register and managed in accordance to the Group’s risk management methodology. The Head of the Group • Formal operating structure in place with clearly defined Strategic Planning and Investment also assists in the facilitation lines of responsibility and accountability; process for the development of action plans to address key risks of the Group. • Board Committees have been established to assist the Board in discharging its duties. The committee are: During the year, the status of key risk action plans of the Group - Audit Committee and the respective Divisions were presented to the Board of - Nomination and Remuneration Committee Directors (“Board”) on a half-yearly basis. The Board has - Management Committee assumed the oversight and strategic role for ERM. - Risk Management Committee
Audit Committee • Management Committee meets regularly to oversee the day-to-day operation and business affairs of the Group as The Audit Committee (“AC”), which is chaired by a Senior well as guiding, directing and monitoring the activities to Independent Non-Executive Director deliberates on findings and achieve the corporate objectives and goals of the Group; recommendations for improvement proposed by the internal and external auditors. The AC also evaluates the adequacy and • Policies and procedures for key processes are documented effectiveness of the Group’s risk management and system of to provide guidance to all levels of staff. The policies and internal control. Apart from reviewing the annual audit plan, procedures are reviewed and regularly updated when the AC assesses the scope and quality of audit performed. necessary;
Further details on the AC are set out in the AC Report. • Where appropriate, certain companies have the ISO accreditation for their operational processes; Internal Audit Function • Comprehensive operation and financial reviews by the The Internal Audit Function is carried out by the Group Internal Board vide the quarterly financial reports; Audit Department (“Group IAD”) of MTD Group. Group IAD independently carries out its function and provides the AC and • Strategic Business Plan and Annual Operating Budget the Board with the assurance on the adequacy and integrity of for business review of current financial year performance the system of internal control. compared to the budget and previous financial year results, and projected three (3) years Strategic Business Group IAD reviews the internal control systems and procedures Plan and Annual Operating Budget of MTD ACPI Group of the Group’s businesses based on the annual audit plan. The are presented to the Board annually, for review, approval annual audit plan is reviewed and approved by the AC and the and adoption; findings of the audits are submitted to the AC for review at their periodic meetings. Group IAD adopts a risk-based approach • Provisions of regular and comprehensive information to when establishing its audit plan and strategy. Responses from management and employees; Management and action plans are regularly reviewed and followed up by Group IAD and the AC. • Key Performance Indicators (“KPIs”) are used to measure staff performance annually;
54 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Statement on Risk Management and Internal Control
• KPI Balance Score Card to measure the company’s ASSURANCE FROM MANAGEMENT performance and in meeting the corporate objectives and goals of the Group annually; For the financial year under review, the Board has received a written assurance from the Chief Executive Officer (“CEO”) and • Proper guidelines for hiring and termination of staff, and the General Manager, Head, Finance & Treasury Division that annual performance appraisal system are in place; the Group’s risk management and internal control system, in all material aspects, is operating adequately and effectively. There • Training and development programmes are identified were no material control failures or adverse compliance events for employees to acquire the necessary knowledge that have directly resulted in any material loss to the Group. and competency to meet their performance and job expectations; REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS • Whistle blowing policy is established to provide an avenue and a structured mechanism for employees to raise or As required by paragraph 15.23 of the Main Market Listing report concerns on any suspected wrongful activities Requirements of Bursa Malaysia Securities Berhad, the external or wrongdoing and to protect the value of integrity, auditors have reviewed this Statement on Risk Management transparency and accountability in where the Group and Internal Control for inclusion in the annual report of the conducts its business and affairs; Group for the financial year ended 31 March 2020. As set out in their terms of engagement, the said review procedures • A Confidential Information Policy is established to were performed in accordance with the Audit and Assurance manage, control and protect confidential information used Practice Guide 3 [“AAPG 3”] issued by the Malaysian Institute by the Group to avoid leakage and its improper use; of Accountants.
• Insurance coverage to protect against any material loss or AAPG 3 does not require the external auditors to consider damage of assets and resources of the Group insured; and whether this Statement covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the • Regular visits to operating units by senior management Group’s risk and control procedures. Based on their procedures and internal auditors. performed, the external auditors have reported to the Board that nothing has come to their attention that causes them The Board is of the view that the system of risk management to believe that this Statement is not prepared, in all material and internal control instituted throughout the Group is sound and respects, in accordance with the disclosures required by sufficient. All internal control weaknesses identified during the paragraphs 41 and 42 of the Statement on Risk Management financial year under review have been or are being addressed. and Internal Control: Guidelines for Directors of Listed Issuers, Notwithstanding this, reviews of all control procedures will be nor is factually inaccurate. This statement is approved by the continuously carried out to ensure the ongoing effectiveness Board of Directors on 21 August 2020. and adequacy of the system of risk management and internal control, so as to safeguard shareholders’ investment and the Group’s assets.
MTD ACPI ENGINEERING BERHAD 55 ANNUAL REPORT 2020 Analysis of Shareholdings As at 30 July 2020
SHARE CAPITAL
Total Number of Issued Shares : 231,632,798 ordinary shares Total Issued Share Capital : RM339,770,686 Number of Treasury Shares held : 637,000 ordinary shares Voting Right : One vote per ordinary share on a poll Number of Shareholders : 4,521
DISTRIBUTION OF SHAREHOLDERS
No. of *% of No. of *% of Issued Size of Holdings Shareholders Shareholders Issued Shares Shares Capital Less than 100 shares 270 5.97 8,718 # 100 to 1,000 shares 1,908 42.20 863,551 0.37 1,001 to 10,000 shares 1,550 34.29 6,865,510 2.97 10,001 to 100,000 shares 672 14.86 22,030,499 9.54 100,001 to less than 5% of issued shares 118 2.61 46,676,911 20.21 5% and above of issued shares 3 0.07 154,550,609 66.91 Total 4,521 100.00 230,995,798 100.00
SUBSTANTIAL SHAREHOLDERS
Direct Interest Indirect Interest No. of No. of Name of Shareholders Issued Shares *% Issued Shares *% MTD Equity Sdn Bhd (MTD Equity) 88,000,000 38.10 - - Metacorp Berhad (Metacorp) 27,254,610 11.80 - - Alloy Capital Sdn Bhd (ACSB) 39,295,999 17.01 117,269,410(1) 50.77 Lambang Simfoni Sdn Bhd (Lambang Simfoni) - - 27,254,610(2) 11.80 MTD Capital Bhd (MTD) 2,014,800 0.87 115,254,610(3) 49.90 Nikvest Sdn Bhd (Nikvest) - - 117,269,410(4) 50.77 Alloy Consolidated Sdn Bhd (Alloy) - - 156,565,409(5) 67.78 Tan Sri Dr. Nik Hussain bin Abdul Rahman - - 156,565,409(6) 67.78 Dato’ Nik Faizul bin Tan Sri Nik Hussain - - 117,278,660(7) 50.77
Notes: # Negligible * Based on 230,995,798 ordinary shares (Total number of issued shares of 231,632,798 ordinary shares less Treasury Shares of 637,000). (1) Deemed interested by virtue of its shareholding in MTD. (2) Deemed interested by virtue of its shareholding in Metacorp. (3) Deemed interested by virtue of the interests of its wholly-owned subsidiaries namely, MTD Equity and Metacorp. (4) Deemed interested by virtue of its shareholding in MTD. (5) Deemed interested by virtue of the interests of its subsidiaries namely, MTD and ACSB. Alloy has direct shareholding of 26.01% and indirect shareholding of 51.18% in MTD through its wholly-owned subsidiaries, ACSB (47.78%) and Alloy Concrete Engineering Sdn Bhd (3.40%). (6) Deemed interested by virtue of his interests in MTD through his children’s shareholdings in Nikvest and his 100% shareholding in Alloy. (7) Deemed interested by virtue of his spouse’s shareholding in MTD ACPI Engineering Berhad and his shareholding in Nikvest.
56 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Analysis of Shareholdings As at 30 July 2020
DIRECTORS’ SHAREHOLDINGS
Direct Interest Indirect Interest No. of No. of Name of Directors Issued Shares *% Issued Shares *% Dato’ Ir. Kalid bin Alias - - - - Dato’ Ir. Wan Razali bin Wan Muda - - - - Nik Din bin Nik Sulaiman - - - - Keith George Cowling - - - - Nik Faeruz binti Tan Sri Nik Hussain - - - -
LIST OF THIRTY (30) LARGEST SHAREHOLDERS
No. of No. Name of Shareholders Issued Shares *%
1 MTD Equity Sdn Bhd 88,000,000 38.10 2 Alloy Capital Sdn Bhd 39,295,999 17.01 3 Metacorp Berhad 27,254,610 11.80 4 Alliancegroup Nominees (Tempatan) Sdn Bhd 4,048,400 1.75 Pledged Securities Account for Tan Kian Aik (8058967) 5 Alliancegroup Nominees (Tempatan) Sdn Bhd 2,406,500 1.04 Pledged Securities Account for Tan Kian Chuan (8059299) 6 Tan Eng Hai 2,141,800 0.93 7 Chua Hock Chin 2,062,411 0.89 8 MTD Capital Bhd 2,014,800 0.87 9 Choong Yean Yaw 1,533,700 0.66 10 Subramaniam Pillai A/L Sankaran Pillai 1,500,000 0.65 11 Koh Kwee Hooi 1,105,800 0.48 12 TA Nominees (Tempatan) Sdn Bhd 1,000,000 0.43 Pledged Securities Account for Chong Khong Shoong 13 CGS-CIMB Nominees (Tempatan) Sdn Bhd 1,000,000 0.43 Pledged Securities Account for Teh Shiou Cherng (J D B Tunggal BR-CL) 14 Koay Teng Liang 941,400 0.41 15 Quek Phaik Im 919,500 0.40 16 Cheah Yow Wah 824,200 0.36 17 Zuraida Binti Md Adib 750,000 0.32 18 Ooi Siew Hong 687,800 0.30 19 Tan Kian Ling 618,700 0.27 20 HLIB Nominees (Tempatan) Sdn Bhd 600,000 0.26 Hong Leong Bank Bhd For Teh Shiou Cherng 21 Teh Shiou Cherng 576,000 0.25
MTD ACPI ENGINEERING BERHAD 57 ANNUAL REPORT 2020 Analysis of Shareholdings As at 30 July 2020
LIST OF THIRTY (30) LARGEST SHAREHOLDERS (CONT’D)
No. of No. Name of Shareholders Issued Shares *% 22 Teh Bee Gaik 573,500 0.25 23 Soon Khiat Voon 560,000 0.24 24 Maybank Nominees (Tempatan) Sdn Bhd 555,000 0.24 Chung Chit Min 25 Tan Kian Aik 529,000 0.23 26 Koay Teng Kheong 526,000 0.23 27 Chew Swee Seng 505,000 0.22 28 Lee Geok Lin 481,200 0.21 29 Loh Kwok Yee 466,700 0.20 30 Wong Juan Yang 449,000 0.19 Total 183,927,020 79.62
Note: * Based on 230,995,798 ordinary shares (Total number of issued shares of 231,632,798 ordinary shares less Treasury Shares of 637,000).
58 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Financial Statements
60 – 63 72 – 73 Directors’ Report Statements of Profit or Loss and Other Comprehensive Income 64 Statement by Directors 74 – 75 Statements of Changes In Equity 64 Statutory Declaration 76 – 77 Statements of Cash Flows 65 – 69 Independent Auditors’ Report 78 – 147 Notes to the Financial Statements 70 – 71 Statements of Financial Position
FOR MORE INFORMATION VISIT OUR WEBSITE
www.mtdacpi.com
MTD ACPI ENGINEERING BERHAD 59 ANNUAL REPORT 2020 Directors’ Report
The Directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 March 2020.
PRINCIPAL ACTIVITIES
The principal activities of the Company are investment holding and project management. The principal activities of the subsidiaries are disclosed in Note 8 to the financial statements. There have been no significant changes in the nature of these activities of the Group and of the Company during the financial year.
RESULTS
Group Company RM’000 RM’000
(Loss)/Profit for the financial year (21,048) 11,882
Attributable to:
Owners of the parent (20,549) 11,882 Non-controlling interests (499) -
(21,048) 11,882
DIVIDEND
No dividend has been paid, declared or proposed by the Company since the end of the previous financial year. The Directors do not recommend the payment of any dividend in respect of the financial year ended 31 March 2020.
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year other than those presented in the statements of changes in equity.
ISSUE OF SHARES AND DEBENTURES
The Company did not issue any new shares or debentures during the financial year.
60 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Directors’ Report
DIRECTORS
The Directors who have held office during the financial year and up to the date of this report are as follows:
MTD ACPI Engineering Berhad
Dato’ Ir. Kalid bin Alias Nik Din bin Nik Sulaiman Keith George Cowling Dato’ Ir. Wan Razali bin Wan Muda Nik Faeruz binti Tan Sri Nik Hussain
Subsidiaries of MTD ACPI Engineering Berhad (excluding those who are already listed above)
Tan Sri Dr. Nik Hussain bin Abdul Rahman Dato’ Nik Fauzi bin Tan Sri Nik Hussein Dato’ Nik Faizul bin Tan Sri Nik Hussain Ahmad Tarmizi bin Ismail Tee Kim Siew Vijayaraj A/L Govindarajoo Isaac S. David Gil A. Talingdan II Oscar S. Rayo Dr. Nik Faizah binti Tan Sri Nik Hussein Imran Gulcharan bin Abdullah (Appointed on 28 February 2020) Nik Fadzlin binti Tan Sri Nik Hussain (Appointed on 28 February 2020) Md. Rijaluddin bin Mohd Salleh (Resigned on 29 February 2020) Radzimah binti Mohd Radzi (Resigned on 29 February 2020) Zaim Husni bin Omar (Resigned on 6 August 2020)
DIRECTORS’ INTERESTS
According to Register of Directors’ Shareholdings kept by the Company under Section 59 of the Companies Act 2016 in Malaysia, none of the Directors holding office at the end of financial year held any beneficial interests in ordinary shares in the Company and of its related corporations during the financial year ended 31 March 2020.
DIRECTORS’ BENEFITS
Since the end of the previous financial year, none of the Directors have received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of remuneration received or due and receivable by the Directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest other than those as disclosed in Note 33 to the financial statements.
There were no arrangements made during and at the end of the financial year, to which the Company is a party, which had the object of enabling the Directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.
DIRECTORS’ REMUNERATION
The details of Directors’ remuneration are disclosed in Note 28 to the financial statements.
MTD ACPI ENGINEERING BERHAD 61 ANNUAL REPORT 2020 Directors’ Report
INDEMNITY AND INSURANCE FOR DIRECTORS, OFFICERS AND AUDITORS
The Group and the Company effected Directors’ and officers’ liability insurance during the financial year to protect the Directors and the officers of the Group and of the Company against potential costs and liabilities arising from claims brought against the Directors and the officers.
During the financial year, the total amount of insurance premium paid for the Directors and the officers of the Group and of the Company are RM18,000.
There were no indemnity given to or insurance effected for the auditors of the Group and of the Company during the financial year.
OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY
(I) AS AT THE END OF THE FINANCIAL YEAR
(a) Before the financial statements of the Group and of the Company were prepared, the Directors took reasonable steps:
(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and had satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and
(ii) to ensure that any current assets other than debts, which were unlikely to realise their book values in the ordinary course of business had been written down to their estimated realisable values.
(b) In the opinion of the Directors, the results of the 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.
(II) FROM THE END OF THE FINANCIAL YEAR TO THE DATE OF THIS REPORT
(c) The Directors are not aware of any circumstances:
(i) which would render the amounts written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any material extent;
(ii) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; and
(iii) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) In the opinion of the Directors:
(i) there has not arisen any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made; and
(ii) no contingent or other liability has become enforceable, or is likely to become enforceable, within the period of twelve (12) months after the end of the financial year which would or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due.
62 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Directors’ Report
OTHER STATUTORY INFORMATION REGARDING THE GROUP AND THE COMPANY (CONT’D)
(III) AS AT THE DATE OF THIS REPORT
(e) There are no charges on the assets of the Group and of the Company which have arisen since the end of the financial year to secure the liabilities of any other person.
(f) There are no contingent liabilities of the Group and of the Company which have arisen since the end of the financial year.
(g) The Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements of the Group and of the Company misleading.
SIGNIFICANT EVENT DURING THE FINANCIAL YEAR
Significant event during the financial year is disclosed in Note 34 to the financial statements.
SIGNIFICANT EVENT SUBSEQUENT TO THE END OF THE REPORTING PERIOD
Significant event subsequent to the end of the reporting period is disclosed in Note 35 to the financial statements.
ULTIMATE HOLDING COMPANY
The Directors regard Alloy Consolidated Sdn. Bhd., a company incorporated in Malaysia, as the ultimate holding company.
AUDITORS
The auditors, BDO PLT (LLP0018825-LCA & AF 0206), have expressed their willingness to continue in office.
The details of auditors’ remuneration of the Company and its subsidiaries for the financial year ended 31 March 2020 are disclosed in Note 25 to the financial statements.
Signed on behalf of the Board in accordance with a resolution of the Directors.
Nik Faeruz binti Tan Sri Nik Hussain Keith George Cowling Director Director
Batu Caves, Selangor Darul Ehsan 21 August 2020
MTD ACPI ENGINEERING BERHAD 63 ANNUAL REPORT 2020 Statement by Directors Pursuant to Section 251(2) of the Companies Act 2016
In the opinion of the Directors, the financial statements set out on pages 70 to 147 have been drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 March 2020 and of the financial performance and cash flows of the Group and of the Company for the financial year then ended.
On behalf of the Board,
Nik Faeruz binti Tan Sri Nik Hussain Keith George Cowling Director Director
Batu Caves, Selangor Darul Ehsan 21 August 2020
Statutory Declaration Pursuant to Section 251(1) of the Companies Act 2016
I, Aziah binti Mustapa (CA 11719), being the officer primarily responsible for the financial management of MTD ACPI Engineering Berhad, do solemnly and sincerely declare that the financial statements set out on pages 70 to 147 are, to the best ofmy knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly ) declared by the abovenamed at ) Kuala Lumpur ) in the Federal Territory on ) 21 August 2020 ) Aziah binti Mustapa
Before me:
64 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Independent Auditors’ Report To the members of MTD ACPI ENGINEERING BERHAD (Incorporated in Malaysia)
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of MTD ACPI Engineering Berhad, which comprise the statements of financial position as at 31 March 2020 of the Group and of the Company, 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 financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 70 to 147.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 March 2020, and of their financial performance and cash flows for the financial year then endedin accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the requirements of the Companies Act 2016 in Malaysia.
Basis for Opinion
We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing (“ISAs”). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence and Other Ethical Responsibilities
We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matters for the Group
1. Revenue recognition from construction contracts
We refer to Note 14 and Note 22 to the financial statements on the recognition of revenue in accordance with MFRS 15 Revenue from Contracts with Customers.
We determined this to be a key audit matter because it requires management to exercise significant judgement in determining performance obligations, transaction price allocation and costs in applying the input method to recognise revenue over time.
In estimating the progress toward complete satisfaction of performance obligations, the Group considers the completeness and accuracy of its estimated total contract sum, including contract variations, claims and contingencies.
MTD ACPI ENGINEERING BERHAD 65 ANNUAL REPORT 2020 Independent Auditors’ Report To the members of MTD ACPI ENGINEERING BERHAD (Incorporated in Malaysia)
Key Audit Matters (Cont’d)
Key Audit Matters for the Group (Cont’d)
1. Revenue recognition from construction contracts (Cont’d)
Audit response
Our audit procedures included the following:
a. Assessed estimated total costs to complete through inquiries of operational and financial personnel of the Group;
b. Inspected documentation to support cost estimates made including contract variations and cost contingencies;
c. Compared contract budgets to actual outcomes to assess reliability of management budgeting process and controls; and
d. Inspected correspondences from sub-contractors in relation to variations and claims to corroborate key judgement applied by management.
2. Recoverability of trade and other receivables of the Group
With reference to Note 11 to the financial statements, the trade and other receivables, net of impairment, of the Group were recorded as RM143.1 million as at 31 March 2020.
We determined this to be key audit matter because it requires management to exercise significant judgement in determining the probability of default by trade and other receivables and appropriate forward looking information arising from the impact of the COVID-19 pandemic.
Audit response
Our audit procedures, with the involvement of component auditors, included the following:
a. Recomputed the probability of default using historical data and forward looking information adjustment, incorporating the impact of the COVID-19 pandemic applied by the Group;
b. Recomputed the correlation coefficient between the macroeconomic indicators used by the Group and historical losses to determine the appropriateness of the forward-looking information used by the Group; and
c. Inquiries of management to assess the rationale underling the relationship between the forward-looking information and expected credit losses.
Key Audit Matters for the Company
We have determined that there are no key audit matters to communicate in our auditors’ report in respect of the audit of the financial statements of the Company.
66 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Independent Auditors’ Report To the members of MTD ACPI ENGINEERING BERHAD (Incorporated in Malaysia)
Information Other than the Financial Statements and Auditors’ Report Thereon
The Directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.
Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with MFRSs, IFRSs and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the ability of the Group and of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with approved standards on auditing in Malaysia and ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
(a) Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(b) Obtain an understanding of internal control relevant to the audit 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 internal control of the Group and of the Company.
MTD ACPI ENGINEERING BERHAD 67 ANNUAL REPORT 2020 Independent Auditors’ Report To the members of MTD ACPI ENGINEERING BERHAD (Incorporated in Malaysia)
Auditors’ Responsibilities for the Audit of the Financial Statements (Cont’d)
As part of an audit in accordance with approved standards on auditing in Malaysia and ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also (Cont’d):
(c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.
(d) Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group or of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.
(e) Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.
(f) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiaries of which we have not acted as auditors, are disclosed in Note 8 to the financial statements.
68 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Independent Auditors’ Report To the members of MTD ACPI ENGINEERING BERHAD (Incorporated in Malaysia)
Other Matters
This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
BDO PLT Rejeesh A/L Balasubramaniam LLP0018825-LCA & AF 0206 02895/08/2022 J Chartered Accountants Chartered Accountant
Kuala Lumpur 21 August 2020
MTD ACPI ENGINEERING BERHAD 69 ANNUAL REPORT 2020 Statements of Financial Position As at 31 March 2020
Group Company 2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
ASSETS
Non-current assets
Property, plant and equipment 6 122,071 133,808 7,013 7,058 Right-of-use assets 7 15,836 - 608 - Investments in subsidiaries 8 - - 42,845 42,845 Investments in associates 9 506 522 - - Other investments 10 161 161 161 161 Trade and other receivables 11 54,865 40,201 48,377 40,579 Deferred tax assets 12 1,791 2,484 - -
195,230 177,176 99,004 90,643
Current assets
Inventories 13 18,696 21,327 - - Other investments 10 19 38 - - Trade and other receivables 11 88,269 108,191 18,600 26,357 Contract assets 14 12,855 32,614 - - Current tax assets 8,436 6,248 517 569 Cash and bank balances 15 17,819 31,457 255 286
146,094 199,875 19,372 27,212
TOTAL ASSETS 341,324 377,051 118,376 117,855
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital 16 339,771 339,771 339,771 339,771 Treasury shares 16 (1,905) (1,905) (1,905) (1,905) Reserves 17 96,218 91,077 5,207 5,207 Accumulated losses (368,801) (350,607) (388,037) (399,919)
65,283 78,336 (44,964) (56,846) Non-controlling interests 14,187 13,429 - -
TOTAL EQUITY/(CAPITAL DEFICIENCY) 79,470 91,765 (44,964) (56,846)
70 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Statements of Financial Position As at 31 March 2020
Group Company 2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
LIABILITIES
Non-current liabilities
Trade and other payables 18 43,843 19,487 148,221 96,077 Provisions 19 5,188 7,242 - - Borrowings 20 - 463 - - Lease liabilities 7 3,843 - 1,308 - Deferred tax liabilities 12 4,955 5,012 269 269
57,829 32,204 149,798 96,346
Current liabilities
Trade and other payables 18 130,090 182,433 7,771 73,499 Contract liabilities 14 4,087 7,876 - - Provisions 19 1,187 1,884 - - Borrowings 20 66,438 60,889 4,987 4,856 Lease liabilities 7 2,223 - 784 -
204,025 253,082 13,542 78,355
TOTAL LIABILITIES 261,854 285,286 163,340 174,701
TOTAL EQUITY AND LIABILITIES 341,324 377,051 118,376 117,855
The accompanying notes form an integral part of the financial statements.
MTD ACPI ENGINEERING BERHAD 71 ANNUAL REPORT 2020 Statements of Profit or Loss and Other Comprehensive Income For the financial year ended 31 March 2020
Group Company 2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
Revenue 22 226,305 249,817 - - Cost of sales 23 (218,577) (232,002) - -
Gross profit 7,728 17,815 - -
Other operating income 24 11,232 17,939 27,032 870 Selling and marketing expenses (3,518) (6,380) - - Administrative and other expenses 25 (30,562) (23,849) (4,753) (4,456) Finance costs 26 (5,172) (6,869) (10,397) (6,997) Share of results of associates, net of tax 9(d) (16) (37) - -
(Loss)/Profit before tax (20,308) (1,381) 11,882 (10,583) Tax expense 29 (740) (5,439) - -
(Loss)/Profit for the financial year (21,048) (6,820) 11,882 (10,583)
Other comprehensive income, net of tax
Items that may be reclassified subsequently to profit or loss
Foreign currency translations 6,518 (618) - -
Items that will not be reclassified subsequently to profit or loss
Actuarial gain on retirement benefit obligations 2,235 - - - Revaluation surplus on property, plant and equipment - 15,781 - 2,955
Total other comprehensive income, net of tax 8,753 15,163 - 2,955
Total comprehensive (loss)/income (12,295) 8,343 11,882 (7,628)
72 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Statements of Profit or Loss and Other Comprehensive Income For the financial year ended 31 March 2020
Group Company 2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
(Loss)/Profit for the financial year attributable to:
Owners of the parent (20,549) (4,686) 11,882 (10,583) Non-controlling interests (499) (2,134) - -
(21,048) (6,820) 11,882 (10,583)
Total comprehensive (loss)/income attributable to:
Owners of the parent (13,053) 9,777 11,882 (7,628) Non-controlling interests 758 (1,434) - -
(12,295) 8,343 11,882 (7,628)
Loss per ordinary share attributable to equity holders of the Company (sen)
Basic and diluted loss per ordinary share (sen)
Loss for the financial year 30 (9) (2)
The accompanying notes form an integral part of the financial statements.
MTD ACPI ENGINEERING BERHAD 73 ANNUAL REPORT 2020 Statements of Changes in Equity For the financial year ended 31 March 2020
Non-distributable Total attributable Exchange to owners Non- Share Treasury translation Revaluation Other Accumulated of the controlling Group capital shares reserve reserve reserves losses parent interests Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Balance as at 1 April 2018 339,771 (1,905) 228 47,190 29,255 (345,980) 68,559 14,863 83,422
Loss for the financial year - - - - - (4,686) (4,686) (2,134) (6,820) Foreign currency translations - - (1,318) - - - (1,318) 700 (618) Revaluation of property, plant and equipment - - - 15,781 - - 15,781 - 15,781
Total comprehensive (loss)/ income - - (1,318) 15,781 - (4,686) 9,777 (1,434) 8,343
Realisation of revaluation reserves - - - (59) - 59 - - -
Balance as at 31 March 2019 339,771 (1,905) (1,090) 62,912 29,255 (350,607) 78,336 13,429 91,765
Balance as at 1 April 2019 339,771 (1,905) (1,090) 62,912 29,255 (350,607) 78,336 13,429 91,765
Loss for the financial year - - - - - (20,549) (20,549) (499) (21,048) Foreign currency translations - - 5,261 - - - 5,261 1,257 6,518 Actuarial gain on retirement benefit obligations - - - - - 2,235 2,235 - 2,235
Total comprehensive income/ (loss) - - 5,261 - - (18,314) (13,053) 758 (12,295)
Realisation of revaluation reserves - - - (120) - 120 - - -
Balance as at 31 March 2020 339,771 (1,905) 4,171 62,792 29,255 (368,801) 65,283 14,187 79,470
74 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Statements of Changes in Equity For the financial year ended 31 March 2020
Non-distributable Share Treasury Revaluation Other Accumulated Company capital shares reserve reserves losses Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Balance as at 1 April 2018 339,771 (1,905) 2,162 90 (389,336) (49,218)
Loss for the financial year - - - - (10,583) (10,583) Revaluation of property, plant and equipment - - 2,955 - - 2,955
Total comprehensive income/(loss) - - 2,955 - (10,583) (7,628)
Balance as at 31 March 2019 339,771 (1,905) 5,117 90 (399,919) (56,846)
Balance as at 1 April 2019 339,771 (1,905) 5,117 90 (399,919) (56,846)
Profit for the financial year - - - - 11,882 11,882 Other comprehensive income, net of tax ------
Total comprehensive income - - - - 11,882 11,882
Balance as at 31 March 2020 339,771 (1,905) 5,117 90 (388,037) (44,964)
The accompanying notes form an integral part of the financial statements.
MTD ACPI ENGINEERING BERHAD 75 ANNUAL REPORT 2020 Statements of Cash Flows For the financial year ended 31 March 2020
Group Company 2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss)/Profit before tax (20,308) (1,381) 11,882 (10,583)
Adjustments for: Depreciation of: - property, plant and equipment 6(f) 4,416 4,602 45 47 - right-of-use assets 7(f) 1,384 - 122 - Dividend income from other investments (5) (4) - - Fair value adjustments on: - trade and other payables (3,973) - (26,848) - - other investments 19 15 - - Finance costs 26 5,172 6,869 10,397 6,997 Gain on disposal of property, plant and equipment (296) (262) - - Impairment losses on: - property, plant and equipment 6 - 14 - - - trade and other receivables 11(n) 2,010 4,475 1,381 230 - contract assets 14(e) - 106 - - Retirement benefits provision 19(ii) 487 572 - - Interest income (316) (210) (49) (7) Reversal of inventories written down 13(d) (160) - - - Inventories written off 13(c) 110 68 - - Inventories written down 13(c) - 1,330 - - Property, plant and equipment written off 6 - 39 - - Reversal of out-of-court settlement and others 19 - (895) - - Reversal of impairment losses on trade and other receivables 11(n) (6,060) (8,646) (134) (150) Share of results of associates 9(d) 16 37 - - Unrealised foreign exchange loss/(gain), net 181 (3,271) - -
Operating (loss)/profit before changes in working capital (17,323) 3,458 (3,204) (3,466)
Changes in working capital: Inventories 2,681 1,120 - - Trade and other receivables 33,778 30,408 252 (223) Trade and other payables (33,259) 5,305 14 (23)
Cash (used in)/generated from operations (14,123) 40,291 (2,938) (3,712)
76 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Statements of Cash Flows For the financial year ended 31 March 2020
Group Company 2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES (CONT’D)
Cash (used in)/generated from operations (Cont’d) (14,123) 40,291 (2,938) (3,712)
Contributions paid for retirement benefit obligations 19(ii) (1,004) (50) - - Tax paid (3,786) (4,454) (68) (121) Tax refunded 1,767 2,141 121 142
Net cash (used in)/from operating activities (17,146) 37,928 (2,885) (3,691)
CASH FLOWS FROM INVESTING ACTIVITIES
Advances from subsidiaries - - 10,521 40,304 Advances from a related party 9 89 - - Advances from/(Repayments to) related companies 6,830 (27,666) 2,954 (30,689) Uplift/(Placement) of deposits pledged to licensed banks (145) (56) (6) (6) Dividend received from other investments 5 4 - - Interest received 316 210 6 7 Interest paid (1,461) (3,623) (9,992) (6,644) Proceeds from disposal of property, plant and equipment 305 301 - - Purchase of: - property, plant and equipment 6(e) (3,391) (3,268) - (5) - right-of-use assets 7(b) (20) - - -
Net cash from/(used in) investing activities 2,448 (34,009) 3,483 2,967
CASH FLOWS FROM FINANCING ACTIVITIES
Drawdown of short term borrowings, net 5,614 8,300 - - Repayments of: - hire purchase creditors - (118) - - - lease liabilities 7(i) (1,292) - (421) - Interest paid (3,525) (3,246) (345) (353)
Net cash from/(used in) financing activities 797 4,936 (766) (353)
Net (decrease)/increase in cash and cash equivalents (13,901) 8,855 (168) (1,077)
Effects of exchange rate changes on cash and cash equivalents 33 13 - -
Cash and cash equivalents at the beginning of financial year 21,372 12,504 (3,285) (2,208)
Cash and cash equivalents at the end of financial year 15(b) 7,504 21,372 (3,453) (3,285)
The accompanying notes form an integral part of the financial statements.
MTD ACPI ENGINEERING BERHAD 77 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
1. CORPORATE INFORMATION
MTD ACPI Engineering Berhad (“the Company”) is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad.
The registered office and principal place of business of the Company is located at Menara MTD, 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan, Malaysia.
The immediate and ultimate holding companies of the Company are MTD Capital Bhd. and Alloy Consolidated Sdn. Bhd., both of which are incorporated and domiciled in Malaysia.
The consolidated financial statements for the financial year ended 31 March 2020 comprise the Company and its subsidiaries and the interests of the Group in associates. These financial statements are presented in Ringgit Malaysia (“RM”), which is also the functional currency of the Company. All financial information presented in RM has been rounded to the nearest thousand, unless otherwise stated.
The financial statements were authorised for issue in accordance with a resolution by the Board of Directors on 21 August 2020.
2. PRINCIPAL ACTIVITIES
The principal activities of the Company are investment holding and project management. The principal activities of the subsidiaries are disclosed in Note 8 to the financial statements. There have been no significant changes in the nature of these activities of the Group and of the Company during the financial year.
3. BASIS OF PREPARATION
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the provisions of the Companies Act 2016 in Malaysia.
The accounting policies adopted are consistent with those of the previous financial year except for the effects of adoption of new MFRSs during the financial year. The new MFRSs and Amendments to MFRSs adopted during the financial year are disclosed in Note 36.1 to the financial statements.
The Group and the Company applied MFRS 16 Leases for the first time during the current financial year, using the cumulative effect method as at 1 April 2019. Consequently, the comparative information were not restated and are not comparable to the financial information of the current financial year.
The financial statements of the Group and of the Company have been prepared under the historical cost convention except as otherwise stated in the financial statements and on the basis of accounting principles applicable to a going concern.
The Group has sufficient cash flows from its business activities and credit facilities in place to meet its operational requirements (as disclosed further in Note 5(b)(ii) to the financial statements), notwithstanding that the Group has net current liabilities of RM41,338,000 as at 31 March 2020, excluding all amounts owing to related parties of RM16,593,000, which the Group has been provided undertakings not to demand repayment by these related parties unless the Group has sufficient funds to permit repayments.
78 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
3. BASIS OF PREPARATION (CONT’D)
In addition, the Group carried out monthly cash flows review for the next twelve (12) months to ensure that the business operations have sufficient funds available to meet its obligations as and when they fall due. Historical results of the treasury management show that the Group has the ability to meet its obligations as and when they fall due and the Group has not defaulted on any obligations due or payable to financial institutions or creditors.
The Directors are confident that the Group will continue to generate sufficient cash flows from operations to meetits obligations as and when they fall due together with continuous financial support from the ultimate and immediate holding companies.
4. OPERATING SEGMENTS
MTD ACPI Engineering Berhad and its subsidiaries are principally engaged in investment holding and project management.
MTD ACPI Engineering Berhad has arrived at three (3) reportable segments that are organised and managed separately based on information reported internally to the management and the Board of Directors. The reportable segments are summarised as follows:
(i) Civil engineering and construction - Constructing and marketing of heavy element precast products for viaducts, elevated highways, light rail transit guideways, bridges, building system products, contracting in the fields of environmental systems and providing specialist contracting services.
(ii) Manufacturing and related services - Manufacturing and marketing of industrial products, project management, manufacturing, marketing, licensing and franchising of precast and engineered products and investment holding.
(iii) Others - Holding of investments in the shares of subsidiaries, associates and other investments.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements.
Inter-segment revenue is priced along the same lines as sales to external customers and is eliminated in the consolidated financial statements. These policies have been applied consistently throughout the current and previous financial years.
Segment assets exclude tax assets. Segment liabilities exclude tax liabilities. Even though borrowings arise from financing activities rather than operating activities, they are allocated to the segments based on relevant factors. Details are provided in the reconciliations from segment assets and liabilities to the position of the Group.
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 (1) period for each reportable segment.
MTD ACPI ENGINEERING BERHAD 79 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
4. OPERATING SEGMENTS (CONT’D)
Per Civil consolidated engineering Manufacturing Adjustments financial and and related and statements 2020 construction services Others Total elimination Note Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue External customers 172,414 53,891 - 226,305 - 226,305 Inter-segment - 96 5,789 5,885 (5,885) A -
Total revenue 172,414 53,987 5,789 232,190 (5,885) 226,305
Results Interest income 8,809 41 6 8,856 (8,540) A 316 Finance costs (2,772) (566) (10,494) (13,832) 8,660 A (5,172) Depreciation of: - property, plant and equipment (65) (4,252) (99) (4,416) - (4,416) - right-of-use assets (107) (503) (774) (1,384) - (1,384) Impairment losses on amounts owing by subsidiaries - - (1,276) (1,276) 1,276 - Share of results of associates (16) - - (16) - (16) Other material non-cash (expenses)/income (1,145) 3,446 (1,263) 1,038 3,177 B 4,215 Tax (expense)/income (906) 166 - (740) - (740)
Segment profit/(loss) 6,410 (6,876) 12,241 11,775 (32,083) (20,308)
Segment assets 290,421 178,318 129,954 598,693 (267,596) 331,097
Segment liabilities 201,051 280,183 176,736 657,970 (401,071) 256,899
Investments in associates 506 - - 506 - 506
Capital expenditure 65 3,526 8 3,599 - C 3,599
80 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
4. OPERATING SEGMENTS (CONT’D)
Per Civil consolidated engineering Manufacturing Adjustments financial and and related and statements 2019 construction services Others Total elimination Note Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenue External customers 187,318 62,499 - 249,817 - 249,817 Inter-segment - 6 6,828 6,834 (6,834) A -
Total revenue 187,318 62,505 6,828 256,651 (6,834) 249,817
Results Interest income 3,176 47 8 3,231 (3,021) A 210 Finance costs (2,691) (202) (6,997) (9,890) 3,021 A (6,869) Depreciation of property, plant and equipment (68) (4,436) (98) (4,602) - (4,602) Impairment losses on amounts owing by subsidiaries - - (5) (5) 5 - Reversal of impairment losses on investment in a subsidiary - - 150 150 (150) - Share of results of associates (37) - - (37) - (37) Other material non-cash (expenses)/income (1,833) (12,461) (1,596) (15,890) 22,196 B 6,306 Tax expense (4,333) (1,106) - (5,439) - (5,439)
Segment profit/(loss) 15,353 (26,938) (11,985) (23,570) 22,189 (1,381)
Segment assets 314,591 176,380 131,496 622,467 (254,148) 368,319
Segment liabilities 233,876 271,884 183,970 689,730 (409,456) 280,274
Investments in associates 522 - - 522 - 522
Capital expenditure 270 3,351 21 3,642 - C 3,642
MTD ACPI ENGINEERING BERHAD 81 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
4. OPERATING SEGMENTS (CONT’D)
A Inter-segment revenues, interest income and finance costs are eliminated on consolidation.
B Other material non-cash (expenses)/income consist of the following items:
2020 2019 RM’000 RM’000
Impairment losses on trade and other receivables (2,010) (4,475) Inventories written off (110) (68) Inventories written down - (1,330) Reversal of inventories written down 160 - Unrealised loss on foreign exchange (201) (407) Unrealised gain on foreign exchange 20 3,678 Gain on disposal of property, plant and equipment 296 262 Reversal of impairment losses on trade and other receivables 6,060 8,646
4,215 6,306
C Capital expenditure consists of additions of:
2020 2019 RM’000 RM’000
Property, plant and equipment 3,391 3,642 Right-of-use assets 208 -
3,599 3,642
(a) Reconciliations of reportable segment assets and liabilities to the corresponding amounts of the Group are as follows:
2020 2019 RM’000 RM’000
Assets Total assets for reportable segments 331,097 368,319 Tax assets 10,227 8,732
Assets of the Group per consolidated statement of financial position 341,324 377,051
Liabilities Total liabilities for reportable segments 256,899 280,274 Tax liabilities 4,955 5,012
Liabilities of the Group per consolidated statement of financial position 261,854 285,286
82 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
4. OPERATING SEGMENTS (CONT’D)
C Capital expenditure consists of additions of (Cont’d):
(b) Geographical information
Revenue and non-current assets information based on geographical location of its customers and assets respectively are as follows:
Revenue Non-current assets* 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Malaysia 226,305 249,817 137,907 133,808
* Non-current assets information presented above consist of the following items as presented in the consolidated statement of financial position:
2020 2019 RM’000 RM’000
Property, plant and equipment 122,071 133,808 Right-of-use assets 15,836 -
137,907 133,808
(c) Major customers
The following are major customers with revenue equal to or more than ten percent (10%) of the Group:
Revenue 2020 2019
- Customer A 17% - - Customer B 54% 60%
The major customers of the Group are derived from the civil engineering and construction segment.
MTD ACPI ENGINEERING BERHAD 83 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
5. CAPITAL AND FINANCIAL RISK MANAGEMENT
(a) Capital management
The primary objective of the capital management of the Group is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise its shareholders’ value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the financial years ended 31 March 2020 and 31 March 2019.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital. Net debt includes current and non-current borrowings, lease liabilities less deposits, cash and bank balances. Capital is the equity attributable to owners of the parent less other restricted reserve fund.
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Borrowings (Note 20) 66,438 61,352 4,987 4,856 Lease liabilities owing to financial institutions 633 - - -
67,071 61,352 4,987 4,856 Less: Cash and bank balances (Note 15) (17,819) (31,457) (255) (286)
Net debt 49,252 29,895 4,732 4,570
Equity attributable to the owners of the parent 65,283 78,336 (44,964) (56,846) Less: Other reserves (Note 17) (29,255) (29,255) (90) (90)
Total capital/(Capital deficiency) 36,028 49,081 (45,054) (56,936)
Gearing ratio 1.37 0.61 * *
* Gearing ratio is not presented as the Company is in capital deficiency position.
(b) Financial risk management objectives and policies
The financial risk management objective of the Group is to optimise value creation for shareholders whilst minimising the potential adverse impact arising from credit risk, liquidity and cash flow risk, interest rate risk and foreign currency risk.
Financial risk management is carried out through risk review programmes, internal control systems and adherence to the Group’s financial risk management policies. The Board regularly reviews these risks and approves such policies that cover the management of these risks. The audit committee provides independent oversight to the effectiveness of the risk management process.
84 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
5. CAPITAL AND FINANCIAL RISK MANAGEMENT (CONT’D)
(b) Financial risk management objectives and policies (Cont’d)
(i) Credit risk
Cash deposits and trade receivables could give rise to credit risk, which requires the loss to be recognised if a counter party fails to perform as contracted. The counter parties are major international institutions and reputable multinational organisations. It is the policy of the Group to monitor the financial standing of these counter parties on an on-going basis to ensure that the Group is exposed to minimal credit risk.
The primary exposure of the Group to credit risk arises through its trade receivables. The trading terms of the Group with its customers are mainly on credit, except for new customers, where deposits in advance are normally required. The credit period is generally for a period of one month, extending up to two months for major customers. Each customer has a maximum credit limit and the Group seeks to maintain strict control over its outstanding receivables via a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management.
The credit risk concentration profiles have been disclosed in Note 11 to the financial statements.
(ii) Liquidity and cash flow risk
The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all operating, investing and financing needs are met. In executing its liquidity risk management strategy, the Group measures and forecasts its cash commitments and maintains a level of cash and cash equivalents deemed adequate to finance the activities of the Group.
Management expects to achieve further liquidity position improvement for the Group for the financial year ending 31 March 2021 arising from:
(i) cash flow generated from operations;
(ii) negotiate with financial institutions to reschedule the existing facilities to coincide with the present operating environment; and
(iii) additional credit facilities from financial institutions.
In addition, there are pending receipts from settlement of litigation claims of RM14,100,000 plus interest thereon as disclosed in Note 32(a) and RM11,920,000 plus interest thereon as disclosed in Note 32(c) to the financial statements.
The immediate and ultimate holding companies, MTD Capital Bhd. and Alloy Consolidated Sdn. Bhd. have indicated their intentions to provide continuous financial support to the Group and the Company so as to enable the Group and the Company to meet their obligations as and when they fall due and to operate as going concerns in the foreseeable future.
The analysis of financial instruments by remaining contractual maturities has been disclosed in Note 7, Note 18 and Note 20 to the financial statements respectively.
MTD ACPI ENGINEERING BERHAD 85 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
5. CAPITAL AND FINANCIAL RISK MANAGEMENT (CONT’D)
(b) Financial risk management objectives and policies (Cont’d)
(iii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the financial instruments of the Group and of the Company would fluctuate because of changes in market interest rates.
The income and operating cash flows of the Group are independent of changes in market interest rates. Interest rate exposure arises mainly from the bank borrowings of the Group and is managed through effective negotiation with financial institutions for best available rates.
The interest rate profile and sensitivity analysis of interest rate risk have been disclosed in Note 11, Note 15, Note 18 and Note 20 to the financial statements respectively.
(iv) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument would fluctuate because of changes in foreign exchange rates.
The Group is exposed to foreign currency risk when the Company or its subsidiaries enter into transactions that are not denominated in their functional currencies. The Group’s foreign currency exposure as at the end of the reporting period related mainly to receivables denominated in Singapore Dollar. Foreign currency exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level.
The Group maintains a natural hedge, where possible, by borrowing in the currency of the country in which the investment is located or by borrowing in currencies that match the future revenue stream to be generated from its investments.
The sensitivity analysis for foreign currency risk has been disclosed in Note 11 to the financial statements.
86 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
6. PROPERTY, PLANT AND EQUIPMENT
Effects of Depreciation Balance adoption charges for Balance as at of MFRS 16 the financial as at Group 1.4.2019 (Note 36.1) Additions Disposals Reclassification year 31.3.2020 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Carrying amount
Freehold land 87,770 - - - - - 87,770 Leasehold land 9,812 (9,812) - - - - - Buildings 15,000 - - - - (742) 14,258 Plant and machinery 19,397 (829) 3,275 (8) 437 (3,463) 18,809 Equipment, furniture and fittings 872 - 94 (1) - (139) 826 Motor vehicles 459 - - - - (134) 325 Capital work-in-progress 498 - 22 - (437) - 83
133,808 (10,641) 3,391 (9) - (4,478) 122,071
At 31 March 2020 Accumulated depreciation Cost/ and Carrying Valuation impairment amount RM’000 RM’000 RM’000
Freehold land, at valuation 87,770 - 87,770 Leasehold land, at valuation - - - Buildings 52,443 (38,185) 14,258 Plant and machinery 118,012 (99,203) 18,809 Equipment, furniture and fittings 6,943 (6,117) 826 Motor vehicles 3,586 (3,261) 325 Capital work-in-progress 83 - 83
268,837 (146,766) 122,071
MTD ACPI ENGINEERING BERHAD 87 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
6. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Depreciation Balance charges for Balance as at Written the financial Impairment as at Group 1.4.2018 Additions Revaluation Disposals off year losses 31.3.2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Carrying amount
Freehold land 77,910 - 9,860 - - - - 87,770 Leasehold land 1,481 - 8,439 - - (108) - 9,812 Buildings 15,742 - - - - (742) - 15,000 Plant and machinery 20,022 2,943 - (39) - (3,529) - 19,397 Equipment, furniture and fittings 707 298 - - - (129) (4) 872 Motor vehicles 551 98 - - (39) (141) (10) 459 Capital work-in-progress 195 303 - - - - - 498
116,608 3,642 18,299 (39) (39) (4,649) (14) 133,808
At 31 March 2019 Accumulated depreciation Cost/ and Carrying Valuation impairment amount RM’000 RM’000 RM’000
Freehold land, at valuation 87,770 - 87,770 Leasehold land, at valuation 11,218 (1,406) 9,812 Buildings 51,754 (36,754) 15,000 Plant and machinery 122,505 (103,108) 19,397 Equipment, furniture and fittings 7,038 (6,166) 872 Motor vehicles 4,384 (3,925) 459 Capital work-in-progress 498 - 498
285,167 (151,359) 133,808
88 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
6. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Depreciation Balance charges for Balance as at the financial as at Company 1.4.2019 year 31.3.2020 RM’000 RM’000 RM’000
Carrying amount
Freehold land 6,800 - 6,800 Equipment, furniture and fittings 174 (45) 129 Motor vehicles - - - Capital work-in-progress 84 - 84
7,058 (45) 7,013
At 31 March 2020 Cost/ Accumulated Carrying Valuation depreciation amount RM’000 RM’000 RM’000
Freehold land, at valuation 6,800 - 6,800 Equipment, furniture and fittings 952 (823) 129 Motor vehicles 55 (55) - Capital work-in-progress 84 - 84
7,891 (878) 7,013
MTD ACPI ENGINEERING BERHAD 89 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
6. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Depreciation Balance charges for Balance as at the financial as at Company 1.4.2018 Additions Revaluation year 31.3.2019 RM’000 RM’000 RM’000 RM’000 RM’000
Carrying amount
Freehold land 3,690 - 3,110 - 6,800 Equipment, furniture and fittings 220 - - (46) 174 Motor vehicles 1 - - (1) - Capital work-in-progress 79 5 - - 84
3,990 5 3,110 (47) 7,058
At 31 March 2019 Cost/ Accumulated Carrying Valuation depreciation amount RM’000 RM’000 RM’000
Freehold land, at valuation 6,800 - 6,800 Equipment, furniture and fittings 999 (825) 174 Motor vehicles 55 (55) - Capital work-in-progress 84 - 84
7,938 (880) 7,058
(a) All items of property, plant and equipment are initially measured at cost. After initial recognition, property, plant and equipment except for freehold land and leasehold land are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Freehold land and leasehold land are stated at valuation, which is the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.
Freehold land and leasehold land are revalued at least every three (3) years to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of each reporting period. The surplus arising from such revaluations is credited to shareholders’ equity as a revaluation reserve, net of deferred tax, if any, and any subsequent deficit is offset against such surplus to the extent of a previous increase for the same property. In all other cases, the deficit would be charged to profit or loss. For a revaluation increase subsequent to a revaluation deficit of the same asset, the surplus is recognised as income to the extent that it reverses the deficit previously recognised as an expense with the balance of increase credited to revaluation reserve.
Depreciation is calculated to write off the cost of the assets to their residual values on a straight line basis over their estimated useful lives. The principal depreciation periods and annual rates are as follows:
Buildings 1.6% - 2.5% Plant and machinery 10% - 20% Equipment, furniture and fittings 15% - 40% Motor vehicles 20%
90 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
6. PROPERTY, PLANT AND EQUIPMENT (CONT’D) (a) (Cont’d) Freehold land has unlimited useful life and is not depreciated. Capital work-in-progress represents plant and machinery, which is stated at cost and is not depreciated until such time when the asset is available for use. The useful lives and residual values of property, plant and equipment are also estimated based on common life expectancies and commercial factors applied in the various respective industries. Changes in expected level of usage and economic development could impact the economic useful lives and the residual values of these assets, and hence future depreciation charges on such assets could be revised. (b) In the previous financial year, the Group had assessed and classified land use rights of the Group as finance leases based on the extent to which risks and rewards incidental to ownership of the land resides with the Group arising from the lease term. Consequently, the Group had classified the unamortised upfront payment for land use rights as finance leases in accordance with MFRS 117 Leases. (c) In the previous financial year, depreciation of leasehold land was calculated over the lease period up to 99 years. (d) The fair value of freehold land and leasehold land which are carried at valuation of the Group and of the Company are categorised as follows:
Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000
Group
2020 Freehold land - 87,770 - 87,770
2019 Freehold land - 87,770 - 87,770 Leasehold land - 9,812 - 9,812
Company
2020 Freehold land - 6,800 - 6,800
2019 Freehold land - 6,800 - 6,800
(i) There were no transfers between Level 1, Level 2, and Level 3 fair value measurements during the financial years ended 31 March 2020 and 31 March 2019. (ii) Level 2 fair value of freehold land and leasehold land were determined by an external independent property valuer, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued. (iii) The fair value measurements of the freehold land and leasehold land are based on the highest and best use, which does not differ from their actual use. (iv) The fair value of freehold land and leasehold land was estimated based on comparison approach where reference is made to recent market sale transactions and asking prices of similar properties in the vicinity. This approach estimates the land value of the lands by analysing market sales of similar properties and by making the necessary adjustments for dissimilarities (legal, economic and physical) between each comparable and the lands under consideration.
MTD ACPI ENGINEERING BERHAD 91 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
6. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
(e) During the financial year, the Group and the Company made the following cash payments to purchase property, plant and equipment:
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Purchase of property, plant and equipment 3,391 3,642 - 5 Financed by hire purchase arrangements - (374) - -
Cash payments on purchase of property, plant and equipment 3,391 3,268 - 5
(f) The depreciation charges for the financial year are allocated as follows:
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Recognised in profit or loss 4,416 4,602 45 47 Capitalised in construction contract cost 62 47 - -
4,478 4,649 45 47
(g) The carrying amount of property, plant and equipment of the Group under finance leases at the end of the reporting period are as follows:
Group 2020 2019 RM’000 RM’000
Plant and machinery - 829
(h) Freehold land and leasehold land of the Group were revalued on 30 November 2018 by the Directors based on a valuation exercise carried out in November 2018 by an independent professional valuer using the open market value basis.
Had the freehold land and leasehold land been carried at cost and at cost less accumulated depreciation respectively, the carrying amounts would have been:
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Freehold land 28,236 28,236 1,414 1,414 Leasehold land - 1,431 - -
92 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
7. LEASES
The Group as a lessee
Effects of Depreciation Balance adoption of charges for Balance as at MFRS 16 the financial as at Right-of-use assets 1.4.2019 (Note 36.1) Additions year 31.3.2020 RM’000 RM’000 RM’000 RM’000 RM’000
Carrying amount
Leasehold land - 9,812 - (226) 9,586 Buildings - - 6,371 (1,062) 5,309 Plant and machinery - 829 208 (96) 941
- 10,641 6,579 (1,384) 15,836
Effects of Balance adoption Balance as at of MFRS 16 Lease Accretion of as at Lease liabilities 1.4.2019 (Note 36.1) Additions payments interest 31.3.2020 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Carrying amount
Buildings - - 6,371 (1,094) 156 5,433 Plant and machinery - 613 188 (198) 30 633
- 613 6,559 (1,292) 186 6,066
Represented by: 2020 RM’000
Current liabilities 2,223 Non-current liabilities 3,843
6,066
MTD ACPI ENGINEERING BERHAD 93 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
7. LEASES (CONT’D)
The Company as a lessee
Depreciation Balance charges for Balance as at the financial as at Right-of-use assets 1.4.2019 Additions year 31.3.2020 RM’000 RM’000 RM’000 RM’000
Carrying amount
Buildings - 730 (122) 608
Balance Balance as at Lease Accretion as at Lease liabilities 1.4.2019 Additions payments of interest 31.3.2020 RM’000 RM’000 RM’000 RM’000 RM’000
Carrying amount
Buildings - 2,453 (421) 60 2,092
Represented by: 2020 RM’000
Current liabilities 784 Non-current liabilities 1,308
2,092
(a) The right-of-use assets are initially measured at cost, which comprise the initial amount of the lease liabilities adjusted for any lease payments made at or before the commencement date of the leases.
After initial recognition, right-of-use assets except for leasehold land are stated at cost less accumulated depreciation and any accumulated impairment losses, and adjusted for any re-measurement of the lease liabilities. Leasehold land is stated at valuation, which is the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.
Leasehold land is revalued at least every three (3) years to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of each reporting period. The surplus arising from such revaluation is credited to shareholders’ equity as a revaluation reserve, net of deferred tax, if any, and any subsequent deficit is offset against such surplus to the extent of a previous increase for the same property. In all other cases, the deficit would be charged to profit or loss. For a revaluation increase subsequent to a revaluation deficit of the same asset, the surplus is recognised as income to the extent that it reverses the deficit previously recognised as an expense with the balance of increase credited to revaluation reserve.
94 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
7. LEASES (CONT’D)
(a) (Cont’d)
The right-of-use assets are depreciated on a straight-line basis over the earlier of the estimated useful lives of the right- of-use assets at the end of the lease term. The lease terms of right-of-use assets are as follows:
Leasehold land 60 years Buildings 3 years Plant and machinery 10 years
(b) The Group made the following cash payments to purchase right-of-use assets arising from plant and machinery:
2020 RM’000
Additions of right-of-use assets 208 Financed by lease liabilities (188)
Cash payments on purchase of right-of-use assets 20
(c) The fair value of leasehold land which is carried at valuation of the Group is categorised as Level 2 in the fair value hierarchy.
There were no transfers between Level 1, Level 2, and Level 3 fair value measurements during the financial year ended 31 March 2020.
Level 2 fair value of leasehold land was determined by an external independent property valuer, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued.
The fair value measurement of the leasehold land is based on the highest and best use, which does not differ from its actual use.
The fair value of leasehold land was estimated based on comparison approach where reference is made to recent market sale transactions and asking prices of similar properties in the vicinity. This approach estimates the land value by analysing market sales of similar properties and by making the necessary adjustments for dissimilarities (legal, economic and physical) between each comparable and the land under consideration.
(d) Leasehold land of the Group was revalued on 30 November 2018 by the Directors based on a valuation exercise carried out in November 2018 by an independent professional valuer using the open market value basis.
Had the leasehold land been carried at cost and at cost less accumulated depreciation respectively, the carrying amount would have been:
Group 2020 RM’000
Leasehold land 1,381
MTD ACPI ENGINEERING BERHAD 95 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
7. LEASES (CONT’D)
(e) The Group has certain leases of premises and machineries with lease term of 12 months or less, and low value leases of office equipment. The Group applies the “short-term lease” and “lease of low-value assets” exemptions for these leases.
(f) The following are the amounts recognised in profit or loss:
Group Company 2020 2020 RM’000 RM’000
Depreciation charge of right-of-use assets (included in administration expenses) 1,384 122 Interest expense on lease liabilities (included in finance costs) 186 60 Expense relating to short-term leases (included in administration expenses) 2,285 743
3,855 925
(g) The following table sets out the carrying amounts, the weighted average incremental borrowing rates and the remaining maturities of the lease liabilities of the Group and of the Company:
Weighted average incremental borrowing rate Within 1 - 2 2 - 5 per annum 1 year years years Total % RM’000 RM’000 RM’000 RM’000
Group
31 March 2020
Lease liabilities Fixed rates 5.38 2,223 2,424 1,419 6,066
Company
31 March 2020
Lease liabilities Fixed rates 5.25 784 861 447 2,092
(h) The table below summarises the maturity profile of the lease liabilities of the Group and of the Company at the end of the reporting period based on contractual undiscounted repayment obligations as follows:
On demand or within One to one year five years Total RM’000 RM’000 RM’000
Group
31 March 2020
Lease liabilities 2,494 4,063 6,557
96 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
7. LEASES (CONT’D)
(h) The table below summarises the maturity profile of the lease liabilities of the Group and of the Company at the end of the reporting period based on contractual undiscounted repayment obligations as follows (Cont’d):
On demand or within One to one year five years Total RM’000 RM’000 RM’000
Company
31 March 2020
Lease liabilities 875 1,364 2,239
(i) For the purpose of the statements of cash flows, the reconciliation of liabilities arising from financing activities as follows:
Group Company 2020 2020 RM’000 RM’000
Lease liabilities at 1 April 2019, as previously reported - - Effects of adoption of MFRS 16 613 -
Lease liabilities at 1 April 2019, as restated 613 -
Cash flows (1,292) (421) Non-cash flows: - additions 6,559 2,453 - unwinding of interest 186 60
Lease liabilities at 31 March 6,066 2,092
8. INVESTMENTS IN SUBSIDIARIES
Company 2020 2019 RM’000 RM’000
Unquoted shares, at cost 141,583 141,583 Less: Impairment losses (98,738) (98,738)
42,845 42,845
(a) Investments in subsidiaries, which are eliminated on consolidation, are stated in the separate financial statements of the Company at cost less accumulated impairment losses, if any.
(b) All components of non-controlling interests shall be measured at their acquisition-date fair values, unless another measurement basis is required by MFRSs. The choice of measurement basis is made on a combination-by-combination basis. Subsequent to initial recognition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity.
MTD ACPI ENGINEERING BERHAD 97 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
8. INVESTMENTS IN SUBSIDIARIES (CONT’D)
(c) The details of the subsidiaries are as follows:
Effective interest in equity Country of 2020 2019 Name of company incorporation % % Principal activities
ACP Technologies Sdn. Bhd. Malaysia 100 100 Dormant
ACPI Engineering Sdn. Bhd. Malaysia 100 100 Dormant
Gandaan Unik Sdn. Bhd. (“GUSB”) Malaysia 100 100 Investment holding
Makin Permata Sdn. Bhd. Malaysia 100 100 Provision of consultancy and management services
Persys Engineering Sdn. Bhd. Malaysia 100 100 Dormant
MTD Construction Sdn. Bhd. (“MTDC”) Malaysia 100 100 Civil engineering and construction works
ACP (Tracks) Sdn. Bhd. (“ACP Tracks”) Malaysia 100 100 Investment holding
Subsidiaries of MTDC
MTD Tunneltech Sdn. Bhd. Malaysia 60 60 Dormant
MTD Construction (Philippines), Inc. * Philippines 60 60 Civil engineering and construction works
Subsidiaries of ACP Tracks
Acentis Engineering Sdn. Bhd. Malaysia 100 100 Dormant
ASC Tiles Sdn. Bhd. Malaysia 100 100 Manufacturing of concrete roof tiles
Associated Structural Concrete Sdn. Bhd. Malaysia 100 100 Dormant
C & G Fabricators Sdn. Bhd. Malaysia 100 100 Dormant
Universal Building Products Sdn. Bhd. Malaysia 100 100 Dormant
Associated Concrete Products (Malaysia) Malaysia 100 100 Manufacturing and marketing Sdn. Bhd. (“ACPM”) of precast concrete products
98 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
8. INVESTMENTS IN SUBSIDIARIES (CONT’D)
(c) The details of the subsidiaries are as follows (Cont’d):
Effective interest in equity Country of 2020 2019 Name of company incorporation % % Principal activities
Subsidiaries of ACPM
ACP Marketing Sdn. Bhd. Malaysia 100 100 Marketing of precast concrete products
Precast Solutions Sdn. Bhd. Malaysia 100 100 Dormant
* Subsidiary audited by a BDO member firm.
(d) Summarised financial information on the subsidiary with significant non-controlling interest (“NCI”):
(i) Summarised statement of financial position
MTD Construction (Philippines), Inc. 2020 2019 RM’000 RM’000
NCI percentage of ownership interest and voting interest 40% 40%
Current assets/Total assets 53,663 50,465
Non-current liabilities 23 11 Current liabilities 17,737 16,450
Total liabilities 17,760 16,461
Net assets 35,903 34,004
Equity attributable to owners of the parent 21,543 20,402 Non-controlling interest 14,360 13,602
35,903 34,004
MTD ACPI ENGINEERING BERHAD 99 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
8. INVESTMENTS IN SUBSIDIARIES (CONT’D)
(d) Summarised financial information on the subsidiary with significant non-controlling interest (“NCI”) (Cont’d):
(ii) Summarised statement of comprehensive income
MTD Construction (Philippines), Inc. 2020 2019 RM’000 RM’000
Revenue - - Loss for the financial year (1,244) (5,331) Total comprehensive income/(loss) 1,899 (3,580)
Loss attributable to: - owners of the parent (745) (3,199) - non-controlling interest (499) (2,132)
Total comprehensive income/(loss) attributable to: - owners of the parent 1,141 (2,146) - non-controlling interest 758 (1,434)
(iii) Summarised statement of cash flows
MTD Construction (Philippines), Inc. 2020 2019 RM’000 RM’000
Net cash (used in)/from operating activities (517) 682 Net cash from investing activities 24 - Net cash used in financing activities - (387)
Net (decrease)/increase in cash and cash equivalents (493) 295 Effects of foreign exchange rates changes 33 13 Cash and cash equivalents at beginning of financial year 576 268
Cash and cash equivalents at end of financial year 116 576
100 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
9. INVESTMENTS IN ASSOCIATES
Group 2020 2019 RM’000 RM’000
Unquoted shares, at cost 10,737 10,737 Share of post-acquisition reserves, net of Group’s dividends (5,681) (5,665) Less: Impairment losses (4,550) (4,550)
506 522
(a) Investments in associates are measured at cost less impairment losses, if any, in the separate financial statements and accounted for using the equity method in the consolidated financial statements.
(b) The details of the associates are as follows:
Effective interest in equity Country of 2020 2019 Name of company incorporation % % Principal activities
Associate of GUSB
Modal Ehsan Sdn. Bhd. * Malaysia 49 49 Property development
Associate of MTDC
Intraxis Engineering Sdn. Bhd. ** (1) Malaysia 40 40 Civil works for Bakun Hydroelectric Project
* Associate audited by BDO PLT. ** Associate audited by firms of auditors other than BDO PLT.
(1) The financial statements of the associate is not coterminous with that of the Group, which have a financial year end of 31 December 2019. For the purpose of applying the equity method of accounting, the unaudited financial statements of the associate as at 31 March 2020 have been used as there have been no significant transactions between the reporting date of their last audited financial statements and 31 March 2020.
MTD ACPI ENGINEERING BERHAD 101 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
9. INVESTMENTS IN ASSOCIATES (CONT’D)
(c) Summarised financial information of the material associates which are accounted for using the equity method:
(i) Summarised statements of financial position
Intraxis Modal Engineering Ehsan Sdn. Bhd. Sdn. Bhd. Total RM’000 RM’000 RM’000
As at 31 March 2020
Assets and liabilities
Current assets 2,945 57,440 60,385 Non-current assets - 23,399 23,399
Total assets 2,945 80,839 83,784
Current liabilities/Total liabilities 1,680 76,722 78,402
Net assets 1,265 4,117 5,382
As at 31 March 2019
Assets and liabilities
Current assets 3,845 46,457 50,302 Non-current assets - 23,404 23,404
Total assets 3,845 69,861 73,706
Current liabilities/Total liabilities 2,541 65,178 67,719
Net assets 1,304 4,683 5,987
102 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
9. INVESTMENTS IN ASSOCIATES (CONT’D)
(c) Summarised financial information of the material associates which are accounted for using the equity method (Cont’d):
(ii) Summarised statements of comprehensive income
Intraxis Modal Engineering Ehsan Sdn. Bhd. Sdn. Bhd. Total RM’000 RM’000 RM’000
For the financial year ended 31 March 2020
Results Revenue - 19,898 19,898 Loss for the financial year (39) (566) (605)
For the financial year ended 31 March 2019
Results Revenue - 13,380 13,380 Loss for the financial year (93) (452) (545)
(d) Reconciliation of the summarised financial information presented above to the carrying amount of the Group’s interest in associates:
Intraxis Modal Engineering Ehsan Sdn. Bhd. Sdn. Bhd. Total RM’000 RM’000 RM’000
At 31 March 2020
Group’s share of net assets 506 4,550 5,056 Less: Impairment losses - (4,550) (4,550)
Carrying amount of Group’s interest in associates 506 - 506
Group’s share of results of associates (16) - (16)
At 31 March 2019
Group’s share of net assets 522 4,550 5,072 Less: Impairment losses - (4,550) (4,550)
Carrying amount of Group’s interest in associates 522 - 522
Group’s share of results of associates (37) - (37)
MTD ACPI ENGINEERING BERHAD 103 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
9. INVESTMENTS IN ASSOCIATES (CONT’D)
(e) The Group has not recognised its share of losses of the associate, Modal Ehsan Sdn. Bhd., during the financial year because the Group’s cumulative share of losses exceeds its interest in that entity and the Group has no obligation in respect of those losses. The unrecognised results are as follows:
2020 2019 RM’000 RM’000
Loss for the financial year (277) (221)
Accumulated losses (2,532) (2,255)
10. OTHER INVESTMENTS
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Non-current
Financial assets at fair value through profit or loss - club memberships, unquoted 161 161 161 161
Current
Financial assets at fair value through profit or loss - quoted ordinary shares in Malaysia 19 38 - -
Total other investments 180 199 161 161
(a) The fair value of quoted ordinary shares in Malaysia is determined by reference to the exchange quoted market prices at the close of the business on the end of the reporting period. The fair value of club memberships is estimated based on references to current available quotation of the same investment.
(b) The fair value of quoted ordinary shares of the Group is categorised as Level 1 in the fair value hierarchy. The fair value of club memberships of the Group and of the Company is categorised as Level 3 in the fair value hierarchy. There is no transfer between levels in the hierarchy during the financial year.
(c) Sensitivity analysis for investment in unquoted club memberships is not material to the Group.
104 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
11. TRADE AND OTHER RECEIVABLES
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Non-current
Trade receivables
Retention sums on contracts: - third parties 35,321 23,732 - - - related companies 6,200 2,347 - -
41,521 26,079 - -
Less: Impairment losses (146) (100) - -
41,375 25,979 - -
Other receivables
Amounts owing by subsidiaries - - 210,028 47,920 Amount owing by a related company 2,954 2,954 - - Amount owing by an associate 14,343 14,343 - - Finance lease receivables - subsidiaries - - 920 -
17,297 17,297 210,948 47,920
Less: Impairment losses (3,807) (3,075) (162,571) (7,341)
13,490 14,222 48,377 40,579
54,865 40,201 48,377 40,579
Current
Trade receivables
Third parties 33,043 58,892 - - Amounts owing by related companies 31,833 34,301 - - Retention sums on contracts: - third parties 10,905 11,047 - - - related companies 6,595 6,142 - -
82,376 110,382 - -
Less: Impairment losses (15,440) (18,988) - -
66,936 91,394 - -
MTD ACPI ENGINEERING BERHAD 105 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
11. TRADE AND OTHER RECEIVABLES (CONT’D)
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Other receivables
Third parties 14,279 12,035 1,166 1,109 Amount owing by ultimate holding company 2 1 - - Amount owing by immediate holding company 508 - - - Amounts owing by subsidiaries - - 34,400 196,324 Amounts owing by related companies 9,465 9,517 163 571 Finance lease receivables - subsidiaries - - 551 - Deposits 1,638 1,875 430 430
25,892 23,428 36,710 198,434
Less: Impairment losses (4,964) (7,206) (18,117) (172,100)
20,928 16,222 18,593 26,334
Prepayments
Prepayments 405 575 7 23
88,269 108,191 18,600 26,357
Total trade and other receivables 143,134 148,392 66,977 66,936
(a) Total trade and other receivables (excluding prepayments) are classified as financial assets measured at amortised cost.
(b) Trade receivables are non-interest bearing and the normal trade credit terms granted by the Group ranged from 30 to 60 days (2019: 30 to 60 days) from date of invoice. Retention sums are receivable at the expiry period of 12 to 24 months (2019: 12 to 24 months) after completion of respective construction contracts. They are recognised at their original invoice amounts, which represent their fair values on initial recognition.
(c) Non-trade amounts owing by ultimate holding company, immediate holding company, subsidiaries, related companies and an associate (current and non-current) represent advances and payments made on behalf, which are unsecured and non-interest bearing, except for amount owing by a related company of RM4,172,000 (2019: RM4,439,000) which bear interest of 6.52% (2019: 6.52%) per annum.
(d) The fair value of non-current trade and other receivables of the Group and of the Company are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending. The carrying amounts of the non-current trade and other receivables of the Group and of the Company are reasonable approximation of their fair value.
106 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
11. TRADE AND OTHER RECEIVABLES (CONT’D)
(e) Included in retention sums on contracts of the Group are:
(i) Retention sums on construction contracts amounting to RM50,114,000 (2019: RM33,707,000); and
(ii) Retention sums on manufacturing contracts amounting to RM5,665,000 (2019: RM5,749,000).
(f) At the end of the reporting period, the interest rate profile of the trade and other receivables was:
Group 2020 2019 RM’000 RM’000
Fixed rate 4,172 4,439
Sensitivity analysis for fixed rate trade and other receivables at the end of the reporting period is not presented as fixed rate instrument is not affected by change in interest rate.
(g) The currency exposure profile of trade and other receivables, excluding prepayments is as follows:
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Singapore Dollar 3,557 2,125 - -
Sensitivity analysis of RM against foreign currency at the end of the reporting period is not presented as change in exchange rate would not materially affect profit or loss.
(h) The repayment terms of finance lease receivables are as follows:
Company 2020 2019 RM’000 RM’000
Finance lease receivables:
Less than one (1) year 615 - One (1) to two (2) years 639 - Two (2) to three (3) years 320 -
1,574 - Less: Unearned interest (103) -
1,471 -
Representing finance lease receivables:
Less than one (1) year 551 - One (1) to two (2) years 605 - Two (2) to three (3) years 315 -
1,471 -
MTD ACPI ENGINEERING BERHAD 107 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
11. TRADE AND OTHER RECEIVABLES (CONT’D)
(i) The reconciliation of movements in the carrying amount of finance lease receivables are as follows:
Company 2020 2019 RM’000 RM’000
Finance lease receivables:
Balance as at 1 April - - Additions 1,723 - Lease payments received (295) - Interest income 43 -
Balance as at 31 March 1,471 -
(j) The finance lease receivables are in relation to back-to-back arrangements with its subsidiaries on the rental of office premise, whereby the Company has entered into rental agreements for the office premise with a related party and subsequently, sub-leased to subsidiaries over the entire lease period. These receivables were recognised at an amount equal to the net investment in the lease and were measured at the present value of the lease payments over the sub- lease periods, discounted at 5.25% based on the discount rate used for the head lease.
(k) Impairment for trade receivables and contract assets that do not contain a significant financing component are recognised based on the simplified approach using the lifetime expected credit losses (“ECL”).
The Group considers credit loss experience and observable data such as current changes and future forecasts in economic conditions by market segment of the Group as disclosed in Note 4 to the financial statements to estimate the amount of ECL. The methodology and assumptions including any forecasts of future economic conditions are reviewed regularly.
During this process, the probability of non-payment by the trade receivables and contract assets is adjusted by forward looking information and multiplied by the amount of the expected loss arising from default to determine the lifetime ECL for the trade receivables and contract assets. The Group has identified inflation rate as the key macroeconomic factor of the forward looking information.
For trade receivables and contract assets, which are reported net, such impairments are recorded in a separate impairment account with the loss being recognised in the statements of profit or loss and other comprehensive income. On confirmation that the trade receivables and contract assets would not be collectible, the gross carrying value of the asset would be written off against the associated impairment.
Management exercised significant judgement in determining the probability of default by trade receivables and contract assets and appropriate forward looking information incorporating the impact of the COVID-19 pandemic in assessing the expected credit loss allowance.
108 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
11. TRADE AND OTHER RECEIVABLES (CONT’D)
(l) Impairment for other receivables, amounts owing by ultimate holding company, immediate holding company, subsidiaries, related companies, an associate and finance lease receivables are recognised based on the general approach within MFRS 9 using the forward looking expected credit loss model. The methodology used to determine the amount of the impairment is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those in which the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those in which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.
The Group and the Company defined significant increase in credit risk based on the operating performance ofthe receivables, changes in contractual terms, payment trends and past due information.
The probabilities of non-payment by other receivables, ultimate holding company, immediate holding company, subsidiaries, related companies, an associate and finance lease receivables are adjusted by forward looking information and multiplied by the amount of the expected loss arising from default to determine the twelve month or lifetime expected credit loss for other receivables, ultimate holding company, immediate holding company, subsidiaries, related companies, an associate and finance lease receivables. The Group has identified inflation rate as the key macroeconomic factor of the forward looking information.
It requires management to exercise judgement in determining the probabilities of default by other receivables, ultimate holding company, immediate holding company, subsidiaries, related companies, an associate and finance lease receivables, appropriate forward looking information and significant increase in credit risk incorporating the impact of the COVID-19 pandemic.
(m) The ageing analysis of trade receivables of the Group is as follows:
Gross Net Expected carrying carrying loss rate amount Impairment amount Group RM’000 RM’000 RM’000
2020
Current 2.0% 95,672 (1,908) 93,764 1 to 90 days 4.1% 2,927 (121) 2,806 More than 91 days 53.4% 25,298 (13,557) 11,741
123,897 (15,586) 108,311
2019
Current 1.9% 115,637 (2,151) 113,486 1 to 90 days 3.2% 2,524 (81) 2,443 More than 91 days 92.1% 18,300 (16,856) 1,444
136,461 (19,088) 117,373
MTD ACPI ENGINEERING BERHAD 109 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
11. TRADE AND OTHER RECEIVABLES (CONT’D)
(n) The reconciliation of movements of impairment loss for trade and other receivables at the end of each reporting period are as follows:
Lifetime ECL Credit Total allowance impaired allowances RM’000 RM’000 RM’000
Group
Trade receivables
2020
At 1 April 2019 1,727 17,361 19,088 Written off - (511) (511) Reversal of impairment losses (1,038) (3,037) (4,075) Charge for the financial year 1,065 - 1,065 Exchange differences 19 - 19
At 31 March 2020 1,773 13,813 15,586
2019
At 1 April 2018 8,758 26,052 34,810 Written off - (8,703) (8,703) Reversal of impairment losses (8,630) (16) (8,646) Charge for the financial year 1,599 28 1,627
At 31 March 2019 1,727 17,361 19,088
Lifetime Lifetime ECL - not ECL - 12-month credit credit ECL impaired impaired Total RM’000 RM’000 RM’000 RM’000
Group
Other receivables
2020
At 1 April 2019 312 3,075 6,894 10,281 Written off - - (474) (474) Reversal of impairment losses (10) - (1,975) (1,985) Charge for the financial year 190 732 23 945 Exchange differences 4 - - 4
At 31 March 2020 496 3,807 4,468 8,771
110 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
11. TRADE AND OTHER RECEIVABLES (CONT’D)
(n) The reconciliation of movements of impairment loss for trade and other receivables at the end of each reporting period are as follows (Cont’d):
Lifetime Lifetime ECL - not ECL - 12-month credit credit ECL impaired impaired Total RM’000 RM’000 RM’000 RM’000
Group (Cont’d)
Other receivables (Cont’d)
2019
At 1 April 2018 - 2,794 4,680 7,474 Written off - - (41) (41) Charge for the financial year 312 281 2,255 2,848
At 31 March 2019 312 3,075 6,894 10,281
Company
Other receivables
2020
At 1 April 2019 - 24,441 155,000 179,441 Reversal of impairment losses - - (134) (134) Charge for the financial year 101 1,266 14 1,381
At 31 March 2020 101 25,707 154,880 180,688
2019
At 1 April 2018 - 24,441 154,920 179,361 Reversal of impairment losses - - (150) (150) Charge for the financial year - - 230 230
At 31 March 2019 - 24,441 155,000 179,441
Credit impaired refers to individually determined debtors who have defaulted on payments and are in significant financial difficulties as at the end of the reporting period.
MTD ACPI ENGINEERING BERHAD 111 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
11. TRADE AND OTHER RECEIVABLES (CONT’D)
(o) The Group determines concentration of credit risk by monitoring the country customers’ profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the trade receivables of the Group at the end of each reporting period are as follows:
Group 2020 2019 RM’000 % of total RM’000 % of total
By country
Malaysia 68,257 63% 81,092 69% Philippines 36,497 34% 34,156 29% Singapore 3,557 3% 2,125 2%
108,311 100% 117,373 100%
At the end of each reporting period, approximately 46% (2019: 44%) of the trade and other receivables of the Group are due from related companies while almost all of the receivables of the Company are balances with related companies.
(p) As at the end of each reporting period, the credit risks exposures and concentration relating to trade receivables of the Group are summarised in the table below:
Group 2020 2019 RM’000 RM’000
Maximum exposure 108,311 117,373
12. DEFERRED TAX (ASSETS)/LIABILITIES
(a) Deferred tax assets and liabilities are made up of the following:
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Balance as at 1 April 2019/2018 2,528 (3,613) 269 114
Recognised in profit or loss (Note 29) 636 3,812 - - Recognised in other comprehensive income - 2,518 - 155 Exchange differences - (189) - -
Balance as at 31 March 2020/2019 3,164 2,528 269 269
Presented after appropriate offsetting:
Deferred tax assets (1,791) (2,484) - - Deferred tax liabilities 4,955 5,012 269 269
3,164 2,528 269 269
112 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
12. DEFERRED TAX (ASSETS)/LIABILITIES (CONT’D)
(b) The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:
Balance Recognised Balance Group as at in profit as at 1.4.2019 or loss 31.3.2020 2020 RM’000 RM’000 RM’000
Deferred tax assets Unused tax losses and unabsorbed capital allowances (2,831) (411) (3,242) Accrued liabilities and others (6,400) 533 (5,867) Offsetting 6,747 571 7,318
(2,484) 693 (1,791)
Deferred tax liabilities Property, plant and equipment 8,771 514 9,285 Freehold land 2,978 - 2,978 Others 10 - 10 Offsetting (6,747) (571) (7,318)
5,012 (57) 4,955
2,528 636 3,164
Recognised in Balance Recognised other Balance Group as at in profit comprehensive Exchange as at 1.4.2018 or loss income differences 31.3.2019 2019 RM’000 RM’000 RM’000 RM’000 RM’000
Deferred tax assets Unused tax losses and unabsorbed capital allowances (3,280) 449 - - (2,831) Accrued liabilities and others (8,946) 2,736 - (190) (6,400) Offsetting 5,218 1,529 - - 6,747
(7,008) 4,714 - (190) (2,484)
Deferred tax liabilities Property, plant and equipment 6,109 637 2,025 - 8,771 Freehold land 2,485 - 493 - 2,978 Others 19 (10) - 1 10 Offsetting (5,218) (1,529) - - (6,747)
3,395 (902) 2,518 1 5,012
(3,613) 3,812 2,518 (189) 2,528
MTD ACPI ENGINEERING BERHAD 113 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
12. DEFERRED TAX (ASSETS)/LIABILITIES (CONT’D)
(b) The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows (Cont’d):
Recognised Balance Recognised in other Balance Company as at in profit comprehensive as at 1.4.2019 or loss income 31.3.2020 2020 RM’000 RM’000 RM’000 RM’000
Deferred tax liabilities Freehold land 269 - - 269
Recognised Balance Recognised in other Balance as at in profit comprehensive as at 1.4.2018 or loss income 31.3.2019 2019 RM’000 RM’000 RM’000 RM’000
Deferred tax liabilities Freehold land 114 - 155 269
(c) The amounts of temporary differences for which no deferred tax assets have been recognised in the statements of financial position are as follows:
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Unused tax losses - Expires by 31 March 2025 38,672 38,686 - - - Expires by 31 March 2026 7,908 7,908 - - - Expires by 31 March 2027 782 - - - Unabsorbed capital allowances 53,655 45,370 - - Other deductible temporary differences 365,496 361,112 278,096 269,530
466,513 453,076 278,096 269,530
Deferred tax assets of the Company and certain subsidiaries have not been recognised in respect of these items as it is not probable that future taxable profits of the Company and the subsidiaries would be available against which the deductible temporary differences could be utilised.
Certain subsidiaries of the Group are entitled to claim reinvestment allowances under Schedule 7A Income Tax Act, 1967. As at the end of the reporting period, the balance of reinvestment allowances not claimed amounted to RM40,075,000 (2019: RM40,075,000). The reinvestment allowances not claimed can be carried forward up to 31 March 2026.
The amount and availability of these items to be carried forward up to the periods as disclosed above are subject to the agreement of the respective local tax authorities.
114 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
13. INVENTORIES
Group 2020 2019 RM’000 RM’000
At cost
Raw materials 5,244 4,710 Finished goods 13,452 16,617
18,696 21,327
(a) Inventories are stated at the lower of cost and net realisable value. The costs of raw materials and finished goods are determined on the weighted average basis.
(b) During the financial year, inventories recognised as cost of sales of the Group amounted to RM25,890,000 (2019: RM30,608,000).
(c) Inventories written off and written down during the financial year amounted to RM110,000 (2019: RM68,000) and RM Nil (2019: RM1,330,000) respectively and recognised as cost of sales of the Group.
(d) The Group reversed RM160,000 (2019: RM Nil) in respect of inventories written down in the previous financial years that was subsequently not required as the Group was able to sell those inventories above their carrying amounts.
14. CONTRACT ASSETS/(LIABILITIES)
Group 2020 2019 RM’000 RM’000
Construction contract costs incurred to date 2,411,775 2,401,611 Attributable profits 129,629 69,431 Less: Impairment losses (106) (106)
2,541,298 2,470,936 Less: Progress billings (2,532,530) (2,446,198)
8,768 24,738
Presented as:
Contract assets 12,855 32,614 Contract liabilities (4,087) (7,876)
8,768 24,738
MTD ACPI ENGINEERING BERHAD 115 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
14. CONTRACT ASSETS/(LIABILITIES) (CONT’D)
(a) Contract assets and contract liabilities from construction contracts represent the timing differences in revenue recognition and the milestone billings. The milestone billings are structured and/or negotiated with customers to reflect physical completion of the contracts.
Contract assets are transferred to receivables when the rights to economic benefits become unconditional. This usually occurs when the Group issues billing to the customer. Contract liabilities are recognised as revenue when performance obligations are satisfied.
There were no significant changes in the contract assets and liabilities during the financial year.
(b) Contract value yet to be recognised as revenue
Revenue expected to be recognised in the future relating to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period, are as follows:
Group 2020 2021 Total RM’000 RM’000 RM’000
31 March 2020 - 4,087 4,087
31 March 2019 7,775 101 7,876
(c) The amount of RM7,290,000 (2019: RM4,754,000) recognised in contract liabilities at the beginning of the financial year has been recognised as revenue for the financial year ended 31 March 2020.
(d) Impairment for contract assets that do not contain a significant financing component are recognised based on the simplified approach using the lifetime expected credit losses as disclosed in Note 11(k) to the financial statements.
(e) The reconciliation of movement in allowance for impairment in contract assets is as follows:
Group 2020 2019 RM’000 RM’000
At 1 April 2019/2018 106 - Charge for the financial year - 106
At 31 March 2020/2019 106 106
116 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
15. CASH AND BANK BALANCES
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Cash and bank balances 14,928 28,711 34 71 Deposits with licensed banks 2,891 2,746 221 215
17,819 31,457 255 286
(a) Cash and bank balances are classified as financial assets measured at amortised cost.
(b) For the purpose of the statements of cash flows, cash and cash equivalents comprise the following as at the end of the reporting period:
Group Company 2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
Cash and bank balances 14,928 28,711 34 71 Deposits with licensed banks 2,891 2,746 221 215
As reported in statements of financial position 17,819 31,457 255 286
Bank overdrafts 20 (7,424) (7,339) (3,487) (3,356) Deposits pledged to licensed banks 31 (2,889) (2,744) (221) (215) Deposit with a licensed bank with maturity of over three (3) months (2) (2) - -
As reported in statements of cash flows 7,504 21,372 (3,453) (3,285)
(c) Deposits with licensed banks are for varying periods of between one (1) month and six (6) months (2019: one (1) month and six (6) months) depending on the immediate cash requirements of the Group and of the Company, and earn interest at the respective short-term deposit rates. The weighted average effective interest rates of the Group and of the Company are 2.70% (2019: 2.95%) and 2.40% (2019: 2.96%) per annum respectively.
(d) At the end of the reporting period, the interest rate profile of the cash and bank balances was:
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Fixed rate 2,891 2,746 221 215
Sensitivity analysis for fixed rate cash and bank balances at the end of the reporting period is not presented as fixed rate instrument is not affected by change in interest rate.
(e) No expected credit losses were recognised arising from cash at banks and deposits with licensed banks because the probability of default by these financial institutions were negligible.
MTD ACPI ENGINEERING BERHAD 117 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
16. SHARE CAPITAL AND TREASURY SHARES
(a) Share capital
Group and Company 2020 2019 Number of Number of shares (’000) RM’000 shares (’000) RM’000
Issued and fully paid
At 1 April/31 March 231,633 339,771 231,633 339,771
The owners of the parent are entitled to receive dividends as and when declared by the Company and are entitled to one (1) vote per ordinary share at meetings of the Company. All ordinary shares rank pari passu with regard to the residual assets of the Company.
(b) Treasury shares
Group and Company 2020 2019 Number of Number of shares (’000) RM’000 shares (’000) RM’000
At 1 April/31 March 637 1,905 637 1,905
Treasury shares relate to ordinary shares of the Company that are held by the Company. The amount consists of the acquisition costs of treasury shares net of the proceeds received on their subsequent sale of issuance during the financial year. There were no treasury shares purchased during the financial year.
The shares repurchased were held as treasury shares in accordance with Section 127 of the Companies Act 2016. The amount consists of the acquisition costs of treasury shares net of the proceeds received on their subsequent sale or issuance. None of the treasury shares were re-sold or cancelled during the financial year.
17. RESERVES
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Non-distributable
Exchange translation reserve 4,171 (1,090) - - Revaluation reserve 62,792 62,912 5,117 5,117 Other reserves 29,255 29,255 90 90
96,218 91,077 5,207 5,207
118 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
17. RESERVES (CONT’D)
(a) Exchange translation reserve
The exchange translation reserve is used to record foreign currency exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group’s net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.
(b) Revaluation reserve
The revaluation reserve arose from the revaluation of freehold land and leasehold land of the Group and of the Company.
(c) Other reserves
Included in other reserves are:
(i) Capital reserve arising from a subsidiary’s bonus issue capitalised from retained earnings.
(ii) Capital gains from the disposal of property, plant and equipment and investments of certain foreign subsidiaries maintained for future appropriation of dividends.
18. TRADE AND OTHER PAYABLES
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Non-current
Trade payables
Retention sums on contracts: - third parties 21,908 19,487 - -
Other payables
Amounts owing to subsidiaries - - 128,457 96,077 Amount owing to ultimate holding company 55 - 1 - Amount owing to immediate holding company 21,880 - 19,763 -
21,935 - 148,221 96,077
43,843 19,487 148,221 96,077
MTD ACPI ENGINEERING BERHAD 119 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
18. TRADE AND OTHER PAYABLES (CONT’D)
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Current
Trade payables
Third parties 85,410 117,708 - - Amount owing to an associate 774 784 - - Retention sums on contracts: - third parties 13,495 13,058 - -
99,679 131,550 - -
Other payables
Third parties 10,032 9,936 33 24 Accruals 3,671 5,627 130 124 Amount owing to ultimate holding company - 72 - 3 Amount owing to immediate holding company - 22,016 - 22,016 Amounts owing to subsidiaries - - - 44,943 Amounts owing to related companies 16,593 13,126 7,608 6,389 Amount owing to a related party 115 106 - -
30,411 50,883 7,771 73,499
130,090 182,433 7,771 73,499
Total trade and other payables 173,933 201,920 155,992 169,576
(a) Trade and other payables are classified as financial liabilities measured at amortised cost.
(b) Trade payables are non-interest bearing and the normal trade credit terms granted to the Group ranged from 30 to 120 days (2019: 30 to 120 days) from date of invoice.
(c) Non-trade amounts owing to ultimate holding company, immediate holding company, subsidiaries, related companies and a related party (current and non-current) represent advances and payments made on behalf, which are unsecured and non-interest bearing except for advances of RM19,763,000 (2019: RM22,016,000) from immediate holding company which bear interest of 6.50% (2019: 6.50%) per annum and advances of RM117,718,000 (2019: RM130,476,000) from a subsidiary which bear interests of 6.52% (2019: from 5% to 6.52%) per annum.
(d) Included in trade payables of the Group are advances received on contracts of RM8,486,000 (2019: RM20,689,000) to be recovered against future progress billings by applying a certain formula as stated in the contracts.
120 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
18. TRADE AND OTHER PAYABLES (CONT’D)
(e) Included in retention sums on contracts of the Group are:
(i) Retention sums on construction contracts amounting to RM35,187,000 (2019: RM32,329,000); and
(ii) Retention sums on manufacturing contracts amounting to RM216,000 (2019: RM216,000).
(f) The fair value of non-current trade and other payables of the Group and of the Company are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending. The carrying amounts of the non-current trade and other payables of the Group and of the Company are reasonable approximation of their fair value.
(g) At the end of the reporting period, the interest rate profile of the trade and other payables was:
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Fixed rate 19,763 22,016 117,718 130,476
Sensitivity analysis for fixed rate trade and other payables at the end of the reporting period is not presented as fixed rate instrument is not affected by change in interest rate.
(h) The maturity profile of the trade and other payables of the Group and of the Company (excluding advances received on contracts) at the end of the reporting period based on contractual undiscounted repayment obligations is summarised in the table below:
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Within one (1) year 121,604 161,744 7,771 73,499 One (1) to five (5) years 47,816 19,487 175,069 96,077
Total 169,420 181,231 182,840 169,576
MTD ACPI ENGINEERING BERHAD 121 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
19. PROVISIONS
Provision for Retirement out-of-court benefit settlement Group obligations and others Total RM’000 RM’000 RM’000
Non-current
2020
At 1 April 2019 7,242 - 7,242 Charge during the financial year 32 - 32 Reversal during the financial year (2,086) - (2,086)
At 31 March 2020 5,188 - 5,188
2019
At 1 April 2018 6,944 - 6,944 Charge during the financial year 298 - 298
At 31 March 2019 7,242 - 7,242
Current
2020
At 1 April 2019 1,463 421 1,884 Reversal during the financial year (697) - (697)
At 31 March 2020 766 421 1,187
2019
At 1 April 2018 1,235 1,316 2,551 Reversal during the financial year (27) (895) (922) Charge during the financial year 255 - 255
At 31 March 2019 1,463 421 1,884
Retirement benefit obligations
The Group operates unfunded defined retirement benefit scheme for its eligible employees. Provision for the unfunded retirement benefit obligations is made in accordance with the terms stipulated in the Collective Agreement for all eligible employees. This is calculated based on the employees’ current emoluments and the length of their service with the subsidiaries within the Group and the Company.
The actuarial valuation dated 16 June 2020 was conducted by an external independent professional actuary, which covered a three years estimation from 31 March 2020 to 31 March 2022.
122 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
19. PROVISIONS (CONT’D)
Retirement benefit obligations (Cont’d)
(i) The amounts recognised in the statements of financial position are determined as follows:
Group 2020 2019 RM’000 RM’000
Present value of unfunded retirement benefit obligations 5,954 8,705
Analysed as follows:
Current liabilities: - not later than one (1) year 766 1,463
Non-current liabilities: - later than one (1) year and not later than five (5) years 5,188 6,672 - later than five (5) years - 570
5,954 8,705
(ii) The following table sets out the reconciliation of retirement benefit obligations:
Group 2020 2019 RM’000 RM’000
At 1 April 2019/2018 8,705 8,179
Current service cost 253 244 Interest cost 234 328
Included in profit or loss (Note 27) 487 572
Remeasurement:
Included in other comprehensive income: - Actuarial gain (2,235) - - Exchange difference 1 4
Benefit paid (1,004) (50)
At 31 March 2020/2019 5,954 8,705
MTD ACPI ENGINEERING BERHAD 123 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
19. PROVISIONS (CONT’D)
Retirement benefit obligations (Cont’d)
(iii) The principal actuarial assumptions used are as follows:
Group 2020 2019 % %
Discount rate 4.4 4.7 Expected rate of salary increases 3.5 6.0
(iv) The following table demonstrates the sensitivity analysis of the Group if the significant actuarial assumptions at the end of the reporting period changed by 1% with all other variables held constant:
Group 2020 2019 RM’000 RM’000
A 1.0% increase/decrease in discount rate will decrease/increase the retirement benefit obligations by: (192) (296)
A 1.0% increase/decrease in expected rate of salary increases will increase/ decrease the retirement benefit obligations by: 165 210
The sensitivity analysis presented above may not be representative of the actual change in retirement benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some assumptions may be correlated.
20. BORROWINGS
Group Company 2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
Non-current liabilities
Secured Hire purchase creditors 21 - 463 - -
Current liabilities
Secured Bank overdrafts 15 3,000 2,994 - - Revolving credits 10,000 10,000 - - Banker’s acceptances 6,314 - - - Hire purchase creditors 21 - 150 - -
124 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
20. BORROWINGS (CONT’D)
Group Company 2020 2019 2020 2019 Note RM’000 RM’000 RM’000 RM’000
Current liabilities (Cont’d)
Unsecured Bank overdrafts 15 4,424 4,345 3,487 3,356 Revolving credits 42,700 43,400 1,500 1,500
66,438 60,889 4,987 4,856
Total borrowings
Bank overdrafts 15 7,424 7,339 3,487 3,356 Revolving credits 52,700 53,400 1,500 1,500 Banker’s acceptances 6,314 - - - Hire purchase creditors 21 - 613 - -
66,438 61,352 4,987 4,856
(a) Borrowings are classified as financial liabilities measured at amortised cost.
(b) Movement of borrowings upon adoption of MFRS 16 are as follows:
Hire purchase creditors Group Note RM’000
At 1 April 2019, as previously reported 613 Effects of adoption of MFRS 16 36.1 (613)
At 1 April 2019, as restated -
(c) The bank borrowings of the Group and of the Company (other than hire purchase creditors as further disclosed in Note 21 to the financial statements) are secured by means of:
(i) Respective contract proceeds of MTD Construction Sdn. Bhd.;
(ii) Corporate guarantee issued by the Company; and
(iii) Negative pledge from subsidiaries’ assets, both present and future.
MTD ACPI ENGINEERING BERHAD 125 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
20. BORROWINGS (CONT’D)
(d) The weighted average interest rates per annum of borrowings that were effective at the end of the reporting period were as follows:
Group Company 2020 2019 2020 2019 % % % %
Bank overdrafts 6.36 7.37 6.72 7.72 Revolving credits 5.04 5.71 5.61 5.80 Banker’s acceptances 4.58 - - - Hire purchase creditors - 3.51 - -
(e) At the end of the reporting period, the interest rate profile of the borrowings was:
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Fixed rate - 613 - -
Variable rate 66,438 60,739 4,987 4,856
Sensitivity analysis for fixed rate borrowings at the end of the reporting date is not presented as fixed rate instrument is not affected by change in interest rate.
A change of 100 basis points in interest rates, assuming all other variables remained constant, at the end of the reporting period would result in the loss after tax of the Group and of the Company to be higher/(lower) by RM505,000 (2019: RM462,000) and RM38,000 (2019: RM37,000) respectively.
(f) The carrying amounts of bank overdrafts, revolving credits and banker’s acceptances are reasonable approximations of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the end of each reporting period.
(g) Borrowings that are not carried at fair values and whose carrying amounts are reasonable approximation of fair values, are as follows:
Group Carrying Carrying amount Fair value amount Fair value 2020 2020 2019 2019 RM’000 RM’000 RM’000 RM’000
Hire purchase creditors - - 613 563
The fair value of hire purchase creditors is estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the end of reporting period.
The fair value of hire purchase creditors is categorised as Level 2 in the fair value hierarchy. There is no transfer between levels in the hierarchy during the financial year.
126 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
20. BORROWINGS (CONT’D)
(h) The maturity profile of the borrowings of the Group and of the Company at the end of the reporting period based on contractual undiscounted repayment obligations is summarised in the table below:
On demand or within One to one year five years Total RM’000 RM’000 RM’000
Group
At 31 March 2020 66,438 - 66,438
At 31 March 2019 60,915 544 61,459
Company
At 31 March 2020 4,987 - 4,987
At 31 March 2019 4,856 - 4,856
(i) For the purpose of the statements of cash flows, the reconciliation of liabilities arising from financing activities as follows:
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Borrowings at 1 April, as previously reported 54,013 45,457 1,500 1,500 Effects of adoption of MFRS 16 (613) - - -
Borrowings at 1 April, as restated 53,400 45,457 1,500 1,500 Cash flows: - Drawdown of short-term borrowings 5,614 8,300 - - - Repayment of hire purchase creditors - (118) - - Non-cash flows: - Acquisition of property, plant and equipment - 374 - -
Borrowings at 31 March 59,014 54,013 1,500 1,500
* Borrowings exclude bank overdrafts.
MTD ACPI ENGINEERING BERHAD 127 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
21. HIRE PURCHASE CREDITORS
Group 2020 2019 RM’000 RM’000
Minimum hire purchase payments: - not later than one (1) year - 176 - later than one (1) year and not later than five (5) years - 544
Total minimum hire purchase payments - 720 Less: Future interest charges - (107)
Present value of hire purchase creditors - 613
Repayable as follows:
Current: - not later than one (1) year - 150
Non-current: - later than one (1) year and not later than five (5) years - 463
- 613
22. REVENUE
Group 2020 2019 RM’000 RM’000
Revenue from contract with customers Revenue from construction contracts 172,414 187,318 Sales of goods 53,891 62,499
226,305 249,817
Timing of revenue recognition Transferred over time 172,414 187,318 Transferred at a point in time 53,891 62,499
226,305 249,817
Disaggregation of revenue from contract with customers has been presented in the operating segments, Note 4 to the financial statements, which has been organised into business units based on their products and services from which the sales transactions originated.
128 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
22. REVENUE (CONT’D)
(a) Revenue from construction contracts
Revenue from contract works are recognised over the period of the contracts by reference to the progress towards complete satisfaction of that performance obligation. Progress is determined on the proportion of construction contract costs incurred for work performed to date against total estimated construction contract costs where the outcome of the project can be estimated reliably.
Significant judgements are required in determining the stage of completion, the extent of construction costs incurred, the estimated total construction revenue and costs. In making the judgements, the Group evaluates based on past experience and by relying on the work of specialists.
The Group identifies performance obligations that are distinct and material, which is judgmental in the context of contract. Transaction prices were determined based on estimated margins prior to its allocation to the identified performance obligation. The Group also estimated total contract costs in applying the input method to recognise revenue over time.
(b) Sales of goods
Revenue from sale of goods is recognised at a point in time when the goods have been transferred to the customer and coincide with the delivery of goods and acceptance by customers.
23. COST OF SALES
Group 2020 2019 RM’000 RM’000
Construction contract costs 166,202 170,047 Cost of inventories sold 52,375 61,955
218,577 232,002
MTD ACPI ENGINEERING BERHAD 129 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
24. OTHER OPERATING INCOME
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Included in other operating income are:
Dividend income from other investments 5 4 - - Fair value adjustments on trade and other payables 3,973 - 26,848 - Gain on disposal of property, plant and equipment 296 262 - - Gain on foreign exchange: - realised 1 - - - - unrealised 20 3,678 - - Interest income from: - deposits with licensed banks 88 56 6 7 - trade and other receivables 228 154 43 - Reversal of impairment losses on trade and other receivables 6,060 8,646 134 150 Reversal of inventories written down 160 - - -
(a) Interest income
Interest income is recognised as it accrues using the effective interest method.
(b) Dividend income
Dividend income is recognised when the right to receive payment is established.
25. ADMINISTRATIVE AND OTHER EXPENSES
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Included in administrative and other expenses are:
Auditors’ remuneration: - statutory audit 358 353 80 75 - other services 20 17 3 17 Depreciation of: - property, plant and equipment 4,416 4,602 45 47 - right-of-use assets 1,384 - 122 - Fair value adjustments on other investments 19 15 - -
130 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
25. ADMINISTRATIVE AND OTHER EXPENSES (CONT’D)
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Impairment losses on: - property, plant and equipment - 14 - - - trade and other receivables 2,010 4,475 1,381 230 - contract assets - 106 - - Inventories written off 110 68 - - Inventories written down - 1,330 - - Management fees - - 1,284 1,662 Loss on foreign exchange: - realised - 5 - - - unrealised 201 407 - - Property, plant and equipment written off - 39 - - Rental of: - buildings 1,709 2,530 743 1,485 - motor vehicles 554 404 - - - equipment, plant and machinery 22 36 - -
26. FINANCE COSTS
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Interest expense on: - amounts owing to related companies 1,461 3,623 9,992 6,644 - revolving credits 2,799 2,730 85 87 - bank overdrafts 494 395 256 264 - banker’s acceptances 185 - - - - lease liabilities 186 - 60 - - others 47 121 4 2
5,172 6,869 10,397 6,997
MTD ACPI ENGINEERING BERHAD 131 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
27. EMPLOYEE BENEFITS
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Wages, salaries and bonuses 16,781 19,685 24 24 Retirement benefit obligations (Note 19) 487 572 - - Defined contribution plan 2,011 2,153 - - Social security contributions 238 234 - - Other benefits 771 854 36 36
20,288 23,498 60 60
Included in the employee benefits of the Group and of the Company are Executive Directors’ remuneration as disclosed in Note 28 to the financial statements.
28. DIRECTORS’ REMUNERATION
The details of remuneration receivable by Directors of the Group and of the Company during the financial year are as follows:
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Directors of the Company
Non-Executive Directors: - Fees 162 161 162 161 - Other emoluments 39 31 39 31
201 192 201 192
Executive Directors: - Fees 36 36 36 36 - Other emoluments 24 24 24 24
60 60 60 60
Total remuneration for Directors of the Company 261 252 261 252
132 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
28. DIRECTORS’ REMUNERATION (CONT’D)
The details of remuneration receivable by Directors of the Group and of the Company during the financial year are as follows (Cont’d):
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Directors of subsidiaries
Executive Directors: - Other emoluments 329 441 - -
Total Directors’ remuneration 590 693 261 252
Total Non-Executive Directors’ remuneration 201 192 201 192
Total Executive Directors’ remuneration 389 501 60 60
Total remuneration for Directors 590 693 261 252
The estimated benefits-in-kind of the Group amounted to RM1,795 (2019: RM4,329).
29. TAX EXPENSE
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Current tax expense based on profit for the financial year:
- income tax 1,899 4,744 - - - real property gains tax - (66) - - - over provision in prior years (1,795) (3,051) - -
104 1,627 - -
Deferred tax (Note 12):
Relating to origination and reversal of temporary differences 804 3,787 - - (Over)/Under provision in prior years (168) 25 - -
636 3,812 - -
740 5,439 - -
MTD ACPI ENGINEERING BERHAD 133 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
29. TAX EXPENSE (CONT’D)
(a) Malaysian income tax is calculated at the statutory tax rate of 24% (2019: 24%) of the estimated taxable profit for the fiscal year.
(b) Tax expense for other taxation authorities are calculated at the rates prevailing in those respective jurisdictions.
(c) Tax on each component of other comprehensive income is as follows:
Before tax Tax effect After tax RM’000 RM’000 RM’000
Group
2020
Items that may be reclassified subsequently to profit or loss
Foreign currency translations 6,518 - 6,518
Items that will not be reclassified subsequently to profit or loss
Actuarial gain on retirement benefit obligations 2,235 - 2,235
2019
Items that may be reclassified subsequently to profit or loss
Foreign currency translations (618) - (618)
Items that will not be reclassified subsequently to profit or loss
Revaluation surplus on property, plant and equipment 18,299 (2,518) 15,781
Company
2019
Items that may be reclassified subsequently to profit or loss
Revaluation surplus on property, plant and equipment 3,110 (155) 2,955
134 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
29. TAX EXPENSE (CONT’D)
(d) The numerical reconciliation between the tax expense and the product of accounting (loss)/profit multiplied by the applicable tax rate of the Group and of the Company are as follows:
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
(Loss)/Profit before tax (20,308) (1,381) 11,882 (10,583)
Tax at Malaysian statutory tax rate of 24% (2019: 24%) (4,874) (331) 2,852 (2,540) Different tax rates in other countries (22) (58) - -
Tax effects in respect of: - non-allowable expenses 11,709 2,361 1,580 2,740 - non-taxable income (7,339) (1,298) (6,488) (209) - utilisation of previously unrecognised deferred tax assets (500) (1,500) - - - deferred tax assets not recognised 3,725 9,348 2,056 9 - share of results of associates 4 9 - - - real property gains tax - (66) - -
2,703 8,465 - -
Over provision of tax expense in prior years (1,795) (3,051) - - (Over)/Under provision of deferred tax in prior years (168) 25 - -
740 5,439 - -
30. LOSS PER SHARE
(a) Basic
Basic loss per ordinary share for the financial year is calculated by dividing the consolidated loss for the financial year attributable to equity holders of the parent by the weighted average number of ordinary shares outstanding during the financial year after deducting the treasury shares.
Group 2020 2019
Loss attributable to equity holders of the parent (RM’000) (20,549) (4,686)
Weighted average number of ordinary shares outstanding (adjusted for treasury shares) (‘000) 230,996 230,996
Loss for the financial year (sen) (9) (2)
MTD ACPI ENGINEERING BERHAD 135 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
30. LOSS PER SHARE (CONT’D)
(b) Diluted
Diluted loss per ordinary share equals basic loss per ordinary share as there were no dilutive potential ordinary shares as at the end of the reporting period.
31. CONTINGENT LIABILITIES
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Secured
Corporate guarantees given to financial institutions for credit facilities granted to subsidiaries - - 206,850 208,470
Bank guarantees given by financial institutions for: - performance bonds 64,384 62,803 - - - working capital 30,531 30,463 20 20
94,915 93,266 206,870 208,490
(a) The Group designates guarantees given to third parties as insurance contracts as defined in MFRS 4Insurance Contracts. The Group recognises these insurance contracts as recognised insurance liabilities when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits would be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
At the reporting date, the Group assesses whether its recognised insurance liabilities are adequate, using current estimates of future cash flows under its insurance contracts. If this assessment shows that the carrying amount of the insurance liabilities is inadequate, the entire deficiency shall be recognised in profit or loss.
Recognised insurance liabilities are only removed from the statement of financial position when, and only when, it is extinguished via a discharge, cancellation or expiration.
The determination of treatment of contingent liabilities is based on management’s view of the expected outcome of the contingencies for matters in the ordinary course of the business.
The Directors are of the view that the chances of the third parties and financial institutions to call upon the guarantees are remote.
(b) In compliance to the terms of the various contracts, the Group and the Company are required to give bank guarantees or performance bonds to clients.
(c) The bank guarantees of the Group and of the Company are secured by means of:
(i) Corporate guarantee issued by the Company;
(ii) Respective contract proceeds of MTD Construction Sdn. Bhd.; and
(iii) Deposits with licensed banks of the Group and of the Company as disclosed in Note 15 to the financial statements.
136 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
32. MATERIAL LITIGATIONS
(a) In the matter of an arbitration between MTD Construction Sdn. Bhd. and Kerajaan Malaysia
MTD Construction Sdn. Bhd. (“Claimant”), a wholly-owned subsidiary of the Company has entered into a formal contract (“Contract”) with the Kerajaan Malaysia (“GOM” or “Respondent”), wherein the Claimant has been appointed by the GOM to undertake the design and construction of Projek Jalan Raya Simpang Pulai-Lojing-Gua Musang ke Kuala Berang, Pakej 2 (dari Pos Selim, Perak Darul Ridzuan ke Ladang Blue Valley, Kampung Raja, Cameron Highlands, Pahang Darul Makmur) (“Project”), subject to the terms and provisions of the Contract. Pursuant to an agreement between the Superintendent Officer (“S.O”) of the Project (acting as the representative of the Respondent), the Claimant had provided a retention bond of RM14.1 million pursuant to a bank guarantee (“Retention Guarantee”) in lieu of the retention monies to be withheld by the Respondent in accordance to the terms and provisions of the Contract. The Respondent had issued a demand notice to HSBC Bank Malaysia Berhad (“HSBC”), demanding the pay out of the Retention Guarantee on the grounds of breach of Contract by the Claimant and the Claimant had filed an application to restrain the GOM from making a demand for the Retention Guarantee and receive payment from HSBC for the said Retention Guarantee, and to restrain HSBC from releasing the money until the final disposal of the matter in respect of the Project. HSBC had paid out the Retention Guarantee to the Respondent following the judgement from the High Court on 15 March 2011.
In addition to the above, the S.O has continuously demanded the Claimant to rectify the slope at Chainage (Ch.) 26+000 of the Project which has shown distress.
In view of the foregoing and to safeguard the interest of the Claimant, the Claimant had on 14 June 2011 issued the Notice of Dispute and Notice of Arbitration pursuant to the provision of Clause 52 of the Conditions of Contract and required the matter to be referred to Arbitration for the disputes which is not limited to the following:
(i) that the Respondent had wrongly demanded the paid out of the Retention Guarantee and that the amount so paid out of the Respondent on the Retention Guarantee ought to be refunded to the Claimant;
(ii) that the S.O ought to issue a Certificate of Making Good Defects to the Claimant; and
(iii) a declaration by the arbitral tribunal that the Claimant was not liable to rectify the distress on the slope at Ch.26+000 of the Project and the Claimant would not be responsible for any failures on any part of the Project.
On 9 August 2012, an arbitrator has been appointed by the Kuala Lumpur Regional Centre of Arbitration.
On 15 October 2019, the Arbitrator has published the Final Award Save as to Costs dated 13 September 2019 declaring, directing and/or awarding in favour of the Claimant the following:
(i) The Claimant is not responsible to rectify the distress on the slope at Chainage (Ch.) 26+000 of the Project;
(ii) The Claimant ought to have been issued with a Certificate of Completion of Making Good Defects as at 23 February 2006;
(iii) The Respondent had wrongly called or demanded the pay out of the Retention Guarantee;
(iv) The Respondent shall pay or refund to the Claimant the sum of RM14,100,000.00 being the amount of the Retention Guarantee;
(v) The Respondent shall pay to the Claimant simple interest on the sum of RM14,100,000.00 at the rate of 5% per annum from 3 March 2011 to the date of full payment of this sum;
MTD ACPI ENGINEERING BERHAD 137 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
32. MATERIAL LITIGATIONS (CONT’D)
(a) In the matter of an arbitration between MTD Construction Sdn. Bhd. and Kerajaan Malaysia (Cont’d)
On 15 October 2019, the Arbitrator has published the Final Award Save as to Costs dated 13 September 2019 declaring, directing and/or awarding in favour of the Claimant the following (Cont’d):
(vi) The costs and expenses of the Arbitration shall be paid by the Respondent to the Claimant, the quantum of which shall be determined and awarded at a later time, if required by the parties; and
(vii) All counterclaims by the Respondent are dismissed.
The Respondent has vide a letter dated 30 January 2020 to the Claimant’s solicitor, requested for the submission of the claim from the Claimant. Accordingly, the Claimant has on 13 February 2020 submitted its Submission of Final Claim to the Respondent.
As of the date of this report, the Respondent has yet to respond to the Submission of Final Claim submitted.
The Group is assessing possible course of actions on this matter and seeking advice from its solicitors on the enforcement of the Final Award. There is no financial and operational impact of the Final Award on the Group until the payment is received.
(b) Persys Engineering Sdn. Bhd. (“PESB”) v Waterize Resources Sdn. Bhd. (“Waterize”)
On 5 May 2014, PESB, a wholly-owned subsidiary of the Company, filed a Writ of Summons and Statement of Claim against Waterize for the outstanding sum of RM1,901,620.10 for works done arising from the Contract of Site Clearance, Earthworks, Retaining Walls, and Drainage Works for Cadangan Pembangunan di Atas Lot 48731 (PT 45264), Mukim Petaling, Daerah Petaling, Selangor Darul Ehsan. Waterize had also on 2 June 2014 filed a counterclaim for the sum of RM1,095,874.63 being alleged losses and damages suffered by Waterize. The Reply to Defence and Counterclaim has been filed by PESB on 27 June 2014. On 27 June 2014, PESB proceeded with filing an application for Summary Judgment.
On the hearing of the winding-up petition dated 2 November 2015, the learned Judge had granted PESB an order in terms, as follows:
(i) that Waterize be wound up;
(ii) that the Director General of Insolvency be appointed as Liquidator of Waterize; and
(iii) that the costs of this Petition of RM5,000.00 be paid out of the assets of Waterize.
PESB had then filed with the Malaysian Department of Insolvency (“MDI”) a proof of debt on 15 December 2015 and now waiting for a creditors’ meeting to be fixed by the MDI.
As of 29 June 2016, PESB has been informed by the MDI that the winding-up process is ongoing and that there is no possibility for any dividends can be declared as at 29 June 2018. The legal proceeding does not have any material impact on the operational and financial position of the Group for the financial year ended 31 March 2020.
138 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
32. MATERIAL LITIGATIONS (CONT’D)
(c) Gerbang Perdana Sdn. Bhd. v MTD ACPI Engineering Berhad and IC & E Group Sdn. Bhd.
MTD ACPI Engineering Berhad (“1st Defendant”) and IC & E Group Sdn. Bhd. (collectively “Defendants”) has claimed for compensation for the termination of a sub-contract dated 13 November 2003 for the “Design, Construction, Completion and Commissioning of Road Bridge, Rail Bridge and Associated Works at Johor Bahru, Johor – Package: Road Bridge – Land Approach (RSB 03)” entered into between Gerbang Perdana Sdn. Bhd. (“Plaintiff”) and the Defendants (“Sub- Contract”) which forms part of the contract dated 1 August 2003 entered into between the Plaintiff and the Government of Malaysia (“Government”) for the ‘Design, Construction, Completion and Commissioning of Gerbang Selatan Bersepadu Road Bridge, Rail Bridge and Associated Works at Johor Bahru, Johor’ (“Main Contract”).
The dispute arose when the Main Contract was repudiated by the Government on 12 April 2006 whereupon, the Government had ordered the Plaintiff to submit its claims for works done inclusive of the claims of any third parties aggrieved by the termination. Consequent to the Plaintiff’s submission of final claim to the Government dated 8 September 2006, the Government made an ex gratia payment of RM154,999,999.00 to the Plaintiff to cover the whole extent of the claims from the third parties claimed vide the Plaintiff (inclusive of 1st Defendant claim).
On 3 July 2009, the Plaintiff had initiated the Suit against the Defendants, seeking for, inter alia, the following:
(i) a declaration that the Plaintiff and Defendants have reached a mutual termination of the Sub-Contract on 15 February 2006;
(ii) a declaration that the Defendants’ request for mediation dated 24 April 2009 is invalid;
(iii) a declaration that the conditions of the Sub-Contract including Clause 35 cannot be enforced after the mutual termination of the Sub-Contract on 15 February 2006;
(iv) an injunction order to stop the Defendants from initiating mediation and arbitration proceedings until further order from the Court and until the disposal of the Plaintiff’s claims; and
(v) general damages, interest, costs and other relief deemed fit by the Court.
The 1st Defendant in return filed its counterclaim on 16 April 2010 against the Plaintiff for the following:
(i) damages in the amount of RM21,551,065.43, or as assessed by the Court;
(ii) further or alternatively; and
- an order that the Plaintiff account to the 1st Defendant for all moneys received by it from the Government in respect of the 1st Defendant’s works
- an order that the Plaintiff pay to the 1st Defendant all sums found to be due to the 1st Defendant.
(iii) costs and other relief deemed fit by the Court.
MTD ACPI ENGINEERING BERHAD 139 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
32. MATERIAL LITIGATIONS (CONT’D)
(c) Gerbang Perdana Sdn. Bhd. v MTD ACPI Engineering Berhad and IC & E Group Sdn. Bhd. (Cont’d)
On 24 November 2015, the Court had dismissed the Plaintiff’s claims against the 1st Defendant with costs of RM100,000.00 and the damages to be paid to the 1st Defendant are to be assessed by the Court (“Order”). The Court had effectively allowed the 1st Defendant’s counterclaim in that the Plaintiff is to account to the 1st Defendant for all moneys received by it from the Government in respect of 1st Defendant’s works and that the Plaintiff pay the 1st Defendant all sums found to be due to 1st Defendant after taking of such account.
The Plaintiff had on 28 December 2015 filed its notice of appeal against the Order to the Court of Appeal and on 2 August 2017, the Court of Appeal had dismissed the Plaintiff’s appeal with costs of RM20,000.00.
On 30 August 2017, the Plaintiff had filed a notice of motion for leave to appeal to the Federal Court against the Order and on 30 January 2018, the Federal Court had dismissed the Plaintiff’s notice of motion for leave to appeal to the Federal Court with costs of RM10,000.00.
Following the dismissal of the Plaintiff’s appeal at the Court of Appeal and Notice of Motion for Leave to appeal to the Federal Court, the Court had directed for the assessment of damages proceedings. Parties had on 26 April 2019 filed and exchanged affidavits in respect of the assessment of damages and on 22 November 2019 filed and exchanged written submissions for assessment of damages.
On 25 June 2020, the Court had delivered its decision with respect to the assessment of damages (“Assessment Order”), as follows:
(i) the Plaintiff to pay the 1st Defendant the full sum claimed by the Plaintiff on behalf of 1st Defendant from the Government, i.e. RM11,919,680.80 (“Judgment Sum”);
(ii) the Plaintiff to pay the 1st Defendant interest at 5% per annum on the Judgment Sum, from the date of the filing of the writ i.e. 3 July 2009 until full payment thereof; and
(iii) the Plaintiff to pay the 1st Defendant the costs of the assessment of damages as well as the costs for interrogatories, in the sum of RM10,000.00.
On 7 July 2020, the Plaintiff has filed a Notice of Appeal against the entire Assessment Order and consequently, the 1st Defendant has filed an appeal against paragraph (ii) of the Assessment Order which awards interest from the date of the filing of the writ, as opposed to the date the Plaintiff received the ex-gratia payment from the Government (collectively, “Assessment Appeals”).
As of the date hereof, the Court has fixed 12 August 2020 for a case management with respect to the directions for the Assessment Appeals.
There is no financial and operational impact of the Assessment Order on the Group, until the disposal of the Assessment Appeals and the payment of the Judgement Sum and interest thereof is received.
140 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
32. MATERIAL LITIGATIONS (CONT’D)
(d) SN Akmida Sdn. Bhd. v MTD Construction Sdn. Bhd.
On 8 May 2020, MTD Construction Sdn. Bhd. (“Defendant”) has terminated the appointment of SN Akmida Holdings Sdn. Bhd. (“Plaintiff”) as the nominated sub-contractor for the Package S208: Construction and Completion of Elevated Stations and Other Associated Works at Equine Park and Taman Putra Damai (“Sub-Contract”) for the Projek Mass Rapid Transit Laluan 2: Sungai Buloh - Serdang - Putrajaya (SSP) (“Project”) on the ground that the Plaintiff has failed to proceed regularly and diligently with the performance of its obligation under the Sub-Contract, persistently neglected to carry out its obligations under the Sub-Contract and failed to comply with the terms and conditions of the Sub- Contract.
By a letter dated 6 May 2020 and 12 May 2020 to Alliance Islamic Bank Berhad, the Defendant has demanded the payment of the guaranteed sum in respect of the Bank Guarantee for the Performance Bond and the Bank Guarantee for the Advance Payment Guarantee respectively provided under the Sub-Contract.
By an Originating Summons and Notice of Application both dated 12 May 2020, the Plaintiff has applied for an order for an injunction against the calling of the Bank Guarantee for the Performance Bond and on 14 May 2020, for the Advance Payment Guarantee by the Defendant.
The Court had on 14 May 2020 and 19 May 2020 issued an interim injunction order essentially restraining the Defendant from demanding the pay out of the Performance Bond and Advance Payment Guarantee respectively until 28 May 2020.
On 28 May 2020, the Court had directed that both Suit No. 36 and Suit No. 41 to be heard together, but not consolidated and further directed the parties to file its respective submissions with 1 September 2020 being fixed as the decision date.
The Court had also ordered that the interim injunction order dated 14 May 2020 and 19 May 2020 respectively be made an ad interim injunctive order to preserve the subject matter of the disputes, namely the Performance Bond and the Advance Payment Guarantee, until the final disposal and resolution of the Suit No. 36 and Suit No. 41 in the Court.
The Group is of the view that save for the orders, costs and other reliefs sought by the Plaintiff, which will materialise only if the Court rules in the Plaintiff’s favour, the litigation will not result in any immediate material financial impact on the Group as at the date of this report.
33. RELATED PARTY DISCLOSURES
(a) Identities of related parties
Parties are considered to be related to the Group if the Group 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, orwhere the Group and the party are subject to common control or common significant influence. Related parties could be individuals or other entities.
Related parties of the Group include:
(i) Alloy Consolidated Sdn. Bhd., the ultimate holding company;
(ii) MTD Capital Bhd., the immediate holding company;
(iii) Direct and indirect subsidiaries, associates or joint ventures of the ultimate and immediate holding companies;
MTD ACPI ENGINEERING BERHAD 141 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
33. RELATED PARTY DISCLOSURES (CONT’D)
(a) Identities of related parties (Cont’d)
Related parties of the Group include (Cont’d):
(iv) Direct and indirect subsidiaries as disclosed in Note 8 to the financial statements;
(v) Associates as disclosed in Note 9 to the financial statements; and
(vi) Key management personnel which comprises persons (including all Directors of the Group) having authority and responsibility for planning, directing and controlling the activities of the Group either directly and indirectly.
(b) Significant related party transactions
In addition to transactions disclosed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year:
Group 2020 2019 RM’000 RM’000
Related companies Contract revenue 47,852 26,479 Progress billings charged 39,958 29,877 Interest income 228 154 Interest expense 1,461 3,623 Internal audit fees expense 232 316 Rental income - * Rental expense 2,788 3,356
Related party Insurance expense paid 260 243
* Amount is less than RM1,000.
142 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
33. RELATED PARTY DISCLOSURES (CONT’D)
(b) Significant related party transactions (Cont’d)
In addition to transactions disclosed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year (Cont’d):
Company 2020 2019 RM’000 RM’000
Immediate holding company Internal audit fees expense 232 316 Interest expense 1,461 3,623
Subsidiaries Management fees expense 1,284 1,662 Interest expense 8,531 3,021
Related company Rental expense 1,164 1,485
Related party Insurance expense * 36
* Amount is less than RM1,000.
The related party transactions described above were carried out on agreed contractual terms and conditions and in the ordinary course of business between the related parties of the Group and the Company.
Information regarding the outstanding balances arising from related party transactions as at 31 March 2020 is disclosed in Note 11 and Note 18 to the financial statements.
(c) Compensation of key management personnel
Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the entity, directly and indirectly, including any Directors (whether executive or otherwise) of the Group and the Company.
The remuneration of Directors and other key management personnel during the financial year was as follows:
Group Company 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000
Short-term employee benefits 575 1,234 107 55 Contributions to defined contribution plan 62 113 - -
637 1,347 107 55
MTD ACPI ENGINEERING BERHAD 143 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
34. SIGNIFICANT EVENT DURING THE FINANCIAL YEAR
The World Health Organisation declared the novel coronavirus (“COVID-19”) a global pandemic on 11 March 2020. The Government of Malaysia imposed the Movement Control Order (“MCO”) on 18 March 2020 and has subsequently entered into the recovery phase of the MCO until 31 August 2020.
The extent of the financial impact on the Group and the Company is difficult to assess at the date of authorisation of financial statements due to uncertainties arising from the pandemic. To mitigate its potential risks exposure, the Group and the Company have taken and will continue to take necessary steps to safeguard and preserve their financial conditions, emphasising on liquidity management to meet their continuing financial commitments and liquidity needs of business operations.
35. SIGNIFICANT EVENT SUBSEQUENT TO THE END OF THE REPORTING PERIOD
As at the date of authorisation of the financial statements, the COVID-19 situation is still evolving and unpredictable. Consequently, the Group and the Company are unable to estimate the financial effects of COVID-19 pandemic at this juncture. The Group and the Company are actively monitoring and managing the operations of the Group and the Company to minimise any impact arising from the COVID-19 pandemic.
36. ADOPTION OF NEW MFRSs AND AMENDMENTS TO MFRSs
36.1 New MFRSs adopted during the financial year
The Group and the Company adopted the following Standards of the MFRS Framework that were issued by the Malaysian Accounting Standards Board (“MASB”) during the financial year:
Title Effective Date
MFRS 16 Leases 1 January 2019 IC Interpretation 23 Uncertainty over Income Tax Treatments 1 January 2019 Amendments to MFRS 128 Long-term Interests in Associates and Joint Ventures 1 January 2019 Amendments to MFRS 9 Prepayment Features with Negative Compensation 1 January 2019 Amendments to MFRS 3 Annual Improvements to MFRS Standards 2015 - 2017 Cycle 1 January 2019 Amendments to MFRS 11 Annual Improvements to MFRS Standards 2015 - 2017 Cycle 1 January 2019 Amendments to MFRS 112 Annual Improvements to MFRS Standards 2015 - 2017 Cycle 1 January 2019 Amendments to MFRS 123 Annual Improvements to MFRS Standards 2015 - 2017 Cycle 1 January 2019 Amendments to MFRS 119 Plan Amendment, Curtailment or Settlement 1 January 2019 Amendment to MFRS 16 Covid-19-Related Rent Concessions 1 June 2020 (early adopted)
Adoption of the above Standards did not have any material effect on the financial performance or position of the Group and of the Company except for the adoption of MFRS 16 as described in the following section.
144 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
36. ADOPTION OF NEW MFRSs AND AMENDMENTS TO MFRSs (CONT’D)
36.1 New MFRSs adopted during the financial year (Cont’d)
MFRS 16 Leases
MFRS 16 supersedes MFRS 117 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. MFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognise most leases on the financial statements.
Lessor accounting under MFRS 16 is substantially unchanged from MFRS 117. Lessors would continue to classify leases as either operating or finance leases using similar principles as in MFRS 117. Therefore, MFRS 16 does not have a material impact for leases for which the Group is the lessor.
The Group applied MFRS 16 using the modified retrospective approach, for which the cumulative effect of initial application is recognised in retained earnings as at 1 April 2019. Accordingly, the comparative information presented is not restated.
On adoption of MFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as “operating leases” under the principles of MFRS 117. These liabilities were measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate of the Group as of 1 April 2019.
In order to compute the transition impact of MFRS 16, a significant data extraction exercise was undertaken by management to summarise all property and equipment lease data such that the respective inputs could be uploaded into management’s model. The incremental borrowing rate method has been adopted where the implicit rate of interest in a lease is not readily determinable.
For leases previously classified as finance leases, the Group recognised the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right-of-use asset and the lease liability respectively at the date of initial application. The measurement principles of MFRS 16 are only applied after that date.
In applying MFRS 16 for the first time, the Group has used the following practical expedients permitted by the Standard:
(a) applying a single discount rate to a portfolio of leases with reasonably similar characteristics;
(b) relying on previous assessments on whether leases are onerous as an alternative to performing an impairment review - there were no onerous contracts as at 1 April 2019;
(c) accounting for operating leases with a remaining lease term of less than 12 months as at 1 April 2019 and do not contain a purchase option as short-term leases;
(d) excluding initial direct costs for the measurement of the right-of-use asset at the date of initial application; and
(e) using hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
MTD ACPI ENGINEERING BERHAD 145 ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
36. ADOPTION OF NEW MFRSs AND AMENDMENTS TO MFRSs (CONT’D)
36.1 New MFRSs adopted during the financial year (Cont’d)
MFRS 16 Leases (Cont’d)
On transition to MFRS 16, the Group recognised right‑of‑use assets and lease liabilities, recognising the difference in retained earnings. The impact on transition is summarised below:
As at As at 31 March 1 April 2019 Impact 2019 Group Note RM’000 RM’000 RM’000
Property, plant and equipment 133,808 (10,641) 123,167 Right-of-use assets - 10,641 10,641 Borrowings 61,352 (613) 60,739 Lease liabilities (a) - 613 613
(a) Lease liabilities are measured as follows:
Group RM’000
Operating lease commitments at 31 March 2019 as disclosed under MFRS 117 29 Recognition exemption for leases with less than 12 months of lease term at transition (29) Finance lease liabilities recognised as at 31 March 2019 613
Lease liabilities recognised at 1 April 2019 613
36.2 New MFRSs that have been issued, but only effective for annual periods beginning on or after 1 January 2020
The following are Standards of the MFRS Framework that have been issued by MASB but have not been early adopted by the Group and the Company:
Title Effective Date
Amendments to References to the Conceptual Framework in MFRS Standards 1 January 2020 Amendments to MFRS 3 Definition of a Business 1 January 2020 Amendments to MFRS 101 and MFRS 108 Definition of Material 1 January 2020 Amendments to MFRS 9, MFRS 139 and MFRS 7 Interest Rate Benchmark Reform 1 January 2020 Annual Improvements to MFRS Standards 2018 - 2020 1 January 2022 Amendments to MFRS 3 Reference to the Conceptual Framework 1 January 2022 Amendments to MFRS 116 Property, Plant and Equipment - Proceeds before Intended Use 1 January 2022 Amendments to MFRS 137 Onerous Contracts - Cost of Fulfilling a Contract 1 January 2022 Amendments to MFRS 101 Classification of Liabilities as Current and Non-current 1 January 2023
146 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notes to the Financial Statements 31 March 2020
36. ADOPTION OF NEW MFRSs AND AMENDMENTS TO MFRSs (CONT’D)
36.2 New MFRSs that have been issued, but only effective for annual periods beginning on or after 1 January 2020 (Cont’d)
The following are Standards of the MFRS Framework that have been issued by MASB but have not been early adopted by the Group and the Company (continued):
Title Effective Date
MFRS 17 Insurance Contracts 1 January 2023 Amendments to MFRS 17 Insurance Contracts 1 January 2023 Amendments to MFRS 10 and MFRS 128 Sale or Contribution of Assets between an Investor and Deferred its Associate or Joint Venture
The Group and the Company are in the process of assessing the impact of implementing these Standards since the effects would only be observable for the future financial years.
37. FINANCIAL REPORTING UPDATE
IFRIC Agenda Decision - An assessment of the lease term (IFRS 16)
The IFRS Interpretations Committee (“IFRIC”) issued a final agenda decision on 26 November 2019 regarding “Lease term and useful life of leasehold improvements (IFRS 16 and IAS 16)”.
The submission to the IFRIC raised a question pertaining the determination of the lease term of a cancellable lease or a renewable lease based on the requirements of IFRS 16.B34.
Based on the final agenda decision, the IFRIC concluded that the determination of the enforceable period of a lease and the lease term itself shall include broad economic circumstances beyond purely commercial terms.
The Group and the Company have implemented the requirements of this final agenda decision during the financial year ended 31 March 2020.
MTD ACPI ENGINEERING BERHAD 147 ANNUAL REPORT 2020 List of Properties As at 31 March 2020
Item Location Owner Description Tenure Land Built-up Approximate Net Book and area area age of Value existing use (sq ft) (sq ft) building (RM’000)
1 PTD No. 34735 Lot 9041 MTD ACPI Land Freehold 616,844 - - 6,800 Mukim of Ampangan Engineering District of Seremban Berhad Negeri Sembilan Darul Khusus
2 PTD 18415 Lot No.9019, Associated Office and Freehold 2,132,008 190,531 25 years 46,175 PTD 18416 Lot No.9020, Concrete factory PTD 18417 Lot No.9021, Products building PTD 18418 Lot No.9022 and (Malaysia) PTD 18419 Lot No.9023 Sdn. Bhd. Mukim Ampangan District of Seremban Negeri Sembilan Darul Khusus
3 Lot No.676 & 677 Associated Office and Freehold 926,098 254,307 16 years 28,555 Mukim of Jeram Batu Concrete factory District of Pontian Products building Johor Darul Takzim (Malaysia) Sdn. Bhd.
4 H.S.(M) 1273 No.P.T.8209K and Associated Office and 60-year 464,570 17,606 39 years 10,488 H.S.(D) 4418 No.P.T.14711K Concrete factory leases Mukim of Kuala Nerus Products building expiring on District of Terengganu (Malaysia) 29.06.2045 Terengganu Darul Iman Sdn. Bhd. and 13.06.2052 respectively
5 Lot 10073 (previously PT 4438) Associated Office and Freehold 2,134,483 419,381 26 years 34,397 Mukim of Batang Kali Concrete factory District of Ulu Selangor Products building Selangor Darul Ehsan (Malaysia) Sdn. Bhd.
6 A1/4A-0019 Persys Double 99-year 1,651 3,058 24 years - No17, Jalan Kenangasari 2A Engineering storey leases Bandar Sg. Buaya Sdn. Bhd. shop office expiring on 48010 Rawang 04.01.2095 Selangor Darul Ehsan
148 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 List of Properties As at 31 March 2020
Item Location Owner Description Tenure Land Built-up Approximate Net Book and area area age of Value existing use (sq ft) (sq ft) building (RM’000)
7 A1/12DS-0120 Persys Double 99-year 1,644 1,460 24 years - No. 27, Jalan Melatisari 2E Engineering storey leases Bandar Sg. Buaya Sdn. Bhd. terrace expiring on 48010 Rawang house 04.01.2095 Selangor Darul Ehsan
8 A1/16-0008 Persys One and 99-year 3,029 1,743 24 years - No.15, Jalan Inaisari 3 Engineering half storey leases Bandar Sg. Buaya Sdn. Bhd. terrace expiring on 48010 Rawang house 04.01.2095 Selangor Darul Ehsan
9 Unit B02-15 Meranti Park MTD Apartment Leasehold - 525 21 years 91 Bukit Tinggi Construction expiring in 28750 Bentong Sdn. Bhd. 2091 Pahang Darul Makmur
10 Unit C03-10 Meranti Park MTD Apartment Leasehold - 805 21 years 82 Bukit Tinggi Construction expiring in 28750 Bentong Sdn. Bhd. 2091 Pahang Darul Makmur
MTD ACPI ENGINEERING BERHAD 149 ANNUAL REPORT 2020 Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Twenty-Seventh (27th) Annual General Meeting (“AGM”) of MTD ACPI Engineering Berhad (“the Company” or “MTD ACPI”) will be held at the Registered Office of the Company at Menara MTD, 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan on Wednesday, 30 September 2020 at 9.30 a.m. for the following purposes:
AGENDA
AS ORDINARY BUSINESS
1. To receive the Audited Financial Statements for the financial year ended 31 March 2020 together with the Reports of the Directors and Auditors thereon. (Please refer to Explanatory Note 1)
2. To approve the payment of Directors’ fees and allowance of up to an aggregate amount of Ordinary Resolution 1 RM300,000 payable for the period from 1 October 2020 until the next AGM of the Company to be held in 2021. (Please refer to Explanatory Note 2)
3. To re-elect the following Directors who retire by rotation in accordance with Article 86 of the Constitution of the Company:
i. Keith George Cowling Ordinary Resolution 2 ii. Dato’ Ir. Wan Razali bin Wan Muda Ordinary Resolution 3
4. To re-appoint Messrs. BDO PLT as Auditors of the Company until the conclusion of the next AGM and Ordinary Resolution 4 t o a u t h o r i s e t h e D i re c t o r s t o fi x t h e i r re m u n e ra t i o n .
AS SPECIAL BUSINESS
To consider, and if thought fit, to pass the following Ordinary Resolutions:
5. Continuation in Office as Independent Non-Executive Director
i. “That Nik Din bin Nik Sulaiman who has served as an Independent Non-Executive Director Ordinary Resolution 5 of the Company for a cumulative term of more than nine (9) years since 31 October 2008, be and is hereby retained as an Independent Non-Executive Director of the Company until the conclusion of the next AGM of the Company.” (Please refer to Explanatory Note 3)
ii. “That Dato’ Ir. Kalid bin Alias who has served as an Independent Non-Executive Director of Ordinary Resolution 6 the Company for a cumulative term of more than twelve (12) years since 15 August 2006, be and is hereby retained as an Independent Non-Executive Director of the Company until the conclusion of the next AGM of the Company.” (Please refer to Explanatory Note 3)
150 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notice of Annual General Meeting
6. Authority for Directors to Issue Shares Pursuant to the Companies Act 2016 Ordinary Resolution 7
“That pursuant to the Companies Act 2016 (“Act”), the Constitution of the Company, the Bursa Malaysia Securities Berhad Main Market Listing Requirements and subject to the approvals of the relevant authorities, the Directors of the Company be and are hereby empowered, pursuant to Sections 75 and 76 of the Act, to issue shares in the Company at any time upon such terms and conditions, to such persons and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed ten per centum (10%) of the total number of issued shares (excluding treasury shares) of the Company for the time being and that the Directors be and are hereby also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and that such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next AGM of the Company.” (Please refer to Explanatory Note 4)
7. Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Ordinary Resolution 8 Revenue or Trading Nature
“That subject to the provisions of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, approval be given to MTD ACPI and/or its subsidiaries (“MTD ACPI Group”) to enter into recurrent related party transactions of a revenue or trading nature which are necessary for the day-to-day operations of MTD ACPI Group, with those related parties as set out in Section 2.3 of the Circular to Shareholders dated 28 August 2020, subject to the following:
a) the transactions are in the ordinary course of business on normal commercial terms which are not more favourable to the related parties than those generally available to the public; and
b) disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to this mandate during the financial year.
And That the authority conferred by this mandate shall commence immediately upon the passing of this ordinary resolution and continue to be in force until:
a) the conclusion of the next AGM of the Company at which time the authority will lapse, unless by a resolution passed at a general meeting of the Company, the authority is renewed;
b) the expiration of the period within which the next AGM is required to be held pursuant to Section 340(2) of the Companies Act 2016 (“Act”) (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or
c) revoked or varied by resolution passed by the shareholders in general meeting,
whichever is the earlier.
And That the Directors be and are hereby authorised to complete and do all such acts and things including, executing all such documents as may be required, to give effect to the transactions contemplated and/or authorised by this resolution.” (Please refer to Explanatory Note 5)
MTD ACPI ENGINEERING BERHAD 151 ANNUAL REPORT 2020 Notice of Annual General Meeting
8. Proposed Shareholders’ Mandate for Additional Recurrent Related Party Transactions of a Ordinary Resolution 9 Revenue or Trading Nature
“That subject to the provisions of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, approval be given to MTD ACPI and/or its subsidiaries (“MTD ACPI Group”) to enter into additional recurrent related party transactions of a revenue or trading nature which are necessary for the day-to-day operations of MTD ACPI Group, with those related parties as set out in Section 2.3 of the Circular to Shareholders dated 28 August 2020, subject to the following:
a) the transactions are in the ordinary course of business on normal commercial terms which are not more favourable to the related parties than those generally available to the public; and
b) disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to this mandate during the financial year.
And That the authority conferred by this mandate shall commence immediately upon the passing of this ordinary resolution and continue to be in force until:
a) the conclusion of the next AGM at which time the authority will lapse, unless by a resolution passed at a general meeting of the Company, the authority is renewed;
b) the expiration of the period within which the next AGM is required to be held pursuant to Section 340(2) of the Companies Act 2016 (“Act”) (but shall not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or
c) revoked or varied by resolution passed by the shareholders in a general meeting,
whichever is the earlier.
And That the Directors be and are hereby authorised to complete and do all such acts and things including, executing all such documents as may be required, to give effect to the transactions contemplated and/or authorised by this resolution.” (Please refer to Explanatory Note 5)
9. To transact any other ordinary business of which due notice shall have been given in accordance with the Constitution of the Company and the Companies Act 2016.
By Order of the Board
Chan Bee Kuan (SSM PC No. 202008001959) (MAICSA 7003851) Cheong Wei Ling (SSM PC No. 202008001285) (MAICSA 7009208) Company Secretaries
Selangor Darul Ehsan 28 August 2020
152 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notice of Annual General Meeting
Notes:
(a) In respect of deposited securities, only members whose names appear in the Record of Depositors on 23 September 2020 shall be eligible to attend, speak and vote at the meeting or appoint proxy to attend, speak and vote on his behalf.
(b) Every member including authorised nominees as defined under the Securities Industry (Central Depositories) Act, 1991 and Exempt Authorised Nominees which holds ordinary shares in the Company for multiple beneficial owners in one securities account (omnibus account), is entitled to appoint another person as his proxy to exercise all or any of his rights to attend, participate, speak and vote instead of him at the meeting, and such proxy need not be a member.
(c) Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his shareholding to be represented by each proxy. There shall be no restriction on the qualification of the proxy. The lodgement of proxy form will not preclude members from attending and voting in person at the meeting.
(d) The instrument appointing a proxy shall be in writing under the hand of the member or his attorney duly authorised in writing, or if the member is a corporation, shall either be executed under its common seal or under the hand of an authorised officer or attorney duly authorised.
(e) The instrument appointing a proxy must be deposited at the Registered Office of the Company at Menara MTD, 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan, not less than twenty-four (24) hours before the time set for the meeting, i.e. latest by Tuesday, 29 September 2020 at 9.30 a.m. or at any adjournment thereof and in default, the instrument of proxy shall not be treated as valid and the person so named shall not be entitled to vote in respect thereof.
(f) Registration will commence at 8.30 a.m. and will be closed once voting commences to facilitate the voting process.
(g) Pursuant to Paragraph 8.29A of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, all resolutions set out in this notice will be put to vote by way of poll.
(h) Please refer to the Administrative Guide on the precautionary measures to minimise risk of Covid-19 pandemic.
Explanatory Notes
1. Audited Financial Statements and Reports of the Directors and Auditors
The Audited Financial Statements and Reports of the Directors and Auditors thereon under Agenda 1 are laid in accordance with Section 340(1) of the Companies Act 2016 (“Act”), for discussion. This Agenda does not require the approval of the shareholders and will not be put to vote by members.
2. Ordinary Resolution 1 - Payment of Directors’ fees and allowance
The proposed ordinary resolution 1 is to seek shareholders’ approval pursuant to Section 230(1) of the Act for the payment of Directors’ fees and allowance of up to an aggregate amount of RM300,000 comprising Directors’ fees of RM234,000 and allowance of RM66,000 payable to Directors for the period from 1 October 2020 until the next AGM of the Company in 2021. Details of Directors’ fees and allowance are set out in the tables below:
Senior Non-Executive Independent Each Other Chairman Director Directors (RM) (RM) (RM)
Monthly Directors’ fee 4,000 3,500 3,000
MTD ACPI ENGINEERING BERHAD 153 ANNUAL REPORT 2020 Notice of Annual General Meeting
Explanatory Notes (Cont’d)
2. Ordinary Resolution 1 - Payment of Directors’ fees and allowance (Cont’d)
Chairman Each Member Executive of Audit of Audit Director Committee Committee (RM) (RM) (RM)
Monthly Directors’ Allowance 2,000 1,000 500
Chairman/Each Member Meeting Allowance (per meeting) (RM)
Nomination and Remuneration Committee (“NRC”) 1,000 Risk Management Committee (“RMC”) 1,000
Computation of the estimated aggregate Directors’ fees and allowance is based on the existing Board and Board Committee composition of the Company and provision for one (1) additional director, in case the appointment is required. In the event the estimated amount is insufficient due to enlarged Board size or more meetings being held by NRC or RMC, approval will be sought at the next AGM for the additional fees and allowance to meet the shortfall.
3. Ordinary Resolution 5 & 6 – Continuation in Office as Independent Director
The Malaysian Code on Corporate Governance provides that the tenure of an independent director does not exceed a cumulative term limit of nine (9) years. If the Board intends to retain an independent director beyond nine (9) years, it should justify and seek annual shareholders’ approval. In addition, if the Board continues to retain the independent director after twelve (12) years, the Board should seek annual shareholders’ approval through a two-tier voting process.
The proposed ordinary resolution 5 & 6, if passed, will allow Nik Din bin Nik Sulaiman and Dato’ Ir. Kalid bin Alias to continue to act as Independent Non-Executive Director of the Company, until the conclusion of the next AGM of the Company.
The Board through the Nomination and Remuneration Committee conducted assessment of their independence and recommended they be retained notwithstanding, they have served as independent director for a cumulative term exceeding nine (9) years based on the following justifications:
a) They fulfilled the criteria of independence set out in the Bursa Malaysia Securities Berhad Main Market Listing Requirements and Corporate Governance Guide issued by Bursa Malaysia Securities Berhad;
b) The Independent Directors’ respective background, experience, personalities and understanding of good corporate governance enable them to provide broad view and balance assessment for decision making; and
c) They continue to actively participate in the Board and Board Committee meetings, challenged and guided the management in an effective manner without compromising their independent judgement and objectivity in the best interest of the Company.
Dato’ Ir. Kalid bin Alias who has served the Company as an Independent Director for a cumulative term exceeding twelve (12) years would be subject to shareholders’ approval through a two-tier voting process i.e. Tier 1 : voting by large shareholders and Tier 2 : voting by other shareholders.
154 MTD ACPI ENGINEERING BERHAD ANNUAL REPORT 2020 Notice of Annual General Meeting
4. Ordinary Resolution 7 - Authority for Directors to Issue Shares Pursuant to the Companies Act 2016
Sections 75 and 76 of the Companies Act 2016 provides amongst others, our Directors are empowered to issue new shares in the Company at any time, up to an aggregate amount not exceeding ten per centum (10%) of the total number of issued shares of the Company (excluding treasury shares), for such purposes as our Directors deem necessary and in the best interest of the Company, without having to convene a general meeting. This authority, unless revoked or varied by the Company at a general meeting, will expire at the conclusion of the next AGM.
This mandate will provide flexibility to our Directors to undertake any corporate exercise or fund raising activities, including but not limited to placement of shares for the purpose of funding current or future investments, working capital and/or acquisitions, which involves issuance of new shares.
As at the date of this Notice, the Company has not issued any new shares pursuant to the shareholders’ mandate obtained on 5 September 2019, which will lapse upon the conclusion of this AGM.
5. Ordinary Resolution 8 & 9 - Proposed Shareholders’ Mandate for Recurrent Related Party Transactions
The proposed Ordinary Resolution 8 & 9, if approved, will allow MTD ACPI Group to enter into recurrent related party transactions of a revenue or trading nature which are necessary for the day-to-day operations of MTD ACPI Group with the related parties.
The details of the proposals are set out in the Circular to Shareholders dated 28 August 2020 and is available on the Company’s website www.mtdacpi.com.
Personal data privacy:
By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Annual General Meeting (“AGM”) of the Company and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member’s personal data by the Company (or its agents) for the purpose of the processing and administration by the Company (or its agents) of proxies and representatives appointed for the AGM (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the “Purposes”), (ii) warrants that where the member discloses the personal data of the member’s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use and disclosure by the Company (or its agents) of the personal data of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.
Statement Accompanying Notice of Annual General Meeting [Pursuant to Paragraph 8.27(2) of Bursa Malaysia Securities Berhad Main Market Listing Requirements]
Details of individuals who are standing for election as Directors (excluding Directors standing for a re-election) No individual is seeking election as a Director at the 27th AGM of the Company.
MTD ACPI ENGINEERING BERHAD 155 ANNUAL REPORT 2020 This page has been intentionally left blank. Proxy Form Number of shares held CDS Account No. MTD ACPI ENGINEERING BERHAD Registration No. 199301004099 (258836-V) (Incorporated in Malaysia)
*I/We, *NRIC No./Company No (FULL NAME IN BLOCK LETTERS AS PER NRIC/CERTIFICATE OF INCORPORATION) of Tel. No (FULL ADDRESS) being a *member/members of MTD ACPI ENGINEERING BERHAD, hereby appoint:
NRIC No
*and/or failing him/her NRIC No or failing him/her, the CHAIRMAN OF THE MEETING as *my/our proxy to vote for *me/us and on *my/our behalf at the Twenty-Seventh Annual General Meeting of MTD ACPI Engineering Berhad (“the Company”) to be held at the Registered Office of the Company at Menara MTD, 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan on Wednesday, 30 September 2020 at 9.30 a.m. and at any adjournment thereof. My/our proxy is to vote as indicated below:
(Please indicate with an “X” in the spaces provided below how you wish your vote to be cast. In the absence of specific direction, your proxy will vote or abstain from voting at his discretion)
Resolution Agenda For Against Resolution 1 Approval of payment of Directors’ fees and allowance payable for the period from 1 October 2020 until the next Annual General Meeting of the Company in 2021 Resolution 2 Re-election of Keith George Cowling as Director Resolution 3 Re-election of Dato’ Ir. Wan Razali bin Wan Muda as Director Resolution 4 Re-appointment of Messrs. BDO PLT as Auditors of the Company and authority to the Directors to fix the Auditors’ remuneration Resolution 5 Continuation in Office as Independent Director – Nik Din bin Nik Sulaiman Resolution 6 Continuation in Office as Independent Director – Dato’ Ir. Kalid bin Alias Resolution 7 Authority for Directors to Issue Shares Pursuant to the Companies Act 2016 Resolution 8 Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature Resolution 9 Shareholders’ Mandate for New Recurrent Related Party Transactions of a Revenue or Trading Nature
Date ...... ……...... For appointment of proxies, percentage of shareholdings to be represented by proxies are as follows: No. of shares Percentage Proxy 1 ...... ……...... ……...... Proxy 2 Signature of Member/Common Seal Total 100% * Delete if inapplicable
Notes: (a) In respect of deposited securities, only members whose names appear in the (e) The instrument appointing a proxy must be deposited at the Registered Office of Record of Depositors on 23 September 2020 shall be eligible to attend, speak the Company at Menara MTD, 1, Jalan Batu Caves, 68100 Batu Caves, Selangor and vote at the meeting or appoint proxy to attend, speak and vote on his behalf. Darul Ehsan, not less than twenty-four (24) hours before the time set for the (b) Every member including authorised nominees as defined under the Securities meeting, i.e. latest by Tuesday, 29 September 2020 at 9.30 a.m. or at any Industry (Central Depositories) Act, 1991 and Exempt Authorised Nominees which adjournment thereof and in default, the instrument of proxy shall not be treated holds ordinary shares in the Company for multiple beneficial owners in one as valid and the person so named shall not be entitled to vote in respect thereof. securities account (omnibus account), is entitled to appoint another person as his (f) Registration will commence at 8.30 a.m. and will be closed once voting commences proxy to exercise all or any of his rights to attend, participate, speak and vote to facilitate the voting process. instead of him at the meeting, and such proxy need not be a member. (g) Pursuant to Paragraph 8.29A of the Bursa Malaysia Securities Berhad Main (c) Where a member appoints more than one (1) proxy, the appointment shall be Market Listing Requirements, all resolutions set out in this notice will be put to invalid unless he specifies the proportions of his shareholding to be represented vote by way of poll. by each proxy. There shall be no restriction on the qualification of the proxy. The (h) Please refer to the Administrative Guide on the precautionary measures to lodgement of proxy form will not preclude members from attending and voting in minimise risk of Covid-19 pandemic. person at the meeting. (d) The instrument appointing a proxy shall be in writing under the hand of the member or his attorney duly authorised in writing, or if the member is a corporation, shall either be executed under its common seal or under the hand of an authorised officer or attorney duly authorised. Fold this flap for sealing
Then fold here
AFFIX STAMP
To: THE COMPANY SECRETARIES MTD ACPI ENGINEERING BERHAD Registration No. 199301004099 (258836-V) Menara MTD, 1, Jalan Batu Caves 68100 Batu Caves Selangor Darul Ehsan Malaysia
1st fold here