financial statement 2007
Post on 07-Apr-2018
214 Views
Preview:
TRANSCRIPT
-
8/6/2019 Financial Statement 2007
1/82
60ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
Financials t a t e m e n t s
-
8/6/2019 Financial Statement 2007
2/82
62 Directors Report
67 Balance Sheets
69 Income Statements
70 Consolidated Statement of
Changes in Equity
72 Company Statement of
Changes in Equity
73 Cash Flow Statements
75 Notes to the
Financial Statements
140 Statement by Directors
140 Statutory Declaration
141 Report of the Auditors
-
8/6/2019 Financial Statement 2007
3/82
62ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
The Directors have pleasure in presenting their report and the audited financial statements of the Group and Company for the financial year
ended 31 December 2007.
PRINCIPAL ACTIVITIES
The principal activities of the Company are investment holding and the provision of management services.
The principal activities of the Group consist of the provision of integrated drilling fluids, drilling waste management solutions, distribution of
oilfield products and services; machine shop services, design and manufacture of monorail, special purpose vehicles, urban transportation
solutions and rail solutions; provision of marine vessel transportation service; industrial and production chemicals and gas business.
There have been no significant changes in the nature of these activities during the financial year.
FINANCIAL RESULTS
Group Company
RM000 RM000
Profit for the financial year 282,155 180,653
Attributable to:
Companys equity holders 257,129 180,653
Minority interest 25,026
DIVIDENDS
The dividends on ordinary shares paid or declared by the Company since the end of the previous financial year were as follows:
RM000
In respect of the financial year ended 31 December 2006, a final gross dividend of 15%, less income tax of 27%,
paid on 20 September 2007 11,036
In respect of the financial year ended 31 December 2007, an interim gross dividend of 7.5%,
less income tax of 27% paid on 31 October 2007 5,506
16,542
The Directors now recommend the payment of a final dividend of 12.5%, less income tax of 26%, amounting to approximately RM9,298,850
in respect of the financial year ended 31 December 2007. This proposed final dividend is subject to the approval of shareholders at the
forthcoming Annual General Meeting and will be reflected in the financial statements for the financial year ending 31 December 2008 upon
approval by the shareholders.
RESERVES AND PROVISIONS
Material transfers to or from reserves or provisions during the financial year are as disclosed in the financial statements.
directors report
-
8/6/2019 Financial Statement 2007
4/82
SHARE CAPITAL
Details of movements in share capital are disclosed in Note 23(a) to the financial statements.
TREASURY SHARES
Details of the Treasury shares are set out in Note 23(b) to the financial statements.
EMPLOYEES SHARE OPTION SCHEME
The Company implemented an Employees Share Option Scheme (ESOS) on 28 April 2003 for a period of 10 years. The ESOS is governed by
the By-Laws which were approved by the shareholders on 28 March 2003.
Details of the ESOS are set out in Note 23(c) to the financial statements.
The Company has been granted an exemption by the Companies Commission of Malaysia from having to disclose the names of options
holders who were granted less than 1,000,000 options under the ESOS during the financial year. This information has been separately filed withthe Companies Commission of Malaysia.
Details of options granted during the financial year under the ESOS over the ordinary shares of RM0.10 each in the Company for option holders
with options exceeding 1,000,000 are as follows:
Number
ESOS ESOS of options
grant date price granted
RM 000
Chuah Mei Lin 20/08/2007 1.21 1,080
24/12/2007 1.21 700
Syahrunizam Samsudin 20/08/2007 1.21 1,080
24/12/2007 1.21 700
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
Significant events during the financial year are disclosed in Note 39 to the financial statements.
SIGNIFICANT EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
Significant events subsequent to the balance sheet date are disclosed in Note 40 to the financial statements.
DIRECTORS
The Directors who have held office during the period since the date of the last report are as follows:
Tan Sri Datuk Asmat bin Kamaludin
Tan Sri Nik Mohamed bin Nik Yaacob
Datuk Hamzah bin Bakar
Datuk Haron bin Siraj
Dato Mohamed Azman bin Yahya
Dato Mohammed Azlan bin Hashim
Foong Choong Hong
Sreesanthan A/L Eliathamby
Shah Hakim @ Shahzanim bin Zain
-
8/6/2019 Financial Statement 2007
5/82
64ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
DIRECTORS INTERESTS
According to the Register of Directors Shareholdings, particulars of interests of Directors who held office at the end of the financial year in
shares and options over shares in the Company are as follows:
Number of ordinary shares of RM0.10 each in the Company
At At
1.1.2007 Bought Sold 31.12.2007
000 000 000 000
Direct interest in the Company
Tan Sri Datuk Asmat bin Kamaludin 200 300 (300) 200
Datuk Haron bin Siraj 120 120
Dato Mohamed Azman bin Yahya 500 (500)
Foong Choong Hong 160 250 410
Shah Hakim @ Shahzanim bin Zain 2,089 (1,560) 529
Indirect interest in the Company
+ Dato Mohamed Azman bin Yahya 10,500 (500) 10,000
# Shah Hakim @ Shahzanim bin Zain 345,337 345,337
* Tan Sri Datuk Asmat bin Kamaludin 140 (110) 30
Number of ordinary shares of RM1.00 each in a subsidiary
At At
1.1.2007 Bought Sold 31.12.2007
000 000 000 000
Direct interest in Scomi Engineering Bhd
Shah Hakim @ Shahzanim bin Zain 100 (100)
Indirect interest in the Scomi Engineering Bhd
# Shah Hakim @ Shahzanim bin Zain 192,568 192,568
* Tan Sri Datuk Asmat bin Kamaludin 100 100
+ Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through Dato Mohamed Azman bin Yahya and his spouses direct
shareholdings in Gajahrimau Capital Sdn Bhd, of which 10,000,000 shares are held through CIMSEC Nominees (Tempatan) Sdn Bhd at the
end of the financial year.
# Deemed interested by virtue of Section 6A(4) of the Companies Act, 1965 through Shah Hakim @ Shahzanim bin Zains shareholding in
Kaspadu Sdn Bhd, which holds an interest in Scomi Group Bhd, which in turn is a substantial shareholder of Scomi Engineering Bhd.
* Deemed interested by virtue of Section 134(12)(c) of the Companies Act, 1965 as amended by the Companies (Amendment) Act, 2007
which took effect on 15 August 2007 through Tan Sri Datuk Asmat bin Kamaludins childs direct shareholding in Scomi Group Bhd.
directors report (contd.)
-
8/6/2019 Financial Statement 2007
6/82
DIRECTORS INTERESTS (CONTD.)
Number of options over ordinary shares of RM0.10 each in the Company
Exercise At Atprice 1.1.2007 Granted Exercised 31.12.2007
RM/share 000 000 000 000
Direct interest in the Company
Tan Sri Datuk Asmat bin Kamaludin 1.24 1,000 (300) 700
Tan Sri Nik Mohamed bin Nik Yaacob 1.34 600 600
Datuk Hamzah bin Bakar 1.24 600 600
Datuk Haron bin Siraj 1.24 600 600
Dato Mohamed Azman bin Yahya 1.24 600 600
Dato Mohammed Azlan bin Hashim 1.34 600 600
Foong Choong Hong 1.24 600 (250) 350
Shah Hakim @ Shahzanim bin Zain 0.17 1,357 1,357
1.12 6,000 6,000Sreesanthan A/L Eliathamby 1.21 420 420
Indirect interest in the Company
* Tan Sri Datuk Asmat bin Kamaludin 0.94 280 (140) 140
* Deemed interested by virtue of Section 134(12)(c) of the Companies Act, 1965 as amended by the Companies (Amendment) Act, 2007
which took effect on 15 August 2007 through Tan Sri Datuk Asmat bin Kamaludins childs direct shareholding in Scomi Group Bhd.
Number of options over ordinary shares of RM1.00 each in a subsidiary
Exercise At At
price 1.1.2007 Granted Exercised 31.12.2007
RM/share 000 000 000 000
Direct interest in Scomi Engineering Bhd
Shah Hakim @ Shahzanim bin Zain 1.00 2,000 2,000
By virtue of his interests in the shares and options in the Company as disclosed above, Shah Hakim @ Shahzanim bin Zain is deemed to have
interest in the shares of all its subsidiaries.
Other than as disclosed above, according to the Register of Directors Shareholdings, the Directors in office at the end of the financial year did
not hold any interest in the shares and options over shares in the Company or shares, options over shares and debentures of its related
corporations during the financial year.
DIRECTORS BENEFITS
During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object
or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company
or any other body corporate, except for options over shares granted by the Company and a subsidiary, Scomi Engineering Bhd, to eligible
employees including certain Directors of the Company pursuant to the Companys and Scomi Engineering Bhds respective Employees Share
Option Schemes.
Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than Directors
remuneration as disclosed in Note 31 to the financial statements) by reason of a contract made by the Company or a related corporation with
the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in
Note 36 to the financial statements.
-
8/6/2019 Financial Statement 2007
7/82
66ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS
Before the income statements and balance sheets were made out, the Directors took reasonable steps:
(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debtsand satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts;
and
(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown
in the accounting records of the Group and Company had been written down to an amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:
(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements
of the Group and Company inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements of the Group and Company misleading; or
(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and Company
misleading or inappropriate.
No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end
of the financial year which, in the opinion of the Directors, will or may affect the ability of the Group or Company to meet their obligations
when they fall due.
At the date of this report, there does not exist:
(a) any charge on the assets of the Group or Company which has arisen since the end of the financial year which secures the liability of any
other person; or
(b) any contingent liability of the Group or Company which has arisen since the end of the financial year.
At the date of this report, 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 misleading.
In the opinion of the Directors:
(a) other than as disclosed in Notes 39 and 43 to the financial statements, the results of the operations of the Group and Company during
the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and
(b) other than as disclosed in Note 40 to the financial statements, there has not arisen in the interval between the end of the financial year
and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the
operations of the Group or Company for the financial year in which this report is made.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
Signed on behalf of the Board of Directors in accordance with their resolution dated 30 April 2008.
TAN SRI DATUK ASMAT BIN KAMALUDIN SHAH HAKIM @ SHAHZANIM BIN ZAIN
CHAIRMAN CHIEF EXECUTIVE OFFICER
directors report (contd.)
-
8/6/2019 Financial Statement 2007
8/82
Group Company
Note 2007 2006 2007 2006
Restated
RM000 RM000 RM000 RM000
NON-CURRENT ASSETS
Property, plant and equipment 5 524,883 409,319 2,234 1,731
Intangible assets 6 506,242 552,888
Investment properties 7 1,638 1,782
Prepaid land lease payments 8 7,604 4,332
Investments in subsidiaries 9 579,978 654,852
Investments in associates 10 357,046 367,818 360,124 360,124
Investments in jointly controlled entities 11 19 19
Amount due from a jointly controlled entity 12 5,171
Other investments 13 1,330 990
Deferred tax assets 26 41,521 16,729
Derivative financial instruments 14 19,378
1,459,661 1,359,048 942,336 1,016,707
CURRENT ASSETS
Inventories 15 327,307 294,454
Receivables, deposits and prepayments 16 733,480 624,273 64,920 660,041
Tax recoverable 13,810 7,161 4,888 2,253
Short term investment 17 700 7,750
Short term deposits, cash and bank balances 18 156,709 300,787 18,484 11,400
1,232,006 1,234,425 88,292 673,694
Non-current assets classified as held for sale 34 15,823
1,247,829 1,234,425 88,292 673,694
LESS: CURRENT LIABILITIES
Payables 20 578,748 484,279 71,689 633,623
Borrowings 21 156,348 245,865 160 84,773
Provision for redundancy 22 2,502 3,304
Current tax liabilities 40,529 39,728
778,127 773,176 71,849 718,396
Liabilities associated with assets classif ied as held for sale 34 10,523
788,650 773,176 71,849 718,396
NET CURRENT ASSETS/(LIABILITIES) 459,179 461,249 16,443 (44,702)
1,918,840 1,820,297 958,779 972,005
balance sheets as at 31 december 2007
-
8/6/2019 Financial Statement 2007
9/82
Group Company
Note 2007 2006 2007 2006
Restated
RM000 RM000 RM000 RM000
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY
HOLDERS OF THE COMPANY
Share capital 23 101,971 100,535 101,971 100,535
Share premium 24 242,929 233,823 242,929 233,823
Treasury shares 23 (18,694) (3,364) (18,694) (3,364)
Other reserves (76,354) (45,964) 12,864 9,498
Retained earnings 552,074 315,215 303,300 139,189
Equity and reserves attributable to the Companys
equity holders 801,926 600,245 642,370 479,681
Minority interest 146,349 44,622
TOTAL EQUITY AND RESERVES 948,275 644,867 642,370 479,681
NON-CURRENT LIABILITIES
Payables 20 67,358 76,045 67,358 67,236
Borrowings 21 890,535 1,084,882 248,890 424,927
Provision for redundancy 22 2,192
Provision for retirement benefits 25 3,982 4,162
Deferred tax liabilities 26 8,690 8,149 161 161
970,565 1,175,430 316,409 492,324
1,918,840 1,820,297 958,779 972,005
The notes set out on pages 75 to 139 form an integral part of, and should be read in conjunction with, these financial statements.
68ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
balance sheets as at 31 december 2007 (contd.)
-
8/6/2019 Financial Statement 2007
10/82
Group Company
Note 2007 2006 2007 2006
Restated
RM000 RM000 RM000 RM000
Revenue 27 1,955,530 1,577,495 33,118 52,916
Cost of sales (1,399,212) (1,126,508)
Gross profit 556,318 450,987 33,118 52,916
Other operating income 167,490 28,573 229,638 166,225
Administrative expenses (226,648) (176,713) (33,675) (25,416)
Selling and distribution expenses (128,787) (125,992)
Other operating expenses (17,581) (7,782) (22,771) (12,474)
Finance cost 29 (87,946) (78,207) (29,174) (33,103)
Share of results of associates 23,570 30,084
Share of results of jointly controlled entities (228)
Profit before taxation 28 286,416 120,722 177,136 148,148
Taxation 30 (4,261) (12,982) 3,517 (7,505)
Profit for the financial year 282,155 107,740 180,653 140,643
Attributable to:
Companys equity holders 257,129 92,414 180,653 140,643
Minority interest 25,026 15,326
Profit for the financial year 282,155 107,740 180,653 140,643
Group
Note 2007 2006
Restated
sen sen
Earnings per ordinary share of RM0.10 each attributable to the Companys equity holders: 32
Basic 25.59 9.29
Fully diluted 24.79 9.08
The notes set out on pages 75 to 139 form an integral part of, and should be read in conjunction with, these financial statements.
income statements for the financial year ended 31 december 2007
-
8/6/2019 Financial Statement 2007
11/82
70ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
E xchange Share
Share Share Treasury fluctuation option Hedge Retained Minority Total
Group Note capital premium shares reserve reserve reserve earnings Total interest equityRM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
At 1 January 2007
as previously reported 100,535 233,823 (3,364) (57,881) 11,917 307,346 592,376 44,622 636,998
prior year adjustment 43(d) 7,869 7,869 7,869
as restated 100,535 233,823 (3,364) (57,881) 11,917 315,215 600,245 44,622 644,867
Currency translation differences
arising during the year
subsidiaries (1,867) (1,867) (3,556) (5,423)
associates (23,287) (23,287) (23,287)
Cash flow hedges: Fair value gains 14,564 14,564 14,564
Transfer to income statement (27,213) (27,213) (27,213)
Net loss recognised directly
in equity (25,154) (12,649) (37,803) (3,556) (41,359)
Profit for the financial year 257,129 257,129 25,026 282,155
Total recognised (loss)/income
for the financial year (25,154) (12,649) 257,129 219,326 21,470 240,796
Share options:
proceeds from shares issued 23, 24 1,436 6,950 8,386 8,386
value of employee services 23(d) 6,631 6,631 6,631 transfer upon exercise 23(d) 2,156 (3,005) (849) 849
Purchase of Treasury shares 23(b) (15,330) (15,330) (15,330)
Share of reserves in
subsidiaries and associates 435 3,352 (3,728) 59 (1,397) (1,338)
Dilution of interest in
subsidiaries due to share
options exercised 4,416 4,416
Other dilution (net) of
interest in subsidiaries 37(a) 78,842 78,842
Dividend 33 (16,542) (16,542) (2,453) (18,995)
At 31 December 2007 101,971 242,929 (18,694) (83,035) 15,978 (9,297) 552,074 801,926 146,349 948,275
consolidated statement of changes in equityfor the financial year ended 31 december 2007
-
8/6/2019 Financial Statement 2007
12/82
E xchange Share
Share Share Treasury fluctuation option Retained Minority Total
Group Note capital premium shares reserve r eserve earnings Total interest equityRM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
At 1 January 2006 99,208 231,748 (13,888) 6,028 227,129 550,225 41,136 591,361
Net loss recognised directly in equity
currency translation differences (43,993) (43,993) (43,993)
Profit for the financial year 92,414 92,414 15,326 107,740
Total recognised (loss)/income for the
financial year (43,993) 92,414 48,421 15,326 63,747
Share options:
proceeds from shares issued 23, 24 1,327 1,737 3,064 1,322 4,386 value of employee services 23(d) 6,808 6,808 6,808
transfer upon exercise 23(d) 338 (637) (299) 299
Purchase of Treasury shares 23(b) (3,364) (3,364) (3,364)
Share of reserves in subsidiaries
and associates (282) (282) (509) (791)
Acquisition of subsidiaries 37(c) 14,919 14,919
Accretion of interest in subsidiaries 37(c) (27,871) (27,871)
Dividend 33 (4,328) (4,328) (4,328)
At 31 December 2006 100,535 233,823 (3,364) (57,881) 11,917 315,215 600,245 44,622 644,867
The notes set out on pages 75 to 139 form an integral part of, and should be read in conjunction with, these financial statements.
-
8/6/2019 Financial Statement 2007
13/82
72ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
Distributable
Share
Share Share Treasury option Retained
Note capital premium shares reserve earnings TotalRM000 RM000 RM000 RM000 RM000 RM000
Company
At 1 January 2007 100,535 233,823 (3,364) 9,498 139,189 479,681
Profit for the year 180,653 180,653
Total recognised income for the
financial year 180,653 180,653
Share options:
proceeds from shares issued 23, 24 1,436 6,950 8,386
value of employees services 23(d) 5,522 5,522
transfer upon exercise 23(d), 24 2,156 (2,156)
Purchase of treasury shares 23(b) (15,330) (15,330)
Dividend 33 (16,542) (16,542)
At 31 December 2007 101,971 242,929 (18,694) 12,864 303,300 642,370
At 1 January 2006 99,208 231,748 6,028 2,874 339,858
Profit for the year 140,643 140,643
Total recognised income for the
financial year 140,643 140,643
Share options:
proceeds from share issued 23, 24 1,327 1,737 3,064
value of employees services 23(d) 3,808 3,808
transfer upon exercise 23(d), 24 338 (338)
Purchase of treasury shares 23(b) (3,364) (3,364)
Dividend 33 (4,328) (4,328)
At 31 December 2006 100,535 233,823 (3,364) 9,498 139,189 479,681
The notes set out on pages 75 to 139 form an integral part of, and should be read in conjunction with, these financial statements.
company statement of changes in equityfor the financial year ended 31 december 2007
-
8/6/2019 Financial Statement 2007
14/82
Group Company
Note 2007 2006 2007 2006
Restated
RM000 RM000 RM000 RM000
CASH FLOWS FROM OPERATING ACTIVITES
Profit before taxation 286,416 120,722 177,136 148,148
Adjustments for:
Depreciation
property, plant and equipment 5 65,842 53,839 1,101 981
investment properties 7 145 145
Amortisation
intangible assets 6 218 216
prepaid rent lease payment 8 710
Impairment 6 375 Allowance for doubtful debts 28 3,271 3,650
Allowance for obsolete stocks 28 701 1,992
Inventories written down 28 209
Unrealised gain on foreign exchange 28 (8,576) (16,285) (4,348) (5,293)
Gain on disposal of property, plant and equipment 28 (1,353) (1,347)
Write back of investment losses 28 (340)
Property, plant and equipment written off 28 2
Gain on dilution of interest in/disposal of
subsidiary companies 28 (140,046) (218,039) (159,198)
Provision for profit guarantee 28 22,771 8,500
Provision for redundancy 28 855 1,939
Provision for retirement benefits 28 353 1,950
Share of profit in associated companies (23,570) (30,084) Share of loss in jointly controlled entity 228
Share option expense 23(d) 6,631 6,808 2,156 3,410
Financing costs 29 87,946 78,207 29,174 33,103
Interest income 28 (6,032) (4,009) (1,637) (963)
Dividend income 28 (17,516) (34,188)
Operating cash flows before working capital changes 273,380 218,348 (9,202) (5,500)
Changes in working capital:
Increase in inventories (33,764) (90,624)
(Increase)/decrease in receivables, deposits and prepayments (108,340) (185,171) 10,982 (1,529)
Increase/(decrease) in payables 105,709 141,336 (22,414) (1,649)
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from/(used in) operations 236,985 83,889 (20,634) (8,678)
Tax (paid)/refund (37,379) (16,366) 882 (7,721)
Redundancy paid (3,920) (5,354)
Retirement benefits paid (250) (1,037)
Net cash generated from/(used in) operating activities 195,436 61,132 (19,752) (16,399)
cash flow statements for the financial year ended 31 december 2007
-
8/6/2019 Financial Statement 2007
15/82
74ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
Group Company
Note 2007 2006 2007 2006
Restated
RM000 RM000 RM000 RM000
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in an associated company (124)
Additional investment in subsidiaries (31,508) (71,692) (12,377) (272,989)
Proceeds from dilution on interest in/disposal of
subsidiaries companies 308,990 342,533 164,250
Purchase of property, plant and equipment (203,998) (102,844) (1,604) (1,227)
Proceeds from disposal of property, plant and equipment 3,748 6,143
Investment in a jointly controlled entity (141)
Proceeds from sale/(purchase) of other investments 7,050 (8,113)
Additions to intangible assets 6 (15,011) (1,576)
Decrease in amount due from joint venture
Repayment of other payables (25,427) (4,586) (16,474)
Dividend received 28 11,739 6,184 17,516 6,184
Interest received 28 6,032 4,009 1,637 963Prepayment of land lease 8 (4,047) (159)
Net cash generated from/(used in) investing activities 57,568 (172,775) 331,231 (102,943)
CASH FLOWS FROM FINANCING ACTIVITIES
Treasury shares 23(b) (15,330) (3,364) (15,330) (3,364)
Issue of share capital arising from the exercise of ESOS 23(a), 24 8,386 3,064 8,386 3,064
Subsidiarys issuance of share capital from the exercise
of ESOS 4,416 1,324
Proceeds from bank borrowings 27,288 825,133 159,954
Repayment of bank borrowings (304,675) (472,222) (260,650) (28,547)
Interest paid on borrowings (78,130) (71,365) (20,259) (22,608)
Dividends paid (16,542) (4,328) (16,542) (4,328)
(Increase)/decrease in short-term deposits pledged as security (5,960) (4,871) 474 12,869
Dividend paid to minority shareholders of subsidiaries (2,453)
Net cash (used in)/generated from financing activities (383,000) 273,371 (303,921) 117,040
NET (DECREASE)/INCREASE IN CASH AND
CASH EQUIVALENTS (129,996) 161,728 7,558 (2,302)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
FINANCIAL YEAR 217,879 58,160 5,469 7,771
CURRENCY TRANSLATION DIFFERENCES (13,197) (2,009)
CASH AND CASH EQUIVALENTS AT END OF
FINANCIAL YEAR 74,686 217,879 13,027 5,469
CASH AND CASH EQUIVALENTS COMPRISE:Short term deposits with licensed banks 18 55,875 196,087 15,004 5,269
Cash and bank balances 18 100,834 104,700 3,480 6,131
Bank overdrafts 21 (50,428) (57,037)
106,281 243,750 18,484 11,400
Add: Cash and cash equivalents of disposal group
held for sale 34 236
Less: Short-term deposits pledged as security 18 (31,831) (25,871) (5,457) (5,931)
74,686 217,879 13,027 5,469
The notes set out on pages 75 to 139 form an integral part of, and should be read in conjunction with, these financial statements.
cash flow statements for the financial year ended 31 december 2007 (contd.)
-
8/6/2019 Financial Statement 2007
16/82
1 PRINCIPAL ACTIVITIES
The principal activities of the Company are investment holding and the provision of management services.
The principal activities of the Group consist of the provision of integrated drilling fluids, drilling waste management solutions, distribution
of oilfield products and services; machine shop services, design and manufacture of monorail, special purpose vehicles, urban
transportation solutions and rail solutions; provision of marine vessel transportation service; industrial and production chemicals and gas
business.
There have been no significant changes in the nature of these activities during the financial year.
2 BASIS OF ACCOUNTING
The financial statements of the Group and Company have been prepared under the historical cost convention except as disclosed in the
summary of significant accounting policies. The financial statements comply with Financial Reporting Standards, the Malaysian
Accounting Standards Board (MASB) Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the
provisions of the Companies Act, 1965.
The preparation of financial statements in compliance with the MASB Approved Accounting Standards in Malaysia for Entities Other than
Private Entities requires the Directors to use certain critical accounting estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the financial year. It also requires Directors to exercise their judgement in the process of applying the
Groups accounting policies. Although these estimates and judgement are based on the Directors best knowledge of current events and
actions, actual results may differ.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in Note 42 to the financial statements.
During the financial year, the Directors of the Group adopted the following Financing Reporting Standards (FRS) issued by the MASB:
(a) Standards and amendments to published standards that are effective and have been adopted The new accounting standards and amendments to published standards that are effective for the Groups financial year ended
31 December 2007 are as follows:
FRS 6 Exploration for and Evaluation of Mineral Resources
FRS 117 Leases
FRS 124 Related Party Disclosures
FRS 6 is not relevant to the Groups operations as the Group does not carry out exploration activities. The effects of the adoption
of FRS 117 and FRS 124 have been disclosed in Note 43.
(b) Standards and amendments to published standard that is early adopted
The Group has adopted the following standard with effect from 1 January 2007 although this standard only requires application
with effect from the financial period commencing on or after 1 July 2007:
FRS 112 Income Taxes. This revised standard has removed the requirements that prohibit the recognition of deferred tax on
reinvestment allowances or other allowances in excess of capital allowances.
A summary of the impact of this new accounting standard to the financial statements of the Group is set out in Note 43.
notes to the financial statements for the financial year ended 31 december 2007
-
8/6/2019 Financial Statement 2007
17/82
76ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
2 BASIS OF ACCOUNTING (CONTD.)
(c) Standards, amendments to published standards and interpretations to existing standards that are not yet effective and have
not been early adopted
The new standards, amendments to published standards and interpretations that are mandatory for the Groups financial periods
beginning on or after 1 January 2008, but which the Group has not early adopted, are as follows:
FRS 107 Cash Flow Statements. This revised standard has no significant changes as compared to the original standard.
FRS 111 Construction Contracts. This revised standard has no significant changes as compared to the original standard.
FRS 118 Revenue. This revised standard has no significant changes as compared to the original standard.
FRS 120 Accounting for Government Grants and Disclosure of Government Assistance. This revised standard allows the
alternative treatment of recording non-monetary government grant at nominal amount on initial recognition.
Amendment to FRS 121 The Effects of Changes in Foreign Exchange Rates Net Investment in a Foreign Operations. This
amendment requires exchange differences on monetary items that form part of the net investment in a foreign operation to be
recognised in equity instead of in profit or loss regardless of the currency in which these items are denominated in.
FRS 134 Interim Financial Reporting. This revised standard has no significant changes as compared to the original standard.
FRS 137 Provisions, Contingent Liabilities and Contingent Assets. This revised standard has no significant changes as compared
to the original standard.
FRS 139 Financial Instruments: Recognition and Measurement. This new standard establishes principles for recognising and
measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. Other than hedge
accounting which has been adopted by the Group during the last financial year, the Group will apply this standard when
effective.
IC Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities. This interpretation deals with
changes in the estimated timing or amount of the outflow of resources required to settle the obligation, or a change in the
discount rate.
IC Interpretation 2 Members Shares in Co-operative Entities and Similar Instruments. This interpretation deals with liabilities or
equity classification of financial instruments which give the holder the right to request redemption, but subject to limits on
whether it will be redeemed.
IC Interpretation 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds. This
interpretation deals with accounting in the financial statements of a contributor for its interests arising from decommissioning
funds.
IC Interpretation 6 Liabilities arising from Participating in a Specific Market-Waste Electrical and Electronic Equipment. This
interpretation provides guidance on the recognition, in the financial statements of producers, of liabilities for waste
management under EU Directive in respect of sales of historical household equipment.
IC Interpretation 7 Applying the Restatement Approach under the FRS 1292004 Financial Reporting in Hyperinflationary
Economies. This interpretation provides guidance on how to apply the requirement of FRS 129 in a reporting period in which
an entity identifies the existence of hyperinflation in the economy of its functional currency, when that economy was not
hyperinflationary in the prior period.
IC Interpretation 8 Scope of FRS 2. This Interpretation clarifies that FRS 2 Share-based payment applies even in the absence of
specifically identifiable goods or services.
The above standards, amendments to published standards and interpretations to existing standards that are not yet effective are
not expected to have a significant impact on the financial statements of the Group and the Company.
The effective date for FRS 139 Financial Instruments: Recognition and Measurement has yet to be determined by the MASB. Entities
are exempted from disclosing the impact of FRS 139 prior to its effective date.
notes to the financial statements for the financial year ended 31 december 2007 (contd.)
-
8/6/2019 Financial Statement 2007
18/82
3 GENERAL INFORMATION
The Company is a public limited liability company, incorporated and domiciled in Malaysia. The Company is listed on the Main Board of
Bursa Malaysia Securities Berhad.
The address of the registered office of the Company is Suite 5.03, 5th Floor, Wisma Chase Perdana, Off Jalan Semantan, Damansara
Heights, 50490 Kuala Lumpur.
The principal place of business of the Company is located at Suite 10.2 10.3, 10th Floor, Wisma Chase Perdana, Off Jalan Semantan,
Damansara Heights, 50490 Kuala Lumpur.
4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unless otherwise stated, the following accounting policies have been used consistently in dealing with items that are considered material
in relation to the financial statements.
4.1 Basis of consolidation
The consolidated financial statements incorporate the audited financial statements of the Company and its subsidiaries made up to
the end of the financial year.
Subsidiaries are those corporations, partnerships or other entities (including special purpose entities) in which the Group has power
to exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying a
shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are consolidated using the purchase method of accounting. Under the purchase method of accounting, subsidiaries are
fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control
ceases. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange, plus costs directly attributable to the acquisition.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the
fair value of the Groups share of the identifiable net assets required is recorded as goodwill. If the cost of acquisition is less than
the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. See
accounting policy Note 4.5(iii) on goodwill on consolidation.
The Group has taken advantage of the exemption provided by FRS 3 Business Combinations to apply the Standard prospectively.
Accordingly, business combinations entered into prior to the effective date have not been restated to comply with this Standard.
Intragroup transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses
are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
Minority interest represents the portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are
not owned, directly or indirectly through subsidiaries, by the parent. It is measured at the minorities share of the fair value of the
subsidiaries identifiable assets and liabilities at the acquisition date and the minorities share of changes in the subsidiaries equity
since that date.
-
8/6/2019 Financial Statement 2007
19/82
78ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
4.1 Basis of consolidation (contd.)
Where more than one exchange transaction is involved, any adjustment to the fair values of the subsidiarys identifiable assets,
liabilities and contingent liabilities relating to previously held interests of the Group is accounted for as a revaluation.
The gain or loss on disposal of a subsidiary which is the difference between net disposal proceeds and the Groups share of its net
assets as of the date of disposal including the cumulative amount of any exchange differences that relate to the subsidiary, is
recognised in the consolidated income statement.
4.2 Transactions with minority interest
The Group applies a policy of treating transactions with minority interest as transactions with parties external to the Group.
Disposals to minority interest result in gains and losses for the Group that are recorded in the income statement. Purchases from
minority interest result in goodwill, being the difference between any consideration paid and the relevant share acquired of the
carrying value of net assets of the subsidiary.
4.3 Investments in associates
Associates are those corporations, partnerships or other entities in which the Group exercises significant influence, but which it does
not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Significant influence is the power
to participate in the financial and operating policy decisions of the associates but not the power to exercise control over those
policies.
Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Groups
investments in associates include goodwill identified on acquisition, net of any accumulated impairment losses. See accounting
policy Note 4.6 on impairment of non-financial assets.
The Groups share of its associates post-acquisition profits or losses is recognised in the income statement, and its share of post-
acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the
carrying amount of the investment. When the Groups share of losses in an associate equals or exceeds its interest in the associate,
including any other unsecured receivables, the Groups interest is reduced to nil and recognition of further losses is discontinued
except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Groups interest in the
associates; unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred.
Where necessary, in applying the equity method, adjustments are made to the financial statements of associates to ensure
consistency of accounting policies with those of the Group.
Dilution gains and losses in associates are recognised in the income statement.
4.4 Investments in jointly controlled entities
Jointly controlled entities are corporations, partnerships or other entities over which there is contractually agreed sharing of control
by the Group with one or more parties where the strategic financial and operating decisions relating to the entities require
unanimous consent of the parties sharing control.
The Groups interest in jointly controlled entities is accounted for in the consolidated financial statements by the equity method of
accounting. Equity accounting involves recognising the Groups share of the post-acquisition results of jointly controlled entities in
the income statement and its share of post-acquisition movements within reserves in reserves. The cumulative post-acquisition
movements are adjusted against the cost of the investment and includes goodwill on acquisition, net of accumulated impairment
losses. See accounting policy Note 4.6 on impairment of non-financial assets.
notes to the financial statements for the financial year ended 31 december 2007 (contd.)
-
8/6/2019 Financial Statement 2007
20/82
4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
4.4 Investments in jointly controlled entities (contd.)
The Group recognises the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to
the other venturers. The Group does not recognise its share of profits or losses from the joint venture that result from the purchase
of assets by the Group from the joint venture until it resells the assets to an independent party. However, a loss on the transaction
is recognised immediately if the loss provides evidence of a reduction in the net realisable value of current assets or an impairment
loss.
Where necessary, adjustments have been made to the financial statements of jointly controlled entities to ensure consistency of
accounting policies with those of the Group.
4.5 Intangible assets
(i) Patents
Patent rights are stated at cost less accumulated impairment losses. These costs are amortised on a straight-line basis over the
useful economic life of the patent rights or over 20 years, whichever is lower.
(ii) Research and development
Research expenditure is recognised as an expense when incurred. Costs incurred on development projects (relating to the
design and testing of new or improved products) are recognised as intangible assets when the following criteria are fulfilled:
(a) it is technically feasible to complete the intangible asset so that it will be available for use or sale;
(b) management intends to complete the intangible asset and use or sell it;
(c) there is an ability to use or sell the intangible asset;
(d) it can be demonstrated how the intangible asset will generate probable future economic benefits;
(e) adequate technical, financial and other resources to complete the development and to use or sell the intangible asset
are available; and
(f) the expenditure attributable to the intangible asset during its development can be reliably measured.
Other development expenditure that do not meet these criteria are recognised as an expense when incurred. Development
costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised development
costs are recorded as intangible assets and amortised from the point at which the asset is ready for use on a straight-line basis
over its useful life, not exceeding five years.
Development assets are tested for impairment annually, in accordance with FRS 136 Impairment of Assets. See accounting
policy Note 4.6 on impairment of non-financial assets.
(i ii) Goodwill
Goodwill represents the excess of the purchase consideration over the fair value of the Groups share of the identifiable net
assets of subsidiaries, jointly controlled entities and associates at the date of acquisition. Goodwill is tested annually for
impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Negative
goodwill is recognised immediately in the income statement. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-
generating units or groups of cash-generating units that are expected to benefit from synergies of the business combination
in which the goodwill arose. Each of those cash-generating units represents the Groups investment in each primary reporting
segment (Note 38).
In respect of acquisitions of joint ventures and associates, the carrying amount of goodwill is included in the carrying amount
of the investment in joint ventures and associates respectively. Such goodwill is also tested for impairment as part of the
overall balance.
-
8/6/2019 Financial Statement 2007
21/82
80ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
4.6 Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever event or changes in cirumstances indicate that the carrying amount
may not be recoverable. Impairment is measured by comparing the carrying value of an asset with its recoverable amount. An
impairment loss is recognised for the amount by which the carrying amount may not be recoverable. Recoverable amount is the
higher of net realisable value and value in use, which is measured by reference to discounted future cash flows. Recoverable
amounts are estimated for individual assets or, if it is not possible, for the relevant cash generating units.
Impairment losses on goodwill are not reversed. Non-financial assets other than goodwill that suffered an impairment are reviewed
for possible reversal of the impairment at each reporting date.
An impairment loss is charged to the income statement immediately. Any subsequent increase in the recoverable amount of an asset
is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that
would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is
recognised in the income statement immediately.
4.7 Investments
Investments in subsidiaries, jointly controlled entities and associates are shown at cost less accumulated impairment losses. Where
an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its
recoverable amount. See accounting policy Note 4.6 on impairment of non-financial assets.
Investments in other non-current investments are shown at cost and an allowance for diminution in value is made where, in the
opinion of the Directors, there is a decline other than temporary in the value of such investments. Where there has been a decline
other than temporary in the value of an investment, such a decline is recognised as an expense in the period in which the decline
is identified.
On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged/credited to the
income statement.
4.8 Property, plant and equipment
Property, plant and equipment, other than freehold land and capital work-in-progress, are stated at cost less accumulated
depreciation or amortisation and impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition
of the items.
Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance costs are charged to the
income statement during the financial year in which they are incurred.
Freehold land is not amortised as it has an infinite life. Capital work-in-progress is stated at cost. Expenditure relating to capital work-
in-progress is capitalised when incurred and will be depreciated only when they are available for intended use.
notes to the financial statements for the financial year ended 31 december 2007 (contd.)
-
8/6/2019 Financial Statement 2007
22/82
4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
4.8 Property, plant and equipment (contd.)
Other property, plant and equipment are depreciated on a straight line basis calculated to write off the cost of the assets to their
residual values over their estimated useful lives. The principal annual rates used for this purpose are as follows:
Freehold buildings 2 20%
Leasehold buildings 2 331/3%
Tools, plant and machinery 8 1/3 20%
Office equipment, fittings and computers 20 331/3%
Motor vehicles 20 331/3%
Vessels 4%
Monorail test track 31/3%
Renovation 331/3%
Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each balance sheet date.
At each balance sheet date, the Group assesses whether there is any indication of impairment. Where an indication of impairmentexists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount. See accounting policy
Note 4.6 on impairment of non-financial assets.
When property, plant and equipment are disposed of, the resultant gain or loss on disposal is determined by comparing the
disposal proceeds with the carrying amount and is included in the income statement.
4.9 Investment properties
Investment properties, principally comprising freehold office buildings, are held for long term rental yields or for capital appreciation
or both, and are not occupied by the Group. Investment properties are carried at cost less any accumulated depreciation and
impairment losses. Investment properties are depreciated on a straight line basis to write off the costs of the assets to their residual
values over their estimated useful life of 20 years.
On disposal of an investment property, or when it is permanently withdrawn from use and no future economic benefits areexpected from its disposal, it is derecognised (eliminated from the balance sheet). The difference between the net disposal proceeds
and the carrying amounts is recognised in profit or loss in the period of the retirement or disposal.
4.10 Receivables
Trade and other receivables are carried at invoiced amount less allowance for doubtful debts. Bad debts are written off in the period
in which they are identified. Allowance for doubtful debts is determined based on estimates of probable losses which may arise
from non-collection of receivables upon review of all material outstanding amounts at the balance sheet date.
4.11 Assets acquired under lease arrangements
Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified
as finance leases.
Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property and the presentvalue of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve
a period constant rate of interest on the balance outstanding. The corresponding rental obligations, net of finance charges, are
included in borrowings. The interest element of the finance charge is charged to income statement over the lease period so as to
achieve a constant periodic rate of interest on the remaining balance of the liability for each period. Property, plant and equipment
acquired under finance lease arrangements are depreciated over the shorter of the estimated useful life of the asset and the lease
term.
-
8/6/2019 Financial Statement 2007
23/82
82ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
4.11 Assets acquired under lease arrangements (contd.)
Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Lease rental payments in respect of operating leases (net of any incentives received from the lessor) are charged
to the income statement on the straight line basis over the lease term.
4.12 Assets acquired under hire purchase financing
Assets acquired under hire purchase financing are included in property, plant and equipment and are depreciated over their useful
lives. Outstanding obligations, after deducting attributable finance expenses, are included as liabilities in the financial statements.
Finance expenses are charged to the income statement on a straight line basis over the period of financing.
4.13 Prepaid land lease payment
Leasehold land that normally has a finite economic life and title is not expected to pass to the lessee by the end of the lease term
is treated as an operating lease. The payment made on entering into or acquiring a leasehold land is accounted as prepaid land
lease payment that is amortised over the lease term in accordance with the pattern of benefits provided.
The Group had previously classified the prepaid land lease payment within its property, plant and equipment. On adoption of FRS
117, Leases, the Group treats such a lease as an operating lease, with the unamortised carrying amount classified as prepaid land
lease payment.
The prepaid lease payments are amortised evenly to the income statement over the respective lease terms of the land which range
from 7 to 999 years.
4.14 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average or first-in-first-out
basis.
For work-in-progress and manufactured inventories, cost consists of direct materials, incidental costs in bringing the inventories to
their present location, direct labour and an appropriate proportion of fixed and variable manufacturing overheads (based on normal
operating capacity).
Net realisable value is the estimated selling price in the ordinary course of business less the costs of completion and applicable
variable selling expenses.
4.15 Foreign currencies
(a) Functional and presentation currency
Items included in the financial statements of each of the Groups entities are measured using the currency of the primary
economic environment in which the entity operates (the functional currency). The financial statements are presented in
Ringgit Malaysia, which is the Companys functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of
the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
the income statement.
notes to the financial statements for the financial year ended 31 december 2007 (contd.)
-
8/6/2019 Financial Statement 2007
24/82
4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
4.15 Foreign currencies (contd.)
(c) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency as
follows:
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
income and expenses for each income statement are translated at average exchange rates (unless this average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income
and expenses are translated at the rate on the dates of the transactions); and
all resulting exchange differences are recognised as a separate component of equity.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to
shareholders equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in
equity are recognised in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of theforeign entity and translated at the closing rate.
4.16 Income tax
Income tax on the profit or loss for the financial year comprises current and deferred tax. Current tax is the expected amount of
income taxes payable in respect of the taxable profit for the financial year and is measured using the tax rates that have been
enacted at the balance sheet date.
Deferred tax is recognised in full, using the liability method, on temporary differences at the balance sheet date between the tax
base of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss. In principle, deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused
tax credits to the extent that it is probable that taxable profits will be available against which the deductible temporary differences,unused tax losses and unused tax credits can be utilised.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled,
based on tax rates that have been enacted or substantially enacted at the balance sheet date.
Deferred tax is recognised on temporary differences arising on investments in subsidiaries, associates and joint ventures except
where the timing of the reversal of temporary difference can be controlled and if is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity,
in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is
an acquisition, in which case the deferred tax is included in the resulting goodwill.
-
8/6/2019 Financial Statement 2007
25/82
84ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
4.17 Revenue recognition
Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise
and the amount of the revenue can be measured reliably. Revenue is shown net of value-added tax, returns, rebates and discounts,
and after eliminating sales within the Group.
(i) Sale of goods
Sale of goods is recognised when significant risks and rewards of ownership of the goods are transferred to the buyer.
(ii) Rendering of services
Revenue from rendering of services is recognised in the accounting period in which the services are rendered, by reference to
completion of the specific transaction, assessed on the basis of the actual service provided as a proportion of the total services
to be provided.
(iii) Interest income
Interest is recognised on a time proportion basis that reflects the effective yield on the asset, taking into account the principal
outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the
Group.
(iv) Rental income
Rental income from operating leases is recognised on a straight-line basis over the term of the lease.
(v) Charter income
Revenue from charter hire is recognised on accrual basis but is deferred when the terms of billings have not been agreed by
third parties or when certain conditions necessary for realisation have yet to be fulfilled.
(vi) Dividend income
Dividend income is recognised when the right to receive payment is established.
(vii) Management fee income
Management fee income is recognised on an accrual basis, based on services rendered.
(viii) Commission income
Commission income is recognised in the accounting period in which goods of principals are sold.
4.18 Cash and cash equivalents
For purposes of the cash flow statements, cash and cash equivalents comprise cash in hand, bank balances, deposits held at call
with banks excluding deposits which are pledged for banking facilities, and other short-term, highly liquid investments with original
maturities of three months or less, and bank overdrafts. Bank overdrafts are included within borrowings in current liabilities on the
balance sheet.
4.19 Employee benefits
(i) Short term benefits
Wages, salaries and bonuses are recognised as an expense in the financial year in which the associated services are rendered
by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when
services are rendered by employees that increase their entitlement to future compensated absences, and short term non-
accumulating compensated absences such as sick leave are recognised when the absences occur.
notes to the financial statements for the financial year ended 31 december 2007 (contd.)
-
8/6/2019 Financial Statement 2007
26/82
4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
4.19 Employee benefits (contd.)
(ii) Defined contribution plan
As required by law, companies in Malaysia make contributions to the Employees Provident Fund (EPF). Some of the Groups
foreign subsidiaries make contributions to publicly or privately administered pension insurance plans on a mandatory,
contractual or voluntary basis. Such contributions are recognised as employee benefit expense when they are due. Prepaid
contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
(iii) Defined benefit plan
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically, defined benefit plans define an
amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as
age, years of service and compensation.
The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined
benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for actuarial gains or
losses and past service costs. The defined benefit obligation is calculated by independent actuaries using the projected unit
credit method. The Group determines the present value of the defined benefit obligation and the fair value of any plan assetswith sufficient regularity such that the amounts recognised in the financial statements do not differ materially from the
amounts that would be determined at the balance sheet date. The present value of the defined benefit obligation is
determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are
denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms
of the related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions in excess of the greater
of 10% of the value of plan assets or 10% of the defined benefit obligation are charged or credited to income over the
employees expected average remaining working lives.
Past-service costs are recognised immediately in income, unless the changes to the plan are conditional on the employees
remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a
straight-line basis over the vesting period.
(iv) Termination benefits
Certain foreign subsidiaries of the Group recognise termination benefits when they are demonstrably committed to either:
terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or
providing termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits are
payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts
voluntary redundancy in exchange for these benefits. Benefits falling due more than 12 months after the balance sheet date
are discounted to present value.
(v) Share-based compensation
The Company operates an equity-settled, share-based compensation plan for the Directors and employees of the Company
and its subsidiaries (ESOS).
The fair value of the employee services received in exchange for the grant of the options is recognised as an expense in the
income statement. The total amount to be recognised over the vesting period is calculated by reference to the fair value of
the options granted. At each balance sheet date, the Company revises its estimates of the number of options that are
expected to become exercisable and the effect of any revision of the original estimates is recognised in the income statement
and a corresponding adjustment is made to equity over the remaining vesting period. When the options are exercised, the
proceeds received (net of directly attributable transaction costs) are credited to share capital and share premium respectively.
The proceeds received net of any directly attributable transactions costs are credited to share capital (nominal value) and share
premium when the options are exercised.
Salient features of the Companys share option scheme are disclosed in Note 23(c) to the financial statements.
-
8/6/2019 Financial Statement 2007
27/82
86ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
4.20 Financial instruments
(i) Description
A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity
instrument of another enterprise.
A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise,
a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable,
or an equity instrument of another enterprise.
A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise,
or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable.
(ii) Financial instruments recognised on the balance sheet
The particular recognition method adopted for other financial instruments recognised on the balance sheet is disclosed in the
individual accounting policy note associated with each item.
(iii) Fair value estimation for disclosure purposes
The fair value of publicly traded derivatives and securities is based on quoted market prices at the balance sheet date. The fair
value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward
foreign exchange contracts is determined using forward exchange market rates at the balance sheet date.
In assessing the fair value of other derivatives and financial instruments, the Group uses a variety of methods and makes
assumptions that are based on market conditions existing at each balance sheet date. Quoted market prices or dealer quotes
for the specific or similar instruments are used for long term debt. Other techniques, such as option pricing models and
estimated discounted value of future cash flows, are used to determine fair value for the remaining financial instruments. In
particular, the fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current
market interest rate available to the Group for similar financial instruments.
4.21 Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasuredat their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either:
(a) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or
(b) hedges of a particular risk associated with a recognised asset or liability or a highly probable forecast transaction (cash flow
hedge).
The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well
as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are
highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of derivative instruments used for hedging purposes are disclosed in Note 14. Movements on the hedging reserveare shown in the statement of changes in equity. The full fair value of a hedging derivative is classified as a non-current asset or
liability when the remaining hedged item is more than 12 months and as a current asset or liability when the remaining maturity
of the hedged item is less than 12 months. Trading derivatives are classified as current asset or liability.
notes to the financial statements for the financial year ended 31 december 2007 (contd.)
-
8/6/2019 Financial Statement 2007
28/82
4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
4.21 Derivative financial instruments and hedging activities (contd.)
(i) Fair value hedge
The Group has entered in Cross Currency Interest Rate Swaps (CCIRS) that are designated as fair value hedges for interest
rate risk and foreign exchange risk on its Murabahah Medium Term Notes, which were issued by a subsidiary. The CCIRS involve
the exchange of principals and floating interest payments in the subsidiarys functional currency for principals and fixed
interest receipts in the foreign currency, in which the issued Murabahah Medium Term Notes are denominated.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income
statement within finance costs, together with any changes in the fair value of the hedged asset or liability that are attributable
to the hedged risk.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for
which the effective interest method is used is amortised to the income statement over the period to maturity.
(i i) Cash flow hedge
The Group has entered in Cross Currency Interest Rate Swaps (CCIRS) that are designated as cash flow hedges for the Groups
exposure to foreign exchange risk on its Murabahah Medium Term Notes, which were issued by a subsidiary. The CCIRS involve
the exchange of principals and fixed interest receipts in the foreign currency, in which the issued Murabahah Medium Term
Notes are denominated, for principals and fixed interest payments in the subsidiarys functional currency.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are
recognised in the hedging reserve within equity and transferred to the income statement within finance costs in the periods
when the underlying hedged items affect the income statement. The changes in fair value relating to the ineffective portion
of the CCIRS are recognised immediately in the income statement within other operating income/expenses.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is
ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative
gain or loss that was reported in equity is immediately transferred to the income statement within other operating
income/expenses.
(iii) Derivatives that do not qualify for hedge accounting
Certain derivatives do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not
qualify for hedge accounting are recognised immediately in the income statement.
4.22 Segmental information
Segment reporting is presented for enhanced assessment of the Groups risks and returns. A business segment is a group of assets
and operations engaged in providing products or services that is subject to risk and returns that are different from those of other
business segments. A geographical segment is engaged in providing products or services within a particular economic environment
that is subject to risks and returns that are different from those components operating in other economic environments.
Segment revenues and expenses are those directly attributable to the segments and include any joint revenue and expenses where
a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of cash,
receivables, inventories and property, plant and equipment, net of allowances and accumulated depreciation and amortisation. Most
segment assets can be directly attributed to the segments on a reasonable basis. Segment assets and liabilities do not include
income tax assets and liabilities respectively.
-
8/6/2019 Financial Statement 2007
29/82
-
8/6/2019 Financial Statement 2007
30/82
-
8/6/2019 Financial Statement 2007
31/82
90ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTD.)
4.28 Non-current assets (or disposal groups) classified as assets held for sale
Non-current assets (or disposal groups) are classified as assets held for sale and stated at the lower of carrying amount and fair
value less costs to sell if their carrying amount is recovered principally through a sale transaction rather than through a continuing
use.
5 PROPERTY, PLANT AND EQUIPMENT
Renovation,
office
Tools, equipment,
Freehold Freehold L easehold plant and fittings and Motor Monorail
Group land buildings buildings machinery computers vehicles Vessels test track Total
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
Cost
At 1 January 2007 8,673 19,131 16,073 599,486 29,683 31,864 25,416 14,800 745,126
Additions 12,413 14,348 17,726 151,758 5,879 2,644 204,768
Disposals (91) (8,720) (210) (1,434) (10,455)
Reclassification (2,888) 2,885 708 (420) (285)
Reclassified as held for
sale (Note 34) (629) (390) (20,210) (21,229)
Currency translation
differences (41) (392) (401) (23,190) (490) (278) (1,585) (26,377)
At 31 December 2007 21,045 30,199 35,563 720,042 34,052 12,301 23,831 14,800 891,833
Accumulated depreciation
At 1 January 2007 2,755 4,285 292,551 19,464 12,654 3,852 246 335,807
Charge for the financial
year (Note 28) 1,066 3,484 49,951 4,394 5,118 1,242 587 65,842
Disposals (23) (6,878) (192) (967) (8,060)
Reclassification (962) 916 (348) 381 13
Reclassified as held for
sale (Note 34) (626) (324) (9,573) (10,523)
Currency translation
differences (239) (326) (14,636) (441) (180) (294) (16,116)
At 31 December 2007 2,620 7,710 320,640 23,282 7,065 4,800 833 366,950
Net book value
At 31 December 2007 21,045 27,579 27,853 399,402 10,770 5,236 19,031 13,967 524,883
notes to the financial statements for the financial year ended 31 december 2007 (contd.)
-
8/6/2019 Financial Statement 2007
32/82
-
8/6/2019 Financial Statement 2007
33/82
92ScomiGroupBhd
AnnualReport2007
www.scomigroup.com.m
y
5 PROPERTY, PLANT AND EQUIPMENT (CONTD.)
Office
Motor equipment
vehicles and fittings Renovation Total
RM000 RM000 RM000 RM000
Company
Cost
At 1 January 2007 360 2,088 1,151 3,599
Additions 963 459 182 1,604
At 31 December 2007 1,323 2,547 1,333 5,203
Accumulated depreciation
At 1 January 2007 139 1,224 505 1,868
Charge for the financial year (Note 28) 212 524 365 1,101
At 31 December 2007 351 1,748 870 2,969
Net book value at 31 December 2007 972 799 463 2,234
Cost
At 1 January 2006 360 1,681 331 2,372
Additions 407 820 1,227
At 31 December 2006 360 2,088 1,151 3,599
Accumulated depreciation
At 1 January 2006 68 646 173 887
Charge for the financial year (Note 28) 71 578 332 981
At 31 December 2006 139 1,224 505 1,868
Net book value at 31 December 2006 221 864 646 1,731
(i) The net book values of property, plant and equipment of the Group acquired under hire purchase are as follows:
Group
2007 2006
RM000 RM000
Hire purchase
Motor vehicles 12,190 13,828
Tools, plant and machinery 3,864 5,809
Office equipment, fittings and computers 9 325
Included in the net book values of motor vehicles acquired under hire purchase above is an amount of RM10,487,000 (2006:
RM13,667,000) in respect of motor vehicles acquired under hire purchase arrangements of disposal group classified as held for sale.
notes to the financial statements for the financial year ended 31 december 2007 (contd.)
-
8/6/2019 Financial Statement 2007
34/82
5 PROPERTY, PLANT AND EQUIPMENT (CONTD.)
(ii) Certain property, plant and equipment of the group are charged as security for banking facilities as disclosed in Note 21 to the
financial statements.
(iii) During the financial year, the Group acquired property, plant and equipment at aggregate costs of RM204,768,000 (2006:
RM110,296,000), of which RM770,000 (2006: RM7,293,000) is by means of hire purchase arrangements.
(iv) Included in the leasehold buildings of the Group was an amount of RM2,235,000 (2006: Nil) relating to expenditure for buildings in
the course of construction.
6 INTANGIBLE ASSETS
Development
Goodwill Patents costs Total
RM000 RM000 RM000 RM000
Group
CostAt 1 January 2007 547,496 3,670 4,362 555,528
Additions (Note 37(a)) 17,667 15,011 32,678
Disposal of business (Note 37(a)) (76,261) (76,261)
Reclassification of asset held for sale (Note 34) (2,007) (2,007)
Currency translation differences (793) (153) (14) (960)
At 31 December 2007 486,102 3,517 19,359 508,978
Accumulated impairment and amortisation
At 1 January 2007 360 2,280 2,640
Amortisation for the financial year (Note 28) 218 218
Currency translation differences (122) (122)
At 31 December 2007 360 2,376 2,736
Net book value
At 31 December 2007 485,742 1,141 19,359 506,242
Cost
At 1 January 2006 515,452 3,464 518,916
Additions 1,576 1,576
Adjustment to cost of business combination 2,000 2,000
Acquisition of subsidiaries (Note 37(c)) 30,168 470 2,786 33,424
Currency translation differences (124) (264) (388)
At 31 December 2006 547,496 3,670 4,362 555,528
Accumulated impairment and amortisation
At 1 January 2006 2,243 2,243
Amortisation for the financial year (Note 28) 216 216
Impairment for the financial year (Note 28) 375 375
Currency translation differences (15) (179) (194)
At 31 December 2006 360 2,280 2,640
Net book value
At 31 December 2006 547,136 1,390 4,362 552,888
-
8/6/2019 Financial Statement 2007
35/82
-
8/6/2019 Financial Statement 2007
36/82
7 INVESTMENT PROPERTIES
Group
2007 2006RM000 RM000
Net book value
At start of financial year 1,782 1,926
Depreciation for the financial year (Note 28) (145) (145)
Currency translation differences 1 1
At end of financial year 1,638 1,782
Cost 2,889 2,889
Accumulated depreciation (1,251) (1,107)
Net book value 1,638 1,782
The fair value of the properties was estimated at RM2.18 million (2006: RM2.10 million) based on a valuation by an independent
professionally qualified valuer. Valuations were based on current price in an active market.
The following amounts have been recognised in the income statement:
Group
2007 2006
RM000 RM000
Rental income 97 151Direct operating expenses of investment properties that did not generate rental income 10 30
8 PREPAID LAND LEASE PAYMENTS
Group
2007 2006
RM000 RM000
At 1 January (Note 43) 4,332 2,619
Additions 4,047 159
Amortisation for the year (Note 28) (710)
Currency translation differences (65) 1,554
As 31 December 7,604 4,332
Analysed as:
Long-term leasehold land 3,176 1,706
Short-term leasehold land 4,428 2,626
7,604 4,332
-
8/6/2019 Financial Statement 2007
37/82
96ScomiGroupBhd
AnnualReport2007
top related