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ANNUAL REPORT 20132013

WE DELIVER WE CARE

DAYA MATERIALS BERHAD (636357-W)

Level U1, Block D5, Solaris DutamasNo. 1, Jalan Dutamas 1, 50480 Kuala LumpurTel: 03 6205 3170 Fax: 03 6205 3171

w w w . d a y a g r o u p . c o m . m y

Contents

we deliverwe C.A.R.E. At DMB, we work hand in hand with our clients to deliver the best solutions any where, any time.

Corporate Information

Corporate Structure

Financial Information

The Team

Pro�le of Directors

Chairman’s Statement

Corporate Social Responsibility

Corporate Governance Statement

Statement on Risk Management and Internal Control

Audit Committee Report

Financial Statements

Directors’ Responsibilities Statement on Financial Statements

Analysis of Shareholdings

Additional Compliance Information

List of Properties 2013

Notice of Eleventh Annual General Meeting

Form of Proxy

02

04

07

08

10

14

23

24

32

34

37

141

142

145

147

150

Committed

Accountable

Resolute

Ethical


2

BOARD OF DIRECTORS

Dato’ Dr. Azmil Khalili Bin Dato’ KhalidChairman/Independent Non-Executive Director

Dato’ Mazlin Bin Md.JunidExecutive Vice Chairman,President & Group Chief Executive O�cer

Nathan Tham Jooi LoonGroup Managing Director

Fazrin Azwar bin Md. NorSenior Independent Non-Executive Director

Tan Sri Dato’ Sri Koh Kin Lip JPIndependent Non-Executive Director

Datuk Lim Soon FooIndependent Non-Executive Director

Ronnie Lim Hai LiangAlternate Director to Datuk Lim Soon Foo

AUDIT COMMITTEE

ChairmanFazrin Azwar bin Md. Nor(Senior Independent Non-Executive Director)

MembersDato’ Dr. Azmil Khalili Bin Dato’ Khalid (Independent Non-Executive Director)

Tan Sri Dato’ Sri Koh Kin Lip JP(Independent Non-Executive Director)

COMPANY SECRETARIES

Chin Ngeok Mui (MAICSA 7003178)Chen Bee Ling (MAICSA 7046517)

REGISTERED OFFICE

Level 8, Symphony House Pusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling Jaya Selangor Darul EhsanTel : 03-7841 8000Fax : 03-7841 8199

COMMITTED

HEAD/MANAGEMENT OFFICE

Level UI, Block D5, Solaris DutamasNo.1, Jalan Dutamas 1 50480 Kuala LumpurMalaysiaTel : 03-6205 3170Fax : 03-6205 3171 Email : [email protected] Website : www.dayagroup.com.my

PRINCIPAL BANKERS

Hong Leong Bank Berhad AmIslamic Bank BerhadAmBank (M) Berhad Malayan Banking Berhad

AUDITORS

Ernst & Young (AF 0039)Chartered AccountantsLevel 23A, Menara MileniumJalan DamanlelaPusat Bandar Damansara50490 Kuala LumpurTel : 03-7495 8000Fax : 03- 2095 5332

SHARE REGISTRAR

Symphony Share Registrars Sdn. Bhd.Level 6, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling Jaya Selangor Darul EhsanTel : 03-7841 8000Fax : 03-7841 8150/8151

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities BerhadStock short name : DAYAStock Code : 0091

CorporateInformation

BOARD OF DIRECTORS

Dato’ Dr. Azmil Khalili Bin Dato’ KhalidChairman/Independent Non-Executive Director

Dato’ Mazlin Bin Md.JunidExecutive Vice Chairman,President & Group Chief Executive O�cer

Nathan Tham Jooi LoonGroup Managing Director

Fazrin Azwar bin Md. NorSenior Independent Non-Executive Director

Tan Sri Dato’ Sri Koh Kin Lip JPIndependent Non-Executive Director

Datuk Lim Soon FooIndependent Non-Executive Director

Ronnie Lim Hai LiangAlternate Director to Datuk Lim Soon Foo

AUDIT COMMITTEE

ChairmanFazrin Azwar bin Md. Nor(Senior Independent Non-Executive Director)

MembersDato’ Dr. Azmil Khalili Bin Dato’ Khalid (Independent Non-Executive Director)

Tan Sri Dato’ Sri Koh Kin Lip JP(Independent Non-Executive Director)

COMPANY SECRETARIES

Chin Ngeok Mui (MAICSA 7003178)Chen Bee Ling (MAICSA 7046517)

REGISTERED OFFICE

Level 8, Symphony House Pusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling Jaya Selangor Darul EhsanTel : 03-7841 8000Fax : 03-7841 8199

COMMITTED

HEAD/MANAGEMENT OFFICE

Level UI, Block D5, Solaris DutamasNo.1, Jalan Dutamas 1 50480 Kuala LumpurMalaysiaTel : 03-6205 3170Fax : 03-6205 3171 Email : [email protected] Website : www.dayagroup.com.my

PRINCIPAL BANKERS

Hong Leong Bank Berhad AmIslamic Bank BerhadAmBank (M) Berhad Malayan Banking Berhad

AUDITORS

Ernst & Young (AF 0039)Chartered AccountantsLevel 23A, Menara MileniumJalan DamanlelaPusat Bandar Damansara50490 Kuala LumpurTel : 03-7495 8000Fax : 03- 2095 5332

SHARE REGISTRAR

Symphony Share Registrars Sdn. Bhd.Level 6, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling Jaya Selangor Darul EhsanTel : 03-7841 8000Fax : 03-7841 8150/8151

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities BerhadStock short name : DAYAStock Code : 0091

3

Annual Report 2013


4

CorporateStructure

Daya Materials Berhad (“DMB”) was incorporated in Malaysia under the Companies Act, 1965 on 8 December 2003 as a public limited company. The principal activities of DMB are that of investment holding and provision of management services to its subsidiary companies. The particulars of the subsidiaries, are as follows:

Subsidiary Companies

Date and Place of

IncorporationAuthorised

Share Capital

Issued and Paid-up Share

Capital

Effective Equity

Interest Principal Activities

1 Daya Polymer Sdn. Bhd. (324073-U) (“DPSB”)

21-11-1994 / Malaysia

RM10,000,000 RM6,000,000 100.00% Manufacturing of semi-conductive compounds and cross-linkable polyethylene compounds for cables and wires and trading of specialty chemicals, related polymer compounds and hardware.

2 DMB Marketing & Trading Sdn. Bhd. (724943-U) (“DMTSB”)

27-02-2006 / Malaysia

RM100,000 RM2.00 100.00% General trading, marketing and investment holding.

3 Meridian Orbit Sdn. Bhd. (780242-P) (“MOSB”)

09-07-2007 / Malaysia

RM100,000 RM100,000 100.00% Investment holding.

4 Daya Secadyme Sdn. Bhd. (188542-W) (“DSSB”)

25-10-1989 / Malaysia

RM5,000,000 RM1,008,000 67.00% Trading in petrochemicals products and investment holding.

5 Daya CMT Sdn. Bhd. (208646-U) (“DCMT”)

28-11-1990 / Malaysia

RM10,000,000 RM8,000,000 100.00% Providing industrial facilities management including builder works, facility operation and maintenance services, upgrade, retrofit, design and build plant facilities.

6 Daya Offshore Construction Limited (formerly known as DMB International Limited) (“DOCL”)

13-08-2008 / Hong Kong

HKD 3,000,000 HKD 3,000,000 100.00% Center for regional procurement and trading as well as international investments.

7 Daya Proffscorp Sdn. Bhd. (173309-T) (“DPRO”)

24-08-1988 / Malaysia

RM5,000,000 RM1,650,000 67.00% Ownership and hiring of forklifts, cranes and heavy machineries and provision of related manpower services in the onshore and offshore oil & gas industry.

8 Daya Urusharta Sdn. Bhd. (863073-M) (“DUSB”)

03-07-2009 / Malaysia

RM100,000 RM100,000 100.00% Property investment holding.

9 Daya OCI Sdn. Bhd. (291138-U) (“DOCI”)

02-03-1994 / Malaysia

RM10,000,000 RM10,000,000 67.00% Supplying of equipment and specialty chemicals for oil & gas process plants, providing installation and maintenance services for air-conditioning and ventilation system, automatic welding services for offshore pipeline installation, maintenance services for both onshore plants and offshore facilities and warehousing and forwarding agency.

10 Seca Chemicals and Catalysts Sdn. Bhd. (710772-A) (“SCCSB”)

26-09-2005 / Malaysia

RM100,000 RM100,000 100.00% Dealing in petroleum, oil & gas products and consulting services.

11 Daya Offshore Construction Sdn. Bhd. (651398-P) (“DOCSB”)

05-05-2004 / Malaysia

RM5,000,000 RM5,000,000 100.00% Dealing in project management, installation and design engineering, fabrication, procurement and logistics, vessel operations, survey and diving operations.

12 Daya Petroleum Ventures Sdn. Bhd. (736674-D) (“DPV”)

06-06-2006 / Malaysia

RM500,000 RM350,000 51.00% Provision of drilling services, geological, petroleum engineering, subsea and deep -water support services and operations and maintenance services.

13 Daya Land & Development Sdn. Bhd. (524602-D) (“DLDSB”)

25-08-2000 / Malaysia

RM500,000 RM500,000 100.00% Property development.

Held through subsidiaries

14 Daya Hightech Sdn. Bhd. (791561-V) (“DHSB”)

10-10-2007 / Malaysia

RM100,000 RM100,000 100.00% Manufacturing of polymer compounds for cables and wires.

15 Seca Engineering and Manpower Services Sdn. Bhd. (704437-A) (“SEMSSB”)

28-07-2005 / Malaysia

RM100,000 RM100,000 67.00% Providing engineering and manpower services.

5

Annual Report 2013

CorporateStructure

cont’d

Subsidiary Companies

Date and Place of

IncorporationAuthorised

Share Capital

Issued and Paid-up Share

Capital

Effective Equity

Interest Principal Activities

Held through subsidiaries

16 Daya Clarimax Sdn. Bhd. (597108-K) (“DCLX”)

28-10-2002 / Malaysia

RM5,000,000 RM2,000,000 100.00% Providing recycling of waste solvent and manufacturing of high purity electronics and technical solvents.

17 Daya FMM Sdn. Bhd. (418776-U) (“DFMM”)

27-01-1997 / Malaysia

RM500,000 RM350,004 100.00% General contractors and related services.

18 PT Daya Secadyme Indonesia (“PTDSI”)

14-01-2010 / Indonesia

USD100,000 USD100,000 67.00% Trading in petrochemicals products.

19 Daya Proffscorp (Sabah) Sdn. Bhd. (922055-P) (“DPROS”)

15-11-2010 / Malaysia

RM500,000 RM450,002.00 67.00% Ownership and hiring of forklifts, cranes and heavy machineries and provision of related manpower services in the onshore and offshore oil & gas industry.

20 Ultrafest Sdn. Bhd. (968989-X) (“USB”)

20-11-2011 / Malaysia

RM500,000 RM500,000 100.00% Property development.

21 Terra Hill Development Sdn. Bhd. (971347-V) (“THDSB”)

12-12-2011 / Malaysia

RM100,000 RM2.00 100.00% Property development.

22 Zen Projects Sdn. Bhd. (974746-K ) (“ZPSB”)

11-01-2012 / Malaysia

RM100,000 RM2.00 100.00% Investment holding.

23 Daya SMG Engineering Sdn. Bhd. (Formerly Known As Daya E&C Sdn. Bhd.) (1024254-V )(“DSMG”)

09-11-2012 / Malaysia

RM100,000 RM2.00 100.00% Provision of electrical, mechanical engineering and construction works.

24 Daya Vessels Limited. (LL09292 ) (Formerly Known As Daya OCI (Labuan) Limited) (“DVL”)

19-11-2012 / Malaysia

No Limit USD10.00 67.00% Shipping leasing business and other related services to the oil and gas industry.

25 Daya Maxflo Sdn. Bhd. (681714-M) (“DMSB”)

21-02-2005 /Malaysia

RM1,500,000 RM1,420,000 25.86% Providing products and services for exploration, drilling and well intervention and production specifically for oil and gas, refining and petrol-chemical.

26 Daya Maritime Limited (LL10243) (“DML”)

27-12-2013 /Malaysia

No Limit USD10 100.00% Shipping leasing business and other related services to the oil and gas industry.

27 PT Daya Maxflo (“PTDM”) 24-12-2013 /Indonesia

USD250,000 USD250,000 20.69% Provision, trade, import and distribute oil and gas products and services to the oil & gas industry.

28 Daya Offshore Construction AS (“DOCAS”)

23-01-2014 /Norway

NOK 30,000 NOK 30,000 100.00% Offshore and offshore operations including contracting, purchasing possession and chartering of vessels, and activities associated.

Joint Venture Company

29 Daya NCHO International Limited (1497588) (formerly known as Daya Clarimax International Limited) (“DNIL”)

26-08-2010 / Hong Kong

HKD 100,000 HKD 100,000 60.00% Provision of management services in tanks and investment holding.

30 Daya Sheffield Sdn. Bhd. (919845-U) (“DSFSB”)

26-10-2010 / Malaysia

RM500,000 RM350,000 34.17% Recruiting and providing specialised, qualified and professional personnel for the onshore and offshore oil and gas industries.

31 Daya NCHO Sdn. Bhd. (933292-U) (“DNSB”)

22-02-2011 / Malaysia

RM1,000,000 RM1,000,000 60.00% Providing ISO tank cleaning, repair and maintenance services.

32 Daya Campo (Sabah) Sdn. Bhd. (956357-W) (“DCSB”)

09-08-2011 / Malaysia

RM1,000,000 RM10,000 40.20% Investment holding.

33 Semangat Global Sdn. Bhd. (802160-P) (“SGSB”)

08-01-2008 / Malaysia

RM500,000 RM200,000 51.00% Construction and development of industrial, commercial and housing project and other related industry.

34 Daya Cutech Inspection Services Sdn. Bhd.(1053933-V) (“DCIS”)

11-07-2013 / Malaysia

RM500,000 RM350,000 25.50% Provision of inspection services, non-destructive testing (“NDT”) and advanced NDT services, cathodic protection, piping and fabrication projects, underwater and subsea services, technical training and certification services, technical manpower outsourcing, engineering, procurement and construction (“EPC”) projects, electrical and mechanical projects in Malaysia.


6

Revenue

EBITDA

PBT

PAT

Total Equity

Total Assets

2009 2010 2011 2012

Restated

RM’000 RM’000 RM’000 RM’0002013

RM’000

188,244 174,223 281,746 296,587

24,032 29,206 30,853 35,704

20,377 22,733 23,760 28,387

13,664 16,966 17,443 20,116

143,481 177,156 210,628 230,914

221,920 292,050 378,115 399,217

523,785

22,495

11,467

4,229

241,961

525,224

REVENUE(RM’000)

‘09 ‘10 ‘11 ‘12 ‘13

18

8,2

44

17

4,2

23 2

81

,74

6

29

6,5

87

52

3,7

85

EBITDA(RM’000)

‘09 ‘10 ‘11 ‘12 ‘13

24

,03

2 29

,20

6

30

,85

3 35

,70

4

22

,49

5

PBT(RM’000)

‘09 ‘10 ‘11 ‘12 ‘13

20

,37

7

22

,73

3

23

,76

0 28

,38

7

11

,46

7

PAT(RM’000)

‘09 ‘10 ‘11 ‘12 ‘13

13

,66

4 16

,96

6

17

,44

3

20

,11

6

4,2

29

TOTAL EQUITY(RM’000)

‘09 ‘10 ‘11 ‘12 ‘13

14

3,4

81

17

7,1

56

21

0,6

28

23

0,9

14

24

1,9

61

TOTAL ASSETS(RM’000)

‘09 ‘10 ‘11 ‘12 ‘13

22

1,9

20

29

2,0

50 37

8,1

15

39

9,2

17 5

25

,22

4

* Joint Venture Company

DNSB60%*

DPSB100%

DSSB67%

SCCSB100%

DOCSB100%

DPV51%

DPRO67%

DOCI67%

DML100%

DMTSB100%

MOSB100%

DCMT100%

DOCL100%

DUSB100%

DLDSB100%

DHSB100%

ZPSB100%

DCLX100%

DFMM100%

DSMG100%

DNIL60%*

THDSB100%

SEMSSB100%

DOCAS100%

DCIS*50%

DPROS100%

DSFSB51%*

DCSB60%*

DVL100%

PTDSI100%

SGSB51%*

USB100%

DMSB50.7%

PTDM80%

PolymerOil & Gas

Technical Services

CorporateStructurecont’d

7

Annual Report 2013

Revenue

EBITDA

PBT

PAT

Total Equity

Total Assets

2009 2010 2011 2012

Restated

RM’000 RM’000 RM’000 RM’0002013

RM’000

188,244 174,223 281,746 296,587

24,032 29,206 30,853 35,704

20,377 22,733 23,760 28,387

13,664 16,966 17,443 20,116

143,481 177,156 210,628 230,914

221,920 292,050 378,115 399,217

523,785

22,495

11,467

4,229

241,961

525,224

REVENUE(RM’000)

‘09 ‘10 ‘11 ‘12 ‘13

18

8,2

44

17

4,2

23 2

81

,74

6

29

6,5

87

52

3,7

85

EBITDA(RM’000)

‘09 ‘10 ‘11 ‘12 ‘13

24

,03

2 29

,20

6

30

,85

3 35

,70

4

22

,49

5PBT(RM’000)

‘09 ‘10 ‘11 ‘12 ‘13

20

,37

7

22

,73

3

23

,76

0 28

,38

7

11

,46

7

PAT(RM’000)

‘09 ‘10 ‘11 ‘12 ‘13

13

,66

4 16

,96

6

17

,44

3

20

,11

6

4,2

29

TOTAL EQUITY(RM’000)

‘09 ‘10 ‘11 ‘12 ‘13

14

3,4

81

17

7,1

56

21

0,6

28

23

0,9

14

24

1,9

61

TOTAL ASSETS(RM’000)

‘09 ‘10 ‘11 ‘12 ‘13

22

1,9

20

29

2,0

50 37

8,1

15

39

9,2

17 5

25

,22

4

* Joint Venture Company

DNSB60%*

DPSB100%

DSSB67%

SCCSB100%

DOCSB100%

DPV51%

DPRO67%

DOCI67%

DML100%

DMTSB100%

MOSB100%

DCMT100%

DOCL100%

DUSB100%

DLDSB100%

DHSB100%

ZPSB100%

DCLX100%

DFMM100%

DSMG100%

DNIL60%*

THDSB100%

SEMSSB100%

DOCAS100%

DCIS*50%

DPROS100%

DSFSB51%*

DCSB60%*

DVL100%

PTDSI100%

SGSB51%*

USB100%

DMSB50.7%

PTDM80%

PolymerOil & Gas

Technical Services

FinancialInformation


8

THE TEAM

1

2

5

6

73 4

1. Dato’ Dr. Azmil Khalili Bin Dato’ Khalid

2. Dato’ Mazlin Bin Md.Junid

3. Nathan Tham Jooi Loon

4. Fazrin Azwar bin Md. Nor

5. Tan Sri Dato’ Sri Koh Kin Lip JP

6. Datuk Lim Soon Foo

7. Ronnie Lim Hai Liang

9

Annual Report 2013

THE TEAM

1

2

5

6

73 4

1. Dato’ Dr. Azmil Khalili Bin Dato’ Khalid

2. Dato’ Mazlin Bin Md.Junid

3. Nathan Tham Jooi Loon

4. Fazrin Azwar bin Md. Nor

5. Tan Sri Dato’ Sri Koh Kin Lip JP

6. Datuk Lim Soon Foo

7. Ronnie Lim Hai Liang


10

1 2 3 4

Profile ofDirectors

1DAto’ Dr. AzmIl KhAlIlI bIn DAto’ KhAlIDIndependent Non-Executive Chairman

Dato’ Dr. Azmil Khalili bin Dato’ Khalid, Malaysian, aged 53, is an Independent Non-Executive Chairman of DMB. He was appointed to the Board on 19 September 2007.

Dato’ Dr. Azmil graduated with a Bachelors Degree in Civil Engineering and subsequently with a Masters in Business Administration. He began his career with a United Kingdom company, Tarmac National Construction and upon his return to Malaysia worked for Trust International Insurance and Citibank NA.

Dato’ Dr. Azmil is currently the President & Chief Executive Officer of AlloyMtd, following the rationalisation exercise between MTD Capital Bhd and its holding company, Alloy Consolidated Sdn Bhd. He concurrently holds the same position in the listed subsidiary of MTD Capital Bhd, namely MTD ACPI Engineering Berhad and is also the Chairman of MTD Walkers PLC, a foreign subsidiary of MTD Capital Bhd listed on the Colombo Stock Exchange in the Republic of Sri Lanka. Dato’ Dr. Azmil holds directorships in other public companies namely, MTD Infraperdana Bhd and Metacorp Berhad, both are subsidiaries of MTD Capital Bhd; and ANIH Berhad, a toll concession company. Dato’ Dr. Azmil is also a director of Environment Idaman Sdn. Bhd., a solid waste concession company; and a Trustee of the Perdana Leadership Foundation. Dato’ Dr. Azmil also sits on the board of several private limited companies.

Dato’ Dr. Azmil is the Chairman of the Nomination Committee and a member of the Audit Committee and Remuneration Committee of the Company.

Dato’ Dr. Azmil attended three out of six Board meetings held during the financial year ended 31 December 2013.

2DAto’ mAzlIn bIn mD JunIDExecutive Vice Chairman, President & Group Chief Executive Officer

Dato’ Mazlin bin Md Junid, Malaysian, aged 52, is DMB’s Executive Vice Chairman, President & Group Chief Executive Officer. He was appointed to the Board on 16 August 2007.

Dato’ Mazlin holds a Bachelor of Science in Mechanical Engineering from Brighton Polytechnic, Sussex, England and a Master in Business Administration from Cranfield University, England. He has extensive experience in corporate management, business and finance after serving Sime Darby Berhad and Aspac Executive Search Sdn. Bhd. as the Group Manager and the Managing Director respectively.

Dato’ Mazlin was formerly an Independent, Non-Executive Director of Sapura Industrial Berhad and Sapura Technology Berhad. He was also formerly an Independent Non-Executive Director and Chairman of the Audit Committee of MTD Infraperdana Berhad. He is also a director of several private limited companies which he owns.

Dato’ Mazlin is a member of the Executive Committee (“EXCO”) of the Company.

Dato’ Mazlin attended all six Board meetings held during the financial year ended 31 December 2013.

11

Annual Report 2013

1 2 3 4

Profile ofDirectors

cont’d

3nAthAn thAm JooI loonGroup Managing Director

Nathan Tham Jooi Loon, Malaysian, aged 48 is DMB’s Group Managing Director. He was appointed to the Board on 30 May 2005.

Mr. Nathan Tham joined DPSB in 2003 as a Director. He graduated from McGill University in Montreal, Canada in 1988 with a Master of Business Administration specialising in corporate finance. He is also a qualified Chartered Financial Analyst. He started his career as a credit analyst with Chase Manhattan Bank in Kuala Lumpur in 1989. In 1995, he joined UBS and later became its Executive Director responsible for Malaysian investment banking and Asia-Pacific Mergers and Acquisitions practices. In 2003, Mr. Nathan Tham was appointed as a Director of Tradewinds Corporation Berhad and PIHP (Selangor) Berhad, both posts he held until 2005. Presently, he is a Director of several private companies in Malaysia, Hong Kong and British Virgin Islands.

Mr. Nathan Tham is the Chairman of the Risk Management Committee and a member of the EXCO of the Company.

Mr. Nathan Tham attended all six Board meetings held during the financial year ended 31 December 2013.

4FAzrIn AzwAr bIn mD norSenior Independent Non-Executive Director

Fazrin Azwar Bin Md Nor, Malaysian, aged 47, is the Senior Independent Non-Executive Director of DMB. He was appointed to the Board on 30 May 2005.

En. Fazrin graduated from the University of Malaya with a Bachelor of Law (LLB) Honors Degree. He is an Advocate and Solicitor and a member of the Malaysian BAR. He is currently the Managing Partner of Messrs. Azwar & Associates.

En. Fazrin is also currently an Independent Non- Executive Chairman of Mercury Industries Berhad, an Independent Non-Executive Director and Audit Committee member of both Poh Kong Holdings Berhad and Tong Herr Resources Berhad and an Independent Non-Executive Director of Ire-Tex Corporation Berhad, all listed on the Main Market of Bursa Securities.

En. Fazrin is also an Independent Non-Executive Director of Times Offset (M) Sdn. Bhd. and a Non-Independent Non-Executive Director of the Kuchinta Holdings Group of Companies.

En. Fazrin is also a chartered member of The Malaysian Institute of Directors and The Institute of Internal Auditors Malaysia.

En. Fazrin is the Chairman of the Audit Committee and a member of the Nomination and Remuneration Committees of the Company.

En. Fazrin attended all six Board meetings held during the financial year ended 31 December 2013.


12

5 6 7

Profile ofDirectorscont’d

5tAn SrI DAto’ SrI Koh KIn lIP JPIndependent Non-Executive Director

Tan Sri Dato’ Sri Koh Kin Lip JP, Malaysian, aged 65, is an Independent Non-Executive Director of DMB. He was appointed to the Board on 22 December 2008.

Tan Sri Dato’ Sri Koh graduated from Plymouth Polytechnic, UK with a Higher National Diploma in Business Studies and a Council’s Diploma in Management Studies. He began his career in Standard Chartered Bank, Sandakan in 1977 as a trainee assistant. In 1978, he joined his family business and was principally involved in administrative and financial matters. In 1985, he assumed the role as a Chief Executive Officer of the family business. In 1987, he was pivotal and instrumental in the formation of Rickoh Holdings Sdn. Bhd., the flagship company of the family business which involves in activities ranging from properties investments, properties letting and property development, securities investments, oil palm plantations, sea and land transportation for crude palm oil and palm kernel, IT, hotel business, trading in golf equipment and accessories, and quarry operations.

Presently, Tan Sri Dato’ Sri Koh is also a Director of NPC Resources Berhad and Cocoaland Holdings Berhad.

Tan Sri Dato’ Sri Koh is the Chairman of the Remuneration Committee and a member of the Audit Committee and Nomination Committee of the Company.

Tan Sri Dato’ Sri Koh attended all six Board meetings held during the financial year ended 31 December 2013.

6DAtuK lIm Soon FooIndependent Non-Executive Director

Datuk Lim Soon Foo, Malaysian, aged 58, is an Independent Non-Executive Director of DMB. He was appointed to the Board on 15 August 2011.

Datuk Lim was admitted as member of The Chartered Institute of Shipbrokers, London since 1979 and currently serving as Chairman and Principal Advisor to Wajah Nichiei Sdn. Bhd., Optic Marine Services International Limited (Hongkong) and Optic Marine Engineering International Limited, providing highly specialized services in the optic fibre submarine cable industry which extend into many countries in Asia Pacific region. The Companies also worked alongside many Global Partners in the optic fibre submarine industry. Datuk Lim also sits in the board of several other private companies involved in plantation, logging and real estates.

Datuk Lim is a member of the Remuneration Committee of the Company.

Datuk Lim is the father of Mr. Ronnie Lim Hai Liang, who acts as his Alternate and a shareholder of the Company.

Datuk Lim attended all of six Board meetings held during the financial year ended 31 December 2013.

13

Annual Report 2013

5 6 7

Profile ofDirectors

cont’d

7ronnIE lIm hAI lIAngAlternate Director to Datuk Lim Soon Foo

Ronnie Lim Hai Liang, Malaysian, aged 33, is an Alternate Director to Datuk Lim Soon Foo. He was appointed to the Board on 15 August 2011 as Alternate Director to Datuk Lim Soon Foo.

Mr. Ronnie Lim graduated from the Flinders University of South Australia, Adelaide with a Bachelor of Law. He began his career as an Assistant Project Manager in small scale housing project developments in Adelaide. He later joined his family business as CEO of Wajah Nichiei Sdn. Bhd., Optic Marine Services International Limited (Hongkong) and Optic Marine Engineering International Limited in the optic fibre submarine cable industry. Mr. Ronnie Lim also sits in the board of a number of family owned companies.

Mr. Ronnie Lim is the son of Datuk Lim Soon Foo, an Independent Non-Executive Director and a substantial shareholder of the Company.

Mr. Ronnie Lim attended four out of six Board meetings held during the financial year ended 31 December 2013.

Family Relationship and Major Shareholders

Save as disclosed, none of the Directors of the Company have any family relationship with any director and/or major shareholders of the Company.

Conflict of Interest

None of the Directors of the Company has entered into any transaction, whether directly or indirectly, which has a conflict of interest with the Company.

Conviction of Offences

All the Directors have not been convicted of any offence within the past ten (10) years other than traffic offences, if any.


14

Dear Shareholders,

Without a doubt, 2013 was the most challenging year in our history.

Chairman’sStatement

15

Annual Report 2013

Dear Shareholders,

Without a doubt, 2013 was the most challenging year in our history.



cont’d

We started the year on a promising note with a fresh contract - our first offshore cable laying project off the coast of Terengganu – in hand. Our Oil & Gas (“O&G”) Division immediately set out to build a new subsea team, not only to execute the project, but more importantly, to also lay the foundation for our entry and expansion into this business. As an integral part of our long-term upstream strategic plan, we entered into a contract to charter a newbuild Offshore Subsea Construction Vessel (“OSCV”) with a Norwegian ship owner on a long-term basis with a view to penetrating the European market. After a competitive tender exercise and months of negotiation, we secured our first international subsea contract in Europe with a major global offshore player. For a small Malaysian company, winning such a significant contract in the North Sea was indeed a defining milestone for us. Along the way, our Technical Services (“TS”) Division also secured two major contracts worth approximately RM420 million in Malaysia during the year.

Optimism grew as we took delivery of our first long-term chartered OSCV, Siem Daya 1, in September 2013 and shortly thereafter completed two spot projects in succession in the North Sea and UK waters respectively. Significantly, these two projects represented our first two offshore projects in Europe, signalling our entry into the European offshore market. The second newbuild OSCV, Siem Daya 2, also on long-term charter, followed in December last year. Substantially modified and upgraded to meet the requirements of our client, each of these vessels has an estimated value of approximately USD130-140 million.

While we were intensifying our efforts in Europe during the middle of the year, significant management focus was naturally diverted away from the day-to-day operation and execution of the local cable laying project. Coupled with the complex nature of the local subsea project and the challenges of having to execute the project with brand new management and operational teams, costs unfortunately escalated significantly beyond our expectations.

Clearly, what is important for us, is to learn from this difficult episode and move forward positively. We regard this as a chance for us to reassess our management adequacy and strengthen our operational competency and efficiencies. We are also taking this opportunity to re-strategize and regroup so that we will emerge leaner, stronger and more resilient. Our resolve is firm. We have also taken a series of concrete steps to rid ourselves of the weaker elements within our group. If we manage this transition well, we are very confident that 2014 could well be our defining moment in our unwavering drive towards creating a truly successful global O&G company.

rEVIEw oF buSInESS

Due to the challenges mentioned above, we recorded our first decline in profitability in eight years since our listing. While sales grew 77% from RM296.6 million in 2012 to RM523.8 million in 2013, our pre-tax profit declined significantly from RM28.4 million to RM11.5 million over the same period.


16

ACCOUNTABLE

Segmental Contribution

2013 283,878 54% 9,637 30% 3,999 18% 274 2%

TS

OG

218,613 42% 20,984 65% 17,711 78% 15,048 94%

21,291 4% 1,431 5% 950 4% 746 4%

523,782 100% 32,052 100% 22,660 100% 16,068 100%

2012 118,290 40% 27,096 61% 22,799 59% 17,085 56%

158,729 53% 17,158 38% 16,052 42% 13,321 44%

19,561 7% 323 1% (245) -1% (53) 0%

296,580 100% 44,577 100% 38,606 100% 30,353 100%

RevenueRM’000 RM’000 RM’000 RM’000

EBITDA PBT PAT

SP

TS

OG

SP

RevenueRestated Restated Restated RestatedRM’000 RM’000 RM’000 RM’000

EBITDA PBT PAT

* The comparative amounts have been reclassi�ed to conform with the current year audited �nancial statement's presentation.

Segmental Revenue2012

OG40%

SP7%

TS53%

Segmental EBITDA2012

OG61%

SP1%

TS38%

Segmental PBT2012

OG59%

SP-1%

TS42%

Segmental PAT2012

OG56%

SP0%

TS44%


OG54%

SP4%

TS42%


OG30%

SP5%

TS65%

Segmental PBT2013

OG18%

SP4%

TS78%

Segmental PAT2013

OG2%

SP4%

TS94%

Chairman’sStatementcont’d

The decline reflected largely the loss incurred in the Upstream Division as well as the drop in business in the Downstream Division.

Now let me highlight the key developments and operating performance in each of our core businesses during 2013. The figures presented here have been adjusted for the management fees charged by the parent holding company for purely comparative and analytical purposes.

17

Annual Report 2013

ACCOUNTABLE

Segmental Contribution

2013 283,878 54% 9,637 30% 3,999 18% 274 2%

TS

OG

218,613 42% 20,984 65% 17,711 78% 15,048 94%

21,291 4% 1,431 5% 950 4% 746 4%

523,782 100% 32,052 100% 22,660 100% 16,068 100%

2012 118,290 40% 27,096 61% 22,799 59% 17,085 56%

158,729 53% 17,158 38% 16,052 42% 13,321 44%

19,561 7% 323 1% (245) -1% (53) 0%

296,580 100% 44,577 100% 38,606 100% 30,353 100%

RevenueRM’000 RM’000 RM’000 RM’000

EBITDA PBT PAT

SP

TS

OG

SP

RevenueRestated Restated Restated RestatedRM’000 RM’000 RM’000 RM’000

EBITDA PBT PAT

* The comparative amounts have been reclassi�ed to conform with the current year audited �nancial statement's presentation.


OG40%

SP7%

TS53%


OG61%

SP1%

TS38%

Segmental PBT2012

OG59%

SP-1%

TS42%

Segmental PAT2012

OG56%

SP0%

TS44%


OG54%

SP4%

TS42%


OG30%

SP5%

TS65%

Segmental PBT2013

OG18%

SP4%

TS78%

Segmental PAT2013

OG2%

SP4%

TS94%

17


18

RESOLUTE


oil & gas Division

From being a predominantly downstream player, our Upstream Division took on great importance in 2013. The offshore cable-lay project contributed approximately RM171.7 million in sales last year. Coupled with the two short-term spot jobs we completed in the North Sea and our growing subsurface & well services activities, our Upstream Division grew significantly from RM11.1 million in 2012 to RM199.3 million in sales last year, overshadowing our traditional Downstream mainstay. However due to the significant cost overrun in the cable-lay project, our Upstream Division as a whole generated a pre-tax loss of RM8.8 million.

Downstream Division also turned in a weaker performance in 2013 but remained an integral part of our overall O&G business. The Division contributed RM84.6 million in sales, representing a decline of 21% as compared to the RM107.2 million generated during the previous financial year. Among the key area within our Downstream Division was downstream chemicals in which we did approximately RM55.3 million in sales last year as compared to RM65.3 million in 2012.

Downstream services however witnessed a resurgence after two years of relatively weak performance. In terms of profitability, Downstream Division as a whole recorded RM12.8 million in pre-tax profits, a decline of 31% as compared to RM18.6 million achieved in 2012. The drop was primarily attributable to the lower sales in downstream chemicals and an unfavourable change in product sales mix, coupled with an increase in overhead costs.

Collectively, our O&G business still has a gross order book of approximately RM1.0 billion at the end of 2013. Of this, approximately 70% is attributable to our long-term European business. As I write this statement, we have deployed both OSCVs in the North Sea since the beginning of March 2014, and we expect significant recurring revenue to be generated from this business.

18

19

Annual Report 2013

RESOLUTE

19


20

ETHICAL


technical Services Division

TS business performed well in 2013, growing by 38% in revenue from RM158.7 million in 2012 to RM218.6 million last year. This was in large part due to the completion or near completion of four key projects for our multinational clients. During the year, our order book grew sharply from approximately RM686 million to over RM1.1 billion. At the end of 31 Dec 2013, we still had gross outstanding order book of RM1 billion.

To be sure, 2013 was not plain sailing all the way. During the year, we had two very difficult projects which were not within our usual core competency of industrial plants. We also built our order book too quickly without adequately sizing up our resources and supporting infrastructure. To compound the problems, the domestic construction industry underwent a period where qualified personnel and skilled workers were not readily available. As a result, a couple of our projects were notably delayed, resulting in higher operating costs and weaker margins, especially during the first half of the year. However we were able to subsequently strengthen our management team and address most of the operating issues, thus restoring our margins toward the end of the year. Overall, we achieved RM17.7 million in pre-tax profits from this business in 2013, representing a slight increase of 10% as compared to 2012.

Specialized Polymer Division

Specialised Polymer (“SP”) recovered from a loss in 2012 to register an improved operating performance in 2013. Sales grew 9% from RM19.6 million in 2012 to RM21.3 million in 2013 while PBT improved to almost RM1 million from a loss of RM0.2 million. The improvement largely reflected the operational improvements we instituted in the past 12 months, especially in the area of production efficiency, product formulations and cost structure. This allowed us to compete on a more equal footing with imported products. However, this being a very mature low-growth industry, competition will remain intense and margin low. Our management will continue to identify and explore ways to progressively refine our business model and strengthen our market position.

CAPItAlIzAtIon

To finance our significant growth in business in 2013, especially the rapid expansion of the Upstream and TS Divisions, our Group incurred significant borrowings during the years, both in long-term and short-term financing purposes. Our short-term working capital lines increased from RM14.1 million in 2012 to RM61.3 million last year, similarly, our long-term mature borrowings increased from RM67.2 million to RM79.8 million. Our bank borrowings will continue to be significant going forward as we continue to have significant order book to execute over the next three years.

21

Annual Report 2013

ETHICAL

21


22

“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little”

- Franklin D. Roosevelt

DMB’s continuous program in delivering CARE and giving back to the community again saw numerous activities being carried out.

APRIL 2013 – DOCI undertook the renovations of the Rumah Amal Buah Hatiku in Bandar Baru Bangi. Founded by Persatuan Kebajikan Islam Peribadi Mulia and operating since 2011, this home provides about 28 children ranging from 2 to 6 years old with food, shelter and educates them in social and moral issues. Renovation works focused mainly on the wet kitchen to provide them with su�cient storage and a proper place to prepare the meals for the children.

JUNE 2013 – In our practice of giving back to the communities in our base of operations, DSSB donated 20 units of wheelchairs to Hospital Labuan.

NOVEMBER 2013 – DPRO donated bicycles and school sundries such as socks, shoes and bags to 30 school going children in Dewan Pemulihan Dalam Komuniti (PDK) Bandar Baru Cheneh, Kemaman.

DECEMBER 2013 – One’s �rst obligation should be to help the member of his own family before he can begin thinking of talking about helping others. Charity begins at home. When some 30 families of the Daya Group employees were a�ected by the �oods that hit circa November/December 2013, DSSB initiated the Flood & Recovery Aid program. Pooling and soliciting contributions from within the company, aid was distributed to the families who were badly a�ected by the �ood situation. Aid was given in the form of supplies like rice, canned food, bottled water, clothes and a small token in monetary terms.


DIVIDEnDS

In view of our significant capital expenditure program in the coming year, details of which are set out in the next section, the Board has decided to forego our dividend payout for the first time since 2006.

CloSIng rEmArKS

The outlook for the Group in the coming years will invariably depend on the performance of our O&G business, especially the upstream subsea sector. The long-term charters of Siem Daya 1 and Siem Daya 2 represent significant commitments on the part of the Group over the next five years and will continue to require considerable resources from us going forward. We take comfort in that these two assets are on contracts with a major client in Europe, and barring unforeseen circumstances, will generate substantial recurring revenue and income to the Group over the long run. It is therefore paramount that these contracts are executed smoothly and within our budgets.

In order to further enhance our operating cost structure, we have commenced negotiation with the vessel owner with a view of purchasing the two vessels outright, at an estimated price of USD140 million each. This represents the bulk of our capital expenditure program. In connection with this, we have also initiated an important RM935-RM950 million fund raising exercise comprising of: (i) RM75-85 million private placement of new shares; (ii) RM150-160 million rights issue with warrants; (iii) RM90-100 million convertible bonds; and (iv) RM590-635 million of long-term senior debt financing. We will be submitting these proposals to the shareholders and relevant regulatory authorities for approval in due course.

Apart from the subsea business, both Exploration & Production (“E&P”) and subsurface business represent two very strategic O&G assets of the Group, and could well become the main catalysts for our future growth. As some of you might be aware, our Group is the pre-IPO cornerstone investor in Reach Energy Berhad (“Reach”), a company set up for the purpose of listing under the Securities Commission’s Special Purpose Acquisition Companies (“SPAC”) framework. Reach had submitted its listing application since August 2013, and naturally we expect to hear from the regulators soon.

Subsurface business is another key area of interest for us. Within this segment, we are active in well intervention and well completion services, particularly in downhole camera and desanding services where we are quickly building a name for ourselves regionally. We expect these services to perform well in the coming year.

In the meantime, we will continue to explore and evaluate strategic options for our TS and SP Divisions. As our O&G business grows, considerable resources are being committed to and channelled into our core offshore subsea and subsurface businesses. To ensure our long-term success in these areas, it has become clear to us that we need to embark on a restructuring exercise with a view of concentrating our resources and intensify our strategic focus on our core businesses. Such a restructuring exercise will necessarily entail the divestment of non-core assets, including both TS and SP Divisions. We have engaged independent advisors to assist us in this effort, and shall update you periodically as and when key developments transpire.

On behalf of the Board and management of the Group, I thank you for your continued loyalty and trust in our vision.

Chairman

Dato’ Dr. Azmil Khalili bin Dato’ Khalid

23

Annual Report 2013

“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little”

- Franklin D. Roosevelt

DMB’s continuous program in delivering CARE and giving back to the community again saw numerous activities being carried out.

APRIL 2013 – DOCI undertook the renovations of the Rumah Amal Buah Hatiku in Bandar Baru Bangi. Founded by Persatuan Kebajikan Islam Peribadi Mulia and operating since 2011, this home provides about 28 children ranging from 2 to 6 years old with food, shelter and educates them in social and moral issues. Renovation works focused mainly on the wet kitchen to provide them with su�cient storage and a proper place to prepare the meals for the children.

JUNE 2013 – In our practice of giving back to the communities in our base of operations, DSSB donated 20 units of wheelchairs to Hospital Labuan.

NOVEMBER 2013 – DPRO donated bicycles and school sundries such as socks, shoes and bags to 30 school going children in Dewan Pemulihan Dalam Komuniti (PDK) Bandar Baru Cheneh, Kemaman.

DECEMBER 2013 – One’s �rst obligation should be to help the member of his own family before he can begin thinking of talking about helping others. Charity begins at home. When some 30 families of the Daya Group employees were a�ected by the �oods that hit circa November/December 2013, DSSB initiated the Flood & Recovery Aid program. Pooling and soliciting contributions from within the company, aid was distributed to the families who were badly a�ected by the �ood situation. Aid was given in the form of supplies like rice, canned food, bottled water, clothes and a small token in monetary terms.

CorporateSocial Responsibility


24

CorporateGovernance Statement

The Board of Directors of Daya Materials Berhad (“the Board”) is committed towards achieving excellence in corporate governance and acknowledges that the prime responsibility for good corporate governance lies with the Board. The Board, in carrying out their roles and responsibilities, is firmly committed to ensuring that the highest standards of corporate governance and corporate conduct are adhered to, in order that the Group achieves strong financial performance for each financial year, and more importantly delivers long-term and sustainable value to shareholders.

The Malaysian Code on Corporate Governance 2012 (“the Code”) sets out principles and recommendations on structures and processes that companies should adopt in making good corporate governance an integral part of their business dealings and culture. The Board reaffirms its support to the Code and believes that good corporate governance is fundamental in achieving the Group’s objectives. To ensure that the best interests of shareholders and other stakeholders are effectively served, the Board continues to play an active role in improving governance practice and constantly monitors the development in corporate governance including in the Code.

The Board is pleased to report to the shareholders, the manner and the extent in which the Group has applied and complied with the Principles and Recommendations of the Code for the financial year ended 31 December 2013.

1. DIrECtorS

1.1 board Composition and balance

As at the date of this statement, the Board consists of six (6) members, comprising two (2) Executive Directors and four (4) Independent Non-Executive Directors with the appropriate mix of skills and experience. With this Board composition, the Company has thus complied with paragraph 15.02(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) which requires that at least two (2) Directors or one-third (1/3) of the Board of Directors, whichever is the higher, to be Independent Directors.

The Directors from different backgrounds and specialisation collectively bring depth and diversity in experience to the Group’s operations. The Independent Non-Executive Directors are independent from management and have no family or business relationships with the Group that could interfere with the exercise of their independent judgment. They bring to bear objective and independent judgment to the decision making of the Board and provide an effective check and balance for the Executive Directors.

In maintaining the independence of the Independent Directors of the Company, annual assessment is performed in order to mitigate risks arising from any possible conflict of interest situations or undue influence affecting their independence. In line with the recommendations of the Code, the tenure of an Independent Director of the Company should not exceed a cumulative term of nine (9) years. The Board must justify and seek shareholders’ approval in the event it retains an Independent Director, who has served in that capacity for more than nine (9) years.

The tenure of Encik Fazrin Azwar Bin Md Nor as an Independent Director of the Company will exceed a cumulative term of nine (9) years by 1 June 2014. Thus, shareholders’ approval will be sought to retain him as an Independent Director of the Company. The Nomination Committee and the Board have performed the assessment on the independence of the Independent Directors. Upon the Nomination Committee’s recommendation, the Board recommended for shareholders’ approval to retain Encik Fazrin Azwar Bin Md Nor as an Independent Non-Executive Director of the Company based on the following justifications:-

a) He fulfils the criteria under the definition of Independent Director as stated in the Main Market Listing Requirements of Bursa Securities and therefore would be able to function as a check and balance and bring an element of objectivity to the Board of Directors;

b) He has devoted sufficient time and attention to his professional obligations for informed and balanced decision making;

c) He has vast experience in a diverse range of businesses and therefore would be able to provide constructive opinion; d) He exercises independent judgement and has the ability to act in the best interest of the Company; e) He has continued to exercise his independence and due care during his tenure as an Independent Non-Executive

Director of the Company and carried out his professional duties in the best interest of the Company and shareholders.

The roles of the Chairman, the Vice Chairman and the Managing Director are separate with clear distinction of responsibilities between them to ensure balance of power and authority. The Chairman, who is a Non-Executive Director, is primarily responsible for the orderly conduct and working of the Board whilst the Vice Chairman and the Managing Director are responsible for the running of the business and operations and implementation of the Board’s policies and decisions.

The brief profiles of each Board member are set out under Profile of Directors on pages 10 to 13 of this Annual Report.

25

Annual Report 2013

1. DIrECtorS cont’d

1.2 Duties and responsibilities

The Board is overall responsible for the corporate governance structure of the Group. Its primary responsibilities pursuant to the recommendations of the Code include:

• reviewandadoptastrategicplanfortheGroup; • overseetheconductoftheGroup’sbusinesstoevaluatewhetherthebusinessisbeingproperlymanaged; • identifyprincipalriskandensuretheimplementationofappropriatesystemstomanagetheserisks; • implementsuccessionplanning, includingappointing,training,fixingthecompensationofandwhereappropriate,

replacing senior management; • developandimplementaninvestorrelationsprogramorshareholderscommunicationspolicyfortheGroup;and • review the adequacy and the integrity of the Group’s internal control systems and management information

systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines.

The Board has delegated certain responsibilities to the Board Committees, such as the Audit Committee, Nomination Committee and Remuneration Committee, which operate within clearly defined terms of reference. These Board Committees have the authority to examine specific issues and forward their recommendations to the Board. At each Board meeting, minutes of the Board Committees meetings are presented to the Board. The respective Chairman of the Board Committees will also report to the Board on key issues deliberated by the Board Committees. The final decisions on all matters, however, rest with the Board.

To ensure the effective discharge of its function and responsibilities, the Board also delegates some of the Board’s authorities to the Executive Committee (“EXCO”), which represents the management. The EXCO is entrusted with the responsibility of carrying out tasks which are assigned by the Board. The EXCO acts on behalf of the Board on matters concerning administrations, operations, capital expenditure, debt approvals and investments. It meets at regular intervals to review and decide on administrative and operational matters, budgets and investment strategies of the Group.

The Board recognises the importance to set out the key values, principles and ethos of the Group, as policies and strategy development are based on these considerations. The Board Charter includes the division of responsibilities and powers between the Board and the management as well as the different committees established by the Board.

The Board Charter sets out the principal role of the Board, the demarcation of the roles, functions, responsibilities and power of the Board, various Board Committees of the Company.

The Board Charter further defines the specific responsibilities of the Board, in order to enhance coordination and communication between the senior management and Board and more specifically, to clarify the accountability of both the Board and management for the benefit of the Company and its shareholders. In addition, it will assist the Board in the assessment of its own performance and of its individual Directors.

The Board will review and update the Board Charter periodically in accordance with the needs of the Company and any new regulations that may have an impact on the discharge of the Board’s responsibilities. The Board Charter is available for reference on the Company’s website.

1.3 Supply of Information

The Board has unrestricted access to timely and accurate information necessary in the furtherance of their duties. All Directors are furnished with the meeting agenda and other documents on matters requiring their consideration prior to and in advance of each meeting. The documents are comprehensive and include qualitative and quantitative information to enable the Board members to make an informed decision. Senior management may be invited to attend these meetings to explain and clarify to the Board on matters being tabled.

The Chairman, with the assistance of the management, undertakes primary responsibility for organising information necessary for the Board to deal with the agenda and in ensuring all Directors have full and timely access to the information relevant to the matters that will be deliberated at the Board meeting. Certain reports, such as those relating to the Company’s financial results for statutory announcements, are submitted to the Audit Committee for their review and recommendation to the Board for approval thereafter.

All proceedings from the Board meetings are recorded by way of minutes. The minutes are then confirmed by the Board and signed as correct records of the proceedings thereat by the Chairman of the meeting.


cont’d


26

CorporateGovernance Statementcont’d


1.3 Supply of Information cont’d

All the Directors have access to the advice and services of the Company Secretary on procedural and regulatory requirements. If required, the Directors may seek independent external professional advice at the Group’s expense, in the furtherance of their duties.

During the financial year ended 31 December 2013, the Board met six (6) times where it deliberated on and considered matters relating to the Group’s financial performance, significant investments, change to management and control structure of the Group, corporate development, strategic issues and business plan. The attendance of each Director at Board meetings held during the financial year ended 31 December 2013 is set out below.

name of Directors no. of board meetings attended Percentage of attendance (%)

Dato’ Dr. Azmil Khalili bin Dato’ Khalid 3/6 50

Dato’ Mazlin bin Md. Junid 6/6 100

Nathan Tham Jooi Loon 6/6 100

Fazrin Azwar bin Md. Nor 6/6 100

Tan Sri Dato’ Sri Koh Kin Lip JP 6/6 100

Datuk Lim Soon Foo (or Alternate, Ronnie Lim Hai Liang)

6/6 100

None of the Directors was absent for more than 50% of the total Board meetings held under the financial year under review, hence complying with paragraph 15.05 of the Main Market Listing Requirements of Bursa Securities.

1.4 board Committees

1.4.1 Audit Committee

The Board established the Audit Committee on 1 June 2005. The Audit Committee comprises of three (3) members, all of whom are Independent Non-Executive Directors. The composition, terms of reference and summary of activities of the Audit Committee during the financial year under review are disclosed in the Audit Committee Report as set out on pages 34 to 36 of this Annual Report.

1.4.2 Nomination Committee

The Nomination Committee comprises three (3) members, all of whom are Independent Non-Executive Directors:

Chairman : Dato’ Dr. Azmil Khalili bin Dato’ Khalid (Independent Non-Executive Director) Member : Fazrin Azwar bin Md. Nor (Senior Independent Non-Executive Director) Tan Sri Dato’ Sri Koh Kin Lip JP (Independent Non-Executive Director)

The Board was of the view that the Board Committees should be chaired by different Independent Non-Executive Directors. Hence, the Board agreed that Dato’ Dr. Azmil Khalili bin Dato’ Khalid remain as Chairman of the Nomination Committee, while Encik Fazrin Azwar bin Md. Nor, who is the Senior Independent Non-Executive Director of the Company continue to act as Chairman of the Audit Committee.

The functions of the Nomination Committee are as follows:

i) To review regularly the Board structure, size and composition and make recommendations to the Board with regards to any adjustments that are deemed necessary;

ii) To propose and identify new nominees for appointment to the Board; iii) To assess Directors on an on-going basis, the effectiveness of the Board as a whole, the Board Committees and

the contribution of each individual Director as well as the Chief Executive Officer; iv) To recommend to the Board, Directors to fill the seats on Board Committees; v) To review annually the Board’s mix of skills and experience and other qualities including core competencies

which non-executive Directors should bring to the Board; vi) To develop the criteria to assess independence of the Independent Directors of the Company;

27

Annual Report 2013


cont’d


1.4 board Committees cont’d

1.4.2 Nomination Committee cont’d

The functions of the Nomination Committee are as follows: cont’d

vii) To determine annually whether or not a Director is Executive, Non-Executive or Independent; viii) To recommend to the Board for continuation (or not) in service of executive Director(s) and Directors who are

due for retirement by rotation; ix) To recommend to the Board for continuation in service of Independent Director(s) who have served the Board

for a cumulative term of more than nine (9) years; x) To consider, in making its recommendations, candidates for directorships proposed by the Chief Executive

Officer and, within the bounds of practicability, by any other senior executive or any Director or shareholder; and

xi) To orientate and educate new Directors on the nature of the business, current issues within the Group and the corporate strategy, the expectations of the Group concerning input from the Directors and the general responsibilities of Directors.

During the financial year ended 31 December 2013, the Nomination Committee met two (2) times and the attendance of each member are as follows:

nomination Committee no. of nomination Committee meetings attended

Dato’ Dr. Azmil Khalili bin Dato’ Khalid 1/2

Fazrin Azwar bin Md. Nor 2/2

Tan Sri Dato’ Sri Koh Kin Lip JP 2/2

1.4.3 Remuneration Committee

The Remuneration Committee comprises of four (4) members, all of whom are Independent Non-Executive Directors:

Chairman : Tan Sri Dato’ Sri Koh Kin Lip JP (Independent Non-Executive Director) Member : Dato’ Dr. Azmil Khalili bin Dato’ Khalid (Independent Non-Executive Director) : Fazrin Azwar bin Md. Nor (Senior Independent Non-Executive Director) : Datuk Lim Soon Foo (Independent Non-Executive Director)

The duties and functions of the Remuneration Committee are as follows:

i) To recommend to the Board the framework of Executive Directors’ remuneration and the remuneration package for each Executive Director, drawing from outside advice as necessary;

ii) To recommend to the Board, guidelines for determining remuneration/fees of Non-Executive Directors; iii) To recommend to the Board any performance related pay schemes for Executive Directors; iv) To review Executive Directors’ scope of service contracts; and v) To consider the appointment of the service of such advisers or consultants as it deems necessary to fulfill its

functions.

During the financial year ended 31 December 2013, the Remuneration Committee met one (1) time and the attendance of each member are as follows:-

remuneration Committee no. of remuneration Committee meetings attended



Dato’ Dr. Azmil Khalili bin Dato’ Khalid 0

Datuk Lim Soon Foo 0


28



1.5 Appointments to the board

The Board recognises its responsibility to carefully appraise and consider the appointment of new and existing Directors so as to continue functioning effectively. Thus, whilst the initial appraisal of new candidates is delegated to the Nomination Committee, the Board will assess and review the appointment or re-appointment of each Director to ensure a good balance of skills and experience in the Board composition. The decision on appointment of new Directors rests with the Board after considering the recommendations of the Nomination Committee.

As at the date of this statement, the Company has not established a policy formalising its approach to boardroom diversity. Hence, no gender diversity policies, targets and measures have been set. The Board, through the Nomination Committee will take the necessary steps to ensure that women candidates are sought as part of its recruitment exercise.

1.6 re-election of Directors

In accordance with the Company’s Articles of Association, one-third (1/3) or the number nearest to one-third (1/3) of the Directors shall retire from office and be eligible for re-election at the Annual General Meeting. Furthermore, each Director shall retire from office at least once in every three (3) years but shall be eligible for re-election. The Directors to retire each year are the Directors who have been longest in office since their last election.

1.7 Directors’ trainings

All members of the Board have completed the Mandatory Accreditation Programme (“MAP”) which was conducted by the Research Institute of Investment Analysts Malaysia as required by Bursa Securities. The Board will undertake an assessment of the training needs of each Director annually and the Directors will continue to undergo further Continuous Education Programmes to keep themselves abreast with the latest developments in the market place and enhance their professionalism in the discharge of their duties and responsibilities.

During the course of the year, they have also attended other training programmes for directors and seminars on area such as financial reporting standards, performamnce reviews, tax and accounting conferences that include the following:

• 19March2013–‘InternationalTradeandIndustryastheDriversofGrowth’–talkbyMinisterofInternationalTrade–talk organized by MIDF Amanah Investment Bank Berhad.

• 2May2013–‘Investments in theMiddleEast/Bridgingwith Industry’sLeaders for InvestmentOpportunities’– talkorganized by Asian Finance Bank Berhad.

• 13June2013–“FX&EconomicOutlooksBriefing“-organizedbyRHBBankBerhad.

• 3-4July2013–‘ShiftingSands: IsTheLawReshapingOurLegalAndCorporateSectors?’–conferenceorganizedbyCurrent Law Journal and BAR Council Malaysia.

• 1 October 2013 – “Enterprise Risk Management Training“ – organized by Optic Marine Services BusinessDevelopment and Risk Department.

• 9October 2013 –‘NominatingCommittee Programme’ – organizedby ICLIF Leadership andGovernanceCentretogether with Bursa Malaysia.

• 24October2013–‘TIMESManufacturingSeminar’–organizedbyTimesOffset(M)Sdn.Bhd.

• 6&7November2013–“InauguralAseanCorporateGovernance(ACG)summit“–organizedbyMalaysianInstituteofCorporate Governance (MICG).

• 15November2013–“2014Budget,RecentTaxDevelopments&GST“-organizedbyErnst&YoungTaxConsultantsSdn. Bhd.

• 25November2013–“EnterpriseRiskManagement-What’s is it& the implications to theBoard&ManagementofListed Issuers“ - organized by KPMG Management & Risk Consulting Sdn. Bhd.

29

Annual Report 2013


1.8 number of Directorship

Pursuant to the Main Market Listing Requirements of Bursa Securities, Directors of the Company shall not hold more than (5) directorship in public listed companies by 1 June 2013.

The Directors of the Company are required to first notify the Chairman, prior to acceptance of new directorship in other public listed companies, including the estimated time commitment required, to ensure that such appointment would not affect their commitments and focus for an effective input to the Board.

As at the date of this Statement, none of the Directors of the Company hold more than five (5) directorship in public listed companies. The directorships of each Director are set out in the Profile of Directors on pages 10 to 13 of this Annual Report.

1.9 Qualified and Competent Company Secretary

The Board is satisfied with the performances and support rendered by the Company Secretary to the Board in the discharge of its functions. The Company Secretary plays an advisory role to the Board in relation to the Company’s constitution, Board’s policies and procedures and compliance with the relevant regulatory requirements, codes or guidance and legislations. The Company Secretary supports the Board in managing the Company’s governance model, ensuring its effectiveness and relevance. The Company Secretary also ensures that the deliberations and decisions made at the Board meetings are well captured and minuted.

1.10 Code of Ethics

The Group is committed in maintaining the highest standards of honesty, integrity and ethical conduct and has established a Code of Conduct and Business Ethics (“the Code of Ethics”) and includes rules and guidance on anti-fraud and whistle blower protection to ensure effective investigation, reporting and disclosure of any occurrences of fraud within the Group.

The Code of Ethics provides general compliance requirements as to employees’ conduct and behaviour in carrying out their duties and responsibilities in day-to-day business operations. The Code of Ethics outlines minimum standards expected of employees in dealing with conflicts of interest, supplier relationships, competitors, external businesses or activities, transactions with the Group, use of the Group’s real and intellectual, use and disclosure of the Group’s confidential information, compliance of national and international laws and regulations, compliance of all relevant health & safety requirements, maintenance of business records and illegal or questionable payments.

The Code of Ethics will be periodically reviewed and it is published on the Company’s website.

2. DIrECtorS’ rEmunErAtIon

The remuneration of Directors is determined at levels, which will enable the Company to attract and retain Directors with the relevant experience and expertise to run the Group successfully. The remuneration of Executive Directors is structured to link rewards to corporate and individual performance. The remuneration of Non-Executive Directors comprises annual Directors’ fee and meeting allowance for each Board or Board Committee meeting attended by them. The determination of the remuneration packages of non-executive directors, including non-executive chairman, is a matter for the Board as a whole.

The details of remuneration of Directors of the Company during the financial year ended 31 December 2013 are as below:

(i) Aggregate remuneration categorised into components:

Executive Directors

non-Executive Directors total

(rm) (rm) (rm)

Fees 278,000 108,000 386,000

Salaries & other emoluments 3,431,124 58,500 3,489,624

total 3,709,124 166,500 3,875,624


cont’d


30

2. DIrECtorS’ rEmunErAtIon cont’d

(ii) The number of Directors whose total remuneration fall within the following bands:-

range Executive Directors non-Executive Directors

Below RM50,000 - 4

RM1,300,000-RM1,350,001 1 -

RM2,350,001-RM2,400,000 1 -

3. InVEStorS rElAtIon AnD ShArEholDErS CommunICAtIon The Company recognises the value of transparent, consistent and coherent communications with investment community

consistent with commercial confidentiality and regulatory considerations. The Company aims to build long-term relationships with shareholders and potential investors through appropriate channels for the management and disclosure of information. These investors are provided with sufficient business, operations and financial information on the Group to enable them to make informed investment decisions.

3.1 Dialogue with shareholders and investors

In maintaining the commitment to effective communication with the shareholders, the Company adopts the practice of comprehensive, timely and continuing disclosures of information to its shareholders as well as to the general investing public.

Where possible and applicable, the Company also provides additional disclosure of information on a voluntary basis. The Company believes that consistently maintaining a high level of disclosure and extensive communication with its shareholders is vital to shareholders and investors to make informed investment decisions.

The primary tools of communication with the shareholders of the Company are through the annual report, quarterly reports, announcements through Bursa Securities and circulars. The Company’s website at www.dayagroup.com.my contains vital information concerning the Group which is updated on a regular basis and shareholders are able to pose questions to the Company through the website. All announcements made by the Company, annual reports as well as the notice of general meetings are also made available on the Company’s website.

The Board considers it essential for investors to be kept informed of all latest financial results and developments of the Company and the Group and where appropriate, will provide disclosure that is in the best interest of the Company and also of the shareholders. All such reporting information can be obtained from the websites of the Company and Bursa Securities.

In addition to the above, the Board has identified En. Fazrin Azwar bin Md. Nor as the Senior Independent Non-Executive Director to whom all concerns from the shareholders or investors may be conveyed.

3.2 general meetings

All shareholders are encouraged to attend the Company’s General Meetings and to participate in the proceedings. The Company allows a member to appoint more than one (1) proxy, who may but need not be a member of the Company. A member may appoint any person to be his/her proxy without limitation and the proxy shall have the same rights as the member to speak at the General Meetings.

At the Annual General Meeting and Extraordinary General Meeting, the Chairman gives shareholders ample opportunity to participate through questions on the prospects, performance of the Group and other matters of concern addressed to the Board. Shareholders’ suggestions received during the General Meetings are reviewed and considered for implementation, wherever possible. The Company would conduct poll voting if demanded by shareholders at the General Meetings.

Notice of the general meetings and the Group’s annual report are sent out to the shareholders within the period prescribed by the Company’s Articles of Association. The notice of the meetings will also be advertised in the newspaper.


31

Annual Report 2013

4. ACCountAbIlItY AnD AuDIt

4.1 Financial reporting

The Board is responsible for presenting a balanced and meaningful assessment of the Group’s financial performance and prospects primarily through the annual report, financial statements and quarterly announcements of the Group’s results. The Audit Committee assists the Board in ensuring accuracy, adequacy and completeness of information for disclosure. The Statement by Directors pursuant to Section 169 of the Companies Act, 1965 is set out on page 42 of this Annual Report and the Statement explaining the responsibility for preparing the annual audited financial statements is set out on page 141 of this Annual Report.

4.2 Internal Control and risk management

The Board is ultimately responsible for the overall system of internal controls, which includes not only financial controls but also controls relating to operations, compliance and risk management. The internal control system which is designed to meet the needs of the Company and to manage risks to which the Company is exposed can only provide reasonable and not absolute assurance against material misstatement, loss or fraud.

Further details relating to internal control are set out in the Statement on Risk Management and Internal Control on pages 32 and 33 and the Audit Committee Report on pages 34 to 36 of this Annual Report.

4.3 relationship with Auditors

Theexternal auditors,MessrsErnst&Young,havecontinued to report tomembersof theCompanyon theirsfindingswhich are included as part of the Company’s financial reports with respect to each year’s audit on the statutory financial statements. In doing so, the Company has established a transparent arrangement with the auditors to meet their professional requirements.

The Audit Committee undertakes an annual assessment of the suitability and independence of the external auditors. Having satisfied with their performance, the Audit Committee will recommend their re-appointment to the Board, upon which shareholders’ approval will be sought at the Annual General Meeting.

Key features underlying the relationship of the Audit Committee with the external auditor and internal auditor are included in the Audit Committee Report on pages 34 to 36 of this Annual Report.

5. SuStAInAbIlItY PolICY

The Board promotes good Corporate Governance in the application of sustainability practices throughout the Group, the benefits of which are believed to translate into better corporate performance.

A detailed report on sustainability activities, demonstrating the Company’s commitment to the global environmental, social, governance and sustainability agenda, appears in the Corporate Responsibility Statement on page 23 of this Annual Report.


cont’d


32

Statement onRisk Management and Internal Control

IntroDuCtIon

The Board of Directors of Daya Materials Berhad (the “Board”) is pleased to provide the following statement on the state of risk management and internal control of Daya Materials and its subsidiaries (“Group”), which have been prepared in accordance with the “Statement on Risk Management and Internal Control: Guidance for Directors of Public Listed Companies” as adopted by the Bursa Malaysia Securities Berhad (“Bursa Securities”).

boArD rESPonSIbIlItY

The Board acknowledges its responsibility to maintain a sound system of internal control in the Group and to review the adequacy and integrity of the system to safeguard the shareholders’ investments and the Group’s assets. As with the inherent limitations in any system of internal control, the Group’s system too is designed to manage rather than eliminate the risk of failure to achieve its business objectives. The system of internal control is designed to provide reasonable assurance against material misstatement or loss.

The Board confirms that there is an ongoing process for identifying, evaluating, monitoring and managing the significant risks faced by the Group. This process has been in place throughout the year. Such process is also applied consistently throughout the Group and is regularly reviewed by the Board.

thE grouP’S SYStEm oF IntErnAl Control

The Board has established an internal audit function which is carried out in-house via the Group Internal Audit Department. This audit function covers all principal areas of operations and continuously offers assurances on the system of internal control. The internal audit function is independent of the activities it audits and audits are performed with impartiality, proficiently and with due professional care. The internal audit function reports to the Audit Committee whose members are all independent and non-executive members of the Board. All reports are presented to the Audit Committee whom shall ensure that all risks identified are satisfactorily dealt with. It is the practice of the Board to review the internal audit function’s scope of work, authority and resources as and when required.

The internal audit function has adopted a risk-based approach in its audit work. The audit focused on areas with high risk, which were identified in the risk management framework, to ensure that the controls were functioning and where necessary, action plans were developed to improve on controls to manage significant risks.

The Group has put in place the following key elements of internal control:-

i) There is a formal organization structure within the Group with delineated lines of responsibility, authority and accountability; ii) Clearly documented internal policies, manuals, procedures and work instructions, and which are updated from time to time;iii) Regular Board and management meetings are held where information is provided to the Board and management covering

financial performances and operations;iv) Major investments, acquisitions and disposals are appraised prior to approval by the EXCO or the Board;v) Regular training and development programs are being attended by employees with the objective of enhancing their knowledge

and competency; andvi) Management accounts and reports are prepared monthly for monitoring of actual performance versus budget. In this instance,

material variances are explained and corrective actions, where necessary, are taken.

The Audit Committee established by the Board performs an oversight role in maintaining the integrity of the Group’s system of internal control. The Audit Committee is assisted by the Group Internal Audit Department which performs regular audits to review the internal controls and risk management practices and also the external auditors which review the financial reporting controls. The internal control system will continue to be reviewed, added on or updated in line with the changes in the operating environment.

The internal audit expense costs incurred for the financial year ended 31 December 2013 was RM191,629.60.

33

Annual Report 2013

rISK mAnAgEmEnt

The Group has established a risk management framework, where a structured process to identify, evaluate, manage and communicate principal risks faced by the Group was formalized via the Risk Management Policy and Guidelines for adoption by all business units across the Group.

The management is responsible for identifying, analyzing, managing and reporting on significant risks on an ongoing basis. These functions were carried out continuously during the year and significant risk matters together with the relevant systems of controls to manage those risks are reported to the Board for discussion on quarterly basis.

The risk profile of the Group has been compiled to facilitate the Board and management to prioritize their focus on areas of high risks. Corresponding controls to manage the relevant identified risks have also been documented. Where there are deficiencies, action plans have been developed to improve the system of controls in order to effectively manage the risks.

Control wEAKnESS

The management continues to take measures to strengthen the control environment. In the year under review, there was no material losses, incurred as a result of weakness in the internal control that would require disclosure in this annual report.

ConCluSIon

The Board is of the opinion that based on the current level of activities, the Group’s system of internal control is adequate and accords with the guidance provided by the Internal Control Guidance adopted by the Bursa Securities.

Date: 29 April 2014

Statement onRisk Management and Internal Control

cont’d


34

AuditCommittee Report

ComPoSItIon

Members of the Audit Committee, their respective designations and directorate are as follows:-

Chairman : FAZRIN AZWAR BIN MD. NOR Chairman, Senior Independent Non-Executive Director

Members : TAN SRI DATO’ SRI KOH KIN LIP JP Independent Non-Executive Director

DATO’ DR. AZMIL KHALILI BIN DATO’ KHALID Independent Non-Executive Director

mEmbErShIP

The Audit Committee shall be appointed by the Board from amongst the Directors and shall consist of not less than three (3) members, where all members must be non-executive directors with a majority of whom shall be Independent Directors.

The Board shall, within three (3) months of a vacancy occurring in the Audit Committee which results in the number of members reduced to below three (3), appoint such number of new members as may be required to make up the minimum number of three (3) members.

The members of the Audit Committee shall elect a Chairman from among their members who shall be an Independent Director. An alternate Director must not be appointed as a member of the Audit Committee.

The Board shall review the terms of office and performance of the Audit Committee and each of its members at least once (1) in every three (3) years to determine whether the Audit Committee and the members have carried out their duties in accordance with their terms of reference.

AuthorItY

The Committee shall, in accordance with the procedure determined by the Board and at the cost of the Company have authority to investigate any matter within its terms of reference, full and unrestricted access to any information pertaining to the Company and all the resources required to perform its duties. The Committee shall have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity and be able to convene meetings or to obtain independent external professional advice or other advice and to secure the attendance of outsiders with relevant experience and expertise if it considers necessary.

mEEtIngS

The Committee shall meet at least four (4) times in a year subject to the quorum of at least two (2) independent directors or more frequently as circumstances required or upon the request of any member of the Committee with due notice of issues to be discussed and shall record its deliberations and conclusions. The Committee may invite any Board member or any senior management of the Company who the Committee thinks fit to attend its meetings to assist and to provide pertinent information as necessary.

The Committee may regulate its own procedures, in particular:

a) The calling of meetings;b) The notice to be given of such meetings;c) The voting and proceedings of such meetings;d) The keeping of minutes; ande) The custody, production and inspection of such minutes.

The Company Secretary shall act as Secretary of the Audit Committee and shall, with the concurrence of the Chairman, draw up the agenda of meetings. The notice of meetings and the meeting papers or explanatory documentation will be circulated to the Audit Committee members prior to each meeting.

The Secretary shall also be responsible for recording the proceedings of the Audit Committee.

35

Annual Report 2013

DutIES

The duties of the Audit Committee include the following:

i) To review the quarterly results and the year-end financial statements, prior approval by the Board, focusing particularly on: • Changes in or implementation of accounting policies and practices; • Significant adjustments or unusual events; • Going concern assumption; and • Compliance with applicable approved financial reporting standards, regulatory and other legal requirements;ii) To review with the external auditor, the audit scope and plan, including any changes to the planned scope of the audit plan, and

to discuss to ensure co-ordination where more than one audit firm is involved;iii) To review with the external auditor, the results of the interim and final audits and the Management’s response thereto, including

the status of previous audit recommendations;iv) To review the assistance given by the Company’s employees to the auditors, and any difficulties encountered in the course of

audit work, including any restrictions on the scope of activities or access to required information (in the absence of management where necessary);

v) To review the appointment and performance of external auditor, the audit fee and any question of resignation or dismissal before making recommendations to the Board;

vi) To review with the external auditor, its evaluations of the system of internal controls;vii) To assess the suitability and independence of external auditors;viii) To review the adequacy of the internal audit scope, functions, authority, competency and resources of the internal audit function

and that it has necessary authority to carry out its work;ix) To review the internal audit programme, processes and reports to evaluate the findings of the internal audit and to ensure that

appropriate and prompt remedial action is taken by Management on the recommendations of the internal audit function;x) To review any appraisal or assessment of the performance of the internal audit function;xi) To approve any appointment or termination of internal audit function;xii) Take cognisance of resignations of internal audit function and provide an opportunity to submits its reasons for resigning; xiii) To consider any related party transaction and conflict of interest situation that may arise within the Group including any

transaction, procedure or course of conduct that raises questions of management integrity;xiv) To verify the allocation of Employees’ Share Option Scheme (“ESOS”) in compliance with the criteria stipulated in the ESOS By

Laws , if any;xv) To direct and, where appropriate, supervise any special projects or investigation considered necessary, and review investigation

reports on any major defalcations, frauds and thefts; and xvi) Such other responsibilities as may be agreed to by the Audit Committee and the Board.

SummArY oF ACtIVItIES

During the financial year ended 31 December 2013, the Audit Committee met five (5) times and the attendance of each member is as follows:

name of Director no. of meetings attended


Dato’ Dr. Azmil Khalili bin Dato’ Khalid 2/5


During the financial year ended 31 December 2013, the Audit Committee have considered, reviewed and discussed the following:

i) Reviewed the external auditor’s scope of work and audit plan for the financial year. Prior to the audit fieldwork, representatives from the external auditor presented their audit strategy and plan to the Audit Committee;

ii) Reviewed with the external auditor the results of the interim and final audits, the management letter, including management’s response and the evaluation of the system of internal controls;

iii) Reviewed the suitability and independence of external auditors and recommended to the Board the re-appointment of the external auditor and approval of audit fees payable to the external auditor;

iv) Met with external auditor twice (2) during the financial year without the presence of any Executive Directors, to discuss problems and reservations arising from the interim and final audits, if any, or any other matter the auditor may wish to discuss;

v) Reviewed the internal audit function’s resource requirements, adequacy of plan, functions and scope for the financial year under review;

vi) Reviewed the performance and competency of internal audit function;

AuditCommittee Report

cont’d


36

SummArY oF ACtIVItIES cont’d

During the financial year ended 31 December 2013, the Audit Committee have considered, reviewed and discussed the following: cont’d

vii) Reviewed the internal audit plan, processes and reports which highlighted the audit issues, recommendations and management’s response. Discuss with management and ensure appropriate actions were taken to improve the system of internal controls based on improvement opportunities identified in the internal audit reports;

viii) Reviewed the adequacy and effectiveness of governance and risk management processes as well as the internal control system through risk assessment reports from the internal auditor. Significant risk issues were summarized and communicated to the Board for consideration and resolution;

ix) Reviewed the unaudited quarterly financial results of the Group and making relevant recommendations to the Board for approval. The review and discussions were conducted with the Group Chief Financial Officer;

x) Reviewed the audited financial statements of the Group prior to submission to the Board for its consideration and approval. The review was to ensure that the audited financial statements were drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable Malaysian Financial Reporting Standards and International Financial Reporting Standards. Any significant issues resulting from the audit of the financial statements by the external auditors were deliberated;

xi) Reviewed related party transactions entered into by the Group, conflict of interest situations and report the same to the Board; xii) Reviewed the Statement on Risk Management and Internal Control and its recommendation to the Board for inclusion in the

Annual report; andxiii) Pertinent issues of the Group which has significant impact on the results of the Group.

The Company has implemented an ESOS of up to 10% of its issued and paid-up share capital for the eligible directors and employees of the DMB Group on 26 February 2009. However, to date, no ESOS options have been granted. Therefore, there was no verification by the Audit Committee on the allocation of options granted to employees pursuant to the ESOS.

SummArY oF ACtIVItIES oF thE IntErnAl AuDIt FunCtIon

During the financial year ended 31 December 2013, the internal audit function carried out four (4) risk-based audit engagements involving Daya Proffscorp Sdn. Bhd., Daya NCHO Sdn. Bhd., Daya Secadyme Sdn. Bhd. and Daya Clarimax Sdn. Bhd. and three (3) follow-up audits involving Daya CMT Sdn. Bhd., Daya Polymer Sdn. Bhd. and Daya Clarimax Sdn. Bhd. In addition, the internal audit function also conducted special audit review on the business operation in Indonesia involving P. T. Daya Secadyme Indonesia. The results of the review were presented in the form of reports using the COSO methodology to the Audit Committee during the quarterly Audit Committee meetings. The reports set out audit findings and recommendations for improvements and status of prior audit findings. The internal auditors also presented the internal audit plan for the financial year ending 31 December 2014 during the fourth quarter Audit Committee meeting. The internal audit plan was approved by the Audit Committee and is subject to revision and amendment with the approval of the Audit Committee (if required) to accommodate any changes within the Group.

AuditCommittee Reportcont’d

FinancialStatements

Directors' Report

Statement by Directors

Statutory Declaration

Independent Auditors' Report

Income Statements

Statements of Comprehensive Income

Statements of Financial Position

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

Supplementary Information

38

42

42

43

45

46

47

49

51

54

140


38

Directors’ Report

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2013. PrinciPal activities The principal activities of the Company are investment holding and provision of management services to its subsidiaries. The principal activities of the subsidiaries are set out in Note 13 to the financial statements. There have been no significant changes in the nature of the principal activities during the financial year.

results

Group company

rM rM

Profit for the year 4,228,842 4,272,964

Attributable to:

Equity holders of the Company 3,597,136 4,272,964

Non-controlling interests 631,706 -

4,228,842 4,272,964 There were no material transfers to or from reserves or provisions during the financial year. In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. DiviDenDs The amount of dividends paid by the Company since 31 December 2012 in respect of the financial year ended 31 December 2012 as reported in the directors’ report of that year was as follows:

rM

Final tax exempt (single-tier) dividends of 2.5% 3,118,295 The Board of Directors does not recommend the payment of any dividends for the financial year ended 31 December 2013. Directors The names of the directors of the Company in office since the date of the last report and at the date of this report are: Dato’ Dr Azmil Khalili Bin Dato’ Khalid Dato’ Mazlin Bin Md. Junid Tham Jooi Loon Fazrin Azwar Bin Md. Nor Tan Sri Dato’ Sri Koh Kin Lip J.P. Datuk Lim Soon Foo Ronnie Lim Hai Liang (Alternate director to Datuk Lim Soon Foo)

39

Annual Report 2013

Directors’ Report

cont’d

Directors’ benefits Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement, to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate. Since the end of the previous financial year, no director has received or become entitled to receive any benefits (other than benefits included in the aggregate amount of emoluments 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 any director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, except as disclosed in Note 28 to the financial statements. Directors’ interests According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company during the financial year were as follows:

number of ordinary shares of rM0.10 each

1.1.2013 acquired Disposed 31.12.2013

the company

Direct interest

Dato’ Mazlin Bin Md. Junid 138,359,386 - (14,000,000) 124,359,386

Tham Jooi Loon 69,370,198 338,000 - 69,708,198

Fazrin Azwar Bin Md. Nor 399,998 - (390,000) 9,998

Tan Sri Dato’ Sri Koh Kin Lip J.P. 78,115,098 - - 78,115,098

Datuk Lim Soon Foo 61,329,098 3,000,000 - 64,329,098

Deemed interest

Dato’ Mazlin Bin Md. Junid (1) 20,000,720 - - 20,000,720

Tham Jooi Loon (2) 4,709,998 - - 4,709,998

Datuk Lim Soon Foo (3) 279,000 - - 279,000 (1) Deemed interest through his son and daughter. (2) Deemed interest through his spouse. (3) Deemed interest through his son. None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year.

issue of shares During the financial year, the Company increased its issued and paid-up share capital from RM123,400,175 to RM126,303,775 by way of the issuance of 2,903,600 new ordinary shares of RM0.10 each in the Company pursuant to the conversion of RM5 million Redeemable Convertible Secured Loan Notes at a conversion price of RM0.172 per share. The new ordinary shares issued during the year ranked pari passu in all respects with the existing ordinary shares of the Company.


40

eMPloyee share oPtion scheMe At an Extraordinary General Meeting held on 26 February 2009, the shareholders of the Company approved the proposed establishment of an Employee Share Option Scheme (“ESOS”) for the eligible directors and employees of the Company and its subsidiaries. The ESOS will be administered by the ESOS Committee to be duly appointed and approved by the Board of Directors. The aggregate number of ESOS Options exercised and ESOS Options offered and to be offered under the scheme shall not exceed 10% of the issue and paid-up ordinary share capital of the Company at any point during the duration of the scheme. No options have been granted since the date of the establishment of the ESOS and at the date of reporting. other statutory inforMation (a) Before the income statements, statements of comprehensive income and statements of financial position of the Group and of the

Company were made out, the directors took reasonable steps:

(i) to ascertain that proper action has been taken in relation to the writing off of bad debts and the making of allowance for impairment and satisfied themselves that all known bad debts had been written off and that adequate allowance for impairment had been made; and

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the

ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render: (i) the amount of the allowance for impairment in the financial statements of the Group and of the Company or the amount

written off for bad debts inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

(e) As at the date of this report, there does not exist:

(i) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.

(f ) In the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial

year and the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.

Directors’ Reportcont’d

41

Annual Report 2013

siGnificant anD subsequent events Details of significant and subsequent events are disclosed in Note 33 and Note 35 to the financial statements. auDitors The auditors, Ernst & Young, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors dated 29 April 2014.

Dato’ Mazlin bin MD. JuniD thaM Jooi loon

Directors’ Report

cont’d


42

Statement by DirectorsPursuant to Section 169(15) of the Companies Act, 1965

Statutory DeclarationPursuant to Section 169(16) of the Companies Act, 1965

We, Dato’ Mazlin Bin Md. Junid and Tham Jooi Loon, being two of the directors of Daya Materials Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 45 to 139 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2013 and of their financial performance and cash flows for the year then ended. The information set out in Note 38 to the financial statements on page 140 have been prepared in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad. Signed on behalf of the Board in accordance with a resolution of the directors dated 29 April 2014.

Dato’ Mazlin bin MD. JuniD thaM Jooi loon

I, Tham Jooi Loon, being the director primarily responsible for the financial management of Daya Materials Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 45 to 140 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed Tham Jooi Loon at Kuala Lumpur in the Federal Territory on 29 April 2014 thaM Jooi loon Before me,

43

Annual Report 2013

Independent Auditors’ Report

to the members of Daya Materials Berhad(Incorporated in Malaysia)

rePort on financial stateMents We have audited the financial statements of Daya Materials Berhad, which comprise the statements of financial position as at 31 December 2013 of the Group and of the Company, and the income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 45 to 139. Directors’ responsibility for the financial statements The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards, and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal controls as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2013 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. rePort on other leGal anD reGulatory requireMents In accordance with the requirements of the Companies Act, 1965 (“Act”) in Malaysia, we also report the followings:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 13 to the financial statements, being financial statements that have been included in the consolidated financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.


44

other rePortinG resPonsibilities The supplementary information set out in Note 38 to the financial statements on page 140 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

ernst & younG MohD. sukarno bin tun sarDonAF : 0039 No. 1697/03/15(J) Chartered Accountants Chartered Accountant Kuala Lumpur, Malaysia 29 April 2014

Independent Auditors’ Report to the members of Daya Materials Berhad(Incorporated in Malaysia)cont’d

45

Annual Report 2013

Income Statements

for the financial year ended 31 December 2013

Group company

restated

2013 2012 2013 2012

note rM rM rM rM

Revenue 3 523,785,217 296,586,781 15,364,116 11,644,887

Cost of sales 4 (445,578,139) (250,923,343) - -

Gross profit 78,207,078 45,663,438 15,364,116 11,644,887

Other income 5,373,450 16,458,838 2,838,421 1,498,729

Selling and distribution expenses (1,092,059) (980,368) - -

Administrative expenses (65,272,005) (29,211,612) (9,602,781) (8,757,292)

Operating profit 17,216,464 31,930,296 8,599,756 4,386,324

Finance costs 5 (6,276,908) (4,067,968) (2,439,370) (1,448,136)

Share of results of joint ventures 14 527,854 524,361 - -

Profit before tax 6 11,467,410 28,386,689 6,160,386 2,938,188

Income tax expense 7 (7,238,568) (8,270,488) (1,887,422) (928,142)

Profit for the year 4,228,842 20,116,201 4,272,964 2,010,046

Attributable to:

Equity holders of the Company 3,597,136 20,170,784 4,272,964 2,010,046

Non-controlling interests 631,706 (54,583) - -

4,228,842 20,116,201 4,272,964 2,010,046

Earnings per share (sen)

- Basic 8 0.29 1.65

- Diluted 8 0.29 1.63

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.


46

Statements of Comprehensive Income for the financial year ended 31 December 2013

Group company

2013 2012 2013 2012

rM rM rM rM

Profit for the year 4,228,842 20,116,201 4,272,964 2,010,046

Other comprehensive income:

Foreign currency translation differences for foreign subsidiaries 843,030 106,714 - -

Total comprehensive income for the year, net of tax 5,071,872 20,222,915 4,272,964 2,010,046

Total comprehensive income for the year attributable to:

Equity holders of the Company 4,440,166 20,277,498 4,272,964 2,010,046

Non-controlling interests 631,706 (54,583) - -

5,071,872 20,222,915 4,272,964 2,010,046


47

Annual Report 2013

Statements of Financial Position as at 31 December 2013

restated restated

2013 2012 1.1.2012

note rM rM rM

Group

non-current assetsProperty, plant and equipment 9 143,845,213 105,582,004 100,018,297 Land held for property development 10 11,294,093 10,474,825 - Investment properties 11 9,812,792 1,195,405 1,210,400 Intangible assets 12 85,698,754 83,896,892 83,885,182 Investment in joint ventures 14 1,789,475 1,109,302 726,318 Available-for-sale financial assets 15 2,400,003 - - Deferred tax assets 16 2,800,267 - - Other receivables 17 103,330 728,096 1,271,456

257,743,927 202,986,524 187,111,653

current assetsInventories 18 17,464,598 14,097,906 14,181,536 Trade and other receivables 17 126,953,105 73,874,827 88,916,079 Other current assets 19 51,024,323 40,125,499 22,615,041 Tax recoverable 1,931,120 1,611,576 2,205,869 Marketable securities 20 129,825 108,188 243,728 Cash and cash equivalents 21 69,977,355 66,412,033 62,840,884

267,480,326 196,230,029 191,003,137

total assets 525,224,253 399,216,553 378,114,790

equity and liabilitiesequity Share capital 22 126,303,775 123,400,175 119,915,854 Reserves 23 114,379,541 107,568,235 90,711,850

240,683,316 230,968,410 210,627,704 Non-controlling interests 1,277,550 (54,583) -

total equity 241,960,866 230,913,827 210,627,704

non-current liabilitiesDeferred tax liabilities 16 - 199,570 951,306 Loans and borrowings 24 63,345,073 40,980,826 48,861,621 Other payables - - 3,000,000

63,345,073 41,180,396 52,812,927

current liabilitiesLoans and borrowings 24 77,766,034 40,348,313 17,862,200 Trade and other payables 25 138,301,554 85,637,534 94,473,588 Provisions 26 610,573 324,694 1,709,277 Tax payable 3,240,153 811,789 629,094

219,918,314 127,122,330 114,674,159

total liabilities 283,263,387 168,302,726 167,487,086

total equity and liabilities 525,224,253 399,216,553 378,114,790


48

2013 2012

note rM rM

company

non-current assets

Property, plant and equipment 9 744,693 841,573

Intangible assets 12 98,825 44,549

Investment in subsidiaries 13 182,108,719 172,852,567

Available-for-sale financial asset 15 2,400,003 -

Deferred tax assets 16 26,736 44,313

185,378,976 173,783,002

current assets

Trade and other receivables 17 53,678,101 32,323,788

Other current assets 19 200,378 124,249

Tax recoverable 1,648,732 1,086,077

Cash and cash equivalents 21 9,538,131 11,798,484

65,065,342 45,332,598

total assets 250,444,318 219,115,600

equity and liabilities

equity

Share capital 22 126,303,775 123,400,175

Reserves 23 58,536,107 51,892,003

total equity 184,839,882 175,292,178

non-current liability

Loans and borrowings 24 22,096,003 9,475,945

current liabilities

Loans and borrowings 24 11,029,978 15,931,440

Trade and other payables 25 32,478,455 18,416,037

43,508,433 34,347,477

total liabilities 65,604,436 43,823,422

total equity and liabilities 250,444,318 219,115,600

Statements of Financial Position as at 31 December 2013cont’d


49

Annual Report 2013

Statements of Changes in Equity


att

ribu

tabl

e to

equ

ity

hol

ders

of t

he c

ompa

ny

non

-dis

trib

utab

le

sha

re

cap

ital

s

hare

p

rem

ium

equ

ity

com

pone

nt

of r

csln

for

eign

tr

ansl

atio

n re

serv

e t

reas

ury

sha

res

Dis

trib

utab

le

reta

ined

p

rofit

s

tot

al

non

- c

ontr

ollin

g in

tere

sts

tot

al

equ

ity

Gro

upn

ote

rM

r

M

rM

r

M

rM

r

M

rM

r

M

rM

as

at 1

Jan

uary

201

211

9,91

5,85

4 1

9,63

0,26

1 2

86,8

24

171

,750

(3

17,0

49)

70,

940,

064

210,

627,

704

- 21

0,62

7,70

4

Conv

ersi

on o

f Red

eem

able

Sec

ured

Loa

n N

otes

(“RC

SLN

”)22

, 23

3,4

84,3

21

2,5

15,6

79

(156

,450

) -

- -

5,8

43,5

50

- 5

,843

,550

Tran

sact

ion

cost

23 -

26,

000

- -

- -

26,

000

- 2

6,00

0

Purc

hase

of t

reas

ury

shar

es23

- -

- -

(2,7

32,3

20)

- (2

,732

,320

) -

(2,7

32,3

20)

Div

iden

ds p

aid

34 -

- -

- -

(3,0

74,0

22)

(3,0

74,0

22)

- (3

,074

,022

)

Tota

l com

preh

ensi

ve in

com

e fo

r the

yea

r -

- -

106

,714

-

20,

170,

784

20,

277,

498

(54,

583)

20,

222,

915

as

at 3

1 D

ecem

ber 2

012

123,

400,

175

22,

171,

940

130

,374

2

78,4

64

(3,0

49,3

69)

88,

036,

826

230,

968,

410

(54,

583)

230,

913,

827

as

at 1

Jan

uary

201

312

3,40

0,17

5 2

2,17

1,94

0 1

30,3

74

278

,464

(3

,049

,369

) 8

8,03

6,82

6 23

0,96

8,41

0 (5

4,58

3)23

0,91

3,82

7

Conv

ersi

on o

f RCS

LN22

, 23

2,9

03,6

00

2,0

96,4

00

(130

,374

) -

- -

4,8

69,6

26

- 4

,869

,626

Purc

hase

of t

reas

ury

shar

es23

(d)

- -

- -

(9,2

93)

- (9

,293

) -

(9,2

93)

Dis

posa

l of t

reas

ury

shar

es23

(d)

- 1

,490

,275

-

- 2

,042

,427

-

3,5

32,7

02

- 3

,532

,702

Div

iden

ds p

aid

34 -

- -

- -

(3,1

18,2

95)

(3,1

18,2

95)

- (3

,118

,295

)

Acqu

isiti

on o

f sub

sidi

ary

- -

- -

- -

- 6

30,6

26

630

,626

Issu

ance

of s

hare

s to

non

-con

trol

ling

inte

rest

in a

sub

sidi

ary

- -

- -

- -

- 6

9,80

1 6

9,80

1

Tota

l com

preh

ensi

ve in

com

e fo

r the

yea

r -

- -

843

,030

-

3,5

97,1

36

4,4

40,1

66

631

,706

5

,071

,872

as

at 3

1 D

ecem

ber 2

013

126,

303,

775

25,

758,

615

- 1

,121

,494

(1

,016

,235

) 8

8,51

5,66

7 24

0,68

3,31

6 1

,277

,550

24

1,96

0,86

6


50

Statements of Changes in Equityfor the financial year ended 31 December 2013cont’d

non-distributable

share capital

share premium

equity component

of rcsln treasury

shares capital reserve

Distributable retained

profits total

equity

note rM rM rM rM rM rM rM

company

as at 1 January 2012 119,915,854 19,630,261 286,824 (317,049) 17,256,197 16,446,837 173,218,924

Conversion of RCSLN 22, 23 3,484,321 2,515,679 (156,450) - - - 5,843,550

Transaction cost 23 - 26,000 - - - - 26,000

Purchase of treasury shares 23 - - - (2,732,320) - - (2,732,320)

Dividends paid 34 - - - - - (3,074,022) (3,074,022)

Total comprehensive income for the year - - - - - 2,010,046 2,010,046

as at 31 December 2012 123,400,175 22,171,940 130,374 (3,049,369) 17,256,197 15,382,861 175,292,178

as at 1 January 2013 123,400,175 22,171,940 130,374 (3,049,369) 17,256,197 15,382,861 175,292,178

Conversion of RCSLN 22, 23 2,903,600 2,096,400 (130,374) - - - 4,869,626

Purchase of treasury shares 23(d) - - - (9,293) - - (9,293)

Disposal of treasury shares 23(d) - 1,490,275 - 2,042,427 - - 3,532,702

Dividends paid 34 - - - - - (3,118,295) (3,118,295)

Total comprehensive income for the year - - - - - 4,272,964 4,272,964

as at 31 December 2013 126,303,775 25,758,615 - (1,016,235) 17,256,197 16,537,530 184,839,882


51

Annual Report 2013



Group company

restated

2013 2012 2013 2012

note rM rM rM rM

cash flows from operating activities

Profit before tax 11,467,410 28,386,689 6,160,386 2,938,188

Adjustments for:

Depreciation of property, plant and equipment 6, 9 5,515,726 4,359,491 271,705 242,959

Depreciation of investment properties 6, 11 14,995 14,995 - -

Amortisation of intangible assets 6, 12 372,198 86,715 15,071 11,374

Allowance for impairment loss 6, 17 5,038,795 743,339 - -

Reversal of allowance for impairment loss 6, 17 (45,837) (90,008) - -

Reversal of discount on convertible loan notes 6 (95,048) (30,178) (95,048) (30,178)

Finance cost 5 6,276,908 4,067,968 2,439,370 1,448,136

Gain on disposal of property, plant and equipment 6 (249,122) (2,962,299) - -

Fair value (gain)/loss on marketable securities 6 (21,637) 11,540 - -

Property, plant and equipment written off 6 19,363 7,854 - -

Dividends income 3, 6 (2,885) (6,085) (4,965,000) (3,676,020)

Gain on disposal of marketable securities 6 - (7,034) - -

Share of results of joint ventures 14 (527,854) (524,361) - -

Interest income 6 (1,152,365) (1,211,827) (2,602,273) (1,498,763)

Development expenditures incurred 10 (424,413) (90,071) - -

Unrealised foreign exchange (gain)/loss (358,554) 90,624 (236,148) 87,029

Operating profit/(loss) before working capital changes 25,827,680 32,847,352 988,063 (477,275)

Inventories (3,366,692) 83,630 - -

Trade and other receivables (52,475,048) 14,840,663 (21,118,165) (7,414,990)

Other current assets (10,898,824) (17,510,458) (76,129) 49,751

Trade and other payables 49,093,938 (11,836,054) 14,062,418 11,989,963

Provisions 285,879 (1,384,583) - -

Cash generated from/(used in) operations 8,466,933 17,040,550 (6,143,813) 4,147,449

Finance cost paid 5 (6,276,908) (4,067,968) (2,439,370) (1,448,136)

Tax paid (8,251,910) (8,221,745) (2,421,760) (1,447,130)

Net cash (used in)/generated from operating activities (6,061,885) 4,750,837 (11,004,943) 1,252,183

cash flows from investing activities

Purchase of property, plant and equipment (a) (45,084,502) (6,502,496) (73,601) (138,874)

Purchase of investment property 11 (8,632,382) - - -

Proceeds from disposal of property, plant and equipment 1,941,798 3,483,443 8,776 -

Purchase of land held for property development 10 (394,855) (10,384,754) - -

Purchase of intangible assets 12 (1,128,925) (98,425) (69,347) -

Proceeds from disposal of marketable securities - 131,034 - -


52

Group company

restated

2013 2012 2013 2012

note rM rM rM rM

cash flows from investing activities cont’d

Decrease/(Increase) in pledged deposits placed with licensed banks 8,378,864 1,483,161 631,910 (1,070,185)

Acquisition of subsidiaries 13 (1,135,190) (6) (3,986,920) (800)

Increase in investment in subsidiaries 13 - - (5,269,199) -

Incorporation of a subsidiary 13 - - (33) -

Purchase of investment available for sale 15 (2,400,003) - (2,400,003) -

Acquisition of a joint venture company 14 (102,000) - - -

Incorporation of a joint venture company 14 (50,000) - - -

Distribution of profits from a joint venture 14 - 141,377 - -

Dividends received 3, 6 2,885 6,085 4,965,000 3,676,020

Interest received 6 1,152,365 1,211,827 2,602,273 1,498,763

Net cash (used in)/generated from investing activities (47,451,945) (10,528,754) (3,591,144) 3,964,924

cash flows from financing activities

Repayment of loans and borrowings (15,409,147) (9,808,911) (10,979,587) (5,907,220)

Proceeds from loans and borrowings 66,220,012 27,274,411 20,000,000 12,000,000

Proceeds from disposal of treasury shares 3,532,702 - 3,532,702 -

Purchase of treasury shares (9,293) (2,732,320) (9,293) (2,732,320)

Issuance of shares in a subsidiary to non-controlling shareholders 69,801 - - -

Dividends paid to owners of the Company 34 (3,118,295) (3,074,022) (3,118,295) (3,074,022)

Net cash generated from financing activities 51,285,780 11,659,158 9,425,527 286,438

net changes in cash and cash equivalents (2,228,050) 5,881,241 (5,170,560) 5,503,545

Effect of exchange rate fluctuations on cash held 847,800 106,714 - -

cash and cash equivalents at the beginning of the year 40,356,841 34,368,886 8,465,574 2,962,029

cash and cash equivalents at the end of the year 38,976,591 40,356,841 3,295,014 8,465,574

the cash and cash equivalents comprise:

Short term investments 21 4,550,811 3,620,798 4,550,811 3,620,798

Fixed deposits with licensed banks 21 40,095,816 29,781,427 2,701,000 3,332,910

Cash and bank balances 21 25,330,728 33,009,808 2,286,320 4,844,776

Bank overdraft 24 (16,130,260) (2,805,824) (3,542,117) -

53,847,095 63,606,209 5,996,014 11,798,484

Less: Fixed deposits with licensed banks pledged 21 (14,870,504) (23,249,368) (2,701,000) (3,332,910)

38,976,591 40,356,841 3,295,014 8,465,574

Statements of Cash Flowsfor the financial year ended 31 December 2013cont’d

53

Annual Report 2013


for the financial year ended 31 December 2013cont’d

(a) During the year, the Group and the Company acquired property, plant and equipment which were financed as follows:

Group company

2013 2012 2013 2012

note rM rM rM rM

Cash 45,084,502 6,502,496 73,601 138,874

Hire purchase 600,600 3,949,700 110,000 120,000

9 45,685,102 10,452,196 183,601 258,874



54

Notes to the Financial Statementsfor the financial year ended 31 December 2013

1. corPorate inforMation

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad.

The registered office of the Company is located at Level 8, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301

Petaling Jaya, Selangor Darul Ehsan. The principal place of business of the Company is located at D5-1-10, Solaris Dutamas, No.1, Jalan Dutamas 1, 50480 Kuala Lumpur.

The consolidated financial statements of the Company as at and for the financial year ended 31 December 2013 comprise the Company and its subsidiaries (together referred to as “the Group”) and the Group’s interest in joint ventures.

The principal activities of the Company are investment holding and provision of management services to its subsidiaries.

The principal activities of the subsidiaries are set out in Note 13.

There have been no significant changes in the nature of the principal activities during the financial year.

2. siGnificant accountinG Policies

2.1 basis of preparation

(a) Statement of compliance

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 and the Companies Act, 1965 in Malaysia.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis unless otherwise as disclosed below.

(c) Functional and presentation currency

The financial statements of each entity in the Group are measured using the currency of the primary economic

environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency.

(d) Use of estimates and judgements

The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(i) Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation

of the value-in-use of the cash-generating units (“CGUs”) to which goodwill is allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the CGUs and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of goodwill as at 31 December 2012 and 31 December 2013 were RM83,490,527 and RM84,320,909 respectively. Further details are disclosed in Note 12(b).

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2. siGnificant accountinG Policies cont’d 2.1 basis of preparation cont’d

(d) Use of estimates and judgements cont’d

(ii) Impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s trade and other receivables at the reporting date is disclosed in Note 17.

(iii) Construction contract

The Group recognises construction contract revenue and expenses in the income statements by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.

Significant judgement is required in determining the stage of completion, the extent of the construction contract costs incurred, the estimated total construction contract revenue and costs, as well as the recoverability of the construction contract costs. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists.

The carrying amounts of assets and liabilities of the Group arising from construction activities are disclosed in

Note 19.

(iv) Provision for defect liability cost

The Group recognises provision for defect liability for future work expected to be carried out subsequent to the projects completion as part of their defect liability obligations. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists.

The carrying amount of the Group’s provision for defect liability cost at the reporting date and further details are disclosed in Note 26. If the actual defect liability cost differ by 10% from management estimates, the Group’s provision for defect liability cost will increase by RM61,057 (2012: RM32,469).

2.2 changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 January 2013, the Group and the Company adopted the following new and amended MFRS and IC Interpretations mandatory for annual financial periods beginning on or after 1 January 2013.

Description

effective for annual periods

beginning on or after

Amendments to MFRS 101: Presentation of Items of Other Comprehensive Income 1 July 2012

MFRS 3: Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) 1 January 2013

MFRS 127: Consolidated and Separate Financial Statements (IAS 27 revised by IASB in December 2003) 1 January 2013

MFRS 10: Consolidated Financial Statements 1 January 2013

MFRS 11: Joint Arrangements 1 January 2013

MFRS 12: Disclosure of Interests in Other Entities 1 January 2013


56

Notes to the Financial Statementsfor the financial year ended 31 December 2013cont’d

2. siGnificant accountinG Policies cont’d 2.2 changes in accounting policies cont’d

Description



MFRS 13: Fair Value Measurement 1 January 2013

MFRS 119: Employee Benefits (IAS 19 as amended by IASB in June 2011) 1 January 2013

MFRS 127: Separate Financial Statements (IAS 27 as amended by IASB in May 2011) 1 January 2013

MFRS 128: Investment in Associate and Joint Ventures (IAS 28 as amended by IASB in May 2011) 1 January 2013

IC Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine 1 January 2013

Amendments to MRFS 7: Disclosures - Offsetting Financial Assets and Financial Liabilities 1 January 2013

Annual Improvements 2009-2011 Cycle 1 January 2013

Amendments to MFRS 1: Government Loans 1 January 2013

Amendments to MFRS 10, MFRS 11 and MFRS 12: Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entitites: Transition Guidance

1 January 2013

Adoption of the above standards and interpretations did not have any effect on the financial performance or position of

the Group and the Company except as discussed below:

MFRS 11 Joint Arrangements

MFRS 11 replaces MFRS 131 Interests in Joint Ventures and IC Interpretation 113 Jointly-Controlled Entities - Non-monetary Contributions by Venturers.

The classification of joint arrangements under MFRS 11 is determined based on the rights and obligations of the parties to the joint arrangements by considering the structure, the legal form, the contractual terms agreed by the parties to the arrangement and when relevant, other facts and circumstances. Under MFRS 11, joint arrangements are classified as either joint operations or joint ventures.

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

MFRS 11 removes the option to account for jointly controlled entities (“JCE”) using proportionate consolidation. Instead, JCE that meet the definition of a joint venture must be accounted for using the equity method.

The application of this new standard affected the financial position of the Group. This is due to the cessation of equity method of accounting of the joint venture arrangement between a subsidiary of the Company, Daya OCI Sdn. Bhd., Alam Maritim Sdn. Bhd. and Ombak Marine Group Sdn. Bhd. Under MFRS 11, the joint venture arrangement between Daya OCI Sdn. Bhd., Alam Maritim Sdn. Bhd. and Ombak Marine Group Sdn. Bhd. is treated as joint operation and is accounted for using the proportionate method.

MFRS 11 has been applied in accordance with the relevant transitional provisions set out in MFRS 11. The initial investment as at 1 January 2012 for the purposes of applying the proportionate method is measured as the line-by-line accounting of the underlying assets and liabilities that the Combined Entity had previously accounted for using equity method.

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2. siGnificant accountinG Policies cont’d 2.2 changes in accounting policies cont’d

MFRS 11 Joint Arrangements cont’d

The following are effects to the income statements, statements of financial position and statements of cash flows arising from the above change in accounting policy:

Group

as previously stated

Mfrs 11 adjustments as restated

rM rM rM

income statements

31 December 2012

Revenue 276,929,368 19,657,413 296,586,781

Cost of sales 221,486,285 29,437,058 250,923,343

Other income 5,723,257 10,735,581 16,458,838

Share of results of joint ventures 1,480,297 (955,936) 524,361

statements of financial position

31 December 2012

Investment in joint ventures 2,390,589 (1,281,287) 1,109,302

Trade and other receivables 72,593,540 1,281,287 73,874,827

statements of cash flows

31 December 2012

Changes in trade and other receivables 13,719,631 1,121,032 14,840,663

Share of results of joint ventures 1,480,297 (955,936) 524,361

Distribution of profits from a joint ventures 2,218,345 (2,076,968) 141,377

statements of financial position

31 December 2011

Investment in joint ventures 3,128,637 (2,402,319) 726,318

Trade and other receivables 86,513,760 2,402,319 88,916,079

The above restatement has no impact on the net profit for the years ended 31 December 2012 and 2011 of the Group.

2.3 standards issued but not yet effective

The standards and interpretations that are issued but not yet effective up to the date of issuance of the Group and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective.


58


2. siGnificant accountinG Policies cont’d 2.3 standards issued but not yet effective cont’d

Description



Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilites 1 January 2014

Amendments to MFRS 10, MFRS 12 and MFRS 127: Investment Entities 1 January 2014

Amendments to MFRS 136: Recoverable Amount Disclosures for Non-Financial Assets 1 January 2014

Amendments to MFRS 139: Novation of Derivatives and Continuation of Hedge Accounting 1 January 2014

IC Intepretation 21: Levies 1 January 2014

Amendments to MFRS 119: Defined Benefit Plans: Employee Contributions 1 July 2014

Annual Improvements to MFRSs 2010-2012 Cycle 1 July 2014

Annual Improvements to MFRSs 2011-2013 Cycle 1 July 2014

MFRS 9: Financial Instruments (IFRS 9 issued by IASB in November 2009) To be announced

MFRS 9: Financial Instruments (IFRS 9 issued by IASB in October 2010) To be announced

MFRS 9 Financial Instruments: Hedge Accounting and amendments to MFRS 9, MFRS 7 and MFRS 139 To be announced

The directors expect that the adoption of the above standards and interpretations will have no material impact on the financial statements in the period of initial application.

2.4 summary of significant accounting policies

(a) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied for like transactions and events in similar circumstances.

The Company controls an investee if and only if the Company has all the following:

(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and(iii) The ability to use its power over the investee to affect its returns.

When the Company has less than a majority of the voting rights of an investee, the Company considers the following in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power over the investee:

(i) The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

(ii) Potential voting rights held by the Company, other vote holders or other parties;(iii) Rights arising from other contractual arrangements; and (iv) Any additional facts and circumstances that indicate that the Company has, or does not have, the current

ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Losses within a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance.

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Annual Report 2013



2. siGnificant accountinG Policies cont’d

2.4 summary of significant accounting policies cont’d (a) Basis of consolidation cont’d

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised in income statements. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to income statements or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment.

Acquisition under Group re-organisation

One of the subsidiaries, Daya Polymer Sdn. Bhd., is consolidated using the merger method of accounting as the combination is an internal group reorganisation. Under the merger method of accounting, shares acquired, the cost of investment on the Company’s financial statements is recorded at the fair value of shares issued and the difference between the carrying value of the investment and the nominal value of shares acquired is treated as merger reserve or merger deficit. Where the carrying value of investment is less than the nominal value of shares acquired, the merger reserve should be treated as reserve on consolidation.

Business combinations

Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Transaction costs incurred are expensed and included in administrative expenses.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with MFRS 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through income statements.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than fair value of the net assets of the subsidiary acquired, the difference is recognised in income statements. The accounting policy for goodwill is set out in Note 2.4(i)(i).


60



2.4 summary of significant accounting policies cont’d

(b) Transaction with non-controlling interests

Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in profit or loss of the Group and within equity in the consolidated statements of financial position, separately from parent shareholders’ equity. Transactions with non-controlling interests are accounted for using the entity concept method, whereby, transactions with non-controlling interests are accounted for as transactions with owners. On acquisition of non-controlling interests, the difference between the consideration and book value of the share of the net assets acquired is recognised directly in equity. Gain or loss on disposal to non-controlling interests is recognised directly in equity.

(c) Subsidiaries

A subsidiary is an entity over which the Group has all the following:

(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and (iii) The ability to use its power over the investee to affect its returns.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in income statements.

(d) Joint ventures

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

On acquisition of an investment in joint venture, any excess of the cost of investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill and included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities of the investee over the cost of investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the joint venture’s profit or loss for the period in which the investment is acquired.

A joint venture is equity accounted for from the date on which the investee becomes a joint venture.

Under the equity method, on initial recognition the investment in a joint venture is recognised at cost, and the carrying amount is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive income of the joint venture after the date of acquisition. When the Group’s share of losses in a joint venture equal or exceeds its interest in the joint venture, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the joint venture.

Profits and losses resulting from upstream and downstream transactions between the Group and its joint venture are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the joint venture. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The financial statements of the joint ventures are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

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Annual Report 2013





(d) Joint ventures cont’d

After application of the equity method, the Group applies MFRS 139 Financial Instruments: Recognition and Measurement to determine whether it is necessary to recognise any additional impairment loss with respect to its net investment in the joint venture. When necessary, the entire carrying amount of the investment is tested for impairment in accordance with MFRS 136 Impairment of Assets as a single asset, by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss is recognised in income statements. Reversal of an impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.

In the Company’s separate financial statements, investments in joint ventures are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in income statements.

(e) Joint operations

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The Group as a joint operator recognises in relation to its interest in a joint operation:

(i) its assets, including its share of any assets held jointly; (ii) its liabilities, including its share of any liabilities incurred jointly; (iii) its revenue from the sale of its share of the output arising from the joint operation;(iv) its share of the revenue from the sale of the output by the joint operation; and (v) its expenses, including its share of any expenses incurred jointly.

The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the MFRSs applicable to the particular assets, liabilities, revenues and expenses.

Profits and losses resulting from transactions between the Group and its joint operation are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the joint operation.

(f) Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s 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 are charged to the income statements during the financial year which they are incurred.

Subsequent to recognition, property, plant and equipment except for freehold land and capital-in-progress are stated at cost less accumulated depreciation and any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.4(j).

Freehold land has an unlimited useful life and therefore is not depreciated. Capital-in-progress are not depreciated as these assets are not available for use. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:

Leasehold land Over lease period Building, renovation and electrical installation 2% - 20% Cranes, parts and forklifts 4% - 20% Plant and machinery 4% - 10% Factory equipment 10% - 30% Furniture, fittings, computer and office equipment 10% - 30% Motor vehicles 20%


62




(f) Property, plant and equipment cont’d

The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future benefits embodied in the items of property, plant and equipment.

All item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in the income statements.

(g) Land held for property development and property development costs

(i) Land held for property development

Land held for property development consists of land where no development activities have been carried out or where development activities are not expected to be completed within the normal operating cycle. Such land is classified within non-current assets and is stated at cost less any accumulated impairment losses.

Land held for property development is reclassified as property development costs at the point when development activities have commenced and where it can be demonstrated that the development activities can be completed within the normal operating cycle.

(ii) Property development costs

Property development costs comprise all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities.

When the financial outcome of a development activity can be reliably estimated, property development revenue and expenses are recognised in profit or loss by using the stage of completion method. The stage of completion is determined by the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.

Where the financial outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on properties sold are recognised as an expense in the period in which they are incurred.

Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised as an expense immediately.

Property development costs not recognised as an expense are recognised as an asset, which is measured at the lower of cost and net realisable value.

The excess of revenue recognised in the income statements over billings to purchasers is classified as accrued billings within trade receivables and the excess of billings to purchasers over revenue recognised in income statements is classified as progress billings within trade payables.

(h) Investment properties

Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are measured initially at cost, including transaction costs. Following initial recognition, investment properties are carried at cost less any accumulated depreciation and accumulated impairment losses. Freehold land is not subject to depreciation while the building on the freehold land is depreciated at 2% per annum on a straight-line method.

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or losses on the retirement or disposal of an investment property are recognised in income statements in the year in which they arise.

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(h) Investment properties cont’d

A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property basis when the Group holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at cost less accumulated depreciation and any accumulated impairment losses.

(i) Intangible assets

(i) Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(ii) Software

Software is recognised on a cost model basis where the asset is to be carried at cost less any accumulated amortisation and accumulated impairment loss. The software is amortised over 5 years.

The carrying value is reviewed for impairment annually when the asset is not yet in use or more frequently when an indication of impairment arises during the reporting year.

(iii) Research and development costs

All research costs are recognised in the income statements as incurred.

Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditures which do not meet these criteria are expensed when incurred.

Development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are amortised using the straight-line basis over five years. Impairment is assessed whenever there is an indication of impairment and the amortisation period and method are also reviewed at least at each reporting date.

(j) Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a Cash Generating Unit (“CGU”) or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. Impairment losses are recognised in income statements.


64




(j) Impairment of non-financial assets cont’d

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously.

Such reversal is recognised in income statements unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.

(k) Financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.

(i) Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in income statements. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in income statements as part of administrative expenses or other income.

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that is held primarily for trading purposes are presented as current whereas financial assets that is not held primarily for trading purposes are presented as current or non-current based on the settlement date.

The Group’s and the Company’s financial assets at fair value through profit or loss is disclosed in Note 20.

(ii) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

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(k) Financial assets cont’d

(iii) Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.

Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.

The Group and the Company did not have any held-to-maturity investments during the year ended 31 December 2013.

(iv) Available-for-sale financial assets

Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in income statements. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to income statements as a reclassification adjustment when the financial asset is derecognised.

Interest income calculated using the effective interest method is recognised in income statements. Dividends on an available-for-sale equity instrument are recognised in income statements when the Group’s and the Company’s right to receive payment is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in income statements.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date, the date that the Group and the Company commit to purchase or sell the asset.

The Group’s and the Company’s available-for-sale financial assets is disclosed in Note 15.

(l) Impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.


66




(l) Impairment of financial assets cont’d

(i) Trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, receivables that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in income statements.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in income statements.

(ii) Unquoted equity securities carried at cost

If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

(iii) Available-for-sale financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in income statements, is transferred from equity to income statements.

Impairment losses on available-for-sale equity investments are not reversed in income statements in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For available-for-sale debt investments, impairment losses are subsequently reversed in income statements if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in income statements.

(m) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, balances and deposits with banks and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. For the purpose of the statements of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

67

Annual Report 2013





(n) Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost is determined using the first-in, first-out method. The cost of raw materials comprises costs of purchase. The cost of finished goods and work-in-progress comprises cost of raw materials, direct labour, other direct costs and appropriate proportion of production overheads.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to completion and the estimated costs necessary to make the sale.

(o) Provisions

Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

(p) Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

(i) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in income statements. Net gains or losses on derivatives include exchange differences.

The Group and the Company did not have any financial liabilities at fair value through profit or loss during the year ended 31 December 2013.

(ii) Other financial liabilities

The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Loans and borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

For other financial liabilities, gains and losses are recognised in income statements when the liabilities are derecognised, and through the amortisation process.


68



2.4 summary of significant accounting policies cont’d (p) Financial liabilities cont’d

(ii) Other financial liabilities cont’d

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in income statements.

(q) Borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in income statements using the effective interest method.

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use are capitalised as part of the cost of those assets.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

(r) Employee benefits

(i) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in the income statements as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”).

(s) Leases

(i) Classification

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purpose of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases.

69

Annual Report 2013





(s) Leases cont’d

(ii) Finance leases - the Group as Lessee

Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the statements of financial position as loans and borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Group’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the income statements over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in Note 2.4(f ).

(iii) Operating leases - the Group as Lessee

Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

In the case of a lease of land and buildings, the minimum lease payments or the up-front payments made are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payment represents prepaid lease payments and are amortised on a straight-line basis over the lease term.

(iv) Operating leases - the Group as Lessor

Assets leased out under operating lease are presented on the statements of financial position according to the nature of the assets. Contingent rent is recognised as income in the period in which they are earned as stated in Note 2.4(t)(vii).

Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased assets and recognised on a straight line basis over the lease term.

(t) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.

(i) Sale of goods

Revenue is recognised net of discounts upon transfer of significant risks and rewards of ownership to the buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(ii) Management fees

Management fees are recognised when services are rendered.


70




(t) Revenue recognition cont’d

(iii) Dividends income

Dividends income is recognised when the Group’s and the Company’s right to receive payment is established.

(iv) Contract revenue

Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are recognised as revenue and expenses respectively by using the stage of completion method. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs.

Where the outcome of a construction contract cannot be reliably estimated, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

When the total of costs incurred on construction contracts plus, recognised profits (less recognised losses), exceeds progress billings, the balance is classified as amount due from customers on contracts. When progress billings exceed costs incurred plus, recognised profits (less recognised losses), the balance is classified as amount due to customers on contracts.

(v) Services

Revenue from services rendered is recognised net of service taxes and discounts as and when the services are performed.

(vi) Interest income

Interest income is recognised on an accrual basis using the effective interest method.

(vii) Rental income

Rental income from investment property is recognised in the income statements on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

(u) Income taxes

(i) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.

Current taxes are recognised in income statements except to the extent that the tax relates to items recognised outside income statements, either in other comprehensive income or directly in equity.

(ii) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

71

Annual Report 2013





(u) Income taxes cont’d

(ii) Deferred tax cont’d

Deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent

that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when

the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside income statements is recognised outside income statements. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(v) Share capital

An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.


72



2.4 summary of significant accounting policies cont’d (w) Treasury shares

When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount of consideration paid is recognised directly in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total equity. No gain or loss is recognised in income statements on the purchase, sale, issue or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity.

(x) Redeemable convertible secured loan notes

The redeemable convertible secured loan notes are regarded as compound instruments, consisting of a liability component and an equity component. The component of redeemable convertible secured loan notes that exhibits characteristics of a liability is recognised as a financial liability in the statements of financial position, net of transaction costs. On issuance of the redeemable convertible secured loan notes, the fair value of the liability component is determined using a market rate for an equivalent non-convertible debt and this amount is carried as a financial liability in accordance with the accounting policy for financial liabilities as set out in Note 2.4(p).

The residual amount, after deducting the fair value of the liability component, is recognised and included in shareholder’s equity, net of transaction costs.

Transaction costs are apportioned between the liability and equity components of the redeemable convertible secured loan notes based on the allocation of proceeds to the liability and equity components when the instruments were first recognised.

(y) Foreign currency

(i) Foreign currency transactions

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (“foreign currencies”) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are translated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in income statements for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. These are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in income statements. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation are recognised in income statements in the Company’s separate financial statements or the individual financial statements of the foreign operation, as appropriate.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in income statements for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

(ii) Foreign operations

The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the income statements.

73

Annual Report 2013





(y) Foreign currency cont’d

(ii) Foreign operations cont’d

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date.

(z) Segment reporting

For management purposes, the Group is organised into operating segments according to the nature of the products and services provided which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the chief operating decision makers, which in this case is the Executive Committee of the Group who regularly review the segment results in order to allocate resources to the segments and to assess the segment performances.

(aa) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

3. revenue

Group company

restated

2013 2012 2013 2012

note rM rM rM rM

Sale of goods 86,306,726 86,141,013 - -

Management fees 28 - - 10,399,116 7,944,867

Dividends income 6, 28 2,885 6,085 4,965,000 3,676,020

Contract revenue 393,542,774 173,036,284 - -

Service revenue 43,932,832 37,403,399 - -

Others - - - 24,000

523,785,217 296,586,781 15,364,116 11,644,887


74


4. cost of sales

Group

restated

2013 2012

rM rM

Cost of inventories sold 57,807,001 53,000,160

Contract costs 363,236,981 178,599,584

Cost of services rendered 24,534,157 19,323,599

445,578,139 250,923,343

5. finance costs

Group company

2013 2012 2013 2012

note rM rM rM rM

Interest expense on advances from subsidiaries 28 - - 1,197,856 431,097

Interest expense on loans and borrowings 6,318,805 3,847,297 1,283,411 796,368

Coupon interest expense on RCSLN (41,897) 220,671 (41,897) 220,671

30 6,276,908 4,067,968 2,439,370 1,448,136

6. Profit before tax The following amounts have been included in arriving at profit before tax:

Group company

restated

2013 2012 2013 2012

note rM rM rM rM

Amortisation of intangible assets 12 372,198 86,715 15,071 11,374

Auditors’ remuneration:

- Statutory audit 330,763 242,402 42,000 38,000

- Other services 40,680 14,029 32,680 14,029

Allowance for impairment loss 17 5,038,795 743,339 - -

Fair value loss on marketable securities 20 - 11,540 - -

Depreciation:

- Property, plant and equipment 9 5,515,726 4,359,491 271,705 242,959

- Investment properties 11 14,995 14,995 - -

Property, plant and equipment written off 19,363 7,854 - -

Remuneration for the Company’s directors 28 3,489,624 3,191,790 3,046,785 2,766,519

Remuneration for the subsidiaries’ directors 28 5,774,084 3,170,648 1,114,767 909,711

Directors’ fees for the Company’s directors 28 386,000 166,000 156,000 156,000

Directors’ fees for the subsidiaries’ directors 28 29,000 89,000 - -

75

Annual Report 2013



6. Profit before tax cont’d The following amounts have been included in arriving at profit before tax: cont’d

Group company

restated

2013 2012 2013 2012

note rM rM rM rM

Directors’ benefits in kind 60,750 23,950 60,750 23,950

Employees benefit expense 29 35,108,828 22,190,428 5,834,324 5,249,197

Foreign exchange loss:

- realised 75,678 709,048 - 100

- unrealised 266,391 92,485 - 87,029

Rental expense 5,184,680 2,154,056 419,872 177,000

and after crediting:

Reversal of discount on convertible loan notes 95,048 30,178 95,048 30,178

Gain on disposal of property, plant and equipment 249,122 2,962,299 - -

Foreign exchange gain:

- Realised 2,019,723 - - -

- Unrealised 624,945 1,861 236,148 -

Fair value gain on marketable securities 20 21,637 - - -

Gain on disposal of marketable securities - 7,034 - -

Interest income 1,152,365 1,211,827 2,602,273 1,498,763

Dividends income from subsidiaries 3,28 - - 4,965,000 3,676,020

Dividends income 3 2,885 6,085 - -

Reversal of allowance for impairment loss 17 45,837 90,008 - -

Insurance income - 10,735,581 - -

Rental income 11 334,442 348,118 - 24,000 7. incoMe tax exPense The major components of income tax expense for the years ended 31 December 2013 and 2012 are:

Group company

2013 2012 2013 2012

rM rM rM rM

Malaysian income tax

Current income tax 9,225,407 9,017,775 1,933,998 1,043,951

Under/(Over)provision in prior years 1,002,258 (19,042) (74,893) (49,786)

10,227,665 8,998,733 1,859,105 994,165


76


7. incoMe tax exPense cont’d

Group company

2013 2012 2013 2012

note rM rM rM rM

Deferred tax

Relating to origination and reversal of temporary differences (3,698,004) (449,327) 27,905 (59,946)

Under/(Over)provision in prior years 708,907 (278,918) 412 (6,077)

16 (2,989,097) (728,245) 28,317 (66,023)

7,238,568 8,270,488 1,887,422 928,142

reconciliation between tax expense and accounting profit

The reconciliation between tax expense and the product of accounting profit multiplied by the appplicable corporate tax rate for years ended 31 December 2013 and 2012 are as follows:

Group company

2013 2012 2013 2012

rM rM rM rM

Profit before tax 11,467,410 28,386,689 6,160,386 2,938,188

Tax at Malaysian statutory tax rate of 25% (2012: 25%) 2,866,853 7,096,672 1,540,097 734,547

Different tax rates in other countries 93,257 62,788 - -

Income not subject to tax (486,183) (122,371) - (74,282)

Expenses not deductible for tax purposes 2,872,169 1,680,170 421,806 323,740

Deferred tax assets not recognised during the year 181,307 83,480 - -

Utilisation of current year’s capital allowance - (7,873) - -

Utilisation of previously unrecognised tax losses - (224,418) - -

Under/(Over)provision of deferred tax in prior years 708,907 (278,918) 412 (6,077)

Under/(Over)provision of income tax in prior years 1,002,258 (19,042) (74,893) (49,786)

7,238,568 8,270,488 1,887,422 928,142

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2012: 25%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction.

Tax savings during the financial year arising from:

Group company

2013 2012 2013 2012

rM rM rM rM

Utilisation of current year tax losses 309,129 274,593 44,937 274,593

Utilisation of previously unrecognised tax losses - 224,418 - -

309,129 499,011 44,937 274,593

77

Annual Report 2013



8. earninGs Per share (a) basic earnings per share

Basic earnings per share is calculated by dividing profit for the year attributable to ordinary equity holders of the Company

by the weighted average number of ordinary shares in issue during the financial year.

Group

2013 2012

Profit attributable to ordinary equity holders of the Company (RM) 3,597,136 20,170,784

Weighted average number of ordinary shares in issue 1,241,984,431 1,220,349,464

Basic earnings per share (sen) 0.29 1.65

(b) Diluted earnings per share

Diluted earnings per share amounts are calculated by dividing profit for the year, net of tax, attributable to owners of the parent (after adjusting for interest expense on redeemable convertible secured loan notes) by the weighted average number of ordinary shares outstanding during the financial year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

Group

2013 2012

Profit attributable to ordinary equity holders of the Company (RM) 3,597,136 20,170,784

Effect of dilution (RM) - 8,539

Adjusted net profit for the period attributable to ordinary equity holders of the Company (RM) 3,597,136 20,179,323

Weighted average number of ordinary shares in issue 1,241,984,431 1,220,349,464

Effect of dilution - 14,994,003

Adjusted weighted average number of shares in issue 1,241,984,431 1,235,343,467

Diluted earnings per share (sen) 0.29 1.63


78


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311,

571

acc

umul

ated

dep

reci

atio

n

As

at 1

Jan

uary

-

758

,734

4

,489

,052

12

,380

,653

5

,369

,239

1

,525

,054

1

,696

,147

3

,718

,316

-

29,

937,

195

Acqu

isiti

on th

roug

h a

busi

ness

co

mbi

natio

n13

- -

- -

- -

106

,579

-

- 1

06,5

79

Char

ge fo

r the

yea

r6,

30 -

117

,462

1

,141

,889

1

,677

,737

7

49,4

93

242

,584

4

24,9

05

1,1

61,6

56

- 5

,515

,726

Dis

posa

ls -

- (1

19,7

20)

- (3

03,3

33)

(56,

942)

(16,

772)

(569

,254

) -

(1,0

66,0

21)

Recl

assi

ficat

ion

- -

(2,2

25)

- -

2,2

25

- -

- -

Tran

sfer

s to

inta

ngib

le a

sset

s12

- -

- -

- (3

,103

) (2

,404

) -

- (5

,507

)

Writ

ten

off -

- -

- -

(9,6

06)

- -

- (9

,606

)

Exch

ange

diff

eren

ces

- -

(1,0

26)

- -

- 1

,028

(1

2,01

0) -

(12,

008)

As

at 3

1 D

ecem

ber

- 8

76,1

96

5,5

07,9

70

14,0

58,3

90

5,8

15,3

99

1,7

00,2

12

2,2

09,4

83

4,2

98,7

08

- 3

4,46

6,35

8

net

car

ryin

g am

ount

As

at 3

1 D

ecem

ber

1,6

00,9

74

7,4

69,6

37

36,

247,

191

43,

620,

451

12,

848,

240

2,2

83,5

23

2,1

81,7

24

2,8

07,9

76

34,

785,

497

143,

845,

213

79

Annual Report 2013



9.

Pro

Pert

y, P

lan

t a

nD

eq

uiP

Men

t c

ont’d

fre

ehol

d la

nd l

ease

hold

la

nd

bui

ldin

g,

reno

vati

on

and

e

lect

rica

l in

stal

lati

on

cra

nes,

p

arts

and

fo

rklif

ts

Pla

nt a

nd

mac

hine

ry

fact

ory

equi

pmen

t

furn

itur

e,fit

ting

s,co

mpu

ter

and

office

equi

pmen

t M

otor

v

ehic

les

cap

ital

in

pro

gres

s t

otal

Gro

upn

ote

rM

r

M

rM

r

M

rM

r

M

rM

r

M

rM

r

M

2012

cost

As

at 1

Jan

uary

1

,600

,974

8

,345

,833

3

4,59

4,33

4 5

7,31

8,67

2 6

,719

,050

2

,142

,990

2

,259

,727

6

,370

,892

1

0,40

9,79

0 12

9,76

2,26

2

Addi

tions

30 -

- 9

32,2

38

4,1

64,1

57

75,

212

808

,991

5

26,3

12

1,2

14,3

49

2,7

30,9

37

10,

452,

196

Dis

posa

ls -

- -

(3,9

16,7

66)

- -

- (6

72,6

58)

- (4

,589

,424

)

Recl

assi

ficat

ion

- -

1,4

92,4

63

- -

- -

- (1

,492

,463

) -

Writ

ten

off -

- -

(35,

961)

(12,

643)

(47,

067)

(10,

164)

- -

(105

,835

)

As

at 3

1 D

ecem

ber

1,6

00,9

74

8,3

45,8

33

37,

019,

035

57,

530,

102

6,7

81,6

19

2,9

04,9

14

2,7

75,8

75

6,9

12,5

83

11,

648,

264

135,

519,

199

acc

umul

ated

dep

reci

atio

n

As

at 1

Jan

uary

-

641

,288

3

,677

,314

14

,183

,435

5

,092

,011

1

,372

,418

1

,449

,057

3

,328

,442

-

29,

743,

965

Char

ge fo

r the

yea

r6,

30

- 1

17,4

46

811

,738

1

,639

,762

2

87,5

53

199

,703

2

56,7

64

1,0

46,5

25

- 4

,359

,491

Dis

posa

ls -

- -

(3,4

11,6

29)

- -

- (6

56,6

51)

- (4

,068

,280

)

Writ

ten

off -

- -

(30,

915)

(10,

325)

(47,

067)

(9,6

74)

- -

(97,

981)

As

at 3

1 D

ecem

ber

- 7

58,7

34

4,4

89,0

52

12,3

80,6

53

5,3

69,2

39

1,5

25,0

54

1,6

96,1

47

3,7

18,3

16

- 2

9,93

7,19

5

net

car

ryin

g am

ount

As

at 3

1 D

ecem

ber

1,6

00,9

74

7,5

87,0

99

32,

529,

983

45,

149,

449

1,4

12,3

80

1,3

79,8

60

1,0

79,7

28

3,1

94,2

67

11,

648,

264

105,

582,

004


80


9. ProPerty, Plant anD equiPMent cont’d

furniture, fittings,

computer and office

equipment Motor

vehicles total

company note rM rM rM

2013

cost

As at 1 January 163,519 1,223,597 1,387,116

Additions 38,006 145,595 183,601

Disposals (13,150) - (13,150)

As at 31 December 188,375 1,369,192 1,557,567

accumulated depreciation

As at 1 January 51,291 494,252 545,543

Charge for the year 6 26,884 244,821 271,705

Disposals (4,374) - (4,374)

As at 31 December 73,801 739,073 812,874

net carrying amount

As at 31 December 114,574 630,119 744,693

2012

cost

As at 1 January 49,919 1,078,323 1,128,242

Additions 113,600 145,274 258,874

As at 31 December 163,519 1,223,597 1,387,116


As at 1 January 26,418 276,166 302,584

Charge for the year 6 24,873 218,086 242,959

As at 31 December 51,291 494,252 545,543

net carrying amount

As at 31 December 112,228 729,345 841,573

81

Annual Report 2013



9. ProPerty, Plant anD equiPMent cont’d (a) capitalisation of borrowing costs

Included in the Group’s property, plant and equipment is interest capitalised amounting to RM878,885 (2012: RM878,885).

(b) capitalisation of charter costs

Included in the Group’s property, plant and equipment is charter costs capitalised amounting to RM25,996,090 (2012: RM nil).

(c) assets pledged as security

The net book value of the Group’s and of the Company’s property, plant and equipment pledged to financial institutions as securities for bank facilities as disclosed in Note 24 are as follows:

Group company

2013 2012 2013 2012

rM rM rM rM

Freehold land 1,549,010 1,549,010 - -

Leasehold land 6,376,517 6,478,931 - -

Building, renovation and electrical installation 30,893,779 27,313,440 - -

Cranes, parts and forklifts 21,660,891 22,862,036 - -

Plant and machinery 11,843,921 237,229 - -

Factory equipment 126,740 283,003 - -

Furniture, fittings, computer and office equipment 49,671 140,856 - -

Motor vehicles 2,673,834 3,010,679 628,288 693,921

Capital in progress - 11,648,264 - -

75,174,363 73,523,448 628,288 693,921

(d) assets held under finance lease

The net book value of the Group’s and of the Company’s assets held under finance lease as at the reporting date is as follows:

Group company

2013 2012 2013 2012

rM rM rM rM

Cranes, parts and forklifts 4,118,573 4,309,853 - -

Motor vehicles 2,673,834 3,007,032 628,288 693,921

6,792,407 7,316,885 628,288 693,921


82


10. lanD helD for ProPerty DeveloPMent

Group

2013 2012

note rM rM

cost

Freehold land, at cost 10,779,609 10,384,754

Development expenditures 514,484 90,071

11,294,093 10,474,825

As at 1 January 10,474,825 -

Acquisition of freehold lands 394,855 10,384,754

Development expenditure incurred 424,413 90,071

30 819,268 10,474,825

As at 31 December 11,294,093 10,474,825

(a) assets pledged as security

The net carrying amount of the Group’s land held for property development of RM9,980,813 (2012: RM9,637,258) are pledged to financial institution as securities for bank facilities as disclosed in Note 24.

(b) assets held in trust

Title deeds in respect of freehold land with a net carrying amount of RM7,272,500 (2012: RM7,272,500) are registered under the third party’s name held in trust on behalf of the Group.

11. investMent ProPerties

freehold land building building under

construction total

note rM rM rM rM

Group

2013

cost

As at 1 January 113,446 1,246,750 - 1,360,196

Additions 30 - - 8,632,382 8,632,382

As at 31 December 113,446 1,246,750 8,632,382 9,992,578


As at 1 January - 164,791 - 164,791

Charge for the year 6, 30 - 14,995 - 14,995

As at 31 December - 179,786 - 179,786

net carrying amount

As at 31 December 113,446 1,066,964 8,632,382 9,812,792

investment properties, at fair value

As at 31 December 279,851 1,406,783 8,632,382 10,319,016

83

Annual Report 2013



11. investMent ProPerties cont’d

freehold land building building under

construction total

note rM rM rM rM

Group

2012

cost

As at 1 January/31 December 113,446 1,246,750 - 1,360,196


As at 1 January - 149,796 - 149,796

Charge for the year 6, 30 - 14,995 - 14,995

As at 31 December - 164,791 - 164,791

net carrying amount

As at 31 December 113,446 1,081,959 - 1,195,405

investment properties, at fair value

As at 31 December 279,851 1,406,783 - 1,686,634

Investment properties comprise commercial properties which are leased out for rental income. Each of the leases contains an initial non-cancellable leases of the period between 1 to 5 years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions.

The following are recognised in income statements in respect of investment properties:

Group

2013 2012

note rM rM

Rental income 6 334,442 348,118

Depreciation on investment properties 6 14,995 14,995 capitalisation of borrowing costs

Included in the Group’s investment property is interest capitalised amounting to RM170,267 (2012: RM nil).


84


12. intanGible assets

Goodwill software Patents and trademarks

Development costs total

Group note rM rM rM rM rM

2013

cost

As at 1 January 83,490,527 498,350 - 360,022 84,348,899

Acquisition through a business combination 13 830,382 - - - 830,382

Additions 30 - 976,840 152,085 - 1,128,925

Transfers from property, plant and equipment 9 - 220,260 - - 220,260

As at 31 December 84,320,909 1,695,450 152,085 360,022 86,528,466

accumulated amortisation

As at 1 January - 91,985 - 360,022 452,007

Amortisation during the year 6,30 - 329,952 42,246 - 372,198

Transfers from property, plant and equipment 9 - 5,507 - - 5,507

As at 31 December - 427,444 42,246 360,022 829,712

net carrying amount

As at 31 December 84,320,909 1,268,006 109,839 - 85,698,754

2012

cost

As at 1 January 83,490,527 399,925 - 360,022 84,250,474

Additions 30 - 98,425 - - 98,425

As at 31 December 83,490,527 498,350 - 360,022 84,348,899


As at 1 January - 5,270 - 360,022 365,292

Amortisation during the year 6,30 - 86,715 - - 86,715

As at 31 December - 91,985 - 360,022 452,007

net carrying amount

As at 31 December 83,490,527 406,365 - - 83,896,892

85

Annual Report 2013



12. intanGible assets cont’d

software total

note rM rM

company

2013

cost

As at 1 January 56,871 56,871

Additions 69,347 69,347

As at 31 December 126,218 126,218


As at 1 January 12,322 12,322

Amortisation during the year 6 15,071 15,071

As at 31 December 27,393 27,393

net carrying amount

As at 31 December 98,825 98,825

2012

cost

As at 1 January/31 December 56,871 56,871


As at 1 January 948 948

Amortisation during the year 6 11,374 11,374

As at 31 December 12,322 12,322

net carrying amount

As at 31 December 44,549 44,549 (a) impairment loss recognised

The Group has not recognised any impairment loss on goodwill during the year.


86


12. intanGible assets cont’d (b) impairment tests for goodwill

allocation of goodwill

Goodwill has been allocated to the Group’s cash generating units (“CGUs”) identified according to the business segments as follows:

Group

2013 2012

rM rM

Oil and gas 73,681,265 72,850,883

Technical services 10,639,644 10,639,644

84,320,909 83,490,527 key assumptions used in value-in-use calculations

The recoverable amount of the CGU is determined based on value-in-use calculations using cash flow projections approved by management covering a five years period. Cash flows beyond the five years period are extrapolated using a growth rate of 2.00% (2012: 3.20%) per annum.

The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:

i. Budgeted gross margin

The basis used to determine the value assigned to the budgeted gross margin is the average gross margin achieved in the year immediately before the budgeted year increased for expected efficiency improvements.

ii. Selling price

The selling price used to calculate the cash inflows from operations was determined after taking into consideration of price trends in the industries which the CGU is exposed. Values assigned are consistent with the external sources of information.

iii. Discount rate and growth rate

The discount rate applied to the cash flow projections is based on the cost of borrowings of the Group throughout the calculation period. The growth rate used is consistent with the projected growth rate of the CGU’s industry and economy. Following are the rates for the calculations of the value-in-use for each of the business segments for the next five years.

business segments

oil and gas technical

service

Discount rate 8.70% 7.21%

Growth rate 5.00% 5.00%-10.00% Sensitivity to changes in assumptions

Barring any unforeseen circumstances, the management believes that no reasonable change in the above assumptions would cause the net carrying amount of goodwill to materially exceed its recoverable amount.

87

Annual Report 2013



13. investMent in subsiDiaries

company

2013 2012

note rM rM

unquoted shares at cost

As at 1 January 172,852,567 172,851,767

Acquisition of subsidiaries a 3,986,920 800

Increase in investment in subsidiaries b 5,269,199 -

Incorporation of a subsidiary c 33 -

As at 31 December 182,108,719 172,852,567 The Company’s investment in subsidiaries with total carrying amounts of RM112,308,946 (2012: RM140,797,077) have been

pledged to a financial institution for banking facilities granted to the Company and for the issuance of the Redeemable Convertible Secured Loan Notes (“RCSLN”) respectively as disclosed in Note 24.

Details of subsidiaries are as follows:

effective equity interest country of

incorporation Principal activities 2013 2012

held by the company

Daya Polymer Sdn. Bhd. 100% 100% Malaysia Manufacturer of semi-conductor and XLPE compounds for cable and wire and trading in specialty chemicals, related polymer compounds and hardware.

DMB Marketing & Trading Sdn. Bhd. 100% 100% Malaysia General trading, marketing and investment holding.

Meridian Orbit Sdn. Bhd. 100% 100% Malaysia Investment holding.

Daya Secadyme Sdn. Bhd.∆*** 67% 75.1% Malaysia Trading in petrochemicals products and investment holding.

Daya CMT Sdn. Bhd. 100% 100% Malaysia Providing industrial facilities management including builder works, facility operation and maintenance services, upgrade, retrofit, design and build plant facilities.

Daya Proffscorp Sdn. Bhd.*** 67% 100% Malaysia Principally engaged in ownership and hiring of forklifts, cranes and heavy machinery and provision of related manpower services in the onshore and offshore oil and gas industry.

Daya Offshore Construction Limited (Formerly known as DMB International Limited)^

100% 100% Hong Kong Center for regional procurement and trading as well as international investments.

Daya Urusharta Sdn. Bhd. 100% 100% Malaysia Property investment holding.

Daya OCI Sdn. Bhd. ∆*** 67% 75.1% Malaysia Supplying of equipment and specialty chemicals for oil and gas process plants, a provider of installation and maintenance services for air-conditioning and ventilation system, a provider for automatic welding services for offshore pipeline installation, a provider for maintenance services for both onshore plants and offshore facilities, a provider for warehousing and forwarding agency.


88


13. investMent in subsiDiaries cont’d Details of subsidiaries are as follows: cont’d



held by the company

Daya Petroleum Ventures Sdn. Bhd.**** 51% 80% Malaysia Provision of drilling services, geological, petroleum engineering, subsea and deep-water support services, and operations and maintenance services.

Daya Offshore Construction Sdn. Bhd. (Formerly known as SD Equipment Sdn. Bhd.)

100% - Malaysia Dealing in project management, installation and design engineering, fabrication, procurement and logistics, vessel operations, survey and diving operations.

Daya Land & Development Sdn. Bhd. 100% - Malaysia Property development.

Seca Chemicals and Catalysts Sdn. Bhd. 100% - Malaysia Dealing in petroleum, oil and gas products, and consulting services.

held through subsidiaries

Daya Hightech Sdn. Bhd. 100% 100% Malaysia Manufacturer of compounds for cable and wire.

Seca Chemicals and Catalysts Sdn. Bhd. - 75.1% Malaysia Dealing in petroleum, oil and gas products, and consulting services.

Daya Offshore Construction Sdn. Bhd. (Formerly known as SD Equipment Sdn. Bhd.)

- 75.1% Malaysia Dealing in project management, installation and design engineering, fabrication, procurement and logistics, vessel operations, survey and diving operations.

Daya Land & Development Sdn. Bhd. - 100% Malaysia Property development.

Seca Engineering and Manpower Services Sdn. Bhd. ∆***

67% 75.1% Malaysia Providing engineering and manpower services.

Daya FMM Sdn. Bhd. 100% 100% Malaysia General contractors and related services.

Daya Clarimax Sdn. Bhd. 100% 100% Malaysia Providing recycling of waste solvent and manufacturing high purity electronics and technical solvent.

Daya Proffscorp (Sabah) Sdn. Bhd. 67% 100% Malaysia Principally engaged in ownership and hiring of forklifts, cranes and heavy machinery and provision of related manpower services in the onshore and offshore oil and gas industry.

Ultrafest Sdn. Bhd. 100% 100% Malaysia Property development.

Zen Projects Sdn. Bhd. 100% 100% Malaysia Investment holding.

Terra Hill Development Sdn. Bhd. 100% 100% Malaysia Property development.

Daya SMG Engineering Sdn. Bhd. (Formerly known as Daya E&C Sdn.Bhd.)

100% 100% Malaysia Provision of electrical, mechanical engineering and construction works.

Daya Vessels Limited. (Formerly known as Daya OCI (Labuan) Limited)

67% 100% Malaysia Shipping leasing business and other related services to the oil and gas industry.

PT Daya Secadyme Indonesia^ ∆*** 67% 75.1% Indonesia Trading in petrochemicals products.

89

Annual Report 2013



13. investMent in subsiDiaries cont’d Details of subsidiaries are as follows: cont’d



held through subsidiaries cont’d

Daya Maxflo Sdn. Bhd.^**** (Formerly known as Maxflo Energy Products Sdn. Bhd.)

25.9% - Malaysia Provision of instrumentation and pipelines products specifically for oil & gas, refining, petro-chemical and energy industry.

Daya Maritime Limited.* 100% - Malaysia Shipping leasing business and other related services to oil & gas industry.

^ Audited by firms of auditors other than Ernst & Young * This company was incorporated on 27 December 2013 and will prepare its first set of audited financial statements for the year ending on 31

December 2014.∆ The non-controlling interests in Daya OCI Sdn. Bhd. (“DOCI”) and Daya Secadyme Sdn. Bhd. (“DSSB”) by way of the Sales & Purchases Agreement

dated 25 May 2012 has agreed to forgo its claim on the assets and profits of DOCI and DSSB. Accordingly, the Group has not recognized any share of non-controlling interest in the income statements and statements of financial position for DOCI, DSSB, its subsidiaries and its joint venture company.

*** The non-controlling interests in DOCI, DSSB and Daya Proffscorp Sdn. Bhd. (“DPRO”) by way of the Sales & Purchases Agreement dated 8 March 2013 has agreed to forgo its claim on the assets and profits of DOCI, DSSB and DPRO. Accordingly, the Group has not recognized any share of non-controlling interest in the income statements and statements of financial position for DOCI, DSSB, DPRO, its subsidiaries and its joint venture company.

**** The non-controlling interests in Daya Petroleum Ventures Sdn. Bhd. (“DPV”) by way of the Sales & Purchases Agreement dated 8 March 2013 has agreed to forgo its claim on the assets and profits of DPV. Accordingly, the Group has not recognized any share of non-controlling interest in the income statements and statements of financial position for DPV, its subsidiary and its joint venture company.

(a) acquisition of subsidiaries i. On 18 March 2013, Daya Petroleum Ventures Sdn. Bhd. entered into a Subscription Agreement with Daya Maxflo

Sdn. Bhd. (formerly known as Maxflo Energy Products Sdn. Bhd.) (“DMSB”), Sales and Purchase Agreement with Jay Dorfman, Shareholders Agreement and Call and Put Option Agreement with Jay Dorfman and Visual Well Solutions Sdn. Bhd. for the proposed acquisition of 50.70% of the issued and paid up share capital of DMSB for a cash consideration of RM1,900,000. The acquisition was completed on 5 April 2013. DMSB is principally engaged in providing instrumentation and pipelines products specifically for oil & gas, refining, petro-chemical and energy industry.

Pursuant to the Call and Put Option Agreement, Jay Dorfman and Visual Well Solutions Sdn. Bhd. (collectively known as “the Grantors”) hereby irrevocably grant to DPV, and DPV hereby agrees to pay to the Grantors (the receipt whereof the Grantors hereby acknowledge), an option to require the Grantors to sell all of the aggregate of up to 280,000 ordinary shares of RM1.00 each in the share capital of DMSB (“Option Shares”) held by the Grantors representing approximately 19.70% of the share capital of DMSB to DPV or its nominee(s), in the following three (3) tranches in consideration of the below stipulated sums. At the same time, DPV also irrevocably grants to the Grantors the option to require DPV to buy the Option Shares from the Grantors and/or its nominee(s) in the same stipulated sums.

(i) Year 1 (Financial Year Ending 31 Dec 2013) - 70,000 shares at RM15.00 each for a total cash consideration of RM1,050,000;

(ii) Year 2 (Financial Year Ending 31 Dec 2014) - 90,000 shares at RM20.00 each for a total cash consideration of RM1,800,000; and

(iii) Year 3 (Financial Year Ending 31 Dec 2015) - 120,000 shares at RM25.00 each for a total cash consideration of RM3,000,000.


90


13. investMent in subsiDiaries cont’d

(a) acquisition of subsidiaries cont’d

i. The put option is fully exercisable by the Grantors only upon DMSB achieving the following net profit after tax (“Profit Guarantee”) in each respective year:

(i) Year 1 (Financial Year Ending 31 Dec 2013) - RM1,750,000 profit guarantee;

(ii) Year 2 (Financial Year Ending 31 Dec 2014) - RM2,500,000 profit guarantee; and

(iii) Year 3 (Financial Year Ending 31 Dec 2015) - RM3,250,000 profit guarantee.

The collective cash consideration is RM5,850,000 for the collective shareholdings interest of 19.70% of the share capital of DMSB.

DMSB has not achieve its Profit Guarantee for the year ended 31 December 2013 and as such no call or put option has been exercise pursuant to the Call and Put Option Agreement for the first year.

ii. On 31 May 2013, through the Internal Group Re-organisation Plan, the Company acquired 500,000 ordinary shares of RM1.00 each in Daya Land & Development Sdn. Bhd. (“DLD”), a subsidiary of Daya CMT Sdn. Bhd. which is a wholly-owned subsidiary of DMB representing 100% of the issued and paid-up share capital of DLD for a cash consideration of RM1,222,065 from DCMT.

iii. On 2 January 2013, through the Internal Group Re-organisation Plan, the Company acquired 100,000 and 10,000 ordinary shares of RM1.00 each in Seca Chemicals and Catalysts Sdn. Bhd. (“SCCSB”) and Daya Offshore Construction Sdn. Bhd. (formerly known as SD Equipment Sdn. Bhd.) (“DOCSB”), sub-subsidiaries of a subsidiary of the Company, Daya Secadyme Sdn. Bhd. (“DSSB”) representing 100% of the issued and paid-up share capital of SCCSB and DOCSB for a cash consideration of RM2,754,855 and RM10,000 respectively from DSSB.

iv. On 30 November 2012, the Group, via its direct wholly-owned subsidiary, Daya CMT Sdn. Bhd. acquired 2 ordinary shares of RM1.00 each in Daya SMG Engineering Sdn. Bhd. (formerly known as Daya E&C Sdn. Bhd.) (“DSMG”), for a total cash consideration of RM2.00 from the Company director, Mr. Tham Jooi Loon and Mr. Tham Wooi Loon, representing 100% equity interest in DSMG.

v. On 2 August 2012, through the Internal Group Re-Organisation Plan, the Company acquired 800 ordinary shares of RM1.00 each in Daya Petroleum Ventures Sdn. Bhd. (“DPV”), a sub-subsidiary of a subsidiary of the Company, Daya Secadyme Sdn. Bhd. representing 80% of the issued and paid-up share capital of DPV for a cash consideration of RM800 from a wholly-owned sub-subsidiary of the Company, Seca Engineering and Manpower Services Sdn. Bhd.

vi. On 14 February 2012, the Group, via its direct wholly-owned subsidiary, Daya CMT Sdn. Bhd. acquired 2 ordinary shares of RM1.00 each in Zen Projects Sdn. Bhd. (“ZPSB”) and Terra Hill Development Sdn. Bhd. (“THDSB”) for a total consideration of RM2.00 each, representing 100% equity interest in ZPSB and THDSB.

The acquired subsidiaries has contributed the following results to the Group:

2013 2012

rM rM

Revenue 10,044,400 -

Net profit/(loss) for the year 1,287,898 (11,103) If the acquisitions for the year had occurred on 1 January 2013, management estimates that consolidated revenue for the

financial year ended 31 December 2013 would have been RM527,508,124 and consolidated profit for the year would have been RM4,345,683. There is no financial impact for the financial year ended 31 December 2012 if the acquisitions had occured on 1 January 2012 as the acquired subsidiaries were dormant.

91

Annual Report 2013




(a) acquisition of subsidiaries cont’d

The acquisitions had the following effect on the Group’s assets and liabilities on acquisition date:

2013 2012

Pre- acquisition

carrying amounts

recognised values on

acquisition

Pre- acquisition

carrying amounts

recognised values on

acquisition

note rM rM rM rM

Property, plant and equipment 9 25,713 25,713 - -

Trade and other receivables 4,612,868 4,612,868 6 6

Cash and cash equivalents 764,810 764,810 - -

Trade and other payables (3,570,082) (3,570,082) - -

Tax payables (133,065) (133,065) - -

Net identifiable assets and liabilities 1,700,244 1,700,244 6 6

Non-controlling interests (838,220) -

Goodwill on acquisition 1,037,976 -

Consideration paid, satisfied in cash 1,900,000 6

Cash and cash equivalents acquired (764,810) -

Net cash outflows 1,135,190 6

Goodwill on acquisition consist of:

Equity holders of the Company 12 830,382 -

Non-controlling interests 207,594 -

1,037,976 -

(b) increase in investment in subsidiaries

i. On 18 July 2013, the Company increased its investment in its wholly-owned subsidiary, Daya Offshore Construction Sdn. Bhd. (formerly known as SD Equipment Sdn. Bhd.) (“DOCSB”) via the subscription of an additional 4,990,000 ordinary shares of RM1.00 each at par for working capital purposes. The new ordinary shares subscribed in DOCSB ranked pari passu in all respects with the existing ordinary shares of DOCSB.

ii. On 20 February 2013, the Company increased its investment in its subsidiary, Daya Petroleum Ventures Sdn. Bhd. (“DPV”) via the subscription of an additional 279,199 ordinary shares of RM1.00 each at par for working capital purposes. The new ordinary shares subscribed in DPV ranked pari passu in all respects with the existing ordinary shares of DPV.

(c) incorporation of subsidiaries i. On 27 December 2013, the Company had incorporated a limited liability company known as Daya Maritime Limited

(“DML”) with paid-up share capital of USD10 divided by 10 ordinary shares of USD1.00 each. DML is to principally engage in the shipping leasing business and other related services to the oil and gas industry.

ii. The Group had on 19 November 2012, via its subsidiary, Daya OCI Sdn. Bhd. incorporated a limited liability company known as Daya Vessels Limited (formerly known as Daya OCI (Labuan) Limited)(“DVL”). The principal activities of DVL is to involve in the shipping leasing business and other related services to the oil and gas industry.


92



(d) Partial disposal of shares in subsidiaries

The Company had on 8 March 2013 entered into four Share Sale Agreements with Wiramas Baiduri Sdn. Bhd. for the disposal of 81,648 ordinary shares of RM1.00 each in Daya Secadyme Sdn. Bhd. (“DSSB”) representing 8.10% of the issued and paid-up share capital of DSSB, 405,000 ordinary shares of RM1.00 each in Daya OCI Sdn. Bhd. (“DOCI”) representing 8.10% of the issued and paid-up share capital of DOCI, 544,500 ordinary shares of RM1.00 each in Daya Proffscorp Sdn. Bhd. (“DPRO”) representing 33% of the issued and paid-up share capital of DPRO and 101,500 ordinary shares of RM1.00 each in Daya Petroleum Ventures Sdn. Bhd. (“DPV”) representing 29% of the issued and paid-up share capital of DPV at the cash consideration of RM6,500,000, RM3,700,000, RM6,700,000 and RM101,500 respectively. The disposal was completed on 5 April 2013.

14. investMent in Joint ventures

Group

restated

2013 2012

note rM rM

unquoted shares, at cost

As at 1 January 682,166 682,166

Acquisition of a joint venture company a 102,000 -

Incorporation of a joint venture company b 50,000 -

Exchange differences 319 -

As at 31 December 834,485 682,166

shares of post acquisition reserve

As at 1 January 427,136 44,152

Share of results of joint ventures 30 527,854 524,361

Distribution of profits from a joint venture - (141,377)

As at 31 December 954,990 427,136

Share of net assets 30 1,789,475 1,109,302

93

Annual Report 2013



14. investMent in Joint ventures cont’d

The aggregate amounts of each of the current assets, non-current assets, current liabilities, non-current liabilities, income and expenses related to the Group’s interests in the joint ventures are as follows:

Group

restated

2013 2012

rM rM

assets and liabilities

Current assets 2,515,856 2,171,603

Non-current assets 1,987,719 2,111,241

Total assets 4,503,575 4,282,844

Current liabilities 2,021,433 1,966,891

Non-current liabilities 692,667 1,206,651

Total liabilities 2,714,100 3,173,542

income and expenses

Income 4,221,376 5,636,596

Expenses (3,693,522) (5,112,235)

Share of results of joint ventures 527,854 524,361 Details of the joint ventures are as follows:



held through subsidiaries

Daya-Sheffield Sdn. Bhd.* 34.2% 38.3% Malaysia Supplying of services and equipments to exploration and extraction companies in the oil and gas industry.

Daya NCHO International Limited** 60% 60% Hong Kong Investment holding to invest in tank services regionally.

Daya NCHO Sdn. Bhd.** 60% 60% Malaysia Provision of ISO tank cleaning, repair and maintenance services.

Daya Campo (Sabah) Sdn. Bhd.* 40.2% 45% Malaysia Investment holding.

Semangat Global Sdn. Bhd. 51% - Malaysia Construction and development of industrial, commercial and housing project and other related industry.

Daya Cutech Inspection Services Sdn. Bhd.***

25.5% - Malaysia Provision of inspection services, non-destructive testing (“NDT”) and advanced NDT services, cathodic protection, piping and fabrication projects, underwater and subsea services, technical training and certification services, technical manpower outsourcing, engineering, procurement and construction, electrical and mechanical projects in Malaysia.

* The effective shareholdings of these joint ventures reduced following the shares disposal in Daya OCI Sdn. Bhd. on 8 March 2013. ** Audited by firms of auditors other than Ernst & Young*** This company was incorporated on 11 July 2013 and will prepare its first set of audited financial statements for the year ending on 31 December 2014.


94


14. investMent in Joint ventures cont’d

(a) acquisition of a joint venture company

On 20 November 2012, the Group, via its direct wholly-owned subsidiary, Daya Land & Development Sdn. Bhd. (“DLD”) entered into a Shareholders Agreement with Chang Cheng Realty Sdn. Bhd. to jointly develop and construct one block of 28 storey retail/showroom/service suites, 40 blocks of four storey shop office and 8 blocks of three storey shops on 4 parcels of empty land held located at Jalan Pintas in the District of Penampang, Sabah, Malaysia to be undertaken by a single-purpose joint venture company, Semangat Global Sdn. Bhd. (“SGSB”).

On 1 March 2013, the Group, via its direct wholly-owned subsidiary, DLD subscribed for 102,000 ordinary shares of RM1.00 each of SGSB for a cash consideration of RM102,000.

(b) incorporation of a joint venture company

Daya Petroleum Ventures Sdn. Bhd. (”DPV”) had on 15 August 2013 entered into a Shareholders and Joint Venture Agreement (“SJVA”) with Cutech Solutions & Services Pte. Ltd. (“CUTECH”) and Wiramas Baiduri Sdn. Bhd. (“WIRAMAS”) to jointly venture into the businesses of provision of inspection services, non-destructive testing (“NDT”) and advanced NDT services, cathodic protection, piping and fabrication projects, underwater and subsea services, technical training and certification services, technical manpower outsourcing, engineering, procurement and construction projects, electrical and mechanical projects in Malaysia (“the Businesses”) (“Proposed Joint Venture”). The Businesses shall be undertaken by a single-purpose joint venture company named Daya Cutech Inspection Services Sdn. Bhd. (“DCIS”).

On 28 August 2013, DPV acquired 2 ordinary shares of RM1.00 each in DCIS, for a cash consideration of RM1 for each ordinary shares from Dato’ Mazlin Bin Md Junid and Shahul Hamid bin Mohd Ismail. On the same date, DPV, CUTECH and WIRAMAS has further subscribed 49,998, 30,000 and 20,000 ordinary shares of RM1.00 each in DCIS for a total cash consideration of RM49,998, RM30,000 and RM20,000 respectively as part of the arrangement for the Proposed Joint Venture.

15. available-for-sale financial asset

2013 2012

rM rM

Available-for-sale financial asset 2,400,003 -

The Company had on 26 July 2013, entered into a subscription agreement (“Subscription Agreement”) with Reach Energy Berhad (formerly known as Reach Energy Sdn. Bhd.) (“Reach Energy”) for the subscription of the following:

(a) 533,334 redeemable convertible preference shares of RM0.01 each (“RCPS”) at an issue price of RM4.50 each in Reach Energy for a consideration of RM2,400,003 (“RCPS Subscription”); and

(b) 12,444,444 ordinary shares of RM0.01 each (“Shares”) together with 12,444,444 free detachable Warrants at an issue price of RM0.45 per Share in Reach Energy for a consideration of RM5,599,999.80 (“Shares Subscription”).

Each RCPS subscribed will be convertible into 10 Shares together with 10 free detachable warrants of Reach Energy upon receipt of approval from the Securities Commission for the Proposed IPO (as defined below). The Company has fully paid for the RCPS Subscription on the even date.

Reach Energy proposes to undertake an initial public offering and listing on the Main Market of Bursa Malaysia Securities Berhad as a Special Purpose Acquisition Company (“SPAC”) (“Proposed IPO”) focused on the oil and gas industry.

The Subscription will enable the Company to invest in Reach Energy, a company which will be an oil and gas exploration and production company, once it completes its qualifying acquisition.

On 29 July 2013, pursuant to the Subscription Agreement, the Company has subscribed for 533,334 RCPS at an issue price of

RM4.50 each in Reach Energy for a consideration of RM2,400,003.

95

Annual Report 2013



16. DeferreD tax

assets liabilities net

2013 2012 2013 2012 2013 2012

Group note rM rM rM rM rM rM

As at 1 January 1,311,637 1,198,845 1,511,207 2,150,151 (199,570) (951,306)

Recognised in income statements 7 3,009,881 112,792 20,784 (615,453) 2,989,097 728,245

Recognised in equity - - (10,740) (23,491) 10,740 23,491

As at 31 December 30 4,321,518 1,311,637 1,521,251 1,511,207 2,800,267 (199,570)

assets liabilities net

2013 2012 2013 2012 2013 2012

company note rM rM rM rM rM rM

As at 1 January 95,619 44,860 51,306 90,061 44,313 (45,201)

Recognised in income statements 7 (3,916) 50,759 24,401 (15,264) (28,317) 66,023

Recognised in equity - - (10,740) (23,491) 10,740 23,491

As at 31 December 91,703 95,619 64,967 51,306 26,736 44,313

The components and movements of deferred tax liabilities and deferred tax assets during the financial year prior to offsetting are as follows:

as at

1 January 2012

recognised

in equity

recognised

in income statements

as at 31 December

2012/1 January

2013 recognised

in equity

recognised in income

statements

as at 31 December

2013

Group rM rM rM rM rM rM rM

Deferred tax liabilities Property, plant and equipment 2,101,970 - (602,881) 1,499,089 - 20,899 1,519,988

RCSLN 48,181 (23,491) (13,950) 10,740 (10,740) - -

Others - - 1,378 1,378 - (115) 1,263

2,150,151 (23,491) (615,453) 1,511,207 (10,740) 20,784 1,521,251

as at 1 January

2012


statements

as at 31 December

2012/1 January

2013


statements

as at 31 December

2013

Group rM rM rM rM rM

Deferred tax assets

Deductible temporary differences 333,159 153,454 486,613 (86,194) 400,419

Tax losses 584,200 159,650 743,850 2,843,809 3,587,659

Provisions 281,486 (200,312) 81,174 252,266 333,440

1,198,845 112,792 1,311,637 3,009,881 4,321,518


96


16. DeferreD tax cont’d

The components and movements of deferred tax liabilities and deferred tax assets during the financial year prior to offsetting are as follows: cont’d

as at 1 January

2012


statements recognised

in equity

as at 31 December

2012/ 1 January

2013


statements recognised

in equity

as at 31 December

2013

company rM rM rM rM rM rM rM

Deferred tax liabilities

Property, plant and equipment 41,880 (1,314) - 40,566 24,401 - 64,967

RCSLN 48,181 (13,950) (23,491) 10,740 - (10,740) -

90,061 (15,264) (23,491) 51,306 24,401 (10,740) 64,967

Deferred tax assets

Deductible temporary differences (44,860) (50,759) - (95,619) 3,916 - (91,703)

Deferred tax assets have not been recognised in respect of the following items:

Group

2013 2012

rM rM

Unutilised tax losses 1,868,275 1,143,048

Unabsorbed capital allowances 36,200 36,200

Other temporary differences 7,000 7,000

1,911,475 1,186,248

97

Annual Report 2013



17. traDe anD other receivables

Group company

restated

2013 2012 2013 2012

note rM rM rM rM

non-current

non-trade

Staff loan a 103,330 728,096 - -

current

trade

Trade receivables b 112,551,279 48,605,287 - -

Amount due from subsidiaries c - - 5,753,064 3,459,992

d 112,551,279 48,605,287 5,753,064 3,459,992

Less: Allowance for impairment loss (5,307,417) (464,609) - -

31(e) 107,243,862 48,140,678 5,753,064 3,459,992

non-trade

Deposits e 3,117,166 7,312,717 65,990 57,490

Staff loans a 723,610 560,900 - -

Sundry receivables 16,226,470 18,210,532 79,239 510,296

Less: Allowance for impairment loss (358,003) (350,000) - -

f 15,868,467 17,860,532 79,239 510,296

Amount due from subsidiaries c - - 47,779,808 28,296,010

19,709,243 25,734,149 47,925,037 28,863,796

Total current trade and other receivables 126,953,105 73,874,827 53,678,101 32,323,788

total trade and other receivables 31(f ) 127,056,435 74,602,923 53,678,101 32,323,788

Add: Cash and cash equivalents 21 69,977,355 66,412,033 9,538,131 11,798,484

total loans and receivables 197,033,790 141,014,956 63,216,232 44,122,272 (a) staff loans

Staff loans are unsecured and non-interest bearing except for the amount of RM703,682 (2012: RM1,271,695) which is a housing loan to a director and subject to interest rate at 5.55% (2012: 5.55%) per annum.

(b) trade receivables

Trade receivables are non-interest bearing and are generally on 30 to 90 days (2012: 30 to 90 days) terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.


98


17. traDe anD other receivables cont’d

(b) trade receivables cont’d

Included in trade receivables at 31 December 2013 are retentions of RM24,841,034 (2012: RM15,730,768) relating to construction work-in-progress.

Retentions are unsecured, interest-free and are expected to be collected as follows:

Group

2013 2012

rM rM

Within 1 year 3,495,000 1,928,346

1 - 2 years 1,697,000 3,020,000

2 - 3 years 4,089,810 388,312

3 - 4 years - 1,049,610

4 - 5 years 15,559,224 9,344,500

24,841,034 15,730,768

(c) amount due from subsidiaries

The amount due from the subsidiaries is unsecured, repayable on demand and non-interest bearing except for the amount of RM46,597,306 (2012: RM27,492,209) which is subject to interest rate at 8.60% to 15.00% (2012: 8.60%) per annum.

Further details on related party transactions are disclosed in Note 28.

(d) ageing analysis of trade receivables

The ageing analysis of the Group’s and of the Company’s trade receivables are as follows:

Group company

2013 2012 2013 2012

rM rM rM rM

Neither past due nor impaired 52,743,158 30,775,695 1,108,428 2,436,955

Past due not impaired:

- 1 to 30 days 12,780,359 8,505,580 9,375 -

- 31 to 60 days 6,339,626 3,858,612 - -

- 61 to 90 days 7,380,306 2,548,121 1,385,840 -

- 91 to 120 days 8,735,980 850,291 1,488,773 153,877

- More than 121 days 5,241,374 1,602,379 1,760,648 869,160

40,477,645 17,364,983 4,644,636 1,023,037

Impaired 19,330,476 464,609 - -

112,551,279 48,605,287 5,753,064 3,459,992

99

Annual Report 2013




(d) ageing analysis of trade receivables cont’d Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group and the Company.

None of the Group’s and of the Company’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired

The Group and the Company have trade receivables amounting to RM40,119,642 (2012: RM17,364,983) and RM4,644,636 (2012: RM1,023,037) respectively that are past due at the reporting date but not impaired.

No allowance for impairment is made as in the opinion of the management, significant portions of the outstanding debts is in line with the norm in the construction industry and would be collected in full within the next twelve months.

Receivables that are impaired

The Group’s trade and other receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

Group

individually impaired

2013 2012

rM rM

Trade and other receivables - nominal amounts 19,688,479 814,609

Less: Allowance for impairment loss (5,665,420) (814,609)

14,023,059 -

Group

2013 2012

note rM rM

As at 1 January 814,609 736,217

Allowance for impairment loss 6 5,038,795 743,339

Reversal of allowance for impairment loss 6 (45,837) (90,008)

Bad debts written off (142,147) (574,939)

As at 31 December 5,665,420 814,609

Group

2013 2012

rM rM

The Group’s allowance accounts arise from:

Trade receivables 5,307,417 464,609

Sundry receivables 358,003 350,000

5,665,420 814,609


100



(d) ageing analysis of trade receivables cont’d Receivables that are impaired cont’d

There is no allowance for impairment made for the Company during the year and prior year.

Trade receivables that are impaired relate to individually determined debtors that are in significant financial difficulties and have defaulted on payment. These receivables are not secured by any collateral or credit enhancements.

(e) Deposits

Included in the prior year deposits of the Group is the deposit made for the purchase of commercial properties amounted to RM4,701,322.

(f) sundry receivables

Included in sundry receivables of the Group are amount due from a joint venture and receivables from legal suit against Mohd Akbar B Hj. Johari, AJ Premier Holdings Sdn. Bhd., Aims Mission Sdn. Bhd., Global Max Trading Sdn. Bhd. and Azrul Bin Mohd Nasir representative of Rasa Indah Trading amounted to RM2,142,990 (2012: RM2,454,533) and RM1,922,250 (2012: RM1,922,250) respectively.

(g) receivables denominated in foreign currencies

Included in trade and other receivables are the following trade and other receivables amounts denominated in a currency other than the functional currency of the entity to which they relate:

Group company

2013 2012 2013 2012

note rM rM rM rM

Hong Kong Dollar 5,143 4,477 3,718,445 2,798,027

Indonesian Rupiah 1,289,583 1,694,861 - -

United States Dollar 8,918,143 915,410 - -

European Dollar 974,580 - - -

Singapore Dollar 103,178 - - -

British Pound Sterling 607,824 - - -

31(c) 11,898,451 2,614,748 3,718,445 2,798,027

18. inventories

Group

2013 2012

rM rM

At cost:

Raw materials 4,058,306 5,401,146

Work-in-progress 72,182 51,513

Finished goods 7,058,738 8,245,516

Consumables 6,275,372 399,731

17,464,598 14,097,906

101

Annual Report 2013



18. inventories cont’d

Assets pledged as security

The Group’s inventories amounted to RM5,153,607 (2012: RM5,674,929) have been pledged to a licensed bank as securities for the bank facilities as disclosed in Note 24.

19. other current assets

Group company

2013 2012 2013 2012

note rM rM rM rM

Amount due from customers on contracts a 41,961,550 38,765,323 - -

Prepayments 9,062,773 1,360,176 200,378 124,249

51,024,323 40,125,499 200,378 124,249 (a) amount due from customers on contracts

Group company

2013 2012 2013 2012

rM rM rM rM

Aggregate costs incurred to date 608,991,066 267,751,020 - -

Add: Attributable profits 72,614,557 32,689,305 - -

681,605,623 300,440,325 - -

Less: Progress billings (661,476,661) (261,675,002) - -

20,128,962 38,765,323 - -

Customer advances for construction work in progress 21,832,588 - - -

41,961,550 38,765,323 - -

Included in the amount due from customers on contracts during the year is the hiring costs of plant and machinery amounting to RM4,845,505 (2012: RM2,183,536).


102


20. Marketable securities

Group

2013 2012

note rM rM

financial assets at fair value through profit or loss

Shares quoted in Malaysia

At cost

As at 1 January 114,900 206,700

Disposals - (91,800)

As at 31 December 114,900 114,900

Accumulated fair value changes

As at 1 January (6,712) 37,028

Fair value changes on marketable securities 6 21,637 (11,540)

Disposals - (32,200)

As at 31 December 14,925 (6,712)

Market value of quoted shares 129,825 108,188

21. cash anD cash equivalents

Group company

2013 2012 2013 2012

note rM rM rM rM

Short term investments 31(b), a 4,550,811 3,620,798 4,550,811 3,620,798

Fixed deposits with licensed banks 31(b), b 40,095,816 29,781,427 2,701,000 3,332,910

Cash and bank balances 25,330,728 33,009,808 2,286,320 4,844,776

17, 32 69,977,355 66,412,033 9,538,131 11,798,484

For the purposes of the statements of cash flows, cash and cash equivalents comprise the following as at the reporting date:

Group company

2013 2012 2013 2012

rM rM rM rM

Cash and cash equivalents 69,977,355 66,412,033 9,538,131 11,798,484

Less: Fixed deposits with licensed banks pledged (14,870,504) (23,249,368) (2,701,000) (3,332,910)

Bank overdraft (16,130,260) (2,805,824) (3,542,117) -

38,976,591 40,356,841 3,295,014 8,465,574

103

Annual Report 2013



21. cash anD cash equivalents cont’d (a) short term investments

The information on financial risks of short term investments are disclosed in Note 31(b).

(b) fixed deposits with licensed banks

The Group’s and the Company’s fixed deposits amounted to RM14,870,504 (2012: RM23,249,368) and RM2,701,000 (2012: RM3,332,910) respectively have been pledged to licensed banks for banking facilities granted to the Company and its subsidiaries.

The maturities of fixed deposits for the Group and the Company were as follow:

Group company

2013 2012 2013 2012

rM rM rM rM

Fixed deposits with licensed banks

Less than three months 33,333,189 26,448,517 - -

More than three months 6,762,627 3,332,910 2,701,000 3,332,910

40,095,816 29,781,427 2,701,000 3,332,910

The interest rates of the fixed deposits are disclosed in Note 31(b).

(c) cash and cash equivalents denominated in foreign currencies

Included in cash and cash equivalents are the following cash and cash equivalents amounts denominated in a currency other than the functional currency of the entity to which they relate:

Group company

2013 2012 2013 2012

note rM rM rM rM

Hong Kong Dollar 36,949 34,931 - -

Indonesian Rupiah 28,773 18,163 - -

European Dollar 415,076 152,051 - -

United States Dollar 2,250,573 598,657 556 1,893

31(c) 2,731,371 803,802 556 1,893


104


22. share caPital

Group and company

number of ordinary shares of rM0.10 each amount

2013 2012 2013 2012

note rM rM

Authorised:

As at 1 January/31 December 2,000,000,000 2,000,000,000 200,000,000 200,000,000

Issued and fully paid:

As at 1 January 1,234,001,750 1,199,158,544 123,400,175 119,915,854

Conversion of RCSLN a 29,036,000 34,843,206 2,903,600 3,484,321

As at 31 December 1,263,037,750 1,234,001,750 126,303,775 123,400,175

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

On 26 February 2009, the shareholders of the Company had approved the proposed establishment of an Employee Share Option Scheme for the eligible directors and employees of the Company and its subsidiaries. However, no options have been awarded at the date of reporting.

(a) conversion of redeemable convertible secured loan notes

On 20 January 2012, the Company announced that 17,421,603 new ordinary shares of RM0.10 each in the Company (“DMB Shares”) were issued pursuant to the conversion of RM3 million Redeemable Convertible Secured Loan Notes (“RCSLN”) at a conversion price of RM0.1722 per DMB share and were listed on Bursa Malaysia Securities Berhad on 25 January 2012.

Subsequently, on 14 May 2012, the Company announced that a further 17,421,603 of new DMB Shares were issued pursuant to the conversion of RM3 million RCSLN at a conversion price of RM0.1722 per DMB share and were listed on Bursa Malaysia Securities Berhad on 15 May 2012.

The Company announced that a further 29,036,000 of new DMB Shares were issued twice on 28 February 2013 and 17 May 2013 respectively, pursuant to the conversion of RM3 million RCSLN at a conversion price of RM0.1722 per DMB share and were listed on Bursa Malaysia Securities Berhad on 1 March 2013 and 20 May 2013 respectively.

105

Annual Report 2013



23. reserves

Group company

2013 2012 2013 2012

note rM rM rM rM

Distributable reserve:

Retained profits 38, a 88,515,667 88,036,826 16,537,530 15,382,861

Non-distributable reserves:

Capital reserve b - - 17,256,197 17,256,197

Foreign translation reserve c 1,121,494 278,464 - -

Treasury shares d (1,016,235) (3,049,369) (1,016,235) (3,049,369)

Equity component of Redeemable Convertible Secured Loan Notes e - 130,374 - 130,374

Share premium f 25,758,615 22,171,940 25,758,615 22,171,940

114,379,541 107,568,235 58,536,107 51,892,003

(a) retained profits

The Company may distribute dividends out of its entire retained profits as at 31 December 2013 under the single tier system.

(b) capital reserve

The capital reserve represents the fair value adjustments on previously held interest in subsidiaries.

(c) foreign translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of the Group entities with functional currencies other than RM.

(d) treasury shares

Group and company

number of ordinary shares of rM0.10 each amount

2013 2012 2013 2012

rM rM

As at 1 January 15,675,700 1,787,100 3,049,369 317,049

Purchase of treasury shares 45,000 13,888,600 9,293 2,732,320

Disposal of treasury shares (10,500,000) - (2,042,427) -

As at 31 December 5,220,700 15,675,700 1,016,235 3,049,369

The shareholders of the Company, by a special resolution passed in a general meeting held on 20 June 2011, approved the Company’s plan to repurchase its own shares. The Directors of the Company are committed to enhance the value of the Company to its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders.

For the year ended 31 December 2013, the Company repurchased 45,000 (2012: 13,888,600) of its issued share capital from the open market on 24 April 2013. The average price paid for the shares repurchased was RM0.42 (2012: RM0.20) per share. The repurchase transactions were financed by internally generated funds. The shares repurchased were retained as treasury shares.


106


23. reserves cont’d (d) treasury shares cont’d

In addition, the Company re-sold its treasury shares in the open market on 19 September 2013 for 2,500,000 ordinary shares at RM0.32 per share for a total cash consideration of RM797,160 net of brokerage, stamping and clearance fees. Subsequently, on 17 October 2013 and 18 October 2013, the Company further re-sold its treasury shares in the open market for 5,000,000 and 3,000,000 ordinary shares at RM0.34 per share for a total cash consideration of RM1,719,108 and RM1,016,434 net of brokerage, stamping and clearance fees respectively. The credit differences arose between the sales consideration and the carrying amount of these treasury shares were recognised in the share premium account.

As at 31 December 2013, the issued and paid up capital of the Company comprising 1,263,037,750 (2012: 1,234,001,750) ordinary shares of RM0.10 each of which 5,220,700 (2012: 15,675,700) ordinary shares of RM0.10 each are held as treasury shares.

(e) equity component of redeemable convertible secured loan notes

Group and company

2013 2012

note rM rM

As at 1 January 130,374 286,824

Conversion to share capital (130,374) (156,450)

As at 31 December 24(c) - 130,374

This reserve represents the fair value of the equity component of the Redeemable Convertible Secured Loan Notes, net of deferred tax, as determined on the date of issue. Pursuant to the conversion of RM5,000,000 RCSLN at a conversion price of RM0.172 per share on 28 February 2013 and 17 May 2013, the whole sum of RCSLN has been fully redeemed.

(f) share premium

This amount arose from premium on the issue of ordinary shares above par value.

The movement in share premium account is as follows:

Group and company

2013 2012

rM rM

As at 1 January 22,171,940 19,630,261

Ordinary shares issued during the year:

Pursuant to conversion of RCSLN 2,096,400 2,515,679

Gain on disposal of treasury shares 1,490,275 -

Transaction cost

Overprovision in prior year - 26,000

As at 31 December 25,758,615 22,171,940

107

Annual Report 2013



24. loans anD borrowinGs

Group company

2013 2012 2013 2012

note rM rM rM rM

secured

non-current

Term loans a 59,578,545 36,535,857 21,660,000 9,000,000

Hire purchase payables b 3,766,528 4,444,969 436,003 475,945

63,345,073 40,980,826 22,096,003 9,475,945

current

Term loans a 15,201,140 20,118,085 7,340,000 10,858,282

Hire purchase payables b 1,230,339 1,181,371 147,861 116,125

Bankers’ acceptance 31(b)(f ) 44,074,171 11,286,000 - -

Trust receipts 31(b)(f ) 1,130,124 - - -

Bank overdraft 31(b)(f ) 16,130,260 2,805,824 3,542,117 -

Redeemable Convertible Secured Loan Notes 31(f ), c - 4,957,033 - 4,957,033

77,766,034 40,348,313 11,029,978 15,931,440

total loans and borrowings25, 30,

31(d), 32 141,111,107 81,329,139 33,125,981 25,407,385 (a) term loans Included in the term loans is an amount of RM6,147,064 (2012: RM7,874,070) which is the term loan approved under the

Green Technology Financing Scheme (“GTFS”). Under the GTFS’s approved term loan, the Government of Malaysia is to bear 2.00% of the total interest rate and a guarantee of 60% on the term loan via Credit Guarantee Corporation Malaysia Berhad.

The securities given for the term loans are disclosed in Note 24(d).

(b) hire purchase payables

Group company

2013 2012 2013 2012

rM rM rM rM

Minimum lease payment

Not later than 1 year 1,500,201 1,768,954 171,636 141,504

Later than 1 year and not later than 2 years 1,894,566 1,216,996 171,636 141,504

Later than 2 years and not later than 5 years 2,310,343 3,323,712 292,898 376,661

5,705,110 6,309,662 636,170 659,669

Future finance charges (708,243) (683,322) (52,306) (67,599)

Present value of hire purchase liabilities 4,996,867 5,626,340 583,864 592,070


108


24. loans anD borrowinGs cont’d (b) hire purchase payables cont’d

Group company

2013 2012 2013 2012

note rM rM rM rM

Present value of hire purchase liabilities

Not later than 1 year 1,230,339 1,181,371 147,861 116,125

Later than 1 year and not later than 2 years 1,774,425 1,144,834 155,206 122,182

Later than 2 years and not later than 5 years 1,992,103 3,300,135 280,797 353,763

4,996,867 5,626,340 583,864 592,070

analysed as

Due after 12 months 3,766,528 4,444,969 436,003 475,945

Due within 12 months 1,230,339 1,181,371 147,861 116,125

31(b)(f ) 4,996,867 5,626,340 583,864 592,070

(c) redeemable convertible secured loan notes (“rcsln”)

On 3 December 2009, the Company issued RM20,000,000 of 4-year Redeemable Convertible Secured Loan Notes for the funding on future synergistic acquisitions of the Group to meet the working requirements of the Group, and to defray the expenses incidental to the RCSLN issue. The terms of the RCSLN are as follows:

(i) The registered holder(s) of the RCSLN will have the option to convert the nominal value of the RCSLN into new ordinary shares of RM0.10 each in the Company at any time during the conversion period, in the following manner:

- Within the first two (2) years from the issue date of the RCSLN, up to RM3 million nominal value of the RCSLN per month; and

- Thereafter, all or part of the outstanding RCSLN at the registered holder(s)’ discretion.

(ii) The RCSLN are convertible into new ordinary shares of RM0.10 each in the Company (“DMB Shares”) at a conversion price of RM0.31 per new DMB share. The conversion price of the RCSLN of RM0.31 was arrived at based on a premium of approximately 22% to the 30-day volume weighted average closing price of DMB Shares of RM0.2537 up to and including 16 April 2009 being the date the terms of the RCSLN were mutually agreed upon. On 25 June 2009, the conversion price of the RCSLN of RM0.31 was adjusted to RM0.2067 pursuant to the bonus issue of 270,595,514 DMB shares, credited as fully paid up, on the basis of 1 DMB Share for every 2 DMB Shares held on 24 June 2009.

(iii) Unless previously redeemed or converted, upon the close of business on the maturity date, all outstanding RCSLN (excluding the RCSLN to be converted on the maturity date) will be redeemed at par by cash and in one lump sum.

(iv) The Company shall have the option to either repurchase or nominate another party to purchase up to RM3 million nominal value of the RCSLN in each calendar month from the registered holder(s) at any time after the second anniversary of the issue date of the RCSLN at a price of 130% of the RCSLN’s nominal value.

(v) The RCSLN bear interest at 4.00% per annum payable quarterly in arrears during the tenure of the RCSLN applicable to those RCSLN which have not been converted prior to the maturity of the RCSLN.

(vi) The RCSLN constitute direct, unconditional, unsubordinated and secured obligations of the issuer ranking pari passu without discrimination, preference or priority with other secured obligations of the issuer, in priority to all present and future unsecured obligations of the issuer from time to time subject to those preferred by law.

109

Annual Report 2013



24. loans anD borrowinGs cont’d

(c) redeemable convertible secured loan notes (“rcsln”) cont’d

(vii) The RCSLN was secured by way of a pledge of 100% unquoted shares over the entire issued and paid up capital of one of its subsidiaries with a carrying amount of RM28,488,131 as disclosed in Note 13.

(viii) On 3 July 2010, the conversion price of the RCSLN of RM0.2067 was adjusted to RM0.1722 pursuant to the bonus issue of 176,122,823 new DMB shares, credited as fully paid up, on the basis of 1 DMB Share for every 5 DMB Shares held on 2 July 2010.

The proceeds received from the issue of the RCSLN have been split between the liability component and the equity component, representing the fair value of the conversion option. The RCSLN are accounted for in the statements of financial position of the Group and of the Company as follows:

2013 2012

note rM rM

Nominal value

As at 1 January 5,000,000 11,000,000

Less: Conversion to new ordinary shares (5,000,000) (6,000,000)

As at 31 December - 5,000,000

Less: Unamortised discount - (42,967)

31(f ) - 4,957,033

Current - 4,957,033 The carrying amount of the liability component of RCSLN at the reporting date is arrived at as follows:

Group and company

2013 2012

note rM rM

Face value of RCSLN - 5,000,000

Equity component

- Equity component, net of deferred tax 23(e) - (130,374)

- Deferred tax liability - (10,740)

Liability component at initial recognition - 4,858,886

Total interest expense recognised to date 1,480,796 1,522,692

Total interest paid to date (1,480,796) (1,424,545)

Liability component as at 31 December - 4,957,033

Interest expense on the convertible notes is calculated on the effective yield basis by applying the coupon interest rate of 4.00% (2012: 4.00%) per annum.


110


24. loans anD borrowinGs cont’d

(d) security Group The bank borrowings and other facilities are secured by way of:

(i) legal charges over subsidiaries freehold land and buildings;(ii) corporate guarantee by the Company; (iii) a debenture over all assets of certain subsidiaries; (iv) a pledge on the Company and subsidiaries’ fixed deposits; and(v) a pledge of 100% unquoted shares over the entire issued and paid-up share capital of certain subsidiaries with a

carrying amount of RM112,308,946 (2012: RM112,308,946) as disclosed in Note 13.

company

The term loan are secured by way of:

(i) a facility agreement to be executed between the Company and the bank;(ii) a pledge of 100% unquoted shares over the entire issued and paid-up capital of certain subsidiaries with a carrying

amount of RM112,308,946 (2012: RM112,308,946) as disclosed in Note 13;(iii) third party secured legal charge over a subsidiary’s freehold land and building; and(iv) a pledge on the Company’s fixed deposits.

Other information on financial risks of loans and borrowings are disclosed in Note 31.

25. traDe anD other Payables

Group company

2013 2012 2013 2012

note rM rM rM rM

trade payables

Third parties a 78,590,251 25,121,106 - -

other payables

Accruals 13,856,545 5,681,771 1,038,513 490,412

Deposits b - 3,000,000 - 3,000,000

Other payables c 45,673,659 51,620,704 970,784 98,074

Amount due to directors 181,099 213,953 127,018 213,953

Amount due to subsidiaries d - - 30,342,140 14,613,598

59,711,303 60,516,428 32,478,455 18,416,037

Total trade and other payables 31(d) 138,301,554 85,637,534 32,478,455 18,416,037

Add: Loans and borrowings 24 141,111,107 81,329,139 33,125,981 25,407,385

total financial liabilities carried at amortised cost 279,412,661 166,966,673 65,604,436 43,823,422

111

Annual Report 2013



25. traDe anD other Payables cont’d

(a) trade payables

The normal trade credit terms granted to the Group from the trade payables are ranging from 14 to 90 days (2012: 14 to 90 days).

(b) Deposits

Deposits for prior year is sums placed by vendors in lieu of the profit guarantees for the acquired subsidiary.

(c) other payables

Included in other payables are advance payments received from customers amounted to RM21,832,588 (2012: RM11,614,600) and retention sum retained from subcontractors amounted to RM10,832,776 (2012: RM6,100,455).

(d) amount due to subsidiaries

Included in amounts due to subsidiaries are loan and advances amounting to RM30,342,140 (2012: RM14,263,921) that are subject to interest rate at per annum 5.00% to 10.10% (2012: 5.00%). The amounts are repayable on demand.

(e) trade and other payables denominated in foreign currencies

Included in trade and other payables of the Group are the following trade and other payables amounts denominated in a currency other than the functional currencies of the entities to which they relate:

Group

2013 2012

note rM rM

Hong Kong Dollar 169,317 59,824

Indonesian Rupiah 19,230 8,097

European Dollar 2,118,394 1,008,785

United States Dollar 27,469,273 612,402

British Pound Sterling 6,366,598 -

Norwegian Krone 309,837 -

Australian Dollar 36,621 -

Singaporean Dollar 229,498 -

31(c) 36,718,768 1,689,108

26. Provisions

Group

2013 2012

rM rM

Defect liability

As at 1 January 324,694 1,709,277

Provision made for the year 387,941 98,823

Utilised/Reversal (102,062) (1,483,406)

As at 31 December 610,573 324,694

The provision for defect liability relates to the construction works done by the technical services segment. The provision is based on estimates made from historical defect claims data from the past construction works.


112


27. coMMitMents (a) capital commitments

Capital expenditure as at the reporting date is as follows:

Group company

2013 2012 2013 2012

rM rM rM rM

Contracted and not provided for

Property, plant and equipment 35,227 11,738,370 35,227 145,970

Approved but not contracted for

Property, plant and equipment 7,425,192 1,209,100 - - (b) operating lease commitments - as lessee

The Group via its sub-subsidiary, Daya Vessels Limited (formerly known as Daya OCI (Labuan) Limited) (“DVL”) had on 4 December 2012 entered into a charter agreement with Siem Offshore Rederi AS for the charter of one of their Offshore Subsea Construction Vessels which is to be named Siem Daya 1 for five (5) years with two (2) yearly options.

Subsequently, the Group via DVL had on 3 September 2013 entered into another charter agreement with Siem Offshore Rederi AS for the charter of another Offshore Construction Vessel to be named Siem Daya 2 for the same five (5) years and two (2) yearly options.

As at 31 December, the Group and the Company had future minimum lease payments payable under non-cancellable operating leases in respect of its buildings and vessels which fall due as follows:

Group company

2013 2012 2013 2012

rM rM rM rM

Not later than 1 year 143,727,656 470,096 480,000 204,000

Later than 1 year but not later than 5 years 845,181,467 243,938 600,000 238,000

More than 5 years 184,954,639 - - -

1,173,863,762 714,034 1,080,000 442,000

(c) operating lease commitments - as lessor

The Group has entered into commercial leases on its investment properties and chartered vessels.

These non-cancellable leases have remaining lease terms of between 1 to 7 years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions.

The Group via its sub-subsidiary, Daya Vessels Limited (formerly known as Daya OCI (Labuan) Limited) (“DVL”) had on 16 August 2013 entered into a charter agreement with Technip Norge AS for the charter of the chartered Offshore Subsea Construction Vessels, Siem Daya 1 and Siem Daya 2 for seven (7) years with the minimum annual charter of 100 days continuously. The remaining days of uncommitted charter by Technip Norge AS is to strategically position for the spot charter which tend to have more competitive charter rates.

113

Annual Report 2013



27. coMMitMents cont’d

(c) operating lease commitments - as lessor cont’d

Future minimum rentals receivable under non-cancellable operating leases at the reporting date are as follows:

Group

2013 2012

rM rM

Not later than 1 year 181,100,403 326,292

Later than 1 year but not later than 5 years 199,426,540 1,286,360

More than 5 years 43,598,075 570,378

424,125,018 2,183,030 (d) finance lease commitments

The Group and the Company have finance lease for certain of its property, plant and equipment. The future minimum lease payments under finance leases together with the present value of the net minimum lease payments are disclose in Note 24(b).

28. relateD Party Disclosures

(a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company have the following transactions with related parties during the financial year:

2013 2012

Group rM rM

Purchases of commercial properties from a director - 3,192,400

Interest income charged on housing loan to a director 56,275 86,872

2013 2012

company note rM rM

Subsidiaries:

- Dividend received 3, 6 4,965,000 3,676,020

- Management fees received/receivable 3 10,399,116 7,944,867

- Interest received/receivable 2,491,098 1,333,700

- Interest paid/payable 5 1,197,856 431,097

- Advances received 15,745,607 17,000,000

- Advances given 16,963,252 5,578,641

- Rental received/receivable - 24,000

- Rental paid/payable 419,872 177,000 The directors are of the opinion that these transactions have been entered into in the normal course of business and have

been established under negotiated terms.

The information on outstanding balances in respect of the above transactions is disclosed in Note 17 and 25.


114


28. relateD Party Disclosures cont’d (b) Compensation of key management personnel

The remuneration of directors and other members of key management personnel during the year was as follow:

Group company

2013 2012 2013 2012

rM rM rM rM

Short term employee benefits 11,755,850 9,189,027 4,515,974 4,120,560

Pension costs

- Defined contribution plan 888,739 841,208 505,675 461,646

12,644,589 10,030,235 5,021,649 4,582,206

Group company

2013 2012 2013 2012

note rM rM rM rM

Included in the total compensation of key management personnel are:

- Remuneration for the Company’s directors 6 3,489,624 3,191,790 3,046,785 2,766,519

- Remuneration for the subsidiaries’ directors 6 5,774,084 3,170,648 1,114,767 909,711

- Directors’ fees for the Company’s directors 6 386,000 166,000 156,000 156,000

- Directors’ fees for the subsidiaries’ directors 6 29,000 89,000 - -

The key management personnel comprise persons having authority and responsibility for planning, directing and

controlling the activities of the Group entities either directly or indirectly.

115

Annual Report 2013



29. eMPloyee benefit exPense

Group company

2013 2012 2013 2012

note rM rM rM rM

Wages and salaries 31,271,290 18,877,302 5,006,036 4,484,951

Social security costs 159,108 120,749 9,244 8,657

Pension costs - defined contribution plans 2,501,214 1,881,751 606,461 542,572

Overtime and allowances 1,177,216 1,310,626 212,583 213,017

6 35,108,828 22,190,428 5,834,324 5,249,197

30. seGMental rePortinG (a) reporting format For management purposes, the Group’s primary segment is organised into business units based on their business industry

and products and services produced, and has three reportable segments as follow:

(i) The polymer segment is involved in manufacturing of advanced materials for the power cables and wires industry and the trading of various other related polymer compounds and specialty chemical products.

(ii) The oil & gas segment is involved in trading and distribution of specialty chemicals and catalysts, provision of heavy machineries and related manpower services, automatic welding services for offshore pipeline installation to the oil and gas industry.

(iii) The technical services segment is involved in services in the construction, maintenance services for air-conditioning and ventilation system and recycling services. This reporting segment has aggregated the construction and maintenance services segment and recycling services segment, which are regarded by management to exhibit similar economic and business characteristics.

Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss.


116


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117

Annual Report 2013



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0,41

7,23

8 2

35,4

81

123

,824

1

38,0

86,1

12

82,

186,

527

Corp

orat

e lia

bilit

ies

826

,015

3

,775

,701

Loan

s an

d bo

rrow

ings

24 1

41,1

11,1

07

81,

329,

139

Tax

paya

ble

3,2

40,1

53

811

,789

Def

erre

d ta

x lia

bilit

ies

16 -

199

,570

Tota

l lia

bilit

ies

283

,263

,387

1

68,3

02,7

26


118


30.

seG

Men

tal

rePo

rtin

G c

ont’d

(b)

busi

ness

seg

men

ts c

ont’d

The

follo

win

g ta

ble

prov

ides

an

anal

ysis

of t

he G

roup

’s re

venu

e, re

sults

, ass

ets

and

liabi

litie

s an

d ot

her i

nfor

mat

ion

by b

usin

ess

segm

ents

: co

nt’d

Po

lym

ero

il &

Gas

tech

nica

l ser

vice

so

ther

sG

roup

201

3 2

012

201

3 2

012

201

3 2

012

201

3 2

012

201

3 2

012

not

e r

M

rM

r

M

rM

r

M

rM

r

M

rM

r

M

rM

oth

er in

form

atio

n

capi

tal

expe

ndit

ures

Prop

erty

, pla

nt a

nd

equi

pmen

t9

511

,208

2

5,86

9 3

8,81

7,09

4 7

,495

,858

2

,190

,315

2

,290

,574

4

,166

,485

6

39,8

95

45,

685,

102

10,

452,

196

Land

hel

d fo

r pr

oper

ty

deve

lopm

ent

10 -

- -

- 8

19,2

68

10,

474,

825

- -

819

,268

1

0,47

4,82

5

Inve

stm

ent

prop

ertie

s11

- -

- -

- -

8,6

32,3

82

- 8

,632

,382

-

Inta

ngib

le a

sset

s12

- -

981

,756

-

77,

822

98,

425

69,

347

- 1

,128

,925

9

8,42

5

511

,208

2

5,86

9 3

9,79

8,85

0 7

,495

,858

3

,087

,405

1

2,86

3,82

4 1

2,86

8,21

4 6

39,8

95

56,

265,

677

21,

025,

446

Dep

reci

atio

n an

d am

orti

sati

on

Prop

erty

, pla

nt a

nd

equi

pmen

t9

410

,866

4

95,2

89

3,4

28,0

91

2,9

09,7

91

1,2

54,3

14

642

,345

4

22,4

55

312

,066

5

,515

,726

4

,359

,491

Inve

stm

ent

prop

ertie

s11

- -

10,

457

10,

457

4,5

38

4,5

38

- -

14,

995

14,

995

Inta

ngib

le a

sset

s12

17,

369

17,

368

258

,109

-

81,

649

57,

973

15,

071

11,

374

372

,198

8

6,71

5

428

,235

5

12,6

57

3,6

96,6

57

2,9

20,2

48

1,3

40,5

01

704

,856

4

37,5

26

323

,440

5

,902

,919

4

,461

,201

119

Annual Report 2013



30. seGMental rePortinG cont’d

(c) Geographical segments

Revenue, segment assets and capital expenditures based on geographical location of customers and assets are as follows:

total revenue from external customers segment assets capital expenditure

restated restated

2013 2012 2013 2012 2013 2012

rM rM rM rM rM rM

Malaysia 497,161,015 295,875,839 410,880,408 296,671,347 56,230,221 21,025,446

Other countries 26,624,202 710,942 10,374,851 2,957,161 35,456 -

Consolidated 523,785,217 296,586,781 421,255,259 299,628,508 56,265,677 21,025,446

The Group’s operations are mainly located in Malaysia.

31. financial instruMents

(a) financial risk management objectives and policies

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include interest rate risk, foreign currency risk, liquidity risk and credit risk.

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s business whilst managing its interest rate risk, foreign currency risk, liquidity risk and credit risk. The policies for managing each of these risks are summarised below. It is the Group’s policy that no trading in derivative financial instruments shall be undertaken.

The following sections provide details regarding the Group’s and the Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

(b) interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Group’s and of the Company’s financial instruments

will fluctuate because of changes in market interest rates. The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings and advances at floating rates given to related companies as the Group and the Company had no substantial long-term interest-bearing assets as at 31 December 2013. The investments in financial assets are mainly short term in nature and they are not held for speculative purposes.

The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowings. The Group reviews its debt portfolio, taking into account the investment holding period and nature of its assets. This strategy allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection against rate hikes.

At the reporting date, the Group and the Company do not have significant interest risk exposure except as disclosed below.

Sensitivity analysis for interest rate risk

At the reporting date, if interest rates had been 100 basis points lower/higher, with all other variables held constant, the Group’s and the Company’s profit before tax would have been RM1,292,070 (2012: RM652,106) and RM106,044 (2012: RM30,092) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loan and borrowings and higher/lower interest income from floating rate loans to related parties and short term investments. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.


120


31.

fin

an

cia

l in

stru

Men

ts c

ont’d

(b

) in

tere

st ra

te ri

sk c

ont’d

Th

e fo

llow

ing

tabl

es s

et o

ut t

he c

arry

ing

amou

nts,

the

inte

rest

rat

es a

s at

the

rep

ortin

g da

te a

nd t

he r

emai

ning

mat

uriti

es o

f th

e G

roup

’s an

d of

the

Com

pany

’s fin

anci

al in

stru

men

ts th

at a

re e

xpos

ed to

inte

rest

rate

risk

:

inte

rest

rate

w

ithi

n 1

year

1

-2 y

ear

2-3

yea

rs

3-4

yea

rs

4-5

yea

rs

Mor

e th

an 5

yea

rs

tot

al

not

e %

r

M

rM

r

M

rM

r

M

rM

r

M

Gro

up

as

at 3

1 D

ecem

ber 2

013

fixe

d ra

te

fina

ncia

l ass

ets

Fixe

d de

posi

ts21

1.20

- 3.

1040

,095

,816

-

- -

- -

40,0

95,8

16

fina

ncia

l lia

bilit

ies

Term

loan

s 7.

60 3

16,6

28

341

,549

3

68,4

30

397

,427

2

28,7

55

- 1

,652

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Hire

pur

chas

e24

(b)

2.34

- 4.

75 1

,230

,339

1

,774

,425

1

,890

,429

8

1,93

7 1

9,73

7 -

4,9

96,8

67

floa

ting

rate

fina

ncia

l ass

ets

Shor

t ter

m in

vest

men

ts21

2.01

- 2.

96 4

,550

,811

-

- -

- -

4,5

50,8

11

Hou

sing

loan

to a

dire

ctor

5.55

600

,352

1

03,3

30

- -

- -

703

,682

fina

ncia

l lia

bilit

ies

Term

loan

s4.

40 -

8.10

14,8

84,5

12

15,7

99,9

09

13,0

18,3

11

6,6

71,7

61

3,3

27,3

34

19,4

25,0

69

73,1

26,8

96

Bank

ove

rdra

ft24

7.60

- 10

.10

16,

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260

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0

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t rec

eipt

s24

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Bank

ers’

acc

epta

nce

243.

50 -

7.85

44,

074,

171

- -

- -

- 4

4,07

4,17

1

121

Annual Report 2013



31.

fin

an

cia

l in

stru

Men

ts c

ont’d

(b

) in

tere

st ra

te ri

sk c

ont’d

Th

e fo

llow

ing

tabl

es s

et o

ut t

he c

arry

ing

amou

nts,

the

inte

rest

rat

es a

s at

the

rep

ortin

g da

te a

nd t

he r

emai

ning

mat

uriti

es o

f th

e G

roup

’s an

d of

the

Com

pany

’s fin

anci

al in

stru

men

ts th

at a

re e

xpos

ed to

inte

rest

rate

risk

: co

nt’d

inte

rest

rate

w

ithi

n 1

year

1

-2 y

ear

2-3

yea

rs

3-4

yea

rs

4-5

yea

rs

Mor

e th

an 5

yea

rs

tot

al

not

e %

r

M

rM

r

M

rM

r

M

rM

r

M

Gro

up

as

at 3

1 D

ecem

ber 2

012

fixe

d ra

te

fina

ncia

l ass

ets

Fixe

d de

posi

ts21

2.15

- 3.

29 2

9,78

1,42

7 -

- -

- -

29,

781,

427

fina

ncia

l lia

bilit

ies

Term

loan

7.

60 3

02,6

19

326

,437

3

52,1

29

379

,843

4

09,7

38

143

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1

,914

,390

Hire

pur

chas

e24

(b)

2.34

- 4.

72 1

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1

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9

56,6

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52

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5

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N

244.

00 4

,957

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- -

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57,0

33

floa

ting

rate

fina

ncia

l ass

ets

Shor

t ter

m in

vest

men

ts21

1.83

- 2.

95 3

,620

,798

-

- -

- -

3,6

20,7

98

Hou

sing

loan

to a

dire

ctor

5.55

568

,013

6

00,3

52

103

,330

-

- -

1,2

71,6

95

fina

ncia

l lia

bilit

ies

Term

loan

s4.

40 -

8.35

19,

815,

466

8,9

47,3

96

8,5

81,1

60

5,3

49,4

15

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19,0

41

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739,

552

Bank

ove

rdra

ft24

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-

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05,8

24

Bank

ers’

acce

ptan

ce24

3.21

- 4.

49 1

1,28

6,00

0 -

- -

- -

11,

286,

000


122


31.

fin

an

cia

l in

stru

Men

ts c

ont’d

(b

) in

tere

st ra

te ri

sk c

ont’d

Th

e fo

llow

ing

tabl

es s

et o

ut t

he c

arry

ing

amou

nts,

the

inte

rest

rat

es a

s at

the

rep

ortin

g da

te a

nd t

he r

emai

ning

mat

uriti

es o

f th

e G

roup

’s an

d of

the

Com

pany

’s fin

anci

al in

stru

men

ts th

at a

re e

xpos

ed to

inte

rest

rate

risk

: co

nt’d

inte

rest

rate

w

ithi

n 1

year

1

-2 y

ear

2-3

yea

rs

3-4

yea

rs

4-5

yea

rs

Mor

e th

an 5

yea

rs

tot

al

not

e %

r

M

rM

r

M

rM

r

M

rM

r

M

com

pany

as

at 3

1 D

ecem

ber 2

013

fixe

d ra

te

fina

ncia

l ass

ets

Fixe

d de

posi

ts21

3.10

2,7

01,0

00

- -

- -

- 2

,701

,000

fina

ncia

l lia

bilit

ies

Hire

pur

chas

e24

(b)

2.39

- 2.

60 1

47,8

61

155

,206

2

80,7

97

- -

- 5

83,8

64

floa

ting

rate

fina

ncia

l ass

ets

Am

ount

due

from

sub

sidi

arie

s8.

60 -

15.0

0 4

6,59

7,30

6 -

- -

- -

46,

597,

306

Shor

t ter

m in

vest

men

ts21

2.01

- 2.

96 4

,550

,811

-

- -

- -

4,5

50,8

11

fina

ncia

l lia

bilit

ies

Am

ount

due

to s

ubsi

diar

ies

5.00

- 10

.10

30,

342,

140

- -

- -

- 3

0,34

2,14

0

Term

loan

s5.

86 -

6.00

7,3

40,0

00

10,

680,

000

7,6

80,0

00

3,3

00,0

00

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29,

000,

000

Bank

ove

rdra

ft24

8.10

3,5

42,1

17

- -

- -

- 3

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,117

123

Annual Report 2013



31.

fin

an

cia

l in

stru

Men

ts c

ont’d

(b

) in

tere

st ra

te ri

sk c

ont’d

Th

e fo

llow

ing

tabl

es s

et o

ut t

he c

arry

ing

amou

nts,

the

inte

rest

rat

es a

s at

the

rep

ortin

g da

te a

nd t

he r

emai

ning

mat

uriti

es o

f th

e G

roup

’s an

d of

the

Com

pany

’s fin

anci

al in

stru

men

ts th

at a

re e

xpos

ed to

inte

rest

rate

risk

: co

nt’d

inte

rest

rate

w

ithi

n 1

year

1

-2 y

ear

2-3

yea

rs

3-4

yea

rs

4-5

yea

rs

Mor

e th

an 5

yea

rs

tot

al

not

e %

r

M

rM

r

M

rM

r

M

rM

r

M

com

pany

as

at 3

1 D

ecem

ber 2

012

fixe

d ra

te

fina

ncia

l ass

ets

Fixe

d de

posi

ts21

3.10

3,3

32,9

10

- -

- -

- 3

,332

,910

fina

ncia

l lia

bilit

ies

Hire

pur

chas

e24

(b)

2.44

- 2.

60 1

16,1

25

122

,182

1

28,2

39

129

,767

8

8,26

6 7

,491

5

92,0

70

RCSL

N

244.

00 4

,957

,033

-

- -

- -

4,9

57,0

33

floa

ting

rate

fina

ncia

l ass

ets

Am

ount

due

from

sub

sidi

arie

s8.

60 2

7,49

2,20

9 -

- -

- -

27,

492,

209

Shor

t ter

m in

vest

men

ts21

2.01

- 2.

96 3

,620

,798

-

- -

- -

3,6

20,7

98

fina

ncia

l lia

bilit

ies

Am

ount

due

to s

ubsi

diar

ies

5.00

14,

263,

921

- -

- -

- 1

4,26

3,92

1

Term

loan

s5.

96 -

6.00

10,

858,

282

4,0

00,0

00

4,0

00,0

00

1,0

00,0

00

- -

19,

858,

282

Th

e ot

her fi

nanc

ial i

nstr

umen

ts o

f the

Gro

up a

nd o

f the

Com

pany

that

are

not

incl

uded

in th

e ab

ove

tabl

es a

re n

ot s

ubje

ct to

inte

rest

rate

risk

.


124


31. financial instruMents cont’d

(c) foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group has transactional currency exposures arising from sales and purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily RM, Hong Kong Dollar (“HKD”) and Indonesian Rupiah (“IDR”). The foreign currencies in which these transactions are denominated are mainly European Dollar (“EURO”), United States Dollar (“USD”), Singapore Dollar (“SGD”), British Pound Sterling (“GBP”) and Norwegian Krone (“NOK”).

Exposure to foreign currency risk

The Group’s and the Company’s exposure to foreign currency (a currency which is other than the currency of the Group and of the Company) risk, based on carrying amounts as at the end of the reporting period was:

2013

total rM denominated in

note rM hkD iDr euro usD sGD GbP nok auD

Group

Trade and other receivables 17(g) 11,898,451 5,143 1,289,583 974,580 8,918,143 103,178 607,824 - -

Cash and cash equivalents 21(c) 2,731,371 36,949 28,773 415,076 2,250,573 - - - -

Trade and other payables 25(e) (36,718,768) (169,317) (19,230) (2,118,394) (27,469,273) (229,498) (6,366,598) (309,837) (36,621)

Exposure in the statement of financial position (127,225) 1,299,126 (728,738) (16,300,557) (126,320) (5,758,774) (309,837) (36,621)

Approximate sales - 40,548 296,017 186,127,832 - 13,135,361 - -

Approximate purchases - - 13,329,189 156,740,078 14,972,109 4,137,900 3,601,422 122,640

- 40,548 (13,033,172) 29,387,754 (14,972,109) 8,997,461 (3,601,422)(122,640)

125

Annual Report 2013




(c) foreign currency risk cont’d

2012

total rM denominated in

note rM hkD iDr euro usD sGD

Group

Trade receivables 17(g) 2,614,748 4,477 1,694,861 - 915,410 -

Cash and cash equivalents 21(c) 803,802 34,931 18,163 152,051 598,657 -

Trade and other payables 25(e) (1,689,108) (59,824) (8,097) (1,008,785) (612,402) -

Exposure in the statement of financial position (20,416) 1,704,927 (856,734) 901,665 -

Approximate sales - 710,942 231,140 113,000 -

Approximate purchases - - 681,135 6,963,348 15,607

- 710,942 (449,995) (6,850,348) (15,607)

rM denominated in

usD hkD

note 2013 2012 2013 2012

company

Trade and other receivables 17(g) - - 3,718,445 2,798,027

Cash and cash equivalents 21(c) 556 1,893 - -

556 1,893 3,718,445 2,798,027 The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including

Hong Kong and Indonesia. The Group’s net investment in Hong Kong and Indonesia are not hedged as currency position in HKD and IDR are considered to be long term in nature.

At the reporting date, the Group and the Company do not have significant foreign currency risk exposure except as disclosed below.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s and of the Company’s profit before tax to a reasonably possible change in the USD, EURO, SGD and GBP exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.


126



(c) foreign currency risk cont’d

Sensitivity analysis for foreign currency risk cont’d

Group

2013 2012

effect on profit before

tax


tax

rM rM

USD/RM - strengthen 10% (2012: 10%) (1,630,056) 90,167

USD/RM - weaken 10% (2012: 10%) 1,630,056 (90,167)

EURO/RM - strengthen 10% (2012: 10%) (72,874) (85,673)

EURO/RM - weaken 10% (2012: 10%) 72,874 85,673

SGD/RM - strengthen 10% (2012: 10%) (12,632) -

SGD/RM - weaken 10% (2012: 10%) 12,632 -

GBP/RM - strengthen 10% (2012: 10%) (575,877) -

GBP/RM - weaken 10% (2012: 10%) 575,877 - The financial impact on the changes of the other currencies other than the above is not disclosed as it is not significant to

the Group.

company

2013 2012


tax


tax

rM rM

HKD/RM - strengthen 10% (2012: 10%) 371,845 279,803

HKD/RM - weaken 10% (2012: 10%) (371,845) (279,803)

(d) liquidity risk Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due

to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities.

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(d) liquidity risk cont’d Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s liabilities at the reporting date based on contractual

undiscounted repayment obligations.

2013

contractual cash flows

carrying amount

on demand or within one year

one to five years

over five years total

note rM rM rM rM rM

Group

financial liabilities:

Trade and other payables 25 138,301,554 138,301,554 - - 138,301,554

Loans and borrowings 24 141,111,107 81,528,684 42,824,164 28,859,818 153,212,666

279,412,661 219,830,238 42,824,164 28,859,818 291,514,220

company



Loans and borrowings 24 33,125,981 12,601,178 23,442,223 - 36,043,401

65,604,436 45,079,633 23,442,223 - 68,521,856

2012

contractual cash flows

carrying amount

on demand or within one year

one to five years

over five years total

note rM rM rM rM rM

Group



Loans and borrowings 24 81,329,139 41,893,480 39,157,422 4,162,015 85,212,917

166,966,673 127,531,014 39,157,422 4,162,015 170,850,451

company



Loans and borrowings 24 25,407,385 16,641,469 9,284,722 - 25,926,191

43,823,422 35,057,506 9,284,722 - 44,342,228


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(e) credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its

obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including short term investments and cash and cash equivalents), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

Exposure to credit risk

The carrying amount of each class of financial assets recognised in the statements of financial position.

Information regarding credit enhancements for trade receivables is disclosed in Note 17(d).

Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the country of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date are as follows:

2013 2012

note rM % of total rM % of total

By country:

Malaysia 96,920,433 90 46,445,817 96

Other countries 10,323,429 10 1,694,861 4

17 107,243,862 100 48,140,678 100

Financial assets that are neither past due nor impaired

Information regarding trade receivables that are neither past due nor impaired is disclosed in Note 17. Deposits with banks and short term investments that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.

Information regarding financial assets that are either past due or impaired is disclosed in Note 17.

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(f) fair values of financial instruments

(i) fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value

2013 2012

carrying amount fair value

carrying amount fair value

note rM rM rM rM

Group

financial

Redeemable Convertible Secured Loan Notes 24(c) - - 4,957,033 4,913,155

company

financial liabilities

Redeemable Convertible Secured Loan Notes 24(c) - - 4,957,033 4,913,155

The fair value of redeemable convertible secured loan note (“RCSLN”) has been determined using a valuation

technique through the discounting of expected future cash flows throughout the terms of RCSLN at the rate of 6.00% (2012: 6.00%).

(ii) Determination of fair value

Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are

reasonable approximation of fair value:

Group company

2013 2012 2013 2012

note rM rM rM rM

financial assets

Trade and other receivables 17 127,056,435 74,602,923 53,678,101 32,323,788

Cash and cashequivalents 21 69,977,355 66,412,033 9,538,131 11,798,484

financial liabilities

Term loans 74,779,685 56,653,942 29,000,000 19,858,282

Hire purchase payables 24(b) 4,996,867 5,626,340 583,864 592,070

Trust receipts 24 1,130,124 - - -

Bankers’ acceptance 24 44,074,171 11,286,000 - -

Bank overdraft 24 16,130,260 2,805,824 3,542,117 -

Trade and other payables 25 138,301,554 85,637,534 32,478,455 18,416,037

As the current interest rates do not differ significantly from the intrinsic value of these financial instruments, the fair values of these financial instruments therefore, closely approximate their carrying values as at the reporting date.


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(f) fair values of financial instruments cont’d (ii) Determination of fair value cont’d

Fair value hierarchy

The Group uses the following hierarchy for determining the fair value of all financial instruments carried at fair value:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 - Inputs that are observable market data, either directly or indirectly Level 3 - Inputs that are not based on observable market data

As at the reporting date, the Group held the following financial assets that are measured at fair value:

level 1 level 2 level 3 total

rM rM rM rM

31 December 2013

Group

financial assets

Financial assets at fair value through profit or loss

- Quoted shares 129,825 - - 129,825

31 December 2012

Group

financial assets

Financial assets at fair value through profit or loss

- Quoted shares 108,188 - - 108,188

The fair value of the unquoted available-for-sale financial assets has not been disclosed, as its fair value cannot be measured reliably due to the lack of quoted market price in an active market. The assumptions required for valuing this financial instruments using valuation techniques by management would results that the range of fair value estimates to be significant and the probability of the various estimates cannot be reasonably assessed. Accordingly, the carrying amount of the available-for-sale financial assets is stated at cost.

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32. caPital ManaGeMent

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise 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 dividends payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2013 and 31 December 2012.

The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. Under the requirement of Bursa Malaysia Securities Berhad’s Practice Note No. 17/2005, the Group is required to maintain a consolidated shareholders’ equity equal to or not less than the 25% of the issued and paid-up capital (excluding treasury shares) and such shareholders’ equity is not less than RM40 million. The Group includes within net debt, loans and borrowings less cash and cash equivalents. Capital includes equity attributable to the owners of the parent.

Group company

2013 2012 2013 2012

note rM rM rM rM

Loan and borrowings 24 141,111,107 81,329,139 33,125,981 25,407,385

Less: Cash and cash equivalents 21 (69,977,355) (66,412,033) (9,538,131) (11,798,484)

Net debt 71,133,752 14,917,106 23,587,850 13,608,901

Equity attributable to the owners of the parent 240,683,316 230,968,410 184,839,882 175,292,178

capital and net debt 311,817,068 245,885,516 208,427,732 188,901,079

Gearing ratio 22.81% 6.07% 11.32% 7.20%

33. siGnificant events Group (a) Purchase of commercial properties

(i) On 15 August 2012, the Group, via its direct wholly owned subsidiary, Daya Urusharta Sdn. Bhd. entered into five conditional Sale and Purchase Agreements with Mr. Tham Jooi Loon, for the proposed acquisition of five office units of a stratified mixed commercial development in Dutamas, Daerah Kuala Lumpur with a total net area of approximately 5,016 square feets for a total consideration of RM3,192,400.

(ii) On 8 November 2012, the Group via its direct wholly owned subsidiary, Daya Urusharta Sdn. Bhd. entered into six Sale and Purchase Agreements with Delight 2000 Holdings Sdn. Bhd. for the acquisition of two units of three storey shop-office and four units of two storey shop office under the leasehold land of under P.N. 48236, Lot No. 42781 in Mukim of Petaling, Kuala Lumpur for a total consideration of RM8,400,000.

DUSB has collected the keys from the developer and performed a joint inspection of the Properties on 15 January 2014. Thus, the purchase of commercial property by DUSB is deem completed upon property handover.


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33. siGnificant events cont’d

Group cont’d

(b) acquisition of a sub-subsidiary

The Group, via its subsidiary, Daya Petroleum Ventures Sdn. Bhd. had on 18 March 2013 entered into a Subscription Agreement with Daya Maxflo Sdn. Bhd. (formerly known as Maxflo Energy Products Sdn. Bhd.) (“Maxflo”), a Sale and Purchase Agreement with Jay Dorfman, and a Shareholders Agreement and a Put and Call Option Agreement with Jay Dorfman and Visual Well Solutions Sdn. Bhd., for the proposed acquisition of 50.70% of the issued and paid up share capital of Maxflo for a cash consideration of RM1,900,000. The acquisition was completed on 5 April 2013.

(c) Group re-organisation on investment in subsidiaries

On 2 January 2013, through the Internal Group Re-organisation Plan, the Company acquired 100,000 and 10,000 ordinary shares of RM1.00 each in Seca Chemicals and Catalysts Sdn. Bhd. (“SCCSB”) and Daya Offshore Construction Sdn. Bhd. (formerly known as SD Equipment Sdn. Bhd.) (“DOCSB”), sub-subsidiaries of a subsidiary of the Company, Daya Secadyme Sdn. Bhd. (“DSSB”) representing 100% of the issued and paid-up share capital of SCCSB and DOCSB for a cash consideration of RM2,754,855 and RM10,000 respectively from DSSB.

On 31 May 2013, the Company through another Internal Group Re-organisation Plan, acquired 500,000 ordinary shares of RM1.00 each in Daya Land & Development Sdn. Bhd. (“DLD”), a sub-subsidiary of a subsidiary of the Company, Daya CMT Sdn. Bhd. (“DCMT”) representing 100% of the issued and paid-up share capital of DLD for a cash consideration of RM1,222,065 from DCMT.

(d) Joint venture arrangement

(i) On 20 November 2012, the Group, via its direct wholly owned subsidiary, Daya Land & Development Sdn. Bhd. (“DLD”) entered into a Shareholders Agreement with Chang Cheng Realty Sdn. Bhd. to jointly develop and construct one block of 28 storey retail/showroom/service suites, forty blocks of four storey shop office and eight blocks of three storey shops on four parcels of empty land held located at Jalan Pintas in the District of Penampang, Sabah, Malaysia to be undertaken by a single-purpose joint venture company, Semangat Global Sdn. Bhd. (“SGSB”).

On 1 March 2013, the Group, via its direct wholly owned sub-subsidiary, DLD subscribed for 102,000 ordinary shares of RM1.00 each of SGSB for a cash consideration of RM102,000.

(ii) On 27 June 2013, the Group, via its indirect joint venture company, Semangat Global Sdn. Bhd. entered into a Joint Venture agreement with Jesselton Venture Sdn. Bhd. to develop a piece of land located at Kampung Lungab, in the district of Penampang, Sabah into residential/commercial development by the construction thereon 83 units of retail shop and 320 units of SOVO.

(iii) On 15 August 2013, the Group, via its subsidiary, Daya Petroleum Ventures Sdn. Bhd. entered into a Shareholders and Joint Venture Agreement with Cutech Solutions & Services Pte. Ltd. and Wiramas Baiduri Sdn. Bhd. to jointly venture into the business of provision of inspection services, non-destructive testing (“NDT”) and advanced NDT services, cathodic protection, piping and fabrication projects, underwater and subsea services, technical training and certification services, technical manpower outsourcing, engineering, procurement and construction (“EPC”) projects, electrical and mechanical projects in Malaysia (“the Business”).

The Business is to be undertaken by a single-purpose joint venture company named Daya Cutech Inspection Services Sdn. Bhd. (“DCIS”).

(iv) On 11 September 2013, the Group, via its indirect joint venture company, Daya Sheffield Sdn. Bhd. (“DSFSB”) entered into a Joint Venture agreement with Connect Energy Services Pte. Ltd. to undertake the provision of manpower services to Songa Offshore Malaysia Sdn. Bhd.

(v) On 16 October 2013, the Group, via its subsidiary, Daya Petroleum Ventures Sdn. Bhd. (“DPV”) entered into a Shareholders and Joint Venture Agreement with PT. Singgar Mulia and Globalstroy Engineering India Pty Ltd, a wholly-owned affiliate of Open Joint Stock Company, Globalstroy Engineering Services, to invest and develop design house business opportunities.

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Annual Report 2013




company

(a) conversion of redeemable convertible secured loan notes

On 28 February 2013, the Company announced that 14,518,002 new ordinary shares of RM0.10 each in the Company (“DMB Shares”) were issued pursuant to the conversion of RM2.5 million Redeemable Convertible Secured Loan Notes (“RCSLN”) at a conversion price of RM0.1722 per DMB share and these shares were listed on Bursa Malaysia Securities Berhad on 1 March 2013.

Subsequently, on 17 May 2013, the Company announced further 14,518,002 new DMB Shares were issued pursuant to the conversion of RM2.5 million RCSLN at a conversion price of RM0.1722 per DMB Share and these shares were listed on Bursa Malaysia Securities Berhad on 20 May 2013.

(b) Private Placement in 2013

On 21 October 2013, the Board announced that the Company proposes to undertake a private placement of new ordinary shares of RM0.10 each in the Company (“DMB Shares”), representing up to 10% of the issued and paid-up share capital of the Company (“Placement Shares”). The Proposed Private Placement is proposed to be implemented pursuant to a prior approval obtained pursuant to Section 132D of the Companies Act, 1965 from shareholders of the Company in a general meeting held on 18 June 2013.

Based on the issued and paid-up share capital of the Company as at 18 October 2013 of RM125,781,705 comprising 1,257,817,054 DMB Shares (excluding treasury shares), the number of Placement Shares to be issued under the Proposed Private Placement would be up to 125,781,705 Placement Shares, representing up to 10% of the issued and paid-up share capital of DMB as at 18 October 2013. The actual number of Placement Shares to be issued pursuant to the Proposed Private Placement would depend on the issued and paid-up share capital of the Company at any point in time upon obtaining all the relevant approvals.

On 28 October 2013, the Board have submitted the additional listing application to Bursa Securities and the application to the Ministry of International Trade and Industry (“MITI”) pursuant to the Proposed Private Placement and subsequently on 30 October 2013, Bursa Securities has approved the listing of and quotation for 125,781,705 new DMB Shares to be issued pursuant to the Proposed Private Placement subject to certain conditions whilst MITI, vide its letter dated 19 November 2013 had informed that it has no objections to the Proposed Private Placement.

On 18 December 2013 (“Price-Fixing Date”), the Board have fixed the issue price at RM0.345 per Placement Share whereby the issue price of RM0.345 represents a discount of approximately 9.7% to the 5-day VWAP of DMB Shares, up to including 17 December 2013 of RM0.3821 per DMB Share. The payments from the Placees are expected to be received within 5 market days from the Price-Fixing Date. The new ordinary shares of RM0.10 each in the Company in relation to the Private Placement were listed on Bursa Malaysia Securities Berhad on 3 January 2014, thereby marking the completion of the Private Placement.

(c) shares buy back/Disposal of treasury shares

During the financial year, the Company acquired 45,000 (2012: 13,888,600) shares in the Company through purchases on the Bursa Malaysia Securities Berhad. The total amount paid to acquire the shares was RM9,293 (2012: RM2,732,320) and this was presented as a component within shareholders’ equity.

In addition, the Company re-sold its treasury shares in the open market on 19 September 2013 for 2,500,000 ordinary shares at RM0.320 per share for a total cash consideration of RM797,160 net of brokerage, stamping and clearance fees. Subsequently, on 17 October 2013 and 18 October 2013, the Company further re-sold its treasury shares in the open market for 5,000,000 and 3,000,000 ordinary shares at RM0.34 per share for a total cash consideration of RM1,719,108 and RM1,016,434 net of brokerage, stamping and clearance fees respectively. The credit differences arose between the sales consideration and the carrying amount of these treasury shares were recognised in the share premium account.


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company cont’d

(d) Partial disposal of shares in subsidiaries

The Company had on 8 March 2013 entered into four Share Sale Agreements with Wiramas Baiduri Sdn. Bhd. for the disposal of 81,648 ordinary shares of RM1.00 each in Daya Secadyme Sdn. Bhd. (“DSSB”) representing 8.10% of the issued and paid-up share capital of DSSB, 405,000 ordinary shares of RM1.00 each in Daya OCI Sdn. Bhd. (“DOCI”) representing 8.10% of the issued and paid-up share capital of DOCI, 544,500 ordinary shares of RM1.00 each in Daya Proffscorp Sdn. Bhd. (“DPRO”) representing 33% of the issued and paid-up share capital of DPRO and 101,500 ordinary shares of RM1.00 each in Daya Petroleum Ventures Sdn. Bhd. (“DPV”) representing 29% of the issued and paid-up share capital of DPV at the cash consideration of RM6,500,000, RM3,700,000, RM6,700,000 and RM101,500 respectively. The disposal was completed on 5 April 2013.

(e) subscription of redeemable convertible preference shares and ordinary shares of reach energy berhad (formerly known as reach energy sdn. bhd.)

The Company had on 26 July 2013, entered into a subscription agreement (“Subscription Agreement”) with Reach Energy Sdn Bhd (“Reach Energy”) for the subscription of the following: (a) 533,334 redeemable convertible preference shares of RM0.01 each (“RCPS”) at an issue price of RM4.50 each in Reach

Energy for a consideration of RM2,400,003 (“RCPS Subscription”); and

(b) 12,444,444 ordinary shares of RM0.01 each (“Shares”) together with 12,444,444 free detachable Warrants at an issue price of RM0.45 per Share in Reach Energy for a consideration of RM5,599,999.80 (“Shares Subscription”).

Reach Energy proposes to undertake an initial public offering and listing on the Main Market of Bursa Malaysia Securities Berhad as a Special Purpose Acquisition Company (“SPAC”) (“Proposed IPO”) focused on the oil and gas industry.

The Subscription will enable the Company to invest in Reach Energy, a company which will be an oil and gas exploration and production company, once it completes its qualifying acquisition.

On 29 July 2013, pursuant to the Subscription Agreement, the Company has subscribed for 533,334 RCPS at an issue price of RM4.50 each in Reach Energy for a consideration of RM2,400,003.

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Annual Report 2013



34. DiviDenDs

Dividends in respect of year

Dividends recognised in year

2013 2012 2013 2012

rM rM rM rM

Proposed:

Single tier dividends of 2.5% on 1,234,001,750 ordinary shares - 3,085,004 - -

recognised during the year:

Single tier dividends of 2.5% on 1,247,317,054 ordinary shares - - 3,118,295 -

Single tier dividends of 2.5% on 1,229,607,650 ordinary shares - - - 3,074,022

- 3,085,004 3,118,295 3,074,022

The Board of Directors does not recommend the payment of any dividends for the financial year ended 31 December 2013.

35. subsequent events

Group (a) incorporation of a sub-subsidiary - Pt Daya Maxflo

On 20 January 2014, the Group, via its sub-subsidiary, Daya Maxflo Sdn. Bhd. (formerly known as Maxflo Energy Products Sdn. Bhd. (“DMSB”) incorporated a limited liability company known as PT Daya Maxflo (“PTDM”).

PTDM was incorporated on 24 December 2013 as per Deed of Establishment a limited liability company with an authorised and fully paid-up share capital of USD250,000 divided into 250,000 ordinary shares of USD1.00 each. PTDM’s paid-up share capital is owned 80% by DMSB and the remaining 20% is owned by Rollin Mahaputra Rahmat Shah, an Indonesian private investor.

The principal activity of PTDM is to provide, trade, import and distribute oil and gas products and services to the oil & gas industry in Indonesia. The incorporation of PTDM is to facilitate DMSB to expand its provision of oil & gas products and services in Indonesia.

(b) incorporation of a sub-subsidiary - Daya offshore construction as

On 23 February 2014, the Group, via its wholly-owned subsidiary, Daya Offshore Construction Sdn. Bhd. (formerly known as SD Equipment Sdn. Bhd.) incorporated a limited liability company known as Daya Offshore Construction AS (“DOCAS”) with an authorised and fully paid-up share capital of NOK30,000 divided into 1,000 ordinary shares of NOK30 each. The principal activities of DOCAS are offshore and offshore operations including contracting, purchasing, possession and chartering of vessels, and activities associated.

The incorporation of DOCAS is to facilitate the Group to expand its subsea business into Norway as a contracting entity for Norwegian and North Sea projects with clients.


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35. subsequent events cont’d

Group cont’d

(c) Partial disposal of shares in subsidiaries

The Company had on 28 April 2014 entered into a Share Sale Agreement (“SSA”) with Perfect Propel Sdn. Bhd. (“Perfect Propel”) to dispose 2,400,000 ordinary shares of RM1.00 each in Daya CMT Sdn. Bhd. (“DCMT”) representing 30% of the issued and paid-up share capital of DCMT at a cash consideration of RM18,000,000 (“Proposed Disposal”).

In the SSA, DCMT includes DCMT and its existing subsidiaries, together with Daya Land & Development Sdn. Bhd. (“DLD”) and its subsidiaries and joint venture company. DLD is currently a wholly-owned subsidiary of the Company. The Company undertakes to ensure (and it is also a condition precedent) that DLD shall become a wholly owned subsidiary of DCMT prior to the completion of Proposed Disposal and DLD’s subsidiaries shall upon completion, remain subsidiaries in the same shareholding percentages as of the date of the SSA.

The SSA is conditional upon the fulfilment (or waived by Perfect Propel) of all the following Conditions Precedent:

(i) Approval of the Company’s shareholders in a general meeting, if required by law. The Company shall within 7 days from the date of SSA advise Perfect Propel if such approval is required.

(ii) The approval and consent of DCMT’s financiers to the transactions contemplated by the SSA having been obtained by the Company or by DCMT (as the case may be), if required under existing financing covenants already undertaken by DCMT.

(iii) The completion of the internal restructuring by the Group in transferring the entire issued and paid up share capital in DLD to DCMT so that DLD becomes the wholly owned subsidiary of DCMT. DLD’s subsidiaries shall upon completion, remain subsidiaries in the same shareholding percentages as of the date of the SSA.

(iv) Perfect Propel conducting and completing the due diligence exercise on DCMT, DLD and its subsidiaries in respect of the legal, financial and operational matters of DCMT, DLD and its subsidiaries.

(v) Perfect Propel not having served notice of termination of the SSA.

Upon the completion of Proposed Disposal, DCMT, DLD and its subsidiaries will become 70% owned subsidiaries of the Company.

Pursuant to the SSA, the Company agrees to grant the call option to Perfect Propel subject to the Company’s shareholders’ approval in a general meeting to be convened, if required by law. Perfect Propel is entitled to exercise the call option in respect of up to 45% of the issued and paid up share capital of DCMT held by the Company other than the shares in the Proposed Disposal (“Call Option Shares”) at any time and from time to time within 24 months from the completion date of the Proposed Disposal.

Pursuant to the SSA, the Company also agrees to grant the put option to Perfect Propel in respect of all the ordinary shares in DCMT and not just part thereof then held by Perfect Propel upon the occurrence of either of the following:

(i) if the total audited consolidated profits after tax of DCMT of RM10,000,000 only for the financial year ending 31 December 2014 and RM12,000,000 only for the financial year ending 31 December 2015 is not achieved pursuant to the SSA; or

(ii) any of the events set out in the SSA if liquidated and ascertained damages are agreed by or judgment debts are entered (and not appealed) against DCMT or its subsidiaries in respect of contracts/works for existing projects of DCMT or its subsidiaries entered into/carried out before or during the financial years ending 31 December 2014 and 31 December 2015 only in respect of specific construction projects; or

(iii) if the Company fails to procure the release of the corporate guarantee given by DCMT in respect of the banking/credit facilities granted to the Company by Hong Leong Bank Bhd prior to the completion of the Proposed Disposal and no later than 3 months after the completion date; or

(iv) failure of the Company to obtain shareholders’ approval or any other approvals required (whether by law or otherwise), or failure of the Company for any other reason(s) whatsoever to sell the Call Option Shares to Perfect Propel (whether in part or in whole) as per the SSA.

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Annual Report 2013



36. Material litiGations

(a) kuala lumpur high court suit no. D3-22-360-2008

On 25 March 2008, Daya Secadyme Sdn. Bhd. (“DSSB”) filed a civil suit against (i) Mohd Akbar B Hj. Johari, (ii) AJ Premier Holdings Sdn Bhd, (iii) Aims Mission Sdn. Bhd., (iv) Global Max Trading Sdn. Bhd. and (v) Azrul Bin Mohd Nasir trading as Rasa Indah Trading (“Defendants”) vide KL High Court Civil Suit No. D3-22-360-2008. The claim against the 1st, 2nd and 3rd Defendants is based on fraudulent misrepresentation and/or fraud perpetrated in conspiracy with the other Defendants, and alternatively for monies had and received, and against the 4th and 5th Defendants on fraud perpetrated in conspiracy with the other Defendants. The amount claimed is RM1,942,000 with interest at 8.00% p.a. thereupon from judgment to settlement, and the legal costs of the proceedings.

On 11 August 2011, the 1st and 2nd Defendants consented to Judgment for a sum of RM1,200,000 payable by way of four (4) installments, RM100,000 on or before 31 December 2011, RM370,000 on or before 31 December 2012, RM365,000 on or before 31 December 2013 and RM365,000 on or before 31 December 2014. In default of any one of these installments, the 1st and 2nd Defendants become liable for the payment of the entire sum claimed of RM1,942,250 less any installments paid. The 1st and 2nd Defendants have also agreed to provide security for the installments payments in the form of titles to properties up to the value of RM300,000 on or before 31 December 2011 and RM900,000 on or before 30 June 2012 in default of which the entire sum due on the installments shall fall due as at the date of default. On 16 August 2011, the Court granted Judgment against the 3rd, 4th and 5th defendants for the sum claimed of RM1,942,000 with costs and interest.

The first installment payment of RM100,000 from the first and second Defendants, was due on or before 31 December

2011. On 29 December 2011, the 1st and 2nd Defendants appealed for the deferrement of first installment payment of RM100,000 with a full settlement by end of April 2012. On 30 April 2012, the 1st and 2nd Defendants again appealed for the deferment of another three plus one months with payments of RM10,000 each payable not later than 10 May 2012 and 31 May 2012 respectively as a pledge of commitments. On 16 May 2012 and 10 July 2012 respectively, DSSB received the cheque of RM10,000 from the 1st and 2nd Defendants on each date.

Thereafter, DSSB has not received the settlement as proposed by the 1st and 2nd Defendants. The 1st Defendant has made a fresh set of proposals in 2013 but has not been able to comply with his own terms.

His last proposal in November 2013 was as follows:

• paymentofRM160,000byorbeforetheendofDecember2013;• paymentofRM150,000amonthbeginningJanuary2014tillendofJune2014;and• finalpaymentofthebalanceduetoDSSBinJuly2014(thedifferencebetweentotalamountduetoDSSBandtotal

amount paid till the end of June 2014).

The above proposal was not complied with, the 1st Defendant submitted a revised payment proposal in February 2014. DSSB has informed him repeatedly that he and the 2nd Defendant are in default of the Consent Judgment, and reserves its rights for further legal considerations on the matter, and that any payment made by the 1st Defendant will be received without prejudice to DSSB’s rights to take steps to enforce the Consent Judgment.

(b) kuala lumpur high court suit no. 22c-29-08/2013

On 26 August 2013, Daya CMT Sdn. Bhd. (“DCMT”), a wholly-owned subsidiary of the Company had received a letter dated 20 August 2013 accompanied with a Writ and Statement of Claim dated 16 August 2013 (“the Writ and Statement of Claim”) via registered post from Messrs Soon Eng Thye & Co., the advocates and solicitors acting for and on behalf of Million Aim Sdn. Bhd. (“Million Aim”) for a claim of RM2,250,000, with interest at 5.00% per annum and the related costs for the claim in relation to reinforced concrete structured works carried out by Million Aim, as sub-contractor on the superstructure works for the project awarded to DCMT by Dreammont Development Sdn. Bhd. on 24 September 2012 (“the IOI Project”).

Million Aim’s claim is based on a purported Statement of Final Accounts, which was signed off by the former Chief Executive Officer of DCMT, Jimmy Liew Hock Leong (“Jimmy Liew”). Million Aim is claiming for the sum of RM2,250,000 with interest at 5.00% per annum as well as costs.

DCMT is disputing the said RM2,250,000 claimed by Million Aim, inter alia for the poor performance of Million Aim in giving rise to the delays and defective works on the IOI Project, which culminated in DCMT’s mutual withdrawal from the IOI Project. In this regard, DCMT is also counterclaiming inter alia for damages and loss of profits.


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36. Material litiGations cont’d (b) kuala lumpur high court suit no. 22c-29-08/2013 cont’d

DCMT is also counterclaiming against Million Aim for its breaches as sub-contractor in another project awarded to DCMT by Yuk Tung Land Sdn. Bhd. on 2 May 2012 (“Yuk Tung Project”).

In addition to the counterclaim for breaches under the IOI Project and Yuk Tung Project, DCMT is also counterclaiming against Million Aim and Jimmy Liew for conspiracy in inter alia the appointment of Million Aim as DCMT’s sub-contractor and/or the finalisation of the Final Accounts.

In relation thereto, Million Aim filed an application under Order 14 of the Rules of Court 2012 for Summary Judgment and the same was fixed for hearing on 14 November 2013. The Summary Judgment application has been dismissed and the matter is set down for trial on 26 February 2014.

The maximum expected losses from the Writ and Statement of Claim, if any, is RM2,250,000, with interest at 5.00% p.a. and costs. The claim has no reasonably foreseeable material financial and operational impact on the Company.

DCMT has appointed Messrs. Zain Megat & Murad (Advocates & Solicitors) to inter alia resist Million Aim’s claim as well as DCMT’s counterclaim against Million Aim and Jimmy Liew.

The suit initiated Million Aim against DCMT, in Kuala Lumpur High Court Civil Suit No. 22C-29-08/2013 as reported as above, was amicably settled between Million Aim and DCMT on 10 January 2014.

Following therefrom, Million Aim’s claim against DCMT as well as DCMT’s counterclaim against Million Aim had been struck out with no liberty to file afresh on 10 January 2014 whereas the matter between DCMT against its former Chief Executive Officer, Jimmy Liew was withdrawn on the same day with liberty to file afresh.

(c) kuala lumpur high court suit no. 22ncc-90-03/2014

On 18 March 2014, the Company and its wholly-owned subsidiary, Daya Offshore Construction Sdn. Bhd. (formerly known as SD Equipment Sdn. Bhd.)(“DOCSB”), had been notified by their lawyers, Messrs. Zain Megat & Murad, of the said lawyers’ receipt in the evening of 17 March 2014, of a letter dated 17 March 2014 from Messrs. Trevor George Partnership (“the Plaintiff’s Solicitors”), the lawyers acting for and on behalf of Mark Leonard Midgley (“Plaintiff”), the former Chief Executive Officer and Director of DOCSB, together with a copy of the sealed Writ of Summons and Statement of Claim (“Writ of Summons and Statement of Claim”) also dated 17 March 2014, where both the Company and DOCSB had been named as defendants in a civil suit filed by the Plaintiff in the High Court of Malaya at Kuala Lumpur (“the Suit”).

The Plaintiff claims that the Company had allegedly breached a Shareholders Agreement dated 30 April 2013 (“Shareholders Agreement”) in relation to DOCSB and the Plaintiff is claiming for inter alia a Declaration to that effect, valuation of the shares in DOCSB, damages and an injunction to restrain breach or further breach of the Shareholders Agreement.

On 2 April 2014, the Company and DOCSB had been notified by their lawyers that the said lawyers had been served on 1 April 2014 by the Plaintiff’s Solicitors, with a Notice of Application and Affidavit in Support dated 31 March 2014 for interlocutory injunction (“Interlocutory Injunction Application”).

The High Court granted an ad interim injunction only in relation to part of the reliefs sought for in the Interlocutory Injunction Application to preserve status quo pending the hearing of the Interlocutory Injunction Application. They are as follows:

(i) an injunction to restrain the Company from selling, transferring and/or otherwise dealing in any manner whatsoever the 5 million ordinary shares in DOCSB that is currently held and registered in the name of the Company; and

(ii) an injunction to restrain the Company from requisitioning, calling, convening and/or otherwise holding any Board and/or Shareholder meeting of DOCSB without the Plaintiff’s participation and/or consent, in contravention of the Shareholders Agreement.

139

Annual Report 2013



36. Material litiGations cont’d (c) kuala lumpur high court suit no. 22ncc-90-03/2014 cont’d

On 17 April 2014, the Company and DOCSB vide their lawyers, filed in and served on the Plaintiff’s Solicitors the following:

(i) Defence and Counterclaim against the Plaintiff; and

(ii) An Affidavit in Reply to resist the Plaintiff’s Injunction Application.

Amongst others, the Company and DOCSB are counterclaiming against the Plaintiff for:

(i) a declaration that the Shareholders Agreement dated 30 April 2013 is not valid and/or not binding and/or otherwise void for total failure of consideration as the Plaintiff had never purchased the 20% shares in DOCSB from the Company as envisaged; and

(ii) breach of his employment agreement, breach of his fiduciary duties, negligent management and/or mismanagement whilst the Plaintiff was the Chief Executive Officer of DOCSB.

The Company and DOCSB have appointed Messrs. Zain Megat & Murad to inter alia challenge and defend the Suit, counterclaim against the Plaintiff and resist the Plaintiff’s Injunction Application.

37. authorisation of financial stateMents for issue

The financial statements for the year ended 31 December 2013 were authorised for issue in accordance with a resolution of the directors on 29 April 2014.


140


38. suPPleMentary inforMation - breakDown of retaineD Profits into realiseD anD unrealiseD

The breakdown of the retained profits of the Group and of the Company as at 31 December 2013 into realised and unrealised is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits and Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

realised and unrealised profits/(losses)

Group company

2013 2012 2013 2012

note rM rM rM rM

Total retained profits/(losses):

- Realised 117,630,185 117,989,371 16,746,942 15,425,577

- Unrealised 3,180,457 (290,195) (209,412) (42,716)

120,810,642 117,699,176 16,537,530 15,382,861

Less: Consolidation adjustments (32,294,975) (29,662,350) - -

Total retained profits 23 88,515,667 88,036,826 16,537,530 15,382,861

141

Annual Report 2013

Directors’Responsibilities Statement

on Financial Statements

In accordance with the Companies Act, 1965, the Directors of the Company are required to prepare financial statements for each financial year which shall give a true and fair view of the financial position of the Company and of the Group as at the end of the financial year and of their results and their cash flows of the Company and of the Group for the financial year.

The Directors are responsible to ensure that the Company and the Group keep proper accounting records to enable the Company to disclose, with reasonable accuracy and without any material misstatement in the financial statements, the financial position, the results and the cash flows of the Company and of the Group. The Directors are also responsible to ensure that the financial statements comply with the Companies Act, 1965 and the relevant accounting standards.

In preparing the financial statements for the financial year ended 31 December 2013, the Directors have:-

- adopted the appropriate accounting policies, which are consistently applied;- made judgements and estimates that are reasonable and prudent;- ensured applicable accounting standards have been followed, subject to any material departures which will be disclosed and

explained in the financial statements; and- prepared the financial statements on the assumption that the Company and the Group will operate as a going concern.

The Directors have provided the auditors with every opportunity to take all steps, undertake all inspections and seek all explanations they considered to be appropriate for the purpose of enabling them to give their audit report on the financial statements.


142

Analysis ofShareholdingsas at 30 April 2014

Authorised share capital : 2,000,000,000 ordinary shares of RM0.10 eachIssued and fully paid-up share capital : 1,388,818,754 ordinary shares of RM0.10 each (include 1,000 ordinary shares of RM0.10

each retained as Treasury Shares)Class of Shares : Ordinary shares of RM0.10 eachVoting Rights : One vote per ordinary share held

Distribution of shareholDinGs

size of shareholdingsno. of

shareholders % of

shareholdersno. of

shares% of

issued capital

1-99 169 1.45 8,966 0.00

100-1,000 347 2.98 230,453 0.02

1,001-10,000 3,722 31.92 27,544,790 1.98

10,001-100,000 6,242 53.54 241,593,851 17.40

100,001-69,440,938* 1,179 10.11 1,119,440,694 80.60

69,440,939 and above** 0 0 0 0

total 11,659 100.00 1,388,818,754 100.00

Notes:

* - Less than 5% of issued shares** - 5% and above of issued shares

substantial shareholDers as at 30 aPril 2014

According to the Register of Substantial Shareholders required to be kept under Section 69L of the Companies Act, 1965, the following are the substantial shareholders of the Company:

number of shares held

name of substantial shareholders Direct % indirect %

Dato’ Mazlin Bin Md Junid 118,359,386 8.52 20,000,720^ 1.44

Tan Sri Dato’ Sri Koh Kin Lip JP 78,115,098 5.62 3,000,000* 0.22

Nathan Tham Jooi Loon 69,708,198 5.02 4,709,998# 0.34

Datuk Lim Soon Foo 64,329,098 4.63 279,000* 0.02

Ronnie Lim Hai Liang (Alternate Director to Datuk Lim Soon Foo)

279,000 0.02 64,329,098** 4.63

^ Indirect Interest via the shareholdings of his children pursuant to Section 134 (12)(c) of the Companies Act, 1965# Indirect Interest via the shareholdings of his spouse pursuant to Section 134 (12)(c) of the Companies Act, 1965* Indirect Interest via the shareholdings of his son pursuant to Section 134 (12)(c) of the Companies Act, 1965** Indirect Interest via the shareholdings of his father pursuant to Section 134 (12)(c) of the Companies Act, 1965

143

Annual Report 2013

Analysis ofShareholdings

as at 30 April 2014cont’d

Directors’ interest as at 30 aPril 2014

According to the Register of Directors’ Shareholding required to be kept under Section 134 of the Companies Act, 1965, the Directors’ interest in the ordinary share capital of the Company are as follows:

name of DirectorsDirect

interest %indirect interest %

Dato’ Dr. Azmil Khalili Bin Dato’ Khalid - - - -

Dato’ Mazlin Bin Md Junid 118,359,386 8.52 20,000,720^ 1.44

Tan Sri Dato’ Sri Koh Kin Lip JP 78,115,098 5.62 3,000,000* 0.22

Nathan Tham Jooi Loon 69,708,198 5.02 4,709,998# 0.34

Fazrin Azwar Bin Md. Nor 9,998 0.00 - -

Datuk Lim Soon Foo 64,329,098 4.63 279,000* 0.02

Ronnie Lim Hai Liang (Alternate Director to Datuk Lim Soon Foo)

279,000 0.02 64,329,098** 4.63

^ Indirect Interest via the shareholdings of his children pursuant to Section 134 (12)(c) of the Companies Act, 1965# Indirect Interest via the shareholdings of his spouse pursuant to Section 134 (12)(c) of the Companies Act, 1965* Indirect Interest via the shareholdings of his son pursuant to Section 134 (12)(c) of the Companies Act, 1965** Indirect Interest via the shareholdings of his father pursuant to Section 134 (12)(c) of the Companies Act, 1965

thirty larGest shareholDers as at 30 aPril 2014

name of shareholders no. of shares% of

issued capital

1 RHB Capital Nominees (Asing) Sdn Bhd- Robert Yee Seng Lee

49,377,700 3.56

2 CIMSEC Nominees (Tempatan) Sdn Bhd- CIMB Bank for Tham Jooi Loon (MM1102)

46,547,998 3.35

3 RHB Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Dato’ Mazlin Bin Md Junid

46,000,000 3.31

4 HSBC Nominees (Asing) Sdn Bhd- Exempt An for Credit Suisse (SG BR-TST-ASING)

45,397,598 3.27

5 HSBC Nominees (Asing) Sdn Bhd- Exempt An for JP Morgan Chase Bank, National Association (Norges BK)

36,717,300 2.64

6 Citigroup Nominees (Tempatan) Sdn Bhd- Exempt An for AIA Bhd

35,597,300 2.56

7 Amsec Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Tan Sri Dato’ Sri Koh Kin Lip

31,461,438 2.27

8 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Tham Wooi Loon

24,239,998 1.75

9 RHB Capital Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Tham Jooi Loon

21,252,200 1.53

10 EB Nominees (Tempatan) Sendirian Berhad- Pledged Securities Account for Tan Sri Dato’ Sri Koh Kin Lip

21,000,000 1.51

11 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Dato’ Mazlin Bin Md Junid

19,359,386 1.39

12 Citigroup Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Dato’ Mazlin Bin Md Junid (000190663)

18,000,000 1.30


144

Analysis ofShareholdingsas at 30 April 2014cont’d

thirty larGest shareholDers as at 30 aPril 2014 cont’d

name of shareholders no. of shares% of issued

capital

13 Cimsec Nominees (Tempatan) Sdn Bhd- CIMB Bank for Tan Sri Dato’ Sri Koh Kin Lip (MY0502)

17,640,000 1.27

14 Citigroup Nominees (Asing) Sdn Bhd- CBNY for DFA Emerging Market Small Cap Series

15,996,000 1.15

15 Citigroup Nominees (Asing) Sdn Bhd- CBNY for Emerging Market Core Equity Portfolio DFA Investment Dimensions Group Inc

14,892,600 1.07

16 RHB Capital Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Dato’ Mazlin Bin Md Junid

14,500,000 1.04

17 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Koh Siew Kong

13,080,000 0.94

18 Ng Chin San 12,125,100 0.87

19 Citigroup Nominees (Tempatan) Sdn Bhd- Pledged Securities Account Tham Wooi Loon (010531334)

12,000,000 0.86

20 Alliancegroup Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Dato’ Mazlin Bin Md Junid (8079781)

11,000,000 0.79

21 RHB Capital Nominees (Tempatan) Sdn Bhd- Datuk Lim Soo Foo

10,951,500 0.79

22 Citigroup Nominees (Asing) Sdn Bhd - CBNY for Dimensional Emerging Markets Value Fund

10,663,200 0.77

23 Hong Leong Assurance Berhad- AS Beneficial Owner (Unitlinked GF)

10,300,000 0.74

24 Koay Siew Choon 9,500,000 0.68

25 Datuk Lim Soon Foo 8,610,000 0.62

26 RHB Capital Nominees (Tempatan) Sdn Bhd- Ganjaran Lebar Sdn Bhd

8,590,800 0.62

27 Kenanga Nominees (Tempatan) Sdn Bhd- Kenanga Capital Sdn Bhd for Dato’ Mazlin Bin Md Junid

8,000,000 0.58

28 Kenanga Nominees (Tempatan) Sdn Bhd- Pledged Securities Account for Tan Sri Dato’ Sri Koh Kin Lip

7,890,000 0.57

29 Song Tae Chin 7,279,198 0.52

30 Lai Ming Chun @ Lai Poh Lin 6,999,998 0.50

total 594,969,314 42.84

145

Annual Report 2013

share buy-back

The details of shares bought back/resold for the financial year ended 31 December 2013 are as follows:

Monthly breakdown bought back

number of shares

Purchase/ (resold)

(units)

Price Per share average cost Per share

(rM)

total consideration

(rM)

number of treasury shares

cancelledlowest

(rM)highest

(rM)

April 2013 45,000 0.205 0.205 0.207 9,293 -

September 2013 (2,500,000) 0.320 0.320 0.184 (458,868) -

October 2013 (8,000,000) 0.325 0.350 0.198 (1,583,559) -

total (10,455,000) 0.194 (2,033,134) -

During the financial year under review, the Company purchased in the open market a total of 45,000 of its own issued shares and resold 10,500,000 of the treasury shares. None of the treasury shares has been cancelled. As at 31 December 2013, the Company held a total of 5,220,700 ordinary shares as treasury shares.

oPtions, warrants or convertible securities

The Company did not issue any options, warrant or convertible securities during the financial year ended 31 December 2013.

aMerican DePository receiPt (“aDr”)/Global DePository receiPt (“GDr”) ProGraMMe

The Company did not sponsor any ADR/GDR Programme during the financial year under review.

iMPosition of sanctions anD/or Penalties

There were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by any relevant regulatory bodies during the financial year under review.

non-auDit fees

Non-audit fees totaling RM40,680 was paid to the external auditors, Messrs Ernst & Young, by the Group for the financial year ended 31 December 2013 for an agreed-upon procedure, review of internal control and financial due diligence relating to an acquisition of a private limited company.

Profit estiMates, forecast or ProJection

The Company did not issue any profit estimate, forecast or projection for the financial year ended 31 December 2013.

variation in results

There was no material variation between the audited results for the financial year ended 31 December 2013 and the unaudited results of the Group as previously announced.

Profit Guarantee

The Company did not issue any profit guarantee during the financial year under review.

AdditionalCompliance Information


146

Material contract involvinG Directors anD MaJor shareholDers

There are no material contracts entered into by the Company and its subsidiaries which involved the interests of the Directors and major shareholders, either still subsisting at the end of the financial year ended 31 December 2013, or which were entered into since the end of the previous financial year.

recurrent relateD Party transactions of a revenue or traDinG nature

Details of the recurrent related party transactions of a revenue or trading nature entered into by the Group is disclosed in Note 28 to the financial statements on page 113 and 114.

Material contract relatinG to loans

There are no material contracts relating to loans involving the interests of the Directors and major shareholders during the financial year under review.

utilisation of ProceeDs

Private Placement

The Company raised approximately RM43.394 million from its private placement exercise proposed in year 2013. As at 31 March 2014, the Company has utilised approximately 99% of the total proceeds raised and the status of the utilization proceeds is as follows:

Proposed utilisation

as per announcement

Proceeds from

Placement shares

new proposed

utilisation of proceeds

variation of utilisation

proceedsactual

utilisation balance

rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Description a b c D = c - b e f = c - e

To refinance existing borrowings 30,000 30,000 5,000 (25,000) 4,600 400

Working capital 7,963 12,994 * 37,394 24,400 37,994 -

To defray estimated expenses in relation to the Proposed Private Placement 400 400 1,000 600 990 10

total proceeds 38,363 43,394 43,394 - 42,984 410

* The variations to the total proceeds raised was adjusted to the amount allocate for utilisation as working capital

In the announcement to Bursa Malaysia Securities Sdn. Bhd. (“Bursa Malaysia”) on 18 February 2014, the Board of Directors of DMB (“the Board”) had resolved to revise the revision of utilisation of the Company’s private placement proceeds of RM43,394 million as disclosed in the announcement to Bursa Malaysia dated 21 October 2013.

As per the announcement dated 21 October 2013, the Board had intended to utilise RM30.0 million of the proceeds from the Private Placement for the purpose of refinancing existing borrowings. However, after taking into consideration the current business needs of the Company and its subsidiaries (the “Group”), the Board has resolved to vary the aforementioned balance of RM24.4 million and RM0.6 million out of the RM30.0 million to be utilised as working capital and expenses in relation to the private placement respectively (“Revision of Utilisation of Proceeds”).

The rationale for the Revision of Utilisation of Proceeds is to enable the Group to optimise the use of the current borrowings facility instead of an early settlement for the existing borrowings in view that these borrowings are not due for settlement yet and to allow the Company to use part of the proceeds from the Private Placement for the settlement of additional expenses relating to the Private Placement.

AdditionalCompliance Informationcont’d

147

Annual Report 2013

List ofProperties 2013

registered owner/location

Description and existing

use

land/built up area

(sq ft) tenure

approximate age of

building

net book value as at 31.12.2013

(rM)Date of last revaluation

Daya Polymer Sdn. Bhd.1744, Jalan Industri Dua, Taman Industri Bukit Panchor,14300 Nibong Tebal,Penang, Malaysia.

Industrial land with

factory, warehouse

and office

136,389/ 81,628

Freehold 16 years 8,477,614 13 October 2008

Daya Secadyme Sdn. Bhd.Lot No. 5410,Kawasan Perindustrian,Teluk Kalong,24007 Kemaman, Terengganu Darul Iman,Malaysia.

Industrialland with

warehouse and office

215,280/ 1,680

Leasehold60 years expiring

7 September 2064

6 years 8,033,518 27 November 2008

Daya Secadyme Sdn. Bhd.Suite B-5-2, Setiawangsa Business Suites, Jalan Setiawangsa 11, Taman Setiawangsa, 54200 Kuala Lumpur,Malaysia.

Business/ Office

N/A/ 3,229

Freehold 7 years 527,736 4 October 2004

Daya Secadyme Sdn. Bhd.Lot PT 8052,Kawasan Perindustrian,Teluk Kalong,24007 Kemaman, Terengganu Darul Iman, Malaysia.

Industrial land

20,000/ N/A


5 November 2069

4 years 1,163,889 NIL

Daya CMT Sdn. Bhd.Plot 81 Lebuhraya Kampung Jawa,Bayan Lepas,11900 Pulau Pinang, Malaysia.

Industrial land with

warehouseand office

46,478/20,748


2 November 2048

14 years 2,056,416 7 July 2008

Daya CMT Sdn. Bhd.72 Jalan Badlishah, 09100 Baling,Kedah Darul Aman, Malaysia.

3 Storeyshophouse

N/A/ 2,314

Freehold 16 years 285,884 7 July 2008

Daya CMT Sdn. Bhd.Lot No. 736 Mukim 1, Jalan Pulau Betong,Balik Pulau, Daerah Barat Daya Pulau Pinang, Malaysia.

Vacant Land 23,573/N/A

Freehold 18 years 51,964 7 July 2008


148

List ofProperties 2013cont’d



use

land/built up area

(sq ft) tenure

approximate age of

building



Daya Clarimax Sdn. Bhd.Lot No. 38,Jalan Sungai Pinang 5/1, Seksyen 5,Phase 2A, Taman Perindustrian Pulau Indah,42920 Port Klang, Selangor Darul Ehsan, Malaysia.

Industrialland with


113,053/28,364


14 February 2104

8 years 8,797,228 2 June 2008

Daya Proffscorp Sdn. Bhd.Lot 3997,Kawasan Perindustrian,Teluk Kalong,24007 Kemaman, Terengganu Darul Iman,Malaysia.

Industrialland with


107,600/ 18,725


26 March 2059

6 years 1,652,998 NIL


Industrialland with workshop

53,908/ 3,720


10 September

2060

12 years 284,537 NIL


Industrialland

53,822/1,600


28 January 2063

5 years 295,349 NIL

Daya OCI Sdn. Bhd.No 9 & 11, Jalan P/8,Kawasan Perindustrian Bangi,Seksyen 13,43650 Bandar Baru Bangi,Selangor, Malaysia.

Industrialland with


21,312/13,701

99 years lease

expiring 29

September 2086

27 years 2,235,692 10 Aug 2010

Daya OCI Sdn. Bhd.Unit No. B-3A-4, Block B, Level 3A,Unit 4, Megan Avenue II,No 12 Jalan Yap Kwan Seng,50450 Kuala Lumpur, Malaysia.

VacantBusiness/

Office

N/A/ 2,293

Grant-in-perpetuiti(freehold)

15 years 397,543 27 Aug 2010

Daya Urusharta Sdn. Bhd.D5-1-6, D5-1-7, D5-1-8, D5-1-9, D5-1-10,Solaris Dutamas, No.1, Jalan Dutamas 1, 50480 Kuala LumpurMalaysia.

Business/Office

N/A/ 5,178

Freehold 7 years 3,437,640 NIL

149

Annual Report 2013

List ofProperties 2013

cont’d



use

land/built up area

(sq ft) tenure

approximate age of

building



Daya Urusharta Sdn. Bhd.D5-1-1,D5-1-2,D5-1-3, D5-1-3A,D5-1-5,Solaris Dutamas,No.1, Jalan Dutamas 1,50480 Kuala LumpurMalaysia.

Business/Office

N/A4,268

Freehold 7 years 3,866,483 NIL

Daya Urusharta Sdn. Bhd.50,50-1,50-2,52,52-1,52A,52A-1,56,56-1,58,58-1,60,60-1,60-2,Jalan Damai Raya 1, Alam Damai,56000 Cheras, Kuala Lumpur,Malaysia.

Vacant Office N/A24,388

99 years lease

expiring on 23 October

2104

1 year 8,632,382 NIL

Ultrafest Sdn. Bhd.CL 025134883, Kampong Gadong Kimanis,Off Jalan Kimanis-Keningau,District of Papar, Sabah,Malaysia.

Proposed developmentof industrial/

factoryunits

385,506/NA

Leasehold99 years

expiring 31 December

2048

NA 2,385,274 NIL

Ultrafest Sdn. Bhd.(Benificially owner)NT 023097841NT 023097850NT 023097869NT 023097878Kampong Gadong Kimanis,Off Jalan Kimanis-Keningau,District of Papar, Sabah,Malaysia.

Proposed developmentof industrial/

factoryunits

1,267,160/NA

Freehold NA 7,595,539 NIL


150

Notice ofEleventh Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Eleventh Annual General Meeting of the Company will be held at MTD Group Building, Ground Floor, No. 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan on Wednesday, 18 June 2014 at 10.30 a.m. for the following purposes:

aGenDa

as ordinary business

1. To receive the Audited Financial Statements for the financial year ended 31 December 2013 together with the Directors’ and Auditor’s Reports thereon.

2. To approve the payment of Directors’ fees of RM156,000.00 for the financial year ended 31 December 2013.

3. To re-elect the following directors retiring in accordance with Article 104 of the Company’s Articles of Association:

a) Tan Sri Dato’ Sri Koh Kin Lip JP

b) Datuk Lim Soon Foo

4. To re-appoint Messrs Ernst & Young as the Company’s auditors for the ensuing year and to authorise the Board of Directors to fix their remuneration.

as special business To consider and, if thought fit, pass with or without modifications, the following ordinary resolutions: 5. authority for Directors to issue and allot shares in the company pursuant to section 132D of

the companies act, 1965

“that pursuant to Section 132D of the Companies Act, 1965, and subject always to the approval of the relevant authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, from time to time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares to be issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being.

anD that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares on Bursa Malaysia Securities Berhad (“Bursa Securities”) and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

6. Proposed renewal of authority for the Purchase by the company of its own ordinary shares

of up to 10% of the issued and paid up share capital (“share buy-back”)

“that, subject to the Companies Act, 1965 (“the Act’), rules, regulations and orders made pursuant to the Act, provisions of the Company’s Memorandum & Articles of Association (“M&A”) and the requirements of Bursa Securities and any other relevant authorities, the Directors of the Company be and are hereby authorised to purchase the Company’s ordinary shares of RM0.10 each (“DMB Shares”) listed on Bursa Securities subject to the following:-

(a) the aggregate number of DMB Shares which may be purchased or held by the Company shall not exceed ten per centum (10%) of the issued and paid-up ordinary share capital of the Company, subject to the restriction that the Company continues to maintain a shareholding spread that is on compliance with the requirements of the Listing Requirements after the shares purchase;

(b) the maximum funds to be allocated by the Company for the purpose of purchasing DMB Shares under the Share Buy-Back shall not exceed the latest available audited retained profits and share premium of the Company;

(Please refer to Explanatory Notes to the Agenda )

Ordinary Resolution 1






151

Annual Report 2013

Notice ofEleventh Annual General Meeting

cont’d

(c) the authority conferred by this resolution to facilitate the Share Buy-Back will commence immediately upon the passing of this ordinary resolution and will continue to be in force until:

(i) the conclusion of the next annual general meeting (“AGM”) of the Company at which time the authority would lapse unless renewed by ordinary resolution, either unconditionally or conditionally; or

(ii) the expiration of the period within which the next AGM of the Company after that date is required by law to be held; or

(iii) the authority is revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting,

whichever occurs first; and

(d) upon completion of the purchase(s) of the DMB Shares by the Company, the Directors of the Company be and are empowered to cancel or retain as treasury shares, any or all of the DMB Shares so purchased, resell on Bursa Securities or distribute as dividends to the Company’s shareholders and/or in any manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the Listing Requirements and any other relevant authorities for the time being in force,

anD that the Directors of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement, finalise, complete or to effect the Share Buy-Back with full powers to assent to any conditions, modifications, resolutions, variations and/or amendments (if any) as may be imposed by the relevant authorities and/or to do all such acts and things as the Directors may deem fit and expedient in the best interest of the Company to give effect to and to complete the purchase of the DMB Shares.”

7. continuing in office as independent non-executive Director

“that approval be and is hereby given to Encik Fazrin Azwar Bin Md. Nor who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine years, to continue to act as an Independent Non-Executive Director of the Company.”

8. To transact any other business of which due notice shall have been given in accordance with the Company’s Articles of Association and the Companies Act, 1965.

By Order of the Board

chin nGeok Mui (MAICSA 7003178)chen bee linG (MAICSA 7046517)Secretaries

Selangor Darul Ehsan20 May 2014

Notes:

i) In respect of deposited securities, only members/shareholders whose names appear in the Record of Depositors as at 12 June 2014 (“General Meeting Record of Depositors”) shall be eligible to attend, speak and vote at the Meeting.

ii) A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote at the Meeting on his/her behalf. In the case of a corporation, a duly authorised representative to attend and vote in its stead. The proxy may but need not be a member of the Company and a member may appoint any person to be his/her proxy without limitation. A proxy/representative appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.

iii) Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy.



152

Notice ofEleventh Annual General Meetingcont’d

iv) The instrument appointing a proxy shall be in writing under the hand of the appointer or if such appointer is a corporation, either under its Common Seal or under the hand of an officer or attorney duly authorised.

v) The instrument appointing a proxy must be deposited at the Registered Office of the Company at Level 8, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time set for holding the Meeting or adjourned meeting.

vi) Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

Explanatory Notes to the Agenda:

Item 1 of the Agenda

This item of the Agenda is meant for discussion only, as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this item of the Agenda is not put forward for voting.

Item 5 of the Agenda - Ordinary Resolution 5

Authority for Directors to issue and allot shares in the Company pursuant to Section 132D of the Companies Act, 1965

The Ordinary Resolution 5, is a renewal of the previous year mandate and if passed, will authorise the Directors of the Company to issue and allot shares up to an aggregate amount not exceeding 10% of the issued share capital of the Company for the time being for such purposes as the Directors consider would be in the best interest of the Company.

This authority unless revoked or varied by the Company at a general meeting will expire at the next Annual General Meeting.

The renewal of this mandate would provide flexibility to the Company for any possible fund raising exercise, including but not limited for further placing of shares, for purpose of funding future investment projects, working capital and/or acquisitions. This authority is to avoid any delay and cost involved in convening a general meeting to approve such issuance of shares.

The Company raised approximately RM43.394 million from its private placement exercise proposed in year 2013. As at 31 March 2014, the Company has utilised approximately 99% of the funds raised. Details of utilisation of proceeds are disclosed in Additional Compliance Information.


Proposed Renewal of Authority for Share Buy Back

The Ordinary Resolution 6, if passed, will empower the Directors of the Company to buy-back and/or hold from time to time shares of the Company not exceeding ten percent (10%) of the issued and paid-up share capital of the Company from time to time being quoted on the Bursa Securities as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company.

Shareholders are advised to refer to the Statement to Shareholders dated 20 May 2014, which was circulated together with the 2013 Annual Report when considering Ordinary Resolution 6 on the Share Buy Back.


Continuing in Office as Independent Non-Executive Director

The Nomination Committee has assessed the independence of Encik Fazrin Azwar Bin Md. Nor, who served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine years and arising therefrom, the Board discussed and agreed with the recommendation of the Nomination Committee that in his long service to the Company, he has performed very well as an Independent Director. There is no reason to believe that he would not continue to act independently and to contribute to the Company as follows:

a) He fulfils the criteria under the definition of Independent Director as stated in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and therefore would be able to function as a check and balance and bring an element of objectivity to the Board of Directors;

b) He has devoted sufficient time and attention to his professional obligations for informed and balanced decision making; c) He has vast experience in a diverse range of businesses and therefore would be able to provide constructive opinion; d) He exercises independent judgement and has the ability to act in the best interest of the Company; e) He has continued to exercise his independence and due care during his tenure as an Independent Non-Executive Director of the Company and carried out

his professional duties in the best interest of the Company and Shareholders.

Daya Materials berhaD(Company Number : 636357-W)(Incorporated in Malaysia under the Companies Act,1965)

I/We

of

being a member/members of Daya Materials Berhad hereby appoint (Mr/Mrs/Ms)

NRIC No. of

or failing him/her, (Mr/Mrs/Ms) NRIC No.

of

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 Eleventh Annual General Meeting of the Company to be held at MTD Group Building, Ground Floor, No. 1, Jalan Batu Caves, 68100 Batu Caves, Selangor Darul Ehsan on Wednesday, 18 June 2014 at 10.30 a.m. and at any adjournment.

In case of vote taken by a show of hands, my/our proxy shall vote on my/our behalf as indicated below:

resolution no. ordinary business for against

Ordinary Resolution 1 Payment of Directors’ fees

Ordinary Resolution 2 Re-election of Tan Sri Dato’ Sri Koh Kin Lip JP as Director

Ordinary Resolution 3 Re-election of Datuk Lim Soon Foo as Director

Ordinary Resolution 4 Re-appointment of Messrs Ernst & Young as the Company’s auditors

special business for against

Ordinary Resolution 5 Authority to Directors to issue and allot shares in the Company pursuant to Section 132D of the Companies Act, 1965

Ordinary Resolution 6 Proposed Renewal of Authority for Share Buy-Back

Ordinary Resolution 7 Continuing in Office as Independent Non-Executive Director - Encik Fazrin Azwar Bin Md. Nor

Please indicate with an (X) in the spaces provided above how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at his/her discretion.

Dated this day of 2014

Signature/Common Seal of Shareholder

NOTES:

i) In respect of deposited securities, only members/shareholders whose names appear in the Record of Depositors as at 12 June 2014 (“General Meeting Record of Depositors”) shall be eligible to attend, speak and vote at the Meeting.

ii) A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote at the Meeting on his/her behalf. In the case of a corporation, a duly authorised representative to attend and vote in its stead. The proxy may but need not be a member of the Company and a member may appoint any person to be his/her proxy without limitation. A proxy/representative appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.

iii) Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy.

iv) The instrument appointing a proxy shall be in writing under the hand of the appointer or if such appointer is a corporation, either under its Common Seal or under the hand of an officer or attorney duly authorised.

v) The instrument appointing a proxy must be deposited at the Registered Office of the Company at Level 8, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time set for holding the Meeting or adjourned meeting.

vi) Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

eleventh annual General MeetinG

forM of Proxy

cDs account no.

no. of shares held

AFFIXSTAMP

1st Fold Here

Fold This Flap For Sealing

Then Fold Here

The Secretary

DAYA MATERIALS BERHAD 636357-W

Level 8, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangor Darul Ehsan

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