Contents
Rationale
KTMB has provided new Electric Train Services (ETS) and
Six Car Set (SCS) services using modern technology and
continuous improvement. It is focused on providing comfort
to the passenger.
Corporate Information
Board of Directors
Statement On Corporate Governance
Statement On Internal Control
Statement On Risk Management
03
04
10
17
19
Audit Committee Report
Chairman’s Statement
Review of Operation
Corporate Calendar
Financial Statements
22
27
34
40
45
KTMB’s MissionBe the preferred land transportation system by providing safe, efficient and reliable integrated rail services for people and goods.
We will:• Becompetitiveandresponsivetomarketneeds.• Achieveourgoalsthroughahighlytrainedandmotivatedworkforceusingmodern
technology and process innovation.• Providereasonableprofitandlongtermgrowthtoshareholders.
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Corporate Information
Chairman
Y.B. Dato’ Sri Ir. Mohd Zin bin Mohamed
President
Datuk Elias bin Kadir
Directors
Pn. Norazura binti Tadzim
Pn. Ruhaizah binti Mohamed Rashid
En. Selvarajoo a/l Manikam
Dato’ Sri Zakaria bin Hj. Bahari
Tn. Hj. Rosli bin Abdullah
En. Harun bin Hj. Johari
Datuk Kamaruzaman bin Hj. Mohd Noor
Sr. Ahmad Zainuddin bin Hj. Jamaluddin
Registered Office
Ibu Pejabat Korporat KTM Berhad Jalan Sultan Hishamuddin
50621 Kuala Lumpur
Malaysia
Tel : +603 2263 1111
www.ktmb.com.my
Auditors
Deloitte KassimChan
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Board Of Directors
Y.BRS. PUAN NORAZURA BINTI TADZIM
Non-Independent Non-Executive Director
Y.Brs. Puan Norazura binti Tadzim, was appointed to the Board
on 1 July 2011. Y. Brs. Puan Norazura’s present position is
the Principal Assistant Secretary at the Investment, Minister of
Finance Incorporated and Privatisation Section of the Ministry
of Finance. She attended 13 out of the 15 Board meetings held
during the financial year. She has no family relationship with
any director. She has no conflict of interest with KTMB and has
never been charged for any offence.
Y.B. Dato’ Sri Ir. Mohd Zin bin Mohamed, was appointed to
the Board as its Non-Executive Chairman on 1 October 2009.
Y.B. Dato’ Sri Ir. Mohd Zin was a former Cabinet Minister holding
the portfolio of Minister of Works. He attended 14 out of the 15
Board meetings held during the financial year. He has no family
relationship with any director. He has no conflict of interest with
KTMB and has never been charged for any offence.
Y.BHG. DATUK ELIAS BIN KADIR
President
Y.Bhg. Datuk Elias Kadir, was appointed to the Board on
2 May 2012. He was formerly the Chief Executive Officer of
Multimodal Freight Sdn. Bhd. Since his appointment, he has
attended 10 out 10 Board meetings held during the financial
year. He has no family relationship with any director. He has no
conflict of interest with KTMB and has never been charged for
any offence.
Y.B. DATO’ SRI IR. MOHD ZIN BIN MOHAMED
Chairman of the Board
Board Of Directors
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Y.BRS. PUAN RUHAIZAH BINTI MOHAMED RASHID
Non-Independent Non-Executive Director
Y. Brs. Puan Ruhaizah binti Mohamed Rashid, was appointed
to the Board on 9 November 2011. At present, Y. Brs. Puan
Ruhaizah is the Deputy Secretary General (Planning) at the
Ministry of Transport. She attended 12 out of the 15 Board
meetings held during the financial year. She has no family
relationship with any director. She has no conflict of interest
with KTMB and has never been charged for any offence.
Y.BRS. ENCIK SELVARAJOO A/L MANIKAM
Non-Independent Non-Executive Director
Y.Brs. Encik Selvarajoo a/l Manikam, was appointed to the
Board on 16 December 2009. Y. Brs. Encik Selvarajoo is
currently a Director at the Economic Council Secretariat of
the Economic Planning Unit. He attended 13 out of the 15
Board meetings held during the financial year. He has no family
relationship with any director. He has no conflict of interest with
KTMB and has never been charged for any offence.
Y.BHG. DATO’ SRI ZAKARIA BIN HJ. BAHARI
Independent Non-Executive Director
Y.Bhg. Dato’ Sri Zakaria bin Hj. Bahari, was appointed to the
Board on 25 February 2010. He was formerly the Secretary
General of the Ministry of Transport. He attended 11 out of the
15 Board meetings held during the financial year. He has no
family relationship with any director. He has no conflict of interest
with KTMB and has never been charged for any offence.
Y.BRS. TUAN HAJI ROSLI BIN ABDULLAH
Independent Non-Executive Director
Y.Brs. Tuan Haji Rosli bin Abdullah, was appointed to the
Board on 20 July 2010. He was formerly the Chief Executive
Officer/Registrar of the Malaysian Institute of Accountants.
He attended 14 out of the 15 Board meetings held during the
financial year. He has no family relationship with any director.
He has no conflict of interest with KTMB and has never been
charged for any offence.
Board Of Directors
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Y.BRS. ENCIK HARUN BIN HJ. JOHARI
Independent Non-Executive Director
Y.Brs. Encik Harun bin Hj. Johari, was appointed to the
Board on 20 July 2010. At present, Y. Brs. Encik Harun is
the Managing Director/Group Chief Executive Officer at the
Malaysian Agrifood Corporation Berhad and Cold Chain
Network (M) Sdn. Bhd. He attended 11 out of the 15 Board
meetings held during the financial year. He has no family
relationship with any director. He has no conflict of interest with
KTMB and has never been charged for any offence.
Independent Non-Executive Director
Y.Bhg. Datuk Kamaruzaman bin Hj. Mohd Noor, was appointed
to the Board on 12 September 2011. He was formerly the
Deputy Secretary General (Planning) at the Ministry of Transport.
He attended all 15 Board meetings held during the financial
year. He has no family relationship with any director. He has no
conflict of interest with KTMB and has never been charged for
any offence.
Y.BRS. SR. AHMAD ZAINUDDIN BIN HJ. JAMALUDDIN
Independent Non-Executive Director
Y.Brs. Sr. Ahmad Zainuddin bin Hj. Jamaluddin, was appointed
to the Board on 27 April 2012. He was formerly an Executive
Director at DK Binajaya Sdn. Bhd. Since his appointment,
he has attended 9 out of 10 Board meetings held during the
financial year. He has no family relationship with any director.
He has no conflict of interest with KTMB and has never been
charged for any offence.
Board Of Directors
Y.BHG. DATUK KAMARUZAMAN BIN HJ. MOHD NOOR
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The Board recognizes the importance of corporate governance
in discharging its responsibilities, protecting and enhancing
shareholders’ value through promoting and practising high
standards of corporate governance throughout the Group. The
Board adopts and applies the principles and best practices as
governed by the Malaysian Code on Corporate Governance
2012 (“Code”) and the ‘Green Book’ on Enhancing Board
Effectiveness set by the Putrajaya Committee on GLC High
Performance.
The following statements set out the Group’s compliance
with the principles of the Code:-
A. DIRECTORS
(i) The Board
The Group recognises the important role played by
the Board in the stewardship of the Group’s direction
and operations, and ultimately, the enhancement
of long-term shareholders’ value. To fulfill this role,
the Board is responsible for the overall corporate
governance of the Group, including its strategic
direction, establishing goals for management and
monitoring the achievement of these goals.
(ii) Board Balance
The current Board has ten (10) members comprising
one (1) Non-Executive Chairman, one (1) Managing
Director/President, three (3) Non-Independent Non-
Executive Directors and 5 (five) Independent Non-
Executive Directors.
The Board comprises professionals drawn from
various backgrounds, bringing in-depth and diversity
in experience, expertise and perspectives to the
Group’s business operations. The Board is satisfied
that the current Board composition fairly reflects the
interests of the shareholders in the Company. The
profiles of the members of the Board are set out in
this Annual Report on pages 4 - 9.
Statement On Corporate Governance
Together with the Managing Director/President who
has in-depth knowledge of the Group’s business,
the Board is constituted of individuals who are
committed to business integrity and professionalism
in all its activities. The Board supports the highest
standards of corporate governance and the
development of best practices for the Group.
(iii) Supply of Information
The Directors whether as full Board or in their
individual capacity, have full and unrestricted
access to all information within the Group and direct
access to the advice and services of the Secretary
who is responsible for ensuring that Board meeting
procedures are followed and that applicable rules
and regulations are complied with. At each meeting
of the Board, the Secretary appraises the Board on
the Group’s compliance obligations and highlights
non-compliances with legal, regulatory and statutory
rules and guidelines, if any.
The notices of meetings and board papers are
distributed to the Directors prior to Board meetings
to provide Directors with sufficient time to deliberate
on issues to be raised at the Board meetings. All
proceedings and resolution passed at each meeting
are properly minuted and filed by the Secretary.
The Directors are also regularly updated and advised
on new regulations, guidelines or directives issued
by the relevant regulatory authorities, if any.
The Board also avails itself of independent
professional advice as and when necessary in
furtherance of their duties, at the Company’s
expense. Additionally, the Board invites the senior
management to brief the Board from time to time on
matters being deliberated, as they are able to help
bring insight into these matters.
(iv) Appointments to the Board
The Board believes that the current composition
of the Board comprises the required mix of skills
and core competencies required for the Board to
discharge its duties effectively.
The Board delegated to the Nomination and
Remuneration Committee the responsibility of
recommending the appointment of new Directors.
New appointees will be considered and evaluated
by the Board and the Secretary will ensure that all
appointments are properly made, and that legal and
regulatory obligations are met.
The Nomination and Remuneration Committee also
annually reviews the effectiveness of the Board as
a whole, its committees and the contribution of
each individual Director, as well as the President.
The Nomination and Remuneration Committee will
ensure that all assessments and evaluations carried
out are properly documented and filed.
(v) Re-election of Directors
In accordance with the Company’s Articles of
Association, one-third (1/3) of the Directors, shall
retire from office, at least once in three (3) years. The
retiring Directors can offer themselves for re-election.
The Directors who are appointed during the financial
year are subject to re-election by shareholders at
the next Annual General Meeting held following their
appointments. Directors over seventy (70) years
of age are required to submit themselves for re-
appointment annually in accordance with section
129(6) of the Companies Act, 1965.
For the forthcoming Annual General Meeting,
Selvarajoo a/l Manikam, Norazura binti Tadzim
and Ruhaizah binti Mohamed Rashid will retire by
rotation pursuant to Article 104 and being eligible,
offer them for re-election.
(vi) Meetings
The Board meets regularly on a monthly basis or as
and when required. There were fifteen (15) meetings
held during the financial year and the attendance
record is as follows:-
Meetings Attended
Dato’ Sri Ir. Mohd Zin bin Mohamed
14/15
Datuk Elias bin Kadir * 10/10
Pn. Norazura binti Tadzim 13/15
Pn. Ruhaizah binti Mohamed Rashid
12/15
En. Selvarajoo a/l Manikam 13/15
Dato’ Sri Zakaria bin Hj. Bahari 11/15
Datuk Kamaruzaman bin Hj. Mohd Noor
15/15
Tn. Hj. Rosli bin Abdullah 14/15
En. Harun bin Hj. Johari 11/15
Sr. Ahmad Zainuddin bin Hj. Jamaluddin **
9/10
Pn. Jamela binti Mohd Syed *** 0/2
Dr. Aminuddin bin Adnan **** 5/5
Note:-* Appointed on 2 May 2012** Appointed on 27 April 2012*** Resigned on 24 February 2012**** Resigned on 30 April 2012
(vii) Directors’ Training
The Directors are encouraged to attend any relevant
training program to further enhance their knowledge
to enable them to discharge their responsibilities
more effectively.
Statement On Corporate Governance
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B. DIRECTORS’ REMUNERATION
The Minister of Finance Incorporated as the Special
Shareholder of the Company determines the
remuneration of the Managing Director/President
and the Non-Executive Directors.
The details of the remuneration of the Directors of
the Company for the financial year under review are
set out in this Annual Report on pages 95 - 96.
The Board of Directors is of the view that the
disclosure of remuneration by appropriate
components and bands is sufficient to meet the
objective of the Code.
C. BOARD COMMITTEES
The Board of Directors delegates certain of its
governance responsibilities to the following Board
Committees, which operate within clearly defined
terms of reference, to assist the Board in discharging
its responsibilities:-
(i) Audit Committee
The Audit Committee Report for the financial year
under review is set out in this Annual Report on
pages 22 - 26.
(ii) Board Procurement Committee (“BPC”)
Formerly known as Tender Committee ‘A’ (“TCA”),
the committee is now called the BPC with effect
from 11 September 2012.
(a) Composition
The BPC comprises at least three (3)
members, made up of both independent
non-executive Directors and non-
independent non-executive Directors.
The Board shall appoint the Chairman and
members of the BPC.
(b) Responsibilities
The responsibilities of the BPC shall be as
follows:-
• recommend to the Board on award of
direct negotiation above RM500,000 up
to RM300 million;
• recommend to the Board on award of
open tender above RM100 million up to
RM300 million;
• recommend to the Board on award of
restricted tender above RM50 million up
to RM300 million;
• approve emergency purchase above
RM5 million;
• approve open tender procurement
exercises for value of RM20 million to
RM100 million;
• approve restricted tender procurement
exercises for value of RM5 million to
RM50 million;
• approve open tender variation orders
(“VO”) up to 10% or RM2 million of
the original contract sum above RM20
million to RM100 million whichever is
lower;
• approverestrictedtenderVOupto10%
or RM2 million of the original contract
sum above RM5 million to RM50 million
whichever is lower; and
• approve extension of time for supply,
works and services within 4 - 6 month.
(c) Meetings
There were nine (9) meetings held during the
financial year and the attendance record is
as follows:-
Meetings Attended
Datuk Kamaruzaman bin Hj. Mohd Noor (Chairman)
9/9
Pn. Norazura binti Tadzim 7/9
Sr. Ahmad Zainuddin bin Hj. Jamaluddin *
4/4
Note:-
* Appointed on 11 September 2012
(iii) Nomination and Remuneration Committee
(“NRC”)
(a) Composition
The NRC shall comprise of at least three (3)
Directors, exclusively non- executive and the
majority of which are independent.
(b) Responsibilities
The responsibilities of the NRC shall be as
follows:-
• reviewindividualremunerationpackages
for all Directors including the Chairman
and recommend to the Board on; (i) all
elements of the remuneration packages
including the terms of employment,
reward structure and fringe benefits;
and (ii) annual increments and ex-gratia
payments for Executive Directors;
• ensure that ExecutiveDirectors abstain
from the deliberations and voting on
decisions in respect of their remuneration
package;
• endorse remuneration packages for
senior management (all staff at the
Heads of Department level and above)
and make recommendation to the Board
to do so similarly;
• recommendtotheBoardonappropriate
board size and ensure that any director
term limits within the Articles of
Association are adhered to, including:
(i) at every Annual General Meeting, 1/3
of the Board retires; or (ii) every Director
retires at least once in 3 years;
• reviewannuallytheBoard’smixofskills
and experiences to ensure it is in line
with the Company’s requirements;
• coordinates evaluation process of
Directors and the collective Board
including the Board of the subsidiary
companies;
• proactively maintains a pipeline of
potential appointees to the Board and/or
committees;
• oversee the development of the
Company’s future leaders and
human capital and make appropriate
recommendations to the Board;
Statement On Corporate Governance
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• review any proposed change to the
organisation structure of the Company
(main chart) and make appropriate
recommendations to the Board;
• review any proposed change in
compensation structure or personnel
policies including terms and conditions
of employment for Executives and
Non-Executives and make appropriate
recommendations to the Board;
• reviewanyproposalfortherecruitment,
promotion, salary increment and
resignation (optional retirement) of
the President and all Senior Vice
Presidents and make the appropriate
recommendations to the Board;
• reviewanyproposalforretrenchmentor
voluntary separation exercise and make
the appropriate recommendations to the
Board;
• reviewanyproposal for thepaymentof
bonus or salary review and make the
appropriate recommendations to the
Board; and
• review any proposal for an increase in
the total number of approved positions
within the Company and make the
appropriate recommendations to the
Board.
(c) Authority
The NRC shall have the authority to do the
following:-
• access to the full company records,
properties and personnel;
• obtain independent professional advice
and expertise necessary to perform its
duties; and
• access to advice and services of the
Company Secretary.
(d) Meetings
There were five (5) meetings held during the
financial year and the attendance record is
as follows:-
Meetings Attended
Dato’ Sri Zakaria bin Hj. Bahari (Chairman)
5/5
Pn. Ruhaizah binti Mohamed Rashid
5/5
Tn. Hj. Rosli bin Abdullah 5/5
(iv) Risk Management Committee
The Risk Management Committee Report for the
financial year under review is set out in this Annual
Report on pages 19 - 20.
E. SHAREHOLDERS
(i) Dialogue between Companies and
Shareholders
The Group recognizes the importance of keeping
shareholders informed of the Group’s business
and corporate developments. Such information
is disseminated via the Group’s annual report and
quarterly performance reports. The Group also
maintains a website at www.ktmb.com.my to
enable easy and convenient access to up-to date
information relating to the Group.
(ii) Annual General Meeting (“AGM”)
Shareholders are notified of the meeting twenty one
(21) days before the meeting.
F. ACCOUNTABILITY AND AUDIT
(i) Financial Reporting
It is the Board’s responsibility to ensure that the
financial statements are prepared in accordance
with the Companies Act 1965 and the applicable
approved accounting standards in Malaysia so
as to present a balanced and fair assessment of
the Group’s financial position and prospects. The
Directors are also responsible for keeping proper
accounting records, safeguarding the assets of the
Group and taking reasonable steps to prevent and
enable detection of fraud and other irregularities.
In preparing the financial statements, the Directors
have taken the necessary steps and actions as
follows:-
(a) selecting suitable accounting policies and
applying them consistently;
(b) stating whether applicable accounting
standards have been followed;
(c) making judgements and estimates that are
reasonable and prudent; and
(d) preparing the financial statements on a going
concern basis, having made reasonable
enquiries and assessments on the resources
of the Group on its ability to continue further
business in the foreseeable future.
(ii) Internal Control
The Board has the overall responsibility for
maintaining a system of internal controls, which
provides reasonable assessments of effective
and efficient operations, internal controls and
compliance with laws and regulations.
(iii) Relationship with Auditors
The Board has established a transparent
relationship with the external auditors through the
Audit Committee, which has been accorded the
authority to communicate directly with the external
auditors. The external auditors in turn are able to
highlight matters requiring the attention of the
Board effectively to the Audit Committee in terms
of compliance with the accounting standards and
other related regulatory requirements.
G. DIRECTORS’ RESPONSIBILITY STATEMENT IN
RESPECT OF FINANCIAL STATEMENTS
The Directors are required to prepare the financial
statements for each financial year that give a true and fair
view of the state of affairs of the Group and of the Company
at the end of the financial year, and of the results and cash
flow of the Group and of the Company for the financial year
then ended.
The Directors consider that, in preparing the financial
statements for the financial year ended 31 December
2012, the Group has used appropriate accounting policies
and applied them consistently and made judgments and
estimates that are reasonable and prudent. The Directors
also consider that all applicable approved accounting
standards have been followed and confirm that the financial
statements have been prepared on a going concern basis.
The Directors are responsible for ensuring that the Group
and the Company keep accounting records that disclose
Statement On Corporate Governance
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reasonable accuracy at any time of the financial position
of the Group and of the Company and which enable
them to ensure that the financial statements comply with
the provisions of the Companies Act 1965 and Financial
Reporting Standards in Malaysia.
Statement On Corporate Governance
The Malaysian Code on Corporate Governance issued in
March 2012 sets out as a principle that the Board of a company
should establish a sound risk management framework and
internal control system.
The Board is pleased to present the Statement on Internal
Control, which outlines the nature and scope of internal controls
of the Company during the financial year under review, and up
to the date of this Annual Report.
Board Responsibility
The Board is responsible for overseeing the adequacy,
integrity and effectiveness of risk management and the internal
control system that are essential facets of effective corporate
governance in order to safeguard shareholders’ investments
and the Company’s assets. However, such systems are
designed to manage rather than eliminate the risk failure to
achieve business objectives. In addition, it should be noted
that the systems could only provide reasonable assurance
against material misstatement or loss or the occurrence of
unforeseeable circumstances.
The Board has delegated its role to committees at the Board
level that have primary risk management and internal control
oversight responsibilities:
• Board Audit Committee – with oversight over the
effectiveness of the governance, risk management and
internal control processes.
• BoardRiskManagementCommittee –with oversight
over risk management.
Management assists the Board in identifying, evaluating,
monitoring and reporting of risks and internal control, taking
appropriate and timely corrective actions as needed, and
providing assurance to the Board that the Company’s
risk management and internal control system is operating
adequately and effectively, in all material aspects.
Risk Management
In order to achieve a sound system of risk management and
internal control, the Board and Management are responsible
to ensure the risk management and control framework is
embedded into the culture, processes and structures of the
Company. The framework is responsive to changes in the
business environment and clearly communicated to all levels.
The Board strongly believes that prudent risk management
is vital for business sustainability and the enhancement of
shareholder’s value.
Internal Control
In view of the importance of maintaining a sound internal
control system, the Board has extended the responsibilities
of determining the quality, adequacy and effectiveness of
the Company’s control environment to the Audit Committee.
The Internal Audit Department reports directly to the Audit
Committee. The Head of Internal Audit Department has
the relevant qualifications and is responsible for providing
assurance to the Board that the internal controls are operating
effectively. Internal auditors carry out their functions according
to the standards set by recognised professional bodies.
Internal auditors also perform regular reviews and appraisals
of the effectiveness of the governance, risk management and
internal controls processes within the Group. Major findings are
then reported upwards to the Board, where appropriate, for
remedial measures and corrective actions to be taken.
Other Key Elements of the Control Process
The Board is committed to maintain a strong internal control
structure for the proper conduct of the Group’s business
activity. The key elements include:
• An organisational structure with defined lines of
responsibility and delegation of authority together with
a hierarchical structure of reporting and accountability;
Statement On Internal Control
A. Introduction
The Board believes that an effective risk management
framework is essential to the Company in its quest
to achieve its corporate objectives, especially on the
enhancement of shareholders’ value in today’s rapidly
changing market environment.
With this in mind, the Board has established a dedicated
Board Committee known as the Risk Management
Committee (“RMC”) to develop and oversee the
implementation of an enterprise-wide risk management
framework in the Company.
B. Risk Management Committee (“RMC”)
The Terms of Reference of the RMC are as set out below:-
(i) Purpose
The RMC shall assist the Board in:
(a) assessing and providing oversight to
management relating to the identification
and evaluation of major risks involved
in the Company’s business operations,
technology and network operations,
finance and accounting, legal compliance,
environmental impact, personnel policy,
treasury, capital budgeting or any other
areas that could create significant risks
to the Company’s results, reputation or
capacity to serve customers; and
(b) reviewing and evaluating the Company’s
actions to mitigate and manage risks.
In discharging its role, the RMC is empowered to investigate
any matter brought to its attention with access to all books,
records, facilities and personnel of the Company. The RMC
has the power to retain outside counsel, risk management
consultants or other experts and will receive adequate
funding from the Company to engage such advisors. The
Committee is also empowered to delegate its authorities,
functions and tasks in carrying out risk management
activities.
(ii) Committee Membership
The RMC shall consist of three (3) or more members,
each of whom is determined by the Board.
Each member of the RMC should have experience
in the identification, evaluation or control of risk.
At least one (1) member of the RMC should
have significant railway operating or technology
experience. Additionally, as a qualification for
continued membership of the RMC, members of
the RMC are encouraged to participate in related
trainings as provided or approved by the Board.
The Board shall appoint the Chairman of the RMC.
The Chairman shall be responsible for scheduling
and presiding over RMC meetings, preparing
agendas and determining the information needs of
the RMC. The Chairman should expect to devote
significant time to the work of the RMC.
(iii) Committee Meetings
The RMC shall meet on a regularly scheduled basis
at least four (4) times per year, or more frequently as
circumstances dictate.
The RMC may request that any officer or other
employee of the Company or the Company’s outside
counsel or other advisor attend any meeting of the
RMC or meet with any members of, or consultants
to, the RMC.
There were three (3) meetings held during the
Statement On Risk Management 18
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• Internal policies and procedures that are regularly
updated to reflect changing risks or resolve operational
deficiencies including clearly defined limits of authority;
• Adetailedbudgetprocesswhichrequiresallbusiness
units to prepare budget and business plan on an annual
basis;
• Review of key business variable and the monitoring
of the achievement of the Group’s performance on a
quarterly basis by the Board and the Audit Committee;
• Periodicexaminationofbusinessprocessandsystem
internal control by the Internal Audit Department which,
regularly submits its reports to the Audit Committee;
• Adequateinsuranceandphysicalsafeguardsonmajor
assets are in place to ensure assets of the Group are
sufficiently covered;
• A code of ethics for all employeeswhich defines the
ethical standards and conduct at work; and
• Maintenanceofproperaccountingrecords,consistent
application of appropriate accounting policies
supported by reasonable and prudent judgments and
estimates, and preparation of the financial statements
in accordance with the provisions of the Companies
Act 1965, applicable approved accounting standards in
Malaysia and other regulatory provisions.
Conclusion
For the financial year under review, the Board is satisfied that
the systems of risk management and internal control were
effective and have not resulted in any material loss, contingency
or uncertainty.
The Group internal control system does not apply to its
associated company and joint ventures, as the Board does
not have any direct control over their operations. Nonetheless,
the Company’s interests are served through the review of
management accounts received.
The Board and Management recognise that the development
of internal control system is an ongoing process and maintains
an ongoing commitment to strengthen the existing internal
control environment of the Group.
Statement On Internal Control
financial year and the attendance record is as
follows:-
Meetings Attended
Datuk Kamaruzaman bin Hj. Mohd Noor (Chairman)
3/3
Pn. Ruhaizah binti Mohamed Rashid
2/3
Dr. Aminuddin bin Adnan * 1/1
En. Afzar bin Zakariya 2/3
Note:-
* Resigned on 30 April 2012
(iv) Key Responsibilities
The following responsibilities are set forth as a guide
with the understanding that the RMC may diverge
as appropriate given the circumstances. The RMC
is authorised to carry out these and such other
responsibilities assigned by the Board from time to
time and take any actions reasonably related to the
mandate of the RMC. The RMC may delegate any
of its responsibilities assigned by the Board.
To fulfil its purpose, the Committee shall:
(a) review and evaluate management’s
identification of all major risks to the business
and their relative weight;
(b) assess the adequacy of management’s
risk assessment, its plans for risk control or
mitigation and disclosure;
(c) review the Company’s disclosure of risks;
(d) review, assess and discuss with the Board:
(i) any significant risks or exposures; (ii) the
steps management has taken to minimise
such risks or exposures; (iii) and Company’s
underlying policies with respect to the risk
assessment and risk management;
(e) consult from time to time with the Board
on issues relating to responsibilities of the
Committee;
(f) conduct an annual self-evaluation of the
performance of the RMC, including its
effectiveness and compliance with its Terms
of Reference;
(g) review and re-assess the adequacy of its
Terms of Reference and amend as the RMC
deems appropriate; and
(h) report regularly to the Board on RMC
findings, recommendations and any other
matters the RMC deems appropriate or at
the Board’s requests and maintain minutes
or other records of RMC meetings and
activities.
Statement On Risk Management
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AuditCommitteeReport
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The Board of Directors is pleased to present the Audit
Committee (AC) Report for the financial period ended 31
December 2012.
MEMBERSHIP
The AC shall be appointed by the Board of Directors and shall
consist of five (5) Non-Executive Directors, a majority of whom
is Independent. The Chairman of the Committee shall be an
Independent Non-Executive Director.
The Board shall review the term of office of the members of the
Committee once every five (5) years.
COMPOSITION AND ATTENDANCE
The AC comprises the directors listed below:
Directors Designation
Tn. Hj. Rosli bin Abdullah Chairman
Pn. Norazura binti Tadzim Member
En. Selvarajoo a/l Manikam Member
Dato’ Sri Zakaria bin Hj. Bahari Member
Pn. Hajjah Jamela binti Mohd Syed (Resigned on 25 February 2012)
Member
Sr. Ahmad Zainuddin bin Hj. Jamaluddin (Appointed on 27 April 2012)
Member
During the financial year 2012, AC held ten (10) meetings.
i) 19Jan2012–57thACMeeting
ii) 17Feb2012–58thACMeeting
iii) 17April2012–59thACMeeting
iv) 17May2012–60thACMeeting
v) 08June2012–SpecialACMeeting
vi) 12Jul2012–61stACMeeting
vii) 30Aug2012–62ndACMeeting
viii)21Sept2012–SpecialACMeeting
Audit Committee Report
ix) 29Nov2012–63rdACMeeting
x) 18Dec2012–SpecialACMeeting
Details of the members’ attendance are as follows:
Directors
Number of
meetings
attended
Tn. Hj. Rosli bin Abdullah 10/10
Pn. Norazura binti Tadzim 10/10
En. Selvarajoo a/l Manikam 8/10
Dato’ Sri Zakaria bin Hj. Bahari 8/10
Sr. Ahmad Zainuddin bin Hj. Jamaluddin 7/7
Pn. Hajjah Jamela binti Mohd Syed 1/2
TERMS OF REFERENCE OF THE AUDIT COMMITTEE
1 Authority
1.1 The Committee shall have the authority to
investigate any activity of the Company and its
subsidiaries and to request for any information it
considers as relevant to its activities.
1.2 All employees are directed to co-operate with
the Committee and to be present at its meetings,
if required, to assist it in its work by providing all
necessary information and explanation.
1.3 The Committee shall have direct access to the
Company’s External and Internal Auditors and
provide a link between these Auditors and the
Board.
1.4 It is also authorised to obtain such independent
professional advice it considers necessary to
investigate any activity within its Terms of Reference.
Audit Committee Report
1.5 A circular resolution in writing signed by a majority of
the members for the time being or their alternates,
not being less than three (3) members shall be
as valid and effectual as if it had been passed
by a meeting of the Committee duly called and
constituted. Any such resolution may consist of
several documents in like form each signed by one
(1) or more members.
2 Scopes and Function
In its role to ensure proper management of the business
operations in compliance with statutory obligations,
policies, procedures, regulations and prudent business
practices, the Committee is responsible to the Board of
Directors for the following:
2.1 To consider and recommend to the Board, the
appointment of the External Auditor, the audit fee
and any question of resignation or dismissal.
2.2 To review with the External Auditor, before the audit
commences, the nature and scope of the audit and
their audit plan.
2.3 To review and report to the Board the quarterly
and year-end financial statements of the Company,
focusing on:
a) Any changes in accounting policies and
practices;
b) Significant adjustments arising from the audit;
c) The going concern assumption; and
d) Compliance with accounting standards and
other legal requirements.
2.4 To discuss problems and reservations arising
from the interim and final audits and any matter
the External Auditor may wish to discuss, in the
absence of the Management, if necessary.
2.5 To review the External Auditor’s management letter
and Management’s response.
2.6 To review in respect of the Internal Audit Department:
a) The adequacy of the scope, functions and
resources of the internal audit function and that
it has the necessary authority to carry out its
work;
b) The internal audit programmed and results of
the internal audit process and where necessary
to ensure that the appropriate action is taken
on the recommendations of the internal audit
function;
c) Any appraisal or assessment of the performance
of members of the Internal Audit and to review
the annual Performance Management System
of Internal Audit staff;
d) Appraise and recommend any training/course,
be it internal or external, which in its opinion
beneficial for the enhancement of members of
the Internal Audit;
e) Consider the adequacy of Internal Audit
function’s structure and organisation, as well as
appraise and recommend recruitment, transfers,
appointments and promotions of members of
the Internal Audit which is to be subsequently
endorsed by the Nomination and Remuneration
Committee;
f) Appraise and recommend the annual salary
increments of members of the Internal Audit in
accordance with the Company policy; and
g) Be informed of resignations of Internal Audit
staff members and provide the resigning staff
member an opportunity to submit his reasons
for resigning.
2.7 To review and report to the Board on the adequacy
and the integrity of the Company’s internal control
systems and management information systems,
including systems for compliance with applicable
laws, rules, directives and guidelines.
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2.8 To propose to the Board the best practices on
disclosure in financial results and annual reports of
the Company in line with the principles set out in the
Malaysian Code of Corporate Governance, other
applicable laws, rules, directives and guidelines.
2.9 To propose that Management has in place an
adequate system of risk management.
2.10 To consider any related party transactions that may
arise within the Company or its subsidiaries.
2.11 To consider the major findings of internal
investigations and Management’s response.
2.12 To consider and examine other matters as defined
by the Board.
3 Meetings
3.1 Meetings shall be held at least four (4) times a year,
although additional meetings may be called at the
Chairman’s discretion. Notice of Meetings shall be
circulated to the members one (1) week in advance.
3.2 The quorum necessary for the transaction of
business of the Audit Committee Meeting may be
fixed by the members and unless so shall be two (2).
3.3 The Head of Finance, the Head of Internal Audit and
a representative of the External Auditor may attend
meetings by invitation.
3.4 Questions arising at any meeting shall be decided
by a majority of votes, each member having one
vote and in case of equality of votes the Chairman
shall have a second or casting vote. Save that where
two members form a quorum, the Chairman of a
meeting at which only such a quorum is present,
or that which only two (2) members are competent
to vote on the question of issue, shall not have a
casting vote.
3.5 The External Auditor may request a meeting if
they consider necessary. Upon the request of the
auditor, the Chairman of the Audit Committee shall
convene a meeting of the Committee to consider
any matter the auditor believes should be brought
to the attention of the Directors.
3.6 The Company Secretary shall be the Secretary of
the Committee.
INTERNAL AUDIT CHARTER
Purpose
To establish the scope and activities of the Internal Audit
function within the organisation consistent with The Institute
of Internal Auditor’s Standards for the Professional Practice of
Internal Auditing.
Nature
Internal auditing is an independent, objective assurance and
consulting activity designed to add value and improve an
organization’s operations. It helps an organization accomplish
its objectives by bringing a systematic, disciplined approach to
evaluate and improve the effectiveness of risk management,
control, and governance processes.
Objective
The objective of Internal Audit is to assist the Board, Audit
Committee and Management in the effective discharge of
their responsibilities in establishing cost-effective controls,
assessing risks, recommending measures to mitigate those
risks and assuring proper governance process. In this regard,
Internal Auditors furnish Management with independent
analysis, appraisals, counsel and information on the activities
they review.
The Internal Audit activity should monitor and evaluate the
effectiveness of the organisation’s risk management, control
and governance systems encompassing the:
a) Reliability and integrity of financial and operational
information;
b) Effectiveness and efficiency of operations;
c) Safeguarding of assets; and
d) Compliance with laws, regulations and contracts.
Responsibility and Authority
1. The responsibilities of Internal Audit within the organisation
are established by this Charter in accordance with
prescribed Auditing Standards.
2. Internal Audit has the authority to access records,
personnel and physical properties at any location relevant
to the performance of engagements. It is expected
that departments or activities under review will provide
every possible assistance to facilitate the progress of the
engagement.
3. The Head of Internal Audit has direct communication with
the Board, Audit Committee, or other appropriate governing
authority. The Head of Internal Audit will submit to the Audit
Committee an annual engagement work schedule including
of staffing plan and financial budget for approval. The Audit
Committee will receive all final audit reports. Each year a
report of Internal Audit activities will be presented to the
Audit Committee and the Board for their information.
4. In order to ensure adequate audit coverage and to minimise
duplicate efforts, all audit effort will be co-ordinated. To this
end, the Head of Internal Audit will co-ordinate its audit
work with that of the External Auditors.
5. In accordance with Auditing Standards, Internal Audit
has no direct responsibility for or authority over any of the
activities reviewed. An Internal Audit review and appraisal,
therefore, does not in any way relieve managers in the
organisation from their regular responsibilities assigned to
them.
Independence
Independence is essential to the effectiveness of Internal Audit
function. This independence is achieved through organisational
status and objectivity.
a) Organisational Status
The Head of Internal Audit reports functionally to
the Audit Committee, or Board of Directors, and
administratively to the President of the Company. This
reporting relationship is to promote independence and
to ensure broad audit coverage, adequate consideration
of engagement communications and appropriate action
on engagement recommendations.
b) Individual Objectivity
The Internal Auditor’s objectivity is not adversely
affected when the auditor recommends standards of
control for systems or reviews procedures before they
are implemented. The auditor’s objectivity is considered
to be impaired if the auditor designs, installs, drafts
procedures for, or operates such systems.
Code of Ethics – Principles
Internal auditors are applying and uphold the following
principles:
1. Integrity
The integrity of internal auditors establishes trust and thus
provides the basis for reliance on their judgment.
2. Objectivity
Internal auditors exhibit the highest level of professional
objectivity in gathering, evaluating, and communicating
information about the activity or process being examined.
Audit Committee Report
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Internal auditors make a balanced assessment of all the
relevant circumstances and are not unduly influenced by
their own interests or by others in forming judgments.
3. Confidentiality
Internal auditors respect the value and ownership of
information they receive and do not disclose information
without appropriate authority unless there is a legal or
professional obligation to do so.
4. Competency
Internal auditors apply the knowledge, skills, and experience
needed in the performance of internal audit services.
Rules of Conduct
1. Integrity
Internal auditors:
1.1 Perform their work with honesty, diligence, and
responsibility.
1.2 Observe the law and make disclosures expected by
the law and the profession.
1.3 Not knowingly be a party to any illegal activity,
or engage in acts that are discreditable to the
profession of internal auditing or to the organization.
1.4 Respect and contribute to the legitimate and ethical
objectives of the organization.
2. Objectivity
Internal auditors:
2.1 Not participate in any activity or relationship that
may impair or be presumed to impair their unbiased
assessment. This participation includes those
activities or relationships that may be in conflict with
the interests of the organization.
2.2 Not accept anything that may impair or be presumed
to impair their professional judgment.
2.3 Disclose all material facts known to them that, if
not disclosed, may distort the reporting of activities
under review.
3. Confidentiality
Internal auditors:
3.1 Prudent in the use and protection of information
acquired in the course of their duties.
3.2 Not use information for any personal gain or in
any manner that would be contrary to the law or
detrimental to the legitimate and ethical objectives
of the organization.
4. Competency
Internal auditors:
4.1 Engage only in those services for which they have
the necessary knowledge, skills, and experience.
4.2 Perform internal audit services in accordance with
the International Standards for the Professional
Practice of Internal Auditing (Standards).
4.3 Continually improve their proficiency and the
effectiveness and quality of their services.
Chairman’s Statement
Y.B. DATO’ SRI IR. MOHD ZIN BIN MOHAMED
CHAIRMAN OF THE BOARD
On behalf of the Board of Directors and the Management
of KTMB, it gives me great pleasure to present the Annual
Report and Audited Financial Statement for the financial
year ended 31 December 2012.
OVERVIEW
Financial Results
There had been mixed growth and declines for the period
under review.
Total revenue from the core businesses increased slightly
from RM352.6 million in 2011 to RM361.0 million in 2012.
There was a business improvement in the ETS services
due to increase in the number of passengers.
KTMBlossesincreasedfromRM119.9milliontoRM283.9
million, despite management efforts to increase revenue,
reduce expenditure and improve efficiency.
At the Group level, KTMB net losses had also increased
from RM103.4 million to RM240.1 million mainly due
to higher operating cost and loss of business in the
Commuter and Intercity segment.
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CORE BUSINESSES
The rail operating business is an essential and integral
component of the service industry, which has great potential for
further growth. KTMB has always been the nations established
player in the land transportation sector, moving passengers and
goods throughout the railway network in Peninsular Malaysia.
Our rail network strategically links the industrial growth centres
in the hinterland to the sea ports such as Pelabuhan Pulau
Pinang, Pelabuhan Klang, Pelabuhan Pasir Gudang and
Pelabuhan Tanjung Pelepas. It also serves as the backbone
for Landbridge services that connect cross-border movements
of cargo between Malaysia and Thailand. Complementing the
rapid development of other modes of transportation, such as
road, sea and air, KTMB continues to focus on providing safe,
efficient and reliable rail services for passengers and goods.
In this connection, during the year, KTMB has proactively
pursued strategies in the following core business areas:
KTM Komuter
The year 2012 saw the transformation of KTM Komuter through
the provision of better quality of service, with the acceptance of
38electrictrainsfromChinabetterknownasMyKomuterSix
Car Set (SCS).
Through the initiative under the National Key Result Areas
(NKRA) by the Government, a total of RM1.9 billion was
allocatedtopurchase38newSCSthatwillhelp improvethe
quality of the commuter services.
MyKomuter can accommodate more than 1,000 passengers
at any one time and has facilities such as intercoms, LCD
information display, Dynamic Route Map, Priority Seating Zone,
two Ladies’ Coaches, CCTV and Wheel Chair area.
KTMB is optimistic that with MyKomuter, passenger’s waiting
time will be shortened from 30 minutes to 15 minutes and
will double the daily commuter service users from 95,000 to
200,000 a day in the near future.
KTM Intercity
For the year ended 2012, the ETS had shown greater
improvement overall since the service was introduced in August
2010. The 2012 revenue had shown an increase of 33.5% from
RM23.9 million to RM31.9 million. The number of passengers
also increased to 33.3% from 0.9 million in 2011 to 1.2 million
in 2012. KTM Intercity is expecting an increase in revenue and
ridership should the level of service especially in the area of
punctuality can be improved.
KTM IntercitycontributedRM81.6million toKTMB’s revenue
in2012compared toRM91.8million in2011whichshowed
a decrease of 11.1%. The number of passengers for the year
2012 recorded a ridership of 3.1 million compared to 3.7 million
in 2011 which is a 16.2% reduction. The decrease in revenue
and ridership was influenced by a series of incidents throughout
the year as well as the effect of the closure of Tanjung Pagar
station in Singapore.
Cargo Services
Revenue from Cargo Services continued to show growth of
1.8%toRM127.4millioncomparedtoRM125.2millioninthe
previous year.
Containerized and cement traffic remained the Cargo Services
major commodity. Containerized traffic brought in RM46.8
million while cement traffic contributed RM44.5 million.
Most of the containerized traffic revenue originated from the
transportation of the South Thai Cargo (STC) from Padang
Besar to North Butterworth Container Terminal.
Traditional commodity such as sugar recorded RM10.7 million
while revenue from the fertilizer train contributed RM3.9 million.
To cover the losses of the Singapore service sector, KTMB had
developed a new cargo terminal at Gelang Patah station. The
terminal was opened for operations in the first quarter of 2012
andcontributedRM3.8millionintermsofrevenueforKTMB.
KTMB continues to provide customers with a viable and
competitive cargo services in the most cost-effective manner.
Capitalising on its established rail infrastructure, KTMB planned
to capture significant market share of the cargo and haulage
businesses, especially in the transportation of commodities
such as containerised cargo, cement and sugar.
Chairman’s Statement
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THE WAY FORWARD
KTMB will continue its efforts to become a viable business
entity at the operational level and increase its efficiency.
Towards this end, KTMB will continue to manage its core
businesses effectively, improve cost-effectiveness and monitor
performance in line with our “Ontime Everytime” tagline.
Prospect and Challenges
We are confident that all the three Strategic Business Units
(SBU) have the potential to perform well in 2013 with increased
volume and improved revenue. The Government’s focus on
encouraging the public to utilise public transport would also
escalate the demand for rail services in the coming years.
The challenge for KTMB is to expeditiously prepare itself in
terms of hardware, software and personnel to cater for the
growing expectations and increasing demands. In this context,
KTMB would continue to accord priority to the development of
human capital so as to ensure the company is a reliable and
cost effective rail transport operator.
ACKNOWLEDGEMENT
On behalf of the Board of Directors, we would like to express
our appreciation to the Management and staff, for their services
rendered during the year and also to thank all of KTMB’s valued
customers for their continued patronage and support.
We would also like to record our appreciation to the
Railwaymen’s Union of Malaya (RUM) and Senior Officers
Association (SOA) for their continued support and cooperation.
The year 2013 will mark a new chapter in the history of KTMB.
It is hoped that the staff at all levels will continue to give their full
support and dedication to the company in meeting the future
challenges ahead.
Lastly, we would like to take this opportunity to express our
gratitude to the Ministry of Finance, the Land Public Transport
Commission, the Ministry of Transport and the Railway Asset
Corporation for their guidance, invaluable assistance and
support in the past year.
Y.B. DATO’ SRI IR. MOHD ZIN BIN MOHAMED
Chairman
Keretapi Tanah Melayu Berhad
Chairman’s Statement
ReviewofOperations
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Review of Operations
The year 2012 had been a very promising and progressive
period for KTMB. KTMB contributed in a big way to the national
transportation agenda.
In the area of rail transportation, KTMB has undertaken many
mega railway projects with the assistance of the Government
that will bring long term development both in terms of economic
growth as well as significant improvement in rail transportation
both in passengers and cargo services.
In terms of passenger conveyance, KTMB has over the years
through Government funding introduced new services i.e.
Electric Train Service (ETS) and Six Car Sets (SCS) Commuter
services to improve the frequency of trains to fulfill the demand
from the general public.
ETS with 5 sets of 6-car coaches was introduced to provide
frequent services between Ipoh and Kuala Lumpur. When it
started in 2010 it was only providing 10 services a day with
an average of 1,000 passengers daily, but over the last three
(3) years the passenger load has increased tremendously and
today we are transporting approximately 4,000 passengers
between Ipoh- Kuala Lumpur and vice versa. The ETS services
has also been increased to 18 services daily from Monday
to Thursday and 22 services from Friday to Sunday, which
resulted in 33.3% increase in ridership from 0.9 million in 2011
to 1.2 million passengers in 2012. With the completion of the
electrified double track in certain areas by 2013 and 2014,
the coverage of ETS will be all the way to Gemas and Padang
Besar. KTMB is in the process of buying new ETS sets to
increase the frequency and reach of its services to more areas
by 2016.
Another major milestone in 2012 is the introduction of KTMB’s
SCS to fulfill the ever growing demand for efficient public
transport in theKlangValley.KTMBhas introduced38 units
of SCS to service the Klang Valley transport needs. With the
introduction of the new services KTMB is able to provide
efficient and comfortable commuter services to the Klang Valley
passengers. It also reduced the waiting time from 30 minutes
to 15 minutes in 2012 during the peak hours. Punctuality
of commuter services also increased in 2012. KTMB also
introduced additional services i.e. 24 hours services during
special occasions like New Year, Chinese New Year and
Thaipusam and also additional services during school holidays
and Hari Raya celebrations.
Cargo business has also significantly contributed to the revenue
ofKTMBwithanincreaseof1.8%initsrevenuefromRM125.2
million in 2011 to RM127.4 million in 2012.
KTMB also took another major step in safety and security
by placing our own auxiliary police personnel on commuter
services to ensure safety of the passenger. To ensure safer
and uninterrupted travel on train, KTMB also continued its
awareness program to educate the people living along the
track.
KTMB also stressed the importance of obtaining international
certification in work processes, resulting in the Commuter
DepotinSentulachievingISO9001:2008certificationin2012.
One of the major factors in KTMB’s success is the well trained
and dedicated work force totaling 5,490 i.e. 531 executive
and 4,959 non-executive. Towards maintaining this excellent
record, KTMB embarked on a wider scale of training program in
year 2012 in line with the Government Transformation Program.
In the year 2012, a total of 3,334 employees attended
training in various disciplines such as train operations, rolling
stock maintenance, overhead line maintenance, track safety,
signaling & communication systems and maintenance,
occupational safety and health at workplace, computer system
applications, customer service, leadership, team building and
other management aspects.
KTMB had earlier initiated the development of the National
Occupational Skills Standards (NOSS) in 11 different categories
together with the other rail operators in Malaysia. All NOSS were
approved and endorsed by the Skills Development Department
under the Ministry of Human Resources. Following this, KTMB
had moved on and initiated the implementation of the National
Dual Training System/Sistem Latihan Dual Nasional (SLDN)
with the aim of certifying the competency of its skilled workers.
A total of 1,250 employees are currently undergoing the SLDN
program which is expected to be completed and certified in
the year 2014. With the availability of certified skilled workers
at various levels, the next milestone for KTMB is to open the
program to other local and international rail operators.
KTMB is also collaborating with the Malaysian Industry-
Government Group for High Technology (MiGHT) to assist
Malaysia in reducing the shortage of skilled workers within the
rail industries and also becoming the Rail Center of Excellence
in the South East Asia region.
KTMB has intensified its marketing through the mainstream
media and has used the media effectively by disseminating
its various offering to the general public. One of the major
promotions in 2012 was the 50% discount for Malaysian
citizens who are earning below RM 3,000 which started on
Review of Operation
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1 November 2012 and will end on 31 October 2013. The
response has been tremendous with 140,000 subscribing to
the Kad Komuter 1Malaysia so far.
KTM Komuter also offered the following promotions from
March to September 2012 i.e. distributed 100,000 vouchers
worth RM2 to the public to be used on commuter travel, 50%
discounted fare on weekly ticket, as well as free rides for
students, disabled persons and senior citizens. KTMB also
embarked on distributing free newspapers to the commuters
in the Klang Valley area. KTMB has also conducted many
familiarization trips for media especially on the new SCS
services. KTMB being a social-minded transporter has also
offered different kinds of discounts to senior citizens, school
children as well as disabled persons. The Ladies Coach, which
was introduced in 2010, received a major boost when the new
SCS introduced additional coaches i.e. from one dedicated
coach to two dedicated coaches.
As rail is a catalyst in the development of the economy of the
country, there are many on-going projects, which are being
undertaken by KTMB through Government funding. The major
and far most important is the double tracking project from
Seremban - Gemas and Ipoh - Padang Besar which is being
undertaken and on-going at the moment. Both of the projects
are expected to be completed in 2013 and 2014 respectively.
KTMB also replaced one of the oldest tunnel in the country i.e.
Bukit Berapit tunnel with the stage opening of its new tunnel 3
km in length on 22 April 2013. The year 2013 will also see the
opening of Bukit Merah Marine Viaduct. Rembau will also have
a brand new station, which is expected to be opened in 2013.
To achieve the targets outlined in the National Key Result Area
(NKRA) in improving urban public transport for the railway
sector, the Government has approved 6 projects amounting to
a total cost of RM299.7 million.
As of 31 December 2012, the Upgrading of Bandar Tasik Selatan
Station and Provision of Universal Facilities at ten commuter
stations have been completed, whereas Provision of CCTV and
Passenger Information System (PIS) and Construction of EMU
Depot at Seremban are expected to complete by June 2013
and December 2013 respectively.
Meanwhile, two projects namely the Remodelling of the
Signalling System between Port Klang Junction - Batu Junction
and Provision of Automatic Fare Collection (AFC) system at the
commuter stations are on-going and is expected to complete
by 2014.
In line with KTMB’s efforts to meet the increasing demand for
passenger and cargo services, the existing capacity of rolling
stock will be upgraded. Pursuant to this, the Government
has allocatedRM528.6million under the 10thMalaysiaPlan
for the upgrading of rolling stock. Besides, procurement
of 12 units of new passenger coaches (Air Conditioned
Second Class Coaches/ASC), 2 units of Air Conditioned
Buffet Coaches (ABC) and 2 units of Power Generating Car
(PGC) have been implemented under the Kumpulan Wang
Amanah Pengangkutan Awam (KWAPA) allocation. The testing
and commissioning works on these coaches and PGC is in
progress and the delivery in stages is expected to start in June
2013.
Major integration works are also taking place currently to
integrate KTMB stations with other rail operators i.e. Subang
Jaya (LRT), Sungai Buloh (MRT), Kajang (MRT) and KL Sentral
(MRT). All these integration works will provide seamless travel
for the people.
With substantial amount of money spent on developing rail
infrastructure, the volume of both passengers and cargo is
expected to increase 5 folds in the near future, which will result
in tremendous increase in revenue for KTMB.
Review of Operation
With significant amount of investment in the electrified double
track, KTMB will contribute in the reduction of carbon emission
by replacing the current fleet of diesel locomotives with
additional 10 ETS sets to be purchased in the near future.
Corporate Calendar
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6 March 2012
MyKomuter trial run with members of media (KL Sentral
Station–KajangStation–KLSentralStation)atKLSentral
Station.
8 March 2012
The Launching of MyKomuter by Y.A.B. Tan Sri Muhyiddin
Yassin, Deputy Prime Minister of Malaysia at KL Sentral
Station.
31 March 2012
Media Briefing on MyKomuter at KTMB Headquarters.
19 January 2012
Goodies distribution to passengers in conjunction of Chinese
New Year Celebration at KL Sentral Station.
31 January 2012
Media briefing at Batu Caves Station on additional Komuter
services for Thaipusam celebrations at Batu Caves Station.
23 February 2012
International Railway Standards. A seminar jointly organized
by KTMB and Railway International Standards Centre, Japan
and officiated by Y.B Tan Sri Dato’ Seri Syed Hamid bin Syed
Jaafar Albar, Chairman of SPAD at InterContinental Hotel,
Kuala Lumpur.
Corporate Calendar
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Corporate Calendar
24 April 2012
Y.B. Dato’ Sri Kong Cho Ha, Minister of Transport Site Visit to
the new Bahau Station.
9 May 2012
KTM Berhad Labour Day celebrations at KTMB Headquarters.
21 May 2012
ETS the official transportation for Indian Hockey Players
in conjunction of Sultan Azlan Shah Cup 2012 Hockey
Tournament at Stadium Azlan Shah, Ipoh, Perak.
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21 June 2012
Groundbreaking Ceremony of KTMB EMU Seremban Depot
by Y.B Dato’ Sri Kong Cho Ha, Minister of Transport at
Seremban Station.
3 July 2012
Visit by the Minister of Transport, Y.B Dato’ Sri Kong Cho Ha
to the multi-storey car park at Serdang Station.
23 August 2012
Study visit to KTMB by the Governor’s Bureau of the State
Railway of Thailand.
13 September 2012
MyKomuter Fun Ride with school children from Seremban to
Kuala Lumpur.
14 September 2012
RecognitionCeremonyofISO9001:2008Certificate,EMU
Sentul Depot.
24 – 28 September 2012
33rd Joint Conference between KTMB -SRT in Pattaya,
Thailand.
10 October 2012
Handover Ceremony of Emergency Response Plan Manual
between JBPM / KTMB and ERP at Taman Wahyu Station.
18 October 2012
Press Conference on Komuter 1Malaysia Card at KL Sentral
Station.
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Corporate Calendar
31 October 2012
MyKomuter Familiarization Trip (Phase 2) with members of
media at KL Sentral Station.
4 November 2012
Study visit by Switzerland Delegates at Train Control &
Command Centre (TCCC), KL Sentral.
14 November 2012
Study visit to KTMB by the East Japan Railway Company (1st
Group).
27 November 2012
Study visit to KTMB by the East Japan Railway Company (2nd
Group).
3-7 December 2012
ASEAN Railways CEOs’ (ARCEOs’) Conference in Yangon,
Myanmar.
29 December 2012
The first time ever in Komuter history, a wedding reception
was held at Sentul Station. The newly-wed took a ride on
MyKomuter to Sentul Station. The coverage of the wedding
ceremony is to make known that KTMB offer space for such
activities.
29-30 December 2012
KTMB participated in Sayangi Selangor Carnival at I-City,
Shah Alam.
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Financial Statements
Directors’ Report
Independent Auditors’ Report
Statements Of Comprehensive Income
Statements Of Financial Position
Statements Of Changes In Equity
Statements Of Cash Flows
Notes To The Financial Stetements
Statements By Directors
Declaration By The Officer Primarily Responsible For
The Financial Management Of The Company
46
50
53
55
59
61
65
156
157
Contents
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The Directors of KERETAPI TANAH MELAYU BERHAD hereby submit their report and the audited financial statements of the
Group and of the Company for the financial year ended 31 December 2012.
Principal Activities
The principal activities of the Company are railway transportation operations and the provision of related railway services in Peninsular
Malaysia and Singapore. The Company operates these activities pursuant to a licence issued by the Ministry of Transport.
The principal activities of its subsidiaries are described in Note 13 of the financial statements.
There have been no significant changes in the nature of these activities during the financial year.
Results Of Operations
The results of operations of the Group and of the Company for the financial year are as follows:
Loss for the financial year attributable to:
Owners of the Company
Non-controlling interest
In the opinion of the directors, the results of operations of the Group and of the Company during the financial year have not been
substantially affected by any item, transaction or event of a material and unusual nature.
Dividends
No dividend has been paid or declared by the Company since the end of the previous financial year. The directors do not recommend
any dividend payment in respect of the current financial year.
Reserves And Provisions
There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial
statements.
Issue Of Shares And Debentures
As approved by the shareholders in the Extraordinary General Meeting (“EGM”) held on 30 October 2012, the authorised share
capital of the Company was increased from RM1,000,000,000 to RM2,000,000,000 by the creation of an additional 1,000,000,000
new ordinary shares of RM1 each.
Directors’ Report
The Company
RM’000
(283,950)
-
(283,950)
The Group
RM’000
(240,156)
16
(240,140)
KERETAPI TANAH MELAYU BERHAD (Incorporated in Malaysia)
During the financial year, the paid up share capital of the Company was increased from RM902,559,000 to RM1,137,459,000 by
way of issuance of 234,900,000 ordinary shares of RM1 each at RM1 per ordinary share for working capital purposes. The new
ordinary shares issued rank pari passu with the then existing ordinary shares of the Company.
The Company has not issued any debentures during the financial year.
Share Options
No options have been granted by the Company to any parties during the financial period to take up unissued shares of the
Company.
No shares have been issued during the financial period by virtue of the exercise of any option to take up unissued shares of the
Company. As at the end of the financial period, there were no unissued shares of the Company under options.
Other Statutory Information
Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made
out, the directors took reasonable steps:
(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for
doubtful debts and had satisfied themselves that there were no known bad debts and that adequate allowance had been
made for doubtful debts; and
(b) to ensure that any current assets which were unlikely to realise their book value in the ordinary course of business had been
written down to their estimated realisable values.
Asof 31December 2012, theGroup and theCompany have a capital deficiency ofRM983,022,000 andRM1,205,226,000
respectively as a result of losses incurred in the current and prior financial years. As mentioned in Note 3 to the Financial Statements,
the financial statements of the Group and of the Company have been prepared on the basis of accounting principles applicable to a
going-concern which presumes that the Group and the Company will continue to receive financial support from Minister of Finance
(Incorporated) to enable the Group and the Company to operate as a going-concern in the foreseeable future. The appropriateness
of the application of going-concern as a basis of preparation of the financial statements of the Group and of the Company is
dependent on the continued financial support from Minister of Finance (Incorporated).
Other than as mentioned in the preceding paragraph, at the date of this report, the Directors are not aware of any circumstances:
(a) which would render it necessary to write off any bad debts or the amount of the allowance for doubtful debts in the financial
statements of the Group and of the Company inadequate to any substantial extent; or
(b) which would render the values attributed to the current assets in the financial statements of the Group and of the Company
misleading; or
Directors’ Report
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(c) 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; or
(d) not otherwise dealt with in this report or financial statements which would render any amount stated in the financial
statements of the Group and of the Company misleading.
At the date of this report, there does not exist:
(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which
secures the liabilities of any other person; or
(b) any contingent liability in respect of the Group and of the Company which has arisen since the end of the financial year.
No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after
the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the
Company to meet their obligations as and when they fall due.
In the opinion of the Directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the
end of the financial year and the date of this report which is likely to affect substantially the results of operations of the Group and
of the Company for the financial year in which this report is made.
Directors
The following directors served on the Board of the Company since the date of the last report:
Dato’ Sri Ir. Mohd Zin bin Mohamed
Selvarajoo a/l Manikam
Dato’ Sri Zakaria bin Bahari
Rosli bin Abdullah
Harun bin Johari
Ruhaizah binti Mohamed Rashid
Sr. Ahmad Zainuddin bin Jamaluddin
Datuk Elias bin Kadir
Norazura binti Tadzim
Datuk Kamaruzaman bin Mohd Noor
In accordance with Article 104 of the Company’s Articles of Association, Selvarajoo a/l Manikam, Norazura binti Tadzim and
Ruhaizah binti Mohamed Rashid retire by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves
for re-election.
Directors’ Interests
None of the Directors holding office at 31 December 2012 had any interest in the ordinary shares of the Company and of its related
corporations during the financial year.
Directors’ Benefits
Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit
(other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the
financial statements or the fixed salary of a full time employee of the Company or of related corporations) by reason of a contract
made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company
in which the Director has a substantial financial interest.
There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company
to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.
Holding Company
The Company is a subsidiary of Minister of Finance (Incorporated), a body corporate incorporated pursuant to the Minister of
Finance(Incorporated)Act,1957(Revised1989).
Auditors
The auditors, Messrs. Deloitte KassimChan, have expressed their willingness to continue in office.
Signed on behalf of the Board
in accordance with a resolution of the Directors,
________________________________________
DATO’ SRI IR. MOHD ZIN BIN MOHAMED
________________________________________
DATUK ELIAS BIN KADIR
Kuala Lumpur
16 May 2013
Directors’ Report
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Report on the Financial Statements
We have audited the financial statements of KERETAPI TANAH MELAYU BERHAD, which comprise the statements of financial
position of the Group and of the Company as of 31 December 2012 and the 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 53 to 155.
Directors’ Responsibility for the Financial Statements
The directors of the Group and the Company are responsible for the preparation of these financial statements so as to give a true
and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the
requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control
relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as
of 31 December 2012 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.
Emphasis of Matters
Asof 31December 2012, theGroup and theCompany have a capital deficiency ofRM983,022,000 andRM1,205,226,000
respectively as a result of losses incurred in the current and prior financial years. As mentioned in Note 3 to the Financial Statements,
Independent Auditors’ ReportTo The Members Of KERETAPI TANAH MELAYU BERHAD
(Incorporated in Malaysia)
the financial statements of the Group and of the Company have been prepared on the basis of accounting principles applicable to a
going-concern which presumes that the Group and the Company will continue to receive financial support from Minister of Finance
(Incorporated) to enable the Group and the Company to operate as a going-concern in the foreseeable future. The appropriateness
of the application of going-concern as a basis of preparation of the financial statements of the Group and of the Company is
dependent on the continued financial support from Minister of Finance (Incorporated).
Report on Other Legal and Regulatory Requirements
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that:
(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 auditors’ reports of the subsidiaries of which we have not acted as
auditors, as mentioned in Note 13 to the Financial Statements, being financial statements that have been included in the
financial statements of the Group;
(c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statements
are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group
and we have received satisfactory information and explanations as required by us for these purposes; and
(d) The audit reports on the accounts of the subsidiaries were not subject to any qualification and did not include any adverse
comment made under Section 174 (3) of the Act.
Other Matters
1. As stated in Note 2 to the financial statements, the Company adopted Malaysian Financial Reporting Standards on 1
January 2012 with a transition date of 1 January 2011. These standards were applied retrospectively by directors to the
comparative information in these financial statements, including the statement of financial position as at 31 December
2011 and 1 January 2011, and the statement of comprehensive income, statement of changes in equity and statement
of cash flows for the year ended 31 December 2011 and related disclosures. The application of these Standards have not
affected the comparative information as previously reported in accordance with Financial Reporting Standards. We were
not engaged to report on these comparative information which is now presented in accordance with Malaysian Financial
Reporting Standards and hence, it is unaudited. Our responsibilities as part of our audit of the financial statements of the
Company for the year ended 31 December 2012 have, in these circumstances, included obtaining sufficient appropriate
audit evidence that the opening balances as at 1 January 2012 do not contain misstatements that materially affect the
financial position as of 31 December 2012 and financial performance and cash flows for the year then ended.
2. 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.
Independent Auditors’ Report
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3. The financial statements of the Company for the year ended 31 December 2011 were audited by another firm of auditors
whosereportdated28June2012expressedanunmodifiedopiniononthosestatements.
DELOITTE KASSIMCHAN
AF 0080
Chartered Accountants
KAMARUL BAHARIN BIN TENGKU ZAINAL ABIDIN
Partner - 2903/11/13 (J)
Chartered Accountant
16 May 2013
Independent Auditors’ Report Statements Of Comprehensive IncomeFor The Year Ended 31 December 2012
Revenue 5 454,671 440,963 360,988 352,560
Cost of services (533,414) (494,814) (466,358) (427,142)
Gross loss (78,743) (53,851) (105,370) (74,582)
Other operating income 103,120 75,977 95,077 79,929
Administrative expenses (59,943) (54,580) (43,206) (35,803)
Other operating expenses (203,030) (79,747) (193,368) (73,612)
Results from operating activities (238,596) (112,201) (246,867) (104,068)
Finance income 1,272 2,255 545 1,384
Finance costs 6 (29,675) (17,823) (29,269) (17,237)
Operating loss (266,999) (127,769) (275,591) (119,921)
Share of profit of equity- accounted investees, net of tax 35,006 24,106 - -
Loss before tax 7 (231,993) (103,663) (275,591) (119,921)
Income tax (expense)/credit 10 (8,147) 210 (8,359) -
Loss for the year (240,140) (103,453) (283,950) (119,921)
Other comprehensive income
Foreign currency translation differences of foreign operations (21) (33) - -
Other comprehensive loss for the year, net of tax (21) (33) - -
Total comprehensive loss for the year (240,161) (103,486) (283,950) (119,921)
The Group The Company
Note
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
KERETAPI TANAH MELAYU BERHAD (Incorporated in Malaysia)
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The accompanying Notes form an integral part of the financial statements.
Loss attributable to:
Owners of the Company (240,156) (103,463) (283,950) (119,921)
Non-controlling interest 16 10 - -
Loss for the year (240,140) (103,453) (283,950) (119,921)
Total comprehensive loss attributable to:
Owners of the Company (240,177) (103,496) (283,950) (119,921)
Non-controlling interest 16 10 - -
Total comprehensive loss for the year (240,161) (103,486) (283,950) (119,921)
The Group The Company
Note
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
Statements Of Comprehensive Income Statements Of Financial PositionAs Of 31 December 2012
KERETAPI TANAH MELAYU BERHAD (Incorporated in Malaysia)
ASSETS
Non-current Assets
Property, plant and equipment 11 148,646 269,980 277,830
Investment properties 12 2,035 2,092 2,149
Investments in associates 14 157,831 145,545 135,212
Other investment 15 140 170 170
Long-term receivables 16 - - 69,216
Deferred tax assets 17 - 3,107 498
Total Non-current Assets 308,652 420,894 485,075
Current Assets
Inventories 18 48,950 42,303 45,428
Trade and other receivables 19 201,042 87,987 84,112
Deposits and prepayments 19 28,925 4,339 5,786
Tax recoverable 3,094 10,007 9,842
Cash and bank balances 20 26,093 40,438 87,723
308,104 185,074 232,891
Non-current assets classified as held for sale 21 5,507 - -
Total Current Assets 313,611 185,074 232,891
Total Assets 622,263 605,968 717,966
EQUITY AND LIABILITIES
Capital and Reserves
Share capital 22 1,137,459 902,559 882,559
Redeemable Cumulative Convertible Preference Shares (“RCCPS”) 23 50,583 50,583 50,583
The Group
Note
31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
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Reserves 24 (303) (282) (249)
Accumulated losses (2,170,857) (1,930,701) (1,827,238)
Equity attributable to owners of the Company (983,118) (977,841) (894,345)
Non-controlling interests 96 80 70
Capital deficiency (983,022) (977,761) (894,275)
Non-current Liabilities
Loans and borrowings 25 1,172,666 1,153,593 1,142,195
Redeemable Convertible Cumulative Preference Shares (“RCCPS”) 23 17,976 16,814 15,697
Deferred tax liabilities 17 1,442 3,190 1,371
Deferred gain 26 - - 69,216
Government grants 27 284 362 38,852
Provisions 28 4,934 5,756 6,578
Retirement benefit obligations 29 90,392 85,486 92,196
Total Non-current Liabilities 1,287,694 1,265,201 1,366,105
Current Liabilities
Trade and other payables 30 166,346 144,683 146,736
Loans and borrowings 25 140,501 161,000 88,917
Provisions 28 822 822 822
Retirement benefit obligations 29 9,879 9,879 7,284
Current tax liabilities 43 2,144 2,377
Total Current Liabilities 317,591 318,528 246,136
Total Liabilities 1,605,285 1,583,729 1,612,241
Total Equity and Liabilities 622,263 605,968 717,966
The Group
Note
31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Statements Of Financial Position
ASSETS
Non-current Assets
Property, plant and equipment 11 126,551 250,079 257,887
Investments in subsidiaries 13 6,649 6,649 6,649
Investments in associates 14 25,830 25,830 25,830
Other investment 15 140 170 170
Total Non-current Assets 159,170 282,728 290,536
Current Assets
Inventories 18 48,950 42,303 45,428
Trade and other receivables 19 182,043 70,779 69,230
Deposits and prepayments 19 24,833 2,618 4,570
Tax recoverable 907 9,277 9,177
Cash and bank balances 20 1,988 7,623 53,583
Total Current Assets 258,721 132,600 181,988
Total Assets 417,891 415,328 472,524
EQUITY AND LIABILITIES
Capital and Reserves
Share capital 22 1,137,459 902,559 882,559
Redeemable Cumulative Convertible Preference Shares (“RCCPS”) 23 50,583 50,583 50,583
Accumulated losses (2,393,268) (2,109,318) (1,989,397)
Capital deficiency (1,205,226) (1,156,176) (1,056,255)
The Company
Note
31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Statements Of Financial PositionAs Of 31 December 2012
KERETAPI TANAH MELAYU BERHAD (Incorporated in Malaysia)
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The Company
Note
31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Non-current Liabilities
Loans and borrowings 25 1,168,192 1,149,184 1,138,861
Redeemable Convertible Cumulative
Preference Shares (“RCCPS”) 23 17,976 16,814 15,697
Government grants 27 285 362 38,852
Provisions 28 4,934 5,756 6,578
Retirement benefit obligations 29 90,392 85,486 92,196
Total Non-current Liabilities 1,281,779 1,257,602 1,292,184
Current Liabilities
Trade and other payables 30 190,761 144,783 145,305
Loans and borrowings 25 139,876 158,418 83,184
Provisions 28 822 822 822
Retirement benefit obligations 29 9,879 9,879 7,284
Total Current Liabilities 341,338 313,902 236,595
Total Liabilities 1,623,117 1,571,504 1,528,779
Total Equity and Liabilities 417,891 415,328 472,524
The accompanying Notes form an integral part of the financial statements.
Statements Of Financial Position
The Group Note
Share Capital
RM’000
RCCPS - EquityRM’000
Non - distributable
Reserves - Other
ReservesRM’000
Accumulatedlosses
RM’000
Attributable to Equity Holders
of the Company
RM’000
Non-Controlling
InterestsRM’000
NetRM’000
Balance as of 1 January 2011 882,559 50,583 (249) (1,827,238) (894,345) 70 (894,275)
Total comprehensive loss for the year - - (33) (103,463) (103,496) 10 (103,486)
Issue of ordinary shares for cash 22 20,000 - - - 20,000 - 20,000
Balance as of 31 December 2011/ 1 January 2012 902,559 50,583 (282) (1,930,701) (977,841) 80 (977,761)
Total comprehensive loss for the year - - (21) (240,156) (240,177) 16 (240,161)
Issue of ordinary shares for cash 22 234,900 - - - 234,900 - 234,900
Balance as of 31 December 2012 1,137,459 50,583 (303) (2,170,857) (983,118) 96 (983,022)
Statement Of Changes In EquityFor The Year Ended 31 December 2012
KERETAPI TANAH MELAYU BERHAD (Incorporated in Malaysia)
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Balance as of 1 January 2011 882,559 50,583 (1,989,397) (1,056,255)
Total comprehensive loss for the year - - (119,921) (119,921)
Issue of ordinary shares for cash 22 20,000 - - 20,000
Balance as of 31 December 2011/ 1 January 2012 902,559 50,583 (2,109,318) (1,156,176)
Total comprehensive loss for the year - - (283,950) (283,950)
Issue of ordinary shares for cash 22 234,900 - - 234,900
Balance as of 31 December 2012 1,137,459 50,583 (2,393,268) (1,205,226)
The Company Note
Share
Capital
RM’000
RCCPS -
Equity
RM’000
Accumulated
losses
RM’000
Net
RM’000
The accompanying Notes form an integral part of the financial statements.
Statement Of Changes In Equity Statements Of Cash FlowsFor The Year Ended 31 December 2012
KERETAPI TANAH MELAYU BERHAD (Incorporated in Malaysia)
CASH FLOWS FROM OPERATING
ACTIVITIES
Loss before tax (231,993) (103,663) (275,591) (119,921)
Adjustments for:
Depreciation of property, plant and equipment 96,581 91,686 90,552 87,957
Depreciation of investment property 57 57 - -
Impairment loss on property, plant and equipment 84,643 20,600 84,643 20,600
Finance costs 29,675 19,487 29,269 18,901
Increase in liability for defined benefit plans 16,408 13,848 16,408 13,848
Allowance for doubtful debts of trade and other receivables 3,394 3,332 2,522 1,984
Property, plant and equipment written off 910 2,174 910 2,174
Provision for inventory 205 - 205 -
Amortisation of Government grants (78) (78) (78) (78)
Finance income (1,272) (2,255) (545) (1,384)
Gain on disposal of property, plant and equipment (25,892) (1,265) (578) (1,198)
Reversal of allowance of doubtful debts of trade and other receivables (4,006) (3,808) (3,327) (2,004)
Share of results of associates (35,006) (24,106) - -
Claims from the Government for uneconomic services (40,827) (28,820) (40,827) (28,820)
Dividend income:
- associated company - - (22,720) (13,773)
- subsidiaries - - (1,756) (1,109)
Impairment loss on other investment 30 - 30 -
Operating Loss Before changes in Working Capital (107,171) (12,811) (120,883) (22,823)
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
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(Increase)/Decrease in:
Trade and other receivables (7,897) (2,052) (11,837) 323
Inventories (6,852) 3,125 (6,852) 3,125
Increase/(Decrease) in:
Trade and other payables 32,807 8,271 33,979 9,802
Cash Used In Operations (89,113) (3,467) (105,593) (9,573)
Interest paid (9,620) (18,370) (9,099) (17,784)
Income tax paid (10,283) (878) - -
Retirement benefits paid (11,502) (17,963) (11,502) (17,963)
Housing loan interest paid (823) (823) (823) (823)
Claims for uneconomic services received 30,002 28,820 30,002 28,820
Net Cash Used In Operating Activities (91,339) (12,681) (97,015) (17,323)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (ii) (54,114) (111,072) (53,242) (107,051)
Proceeds from disposal of property, plant and
equipment 3,080 5,727 1,243 5,326
Interest received 1,272 2,255 545 1,384
Dividends income:
- associates 22,720 13,773 22,720 13,773
- subsidiaries - - 2,756 1,109
Net Cash Used In Investing Activities (27,042) (89,317) (25,978) (85,459)
The Group The Company
Note
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance ofordinary shares 124,900 20,000 124,900 20,000
Proceeds from short-term borrowings 10,116 73,624 10,000 75,234
Advances from subsidiaries - - 11,000 -
Repayment of short-term borrowings (30,959) - (28,542) -
Increase in deposits pledged (341) - - -
Utilisation of stimulus package from Government - (38,412) - (38,412)
Net Cash From Financing Activities 103,716 55,212 117,358 56,822
NET DECREASE IN CASH AND CASH EQUIVALENTS (14,665) (46,786) (5,635) (45,960)
Effects of foreign exchange rate changes (21) (33) - -
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 40,438 87,257 7,623 53,583
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR (i) 26,093 40,438 1,988 7,623
Statements Of Cash Flows
The Group The Company
Note
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
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Deposits place with
Licensed banks 20,894 28,319 - -
Financial institutions 350 - - -
21,244 28,319 - -
Less: Deposits pledged with licensed banks (341) - - -
20,903 28,319 - -
Cash and bank balances 5,190 12,119 1,988 7,623
26,093 40,438 1,988 7,623
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
(i) Cash and cash equivalents
Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position
amounts:
(ii) Purchase of Property, plant and equipment
Duringthefinancialyear,theGroup’sadditionsofproperty,plantandequipmentwithanaggregatecostofRM61,824,000
(2011:RM111,072,000)ofwhichRM7,185,000(2011:RMNil)werereceivedfromDevelopmentAgreementasexplainedin
Note 21 and RM525,000 (2011: RMNil) were acquired by the mean of hire-purchase.
The accompanying Notes form an integral part of the financial statements.
Statements Of Cash Flows
1. GENERAL INFORMATION
Keretapi Tanah Melayu Berhad is a public limited liability company, incorporated and domiciled in Malaysia. Save and except
for one (1) ordinary share owned by the Federal Land Commissioner, all of the equity of the Company is owned by the
Ministry of Finance (Incorporated), a body corporate established in Malaysia.
The principal activities of the Company are railway transportation operations and the provision of related railway services in
Peninsular Malaysia and Singapore. The Company operates these activities pursuant to a licence issued by the Ministry of
Transport. The principal activities of its subsidiaries are described in Note 13. There have been no significant changes in the
nature of these activities during the financial year.
The registered office and principal place of business of the Company is located at Tingkat 1, Ibu Pejabat Korporat KTMB,
Jalan Sultan Hishamuddin, 50621 Kuala Lumpur.
The financial statements of the Group and of the Company were authorised by the Board of Directors for issuance on
16 May 2013.
2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
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 provisions of the Companies Act,
1965 in Malaysia.
Adoption of Malaysian Financial Reporting Standards
The Group’s and the Company’s financial statements for the financial year ended 31 December 2012 have been prepared
in accordance with MFRSs for the first time. In the previous financial years, these financial statements were prepared in
accordance with Financial Reporting Standards (“FRSs”).
The transition to MFRSs is accounted for in accordance with MFRS 1: First-time Adoption of Malaysian Financial Reporting
Standards, with 1 January 2011 as the date of transition. The adoption of MFRSs has not affected the amounts reported on
the financial statements of the Group and of the Company as the restatement has no effect on the net results for the current
and previous financial years. There is also no effect on retained earnings. Consequently, reconciliations of its equity reported
in accordance with FRSs to its equity in accordance with MFRSs for the date of transition to MFRSs in the Group’s and the
Company’s most recent annual financial statements are not being presented.
MFRSs and IC Interpretations (“IC Ints.”) Issued but Not Yet Effective
At the date of authorisation for issue of these financial statements, the new and revised Standards and IC Interpretations
which were in issue but not yet effective and not early adopted by the Group and the Company are as listed below:
Notes To The Financial StatementsFor The Year Ended 31 December 2012
KERETAPI TANAH MELAYU BERHAD (Incorporated in Malaysia)
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MFRS 7 Financial Instruments: Disclosures [Amendments relating to Mandatory Effective Date of MFRS 9 and
Transition Disclosures (IFRS 9 issued by International Accounting Standards Board (“IASB”) in November
2009 and October 2010 respectively)]2
MFRS 7 Financial Instruments: Disclosures (Amendments relating to Disclosures - Offsetting Financial Assets and
Liabilities)1
MFRS 9 Financial Instruments (IFRS 9 issued by IASB in October 2009)3
MFRS 9 Financial Instruments (IFRS 9 issued by IASB in November 2010)3
MFRS 10 Consolidated Financial Statements1
MFRS 10 Consolidated Financial Statements (Amendments relating to Transition Guidance)1
MFRS 11 Joint Arrangements1
MFRS 11 Joint Arrangements (Amendments relating to Transition Guidance)1
MFRS 12 Disclosure of Interests in Other Entities1
MFRS 12 Disclosure of Interests in Other Entities (Amendments relating to Transition Guidance)1
MFRS 13 Fair Value Measurement1
MFRS 101 Presentation of Financial Statements (Amendments relating to Presentation of Items of Other
Comprehensive Income)4
MFRS 119 Employee Benefits (IAS 19 as amended by IASB in June 2011)1
MFRS 127 Separate Financial Statements (IAS 27 as amended by IASB in May 2011)1
MFRS128 InvestmentsinAssociatesandJointVentures(IAS28asamendedbyIASBinMay2011)1
MFRS 132 Financial Instruments: Presentation (Amendments relating to Offsetting Financial Assets and Financial
Liabilities)5
IC Int. 20 Stripping Costs in the Production Phase of a Surface Mine1
Amendments to MFRSs contained in the document entitled Annual Improvements 2009 - 2011 Cycle issued in July 20121
1 Effective immediately on issuance date of 1 March, 2012
2 Effective for annual periods beginning on or after 1 January, 2013
3 Effective for annual periods beginning on or after 1 January, 2015 instead of 1 January, 2013 immediately upon the
issuance of Amendments to MFRS 9 (IFRS 9 issued by IASB in November 2009 and October 2010 respectively) and
MFRS 7 relating to “Mandatory Effective Date of MFRS 9 and Transition Disclosures” on 1 March, 2012
4 Effective for annual periods beginning on or after 1 July, 2012
5 Effective for annual periods beginning on or after 1 January, 2014
The directors anticipate that the abovementioned Standards and IC Interpretations will be adopted in the annual financial
statements of the Group and of the Company when they become effective and that the adoption of these Standards and
IC Interpretations will have no material impact on the financial statements of the Company in the period of initial application.
A brief description of the significant new MFRSs and Amendments to MFRSs that have been issued and may applicable to
the Group and the Company is set out below:
Notes To The Financial Statements
Amendments to MFRS 7 and MFRS 132: Offsetting Financial Assets and Financial Liabilities and the related
disclosures
The amendments to MFRS 132 clarify existing application issues relating to the offset of the financial assets and financial
liabilities requirements. Specifically, the amendments clarify the meaning of “currently has a legally enforceable right of set-
off” and “simultaneous realisation and settlement”.
The amendments to MFRS 7 introduce new disclosure requirements relating to rights of offset and related arrangements for
financial instruments under an enforceable master netting agreements or similar arrangements. Both MFRS 132 and MFRS
7 require retrospective application upon adoption.
MFRS 9 and Amendments relating to Mandatory Effective Date of MFRS 9 and Transition Disclosures
MFRS 9 (IFRS 9 issued by IASB in November 2009) introduces new requirements for the classification and measurement
of financial assets. MFRS 9 (IFRS 9 issued by IASB in October 2010) includes the requirements for the classification and
measurement of financial liabilities and for derecognition.
The amendments to MFRS 9 (IFRS 9 issued by IASB in November 2009 and October 2010 respectively) (“MFRS 9”)
relating to “Mandatory Effective Date of MFRS 9 and Transition Disclosures” which became immediately effective on the
issuance date of 1 March 2012 amended the mandatory effective date of MFRS 9 to annual periods beginning on or after 1
January 2015 instead of on or after 1 January 2013, with earlier application still permitted as well as modified the relief from
restating prior periods. MFRS 7 which was also amended in tandem with the issuance of the aforementioned amendments
introduces new disclosure requirements that are either permitted or required on the basis of the entity’s date of adoption
and whether the entity chooses to restate prior periods.
Key requirements of MFRS 9 are described as follows:
(a) All recognised financial assets that are within the scope of MFRS 139 Financial Instruments: Recognition and
Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are
held within a business model whose objective is to collect the contractual cash flows, and that have contractual
cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at
amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are
measured at their fair values at the end of subsequent accounting periods. In addition, under MFRS 9, entities may
make an irrecoverable election to present subsequent changes in the fair value of equity instrument (that is not held
for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.
(b) With regard to the measurement of financial liabilities designated as at fair value through profit or loss, MFRS 9
requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit
risk of that liability, is presented in other comprehensive income, unless the recognition of the effects of changes in
the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or
loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or
loss. Previously, under FRS 139, the entire amount of the change in the fair value of the financial liability designated
as at fair value through profit or loss was presented in profit or loss.
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MFRS 10, MFRS 11, MFRS 12, MFRS 127 and MFRS 128
In November 2011, a package of five Standards on consolidation, joint arrangements, associates and disclosures was
issued,includingMFRS10,MFRS11,MFRS12,MFRS127(IAS27asamendedbyIASBinMay2011)andMFRS128
(IAS28asamendedbyIASBinMay2011).
Key requirements of these five Standards are described below.
MFRS 10 replaces the parts of MFRS 127 Consolidated and Separate Financial Statements that deal with consolidated
financial statements. IC Int. 112 Consolidation - Special Purpose Entities will be withdrawn upon effective date of MFRS 10.
Under MFRS 10, there is only one basis for consolidation, which is control. In addition, MFRS 10 includes a new definition
of control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its
involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor’s
returns. Extensive guidance has been added in MFRS 10 to deal with complex scenarios.
MFRS 11 replaces MFRS 131 Interests in Joint Ventures. MFRS 11 deals with how a joint arrangement of which two or
more parties have joint control should be classified. IC Int. 113 Jointly Controlled Entities - Non-monetary Contributions
by Venturers will be withdrawn upon the effective date of MFRS 11. Under MFRS 11, joint arrangements are classified as
joint operations or joint ventures, depending on the rights and obligations of the parties to the arrangements. In contrast,
under MFRS 131, there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly
controlled operations. In addition, joint ventures under MFRS 11 are required to be accounted for using the equity method of
accounting, whereas jointly controlled entities under MFRS 131 can be accounted for using the equity method of accounting
or proportionate consolidation.
MFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements,
associates and/or unconsolidated structured entities. In general, the disclosure requirements in MFRS 12 are more extensive
than those in the current standards.
In July 2012, the amendments to MFRS 10, MFRS 11 and MFRS 12 were issued to clarify certain transitional guidance on
the application of these MFRSs for the first time.
MFRS 13
MFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements.
The Standard defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value
measurements. The scope of MFRS 13 is broad; it applies to both financial instrument items and non-financial instrument
items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements,
except in specified circumstances. In general, the disclosure requirements in MFRS 13 are more extensive than those
required in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value
hierarchy currently required for financial instruments only under MFRS 7 Financial Instruments: Disclosures will be extended
by MFRS 13 to cover all assets and liabilities within its scope.
Notes To The Financial Statements
Amendments to MFRS 101: Presentation of Items of Other Comprehensive Income
The amendments to MFRS 101 retain the option to present profit or loss and other comprehensive income in either a single
statement or in two separate but consecutive statements. However, the amendments to MFRS 101 require additional
disclosures to be made in the other comprehensive income section such that items of other comprehensive income are
grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss; and (b) items that will be
reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive
incomeisrequiredtobeallocatedonthesamebasis–theamendmentsdonotchangetheoptiontopresentitemsofother
comprehensive income either before tax or net of tax.
The amendments also introduce new terminology for the statement of comprehensive income and income statement.
Under the amendments to MFRS 101, the “statement of comprehensive income” is renamed “statement of profit or loss
and other comprehensive income” and the “income statement” is renamed the “statement of profit or loss”.
The amendments will be applied retrospectively upon adoption and hence, the presentation of items of other comprehensive
income will be modified accordingly to reflect the changes. Other than the abovementioned presentation changes, the
application of the amendments to MFRS 101 would not result in any impact on profit or loss, other comprehensive income
and total comprehensive income.
MFRS 119 (IAS 19 as amended by IASB in June 2011)
The amendments to MFRS 119 change the accounting for defined benefit plans and termination benefits. The most
significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments
require the recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and
hence eliminate the ‘corridor approach’ permitted under the previous version of MFRS 119 and accelerate the recognition
of past service costs. The amendments require all actuarial gains and losses to be recognised immediately through other
comprehensive income in order for the net pension asset or liability recognised in the consolidated statement of financial
position to reflect the full value of the plan deficit or surplus. Further, the interest cost and expected return on plan assets
used in the previous version of MFRS 119 are replaced with a “net-interest” amount, which is calculated by applying the
discount rate to the net defined benefit liability or asset.
The amendments to MFRS 119 require retrospective application.
Amendments to MFRSs: Annual Improvements 2009 - 2011 Cycle
The Annual Improvements 2009 – 2011 Cycle include a number of amendments to various MFRSs. The amendments to
MFRSs include:
• AmendmentstoMFRS101Presentation of Financial Statements
• AmendmentstoMFRS116Property, Plant and equipment; and
• AmendmentstoMFRS132Financial Instruments: Presentation
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Amendments to MFRS 101
MFRS 101 requires an entity that changes accounting policies retrospectively, or makes a retrospective restatement of
reclassification to present a statement of financial position as at the beginning of the preceding period (third statement of
financial position). The amendments to MFRS 101 clarify that an equity is required to present a third statement of financial
position only when the retrospective application, restatement or reclassification has a material effect on the information
in the third statement of financial position and that related notes are not required to accompany the third statement of
financial position. Hence, the adoption of the amendments when it becomes effective will affect the presentation of the third
statement of financial position and related notes in the future periods.
Amendments to MFRS 116
The amendments to MFRS 116 clarify that spare parts, stand-by equipment and servicing equipment should be classified
as property, plant and equipment when they meet the definition of property, plant and equipment in MFRS 116 and as
inventory otherwise.
Amendments to MFRS 132
The amendments to MFRS 132 clarify that income tax relating to distribution to holders of an equity instrument and to
transaction costs of an equity transaction should be accounted for in accordance with MFRS 112 Income Taxes.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Company have been prepared under the historical cost convention. Historical cost is
generally based on the fair value of the consideration involved in exchange for assets and liabilities.
Asof31December2012,theGroupandtheCompanyhaveacapitaldeficiencyofRM983,022,000andRM1,205,226,000
respectively as a result of losses incurred in the current and prior financial years. The financial statements of the Group
and of the Company have been prepared on the basis of accounting principles applicable to a going-concern which
presumes that the Group and the Company will continue to receive financial support from its holding company, Minister of
Finance (Incorporated) to enable the Group and the Company to operate as a going-concern in the foreseeable future. The
appropriateness of the application of going-concern as a basis of preparation of the financial statements of the Group and
of the Company is dependent on the continued financial support from Minister of Finance (Incorporated).
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end
of financial reporting period. Control is achieved where the Company has the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed during the year are included in the consolidated statement of comprehensive
income from the effective date of acquisition and up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into
line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interests of non-
controlling shareholders may be initially measured either at fair value or at the non-controlling interests’ proportionate share
of the fair value of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-
by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those
interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive
income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Changes in the Group’s interests in subsidiaries that do not result in a loss of control 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. Any difference between the amount by which the non-controlling interests are adjusted
at the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the
Company.
Where the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i)
the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous
carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts
previously recognised in other comprehensive income in relation to the subsidiary are accounted for in the same manner as
would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under
MFRS 139 Financial Instruments : Recognition and Measurement or, when applicable, the cost on initial recognition of an
investment in an associate or jointly controlled entity.
Business Combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each
acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or
assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are
recognised in profit or loss as incurred.
Where applicable, the consideration for the acquisition includes any asset of liability resulting from a contingent consideration
arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the
cost of acquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair value of
contingent consideration classified as an asset or liability are accounted for in accordance with relevant MFRSs. Changes
in the fair value of contingent consideration classified as equity are not recognised.
Notes To The Financial Statements
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Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are
remeasured to fair value at the acquisition date and the resulting gain or loss, if any, is recognised in profit or loss. Amounts
arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive
income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under MFRS 3
(revised) are recognised at their fair value at the acquisition date, except that:
• deferredtaxassetsorliabilitiesandliabilitiesorassetsrelatedtoemployeebenefitarrangementsarerecognisedand
measured in accordance with MFRS 112 Income Taxes and MFRS 119 Employee Benefits respectively;
• liabilitiesorequityinstrumentsrelatedtothereplacementbytheGroupofanacquiree’sshare-basedpaymentawards
are measured in accordance with MFRS 2 Share-based Payment; and
• assets(ordisposalgroups)thatareclassifiedasheldforsaleinaccordancewithMFRS5Non-currentAssetsHeldfor
Sale and Discontinued Operations are measured in accordance with that Standard.
If the initial accounting for a business combination is incomplete by end of the reporting period in which the combination
occurs, the Group reports provisional amounts for the items of which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period, or additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have
affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete information
about facts and circumstances that existed as of the acquisition date, and is subject to a maximum of one year.
Investments in Subsidiaries
Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain
benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible
are considered when assessing whether the Group has such power over another entity.
In the Company’s separate financial statements, investments in subsidiaries are stated at cost less accumulated impairment
losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is
included in profit or loss.
Investment in Associates
Associates are entities in which the Group has significant influence and that is neither a subsidiary nor an interest in a joint
venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but
not in control or joint control over those policies.
Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting.
Under the equity method, the investment in associates is carried in the consolidated statement of financial position at cost
adjusted for post-acquisition changes in the Group’s share of net assets of the associates. The Group’s share of the net
profit or loss of the associates is recognised in the consolidated statement of comprehensive income.
Where there has been a change recognised directly in the equity of the associates, the Group recognises its share of such
changes. In applying the equity method, unrealised gains and losses on transactions between the Group and the associates
are eliminated to the extent of the Group’s interest in the associates. After application of the equity method, the Group
determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment
in the associates. The associates are equity accounted for from the date the Group obtains significant influence until the
date the Group ceases to have significant influence over the associates.
Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. Any excess of
the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost
of the investment is recognised immediately in profit or loss.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any long-term
interests that, in substance, form part of the Group’s net investment in the associates, the Group does not recognise further
losses, unless it has incurred obligations or made payments on behalf of the associate.
The most recent available annual financial statements of the associates are used by the Group in applying the equity
method. Where the dates of the financial statements used are not coterminous with those of the Group, the share of
results is arrived at from the last annual financial statements available and management financial statements to the end of
the accounting period. Uniform accounting policies are adopted for like transactions and events in similar circumstances.
In the Company’s separate financial statements, investments in associates are stated at cost less accumulated impairment
losses.
On disposal of such investments, the difference between net disposal proceeds and their carrying amount is included in
profit or loss.
Goodwill on Consolidation
Goodwill arising on the acquisition of subsidiary represents the excess of cost of the acquisition over the Group’s interest in
the fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities, and is initially recognised as an asset at
cost and subsequently measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (“CGU”) expected
to benefit from the synergies of the combination. CGUs to which goodwill has been allocated are tested for impairment
annually, or more frequently when there is an indication that the unit may be impaired.
Notes To The Financial Statements
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If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis
of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent
period.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the gain or loss on
disposal.
Foreign Currencies
(i) Functional and Presentation Currency
The individual 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.
(ii) 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 the end of each reporting period, monetary items denominated in foreign
currencies are translated at the rates prevailing at the end of the reporting period. Non-monetary items carried at
fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair
value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are
not retranslated.
Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are
included in profit or loss for the period except for exchange differences arising on monetary items that form part of
the Group’s net investment in foreign operations. Exchange differences arising on monetary items that form part of
the Group’s net investment in foreign operations, where that monetary item is denominated in either the functional
currency of the reporting entity or the foreign operations, 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 profit or loss.
Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations,
where that monetary item is denominated in a currency other than the functional currency of either the reporting
entity or the foreign operations, are recognised in profit or loss for the period. Exchange differences arising on
monetary items that form part of the Company’s net investment in foreign operations, regardless of the currency of
the monetary item, are recognised in profit or loss in the Company’s 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 profit or
loss 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 other comprehensive income. Exchange differences arising from such
non-monetary items are also recognised directly in other comprehensive income.
(iii) Foreign Operations
The results and financial position of foreign operations that have a functional currency different from the presentation
currency (Ringgit Malaysia “RM”) of the consolidated financial statements are translated into RM as follows:
- Assets and liabilities for each statement of financial position presented are translated at the closing rate
prevailing at the end of the reporting period;
- Income and expenses for each statement of comprehensive income are translated at average exchange
rates for the year, which approximates the exchange rates at the dates of the transactions; and
- Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January,
2006 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 end of the reporting period. Goodwill and
fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 January, 2006 are
deemed to be assets and liabilities of the Company and are recorded in RM at the rates prevailing at the date
of acquisition.
Financial Instruments
(i) Initial recognition and measurement
A financial asset or financial liability is recognised in the statement of financial position when, and only when, the
Group becomes a party to the contractual provisions of the instrument.
A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair
value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial
instrument.
(ii) Financial instrument categories and subsequent measurement
The Group categorises financial instruments as follows:
Financial assets
Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or
loss’ (FVTPL), ‘held to maturity’ investments, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’.
The classification depends on the nature and purpose of the financial assets and is determined at the time of initial
recognition.
Notes To The Financial Statements
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Effective Interest Method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash receipts through the expected life of the financial assets, or (where appropriate) a shorter period, to the net
carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified
as at FVTPL.
(i) Financial Assets At FVTPL
Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated
as at FVTPL.
A financial asset is classified as held for trading if:
• ithasbeenacquiredprincipallyforthepurposeofsellingitinthenearterm;or
• oninitialrecognitionitispartofaportfolioofidentifiedfinancialinstrumentsthattheGroupmanages
together and has a recent actual pattern of short-term profit-taking; or
• itisaderivativethatisnotdesignatedandeffectiveasahedginginstrument.
A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial
recognition if:
• suchdesignationeliminatesorsignificantlyreducesmeasurementorrecognitioninconsistencythat
would otherwise arise; or
• thefinancialasset formspartofagroupoffinancialassetsorfinancial liabilitiesorboth,which is
managed and its performance is evaluated on a fair value basis, in accordance with the Group’s
documented risk management or investment strategies, and information about the grouping is
provided internally on that basis; or
• itformspartofacontractcontainingoneormoreembeddedderivatives,andMFRS139Financial
Instruments: Recognition and Measurement permits the entire combined contract (asset or liability)
to be designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement
recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or
interest earned on the financial asset and is included in the “other operating income and expenses” line item
in the statements of comprehensive income.
(ii) Held-to-maturity Investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and
fixed maturity dates that the Group has the positive intent and ability to hold to maturity. Subsequent to initial
recognition, held-to-maturity investments are measured at amortised cost using the effective interest method
less any impairment, with revenue recognised on an effective yield basis.
(iii) AFS Financial Assets
AFS financial assets are non-derivatives that are either designated as available-for-sale or are not classified
as loans and receivables, held-to-maturity investment or financial assets at FVTPL. All AFS assets are
measured at fair value at the end of the reporting period. Gains and losses arising from changes in fair value
are recognised in other comprehensive income and accumulated in the investments revaluation reserve,
with the exception of impairment losses, interest calculated using the effective interest method, and foreign
exchange gains and losses on monetary assets, which are recognised in profit or loss. Where the investment
is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the
investment revaluation reserve is reclassified to profit or loss.
AFS equity investments that do not have a quoted market price in an active market and whose fair value
cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such
unquoted equity investments are measured at cost less any identified impairment losses at the end of the
reporting period.
Dividends on AFS equity instruments are recognised in profit or loss when the Group’s right to receive the
dividends is established.
The fair value of AFS monetary assets denominated in that foreign currency is determined in that foreign
currency and translated at the spot rate at the end of the reporting period. The foreign exchange gains and
losses that are recognised in profit or loss are determined based on the amortised cost of the monetary
asset. Other foreign exchange gains and losses are recognised in other comprehensive income.
(iv) Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Loans and receivables are measured at amortised cost using the effective
interest method, less any impairment. Interest income is recognised by applying the effective interest rate,
except for short-term receivables when the recognition of interest would be immaterial.
Financial liabilities
Financial liabilities are initially measured at fair value, net of transaction costs. It is subsequently measured at
amortised cost using the effective interest method, with the interest expense recognised on an effective yield basis.
Notes To The Financial Statements
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The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period to the
net carrying amount on initial recognition.
(i) Financial Liabilities at FVTPL
Financial liabilities are classified as FVTPL when the financial liability is either held for trading or it is designated
as at FVTPL.
A financial liability is classified as held for trading if:
• ithasbeenacquiredprincipallyforthepurposeofrepurchasinginthenearterm;or
• oninitialrecognitionitispartofaportfolioofidentifiedfinancialinstrumentsthattheGroupmanages
together and has a recent actual pattern of short-term profit-taking; or
• itisaderivativethatisnotdesignatedandeffectiveasahedginginstrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial
recognition if:
• suchdesignationeliminatesorsignificantreducesameasurementorrecognitioninconsistencythat
would otherwise arise; or
• thefinancial liabilityformspartofagroupoffinancialassetsorfinancial liabilitiesorboth,whichis
managed and its performance is evaluated on a fair value basis, in accordance with the Group’s
documented risk management or investment strategy, and information about the grouping is provided
internally on that basis; or
• it formspartofacontractcontainingoneormoreembeddedderivatives,andFRS139Financial
Instruments: Recognition and Measurement permits the entire combined contract (asset or liability)
to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement
recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest
paid on the financial liability and is included in the ‘other gains and losses’ line item in the statements of
comprehensive income.
(ii) Other Financial Liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method,
with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments through the expected life of the financial liability, or (where appropriate) a
shorter period, to the net carrying amount on initial recognition.
Derecognition
A financial asset or part of it is derecognised when, and only when, the contractual rights to the cash flows
from the financial asset expire or the financial asset is transferred to another party without retaining control or
substantially all risks and rewards of the assets. On derecognition of a financial asset, the difference between
the carrying amount and the sum of the consideration received (including any new asset obtained less any
new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in
profit or loss.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract
is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the
carrying amount of the financial liability extinguished or transferred to another party and the consideration
paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
Property, Plant and Equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated
impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly
attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing
the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost
of materials and direct labour.
For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs.
Cost also may include transfers from other comprehensive income of any gain or loss on qualifying cash flow
hedges of foreign currency purchases of property, plant and equipment. Purchased software that is integral to the
functionality of the related equipment is capitalised as part of that equipment.
The cost of property, plant and equipment recognised as a result of a business combination is based on fair value
at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged
between knowledgeable willing parties in an arm’s length transaction after proper marketing wherein the parties had
each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment
is based on the quoted market prices for similar items when available and replacement cost when appropriate.
Notes To The Financial Statements
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When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for
as separate items (major components) of property, plant and equipment.
The gains or losses on disposal of an item of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within
“other income” or “other expenses” respectively in profit or loss.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the
item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost
can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day
servicing of property, plant and equipment are recognised in the profit or loss as incurred.
(iii) Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted
for cost, less its residual value.
Depreciation is recognised in the profit or loss on a straight-line basis over the estimated useful lives of each part of
an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold
land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are
ready for their intended use.
The estimated useful lives for the current and comparative periods are as follows:
Buildings 50 years
Plantandmachinery 8years
Container yards 20 years
Infrastructure 10 years
Rolling stocks 20 - 30 years
Coaches 20 years
Railandroadvehicles 8years
Computer 5 years
Office equipment 5 years
Furniture and fittings 5 years
Renovation 10 years
Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate at end of the
financial year.
Assets held for sale
Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
Leases
(i) Finance lease
Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present
value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to
the lessor is included in the statement of finance position as a finance lease obligation.
Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve
a constant rate of interest on the remaining balance of the liabilities. Finance charges are charged directly against
income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance
with the Group’s general policy on borrowing costs.
(ii) Operating lease
Leases, where the Group does not assume substantially all the risks and rewards of the ownership are classified as
operating leases and, the leased assets are not recognised on the Group’s statement of financial position.
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the
lease unless another systematic basis is more representative of the time pattern in which economic benefits from the
leased asset are consumed. Lease incentives received are recognised in profit or loss as an integral part of the total
lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in
which they are incurred.
Inventories
Inventories comprising of spare parts, fuels and other consumables which are not intended for resale, are stated at original
purchase price plus costs incurred in bringing them to their existing location and condition less any allowance for obsolete
inventories. Allowance is made for obsolete, slow-moving and defective inventories.
Statements of Cash Flows
The Group and the Company adopt the indirect method in the preparation of the statements of cash flows.
Notes To The Financial Statements
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Cash and cash equivalents, which comprise deposits with licensed banks and other financial institutions, cash on hand
and at bank, are short-term, highly liquid investments and are readily convertible to cash with insignificant risks of changes
in value.
Impairment
(i) Financial assets
All financial assets (except for investments in subsidiaries and associates) are assessed at each reporting date
whether there is any objective evidence of impairment as a result of one or more events having an impact on the
estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not
recognised. For an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective
evidence of impairment.
An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the
difference between the asset’s carrying amount and the present value of estimated future cash flows discounted
at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an
allowance account.
An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured
as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the
asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an
available-for-sale financial asset has been recognised in the other comprehensive income, the cumulative loss in
other comprehensive income is reclassified from equity to profit or loss.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and
is measured as the difference between the asset’s carrying amount and the present value of estimated future cash
flows discounted at the current market rate of return for a similar financial asset.
Impairment losses recognised in profit or loss for an investment in an equity instrument is not reversed through profit
or loss.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related
to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to
the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the
impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised
in profit or loss.
(ii) Other assets
The carrying amounts of other assets (except for inventories, deferred tax asset and assets arising from employee
benefits) are reviewed at the end of each reporting period to determine whether there is any indication of impairment.
If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, and intangible assets
that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each period
at the same time.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates
cash inflows from continuing use that are largely independent of the cash inflows of other assets (known as cash-
generating unit). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated
to a cash-generating unit or a group of cash-generating units that are expected to benefit from the synergies of the
combination.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less
costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its
estimated recoverable amount.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit or the group
of cash-generating units and then to reduce the carrying amount of the other assets in the cash-generating unit (or
a group of cash-generating units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised
in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine
the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are
credited to profit or loss in the financial year in which the reversals are recognised.
Equity instruments
Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.
(i) Issue expenses
Costs directly attributable to issue of instruments classified as equity are recognised as a deduction from equity.
(ii) Preference share capital
Preference share capital is classified as equity if it is non-redeemable, or is redeemable but only at the Group’s
option, and any dividends are discretionary. Dividends thereon are recognised as distributions within equity.
Notes To The Financial Statements
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Preference share capital is classified as financial liability if it is redeemable on a specific date or at the option of the
equity holders, or if dividend payments are not discretionary. Dividends thereon are recognised as interest expense
in profit or loss as accrued.
Employee Benefits
(i) Short term employee benefits
Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are
measured on an undiscounted basis and are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the
Group and the Company has a present legal or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.
(ii) Defined contribution plan
The Group’s contributions to statutory pension funds are charged to profit or loss in the year to which they relate.
Once the contributions have been paid, the Group has no further payment obligations.
(iii) Defined benefit plans
The Group’s net obligation in respect of defined benefit retirement plans is calculated separately for each plan by
estimating the amount of future benefit that employees have earned in return for their service in the current and
prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and
the fair value of any plan assets are deducted. The discount rate is the yield at the end of the reporting period on
high quality corporate bonds that have maturity dates approximating the terms of the Group’s obligations and that
are denominated in the same currency in which the benefits are expected to be paid. The calculation is performed
annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the
Group, the recognised asset is limited to the net total of any unrecognised past service costs and the present value
of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to
the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding
requirements that apply to any plan in the Group. An economic benefit is available to the Group if it is realisable
during the life of the plan, or any settlement of the plan liabilities.
When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees
is recognised in profit or loss on a straight-line basis over the average period until the benefits become vested. To
the extent that the benefits vest immediately, the expense is recognised immediately in profit or loss.
The Group recognises all actuarial gains and losses arising from defined benefit plans in other comprehensive
income and all expenses related to defined benefit plans in personnel expenses in profit or loss.
The Group recognises gains and losses on the curtailment or settlement of a defined benefit plan when the
curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting change in the fair value of
plan assets, change in the present value of defined benefit obligation and any related actuarial gains and losses and
past service cost that had not previously been recognised.
(iv) Termination benefits
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic
possibility of withdrawal, to a formal detailed plan to terminate employment before the normal retirement date.
Termination benefits for voluntary redundancies are recognised as expenses if the Group has made an offer
encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances
can be estimated reliably. If benefits are payable more than 12 months after the reporting period, then they are
discounted to their present value.
Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions
are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
Contingent liabilities
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably,
the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible
obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are
also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
Revenue and other income
(i) Services
Revenue from services rendered is recognised in profit and loss net of discounts as and when the services are
performed. If it is probable that discounts will be given and the amount can be measured reliably, then the discount
is recognised as a reduction of revenue.
(ii) Claims from the Government for uneconomic services
Claims for uneconomic services are recognised on an accrual basis and is based on an annual budget submitted
to the Government of Malaysia.
Notes To The Financial Statements
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(iii) Rental income
Rental income from property is recognised in profit or loss on a straight-line basis over the term of the lease. Lease
incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Rental
income from subleased property is recognised as other income.
(iv) Interest income
Interest income is recognised as it accrues using the effective interest method in profit or loss.
(v) Dividend income
Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive
payment is established, which in the case of quoted securities is the ex-dividend date.
(vi) Management fee
Management fees are recognised in profit or loss when management services are rendered.
(vii) Government grants
Government grants that compensate the Group for the cost of an asset are recognised initially as deferred income
at fair value when there is reasonable assurance that they will be received and that the Group will comply with the
conditions associated with the grant and are then recognised in profit or loss as other income on a systematic basis
over the useful life of the asset.
Grants that compensate the Group for expenses incurred are recognised in profit or loss as other income on a
systematic basis in the same periods in which the expenses are recognised.
Borrowing costs
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are
recognised in profit or loss using the effective interest method.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the
cost of those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset
is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended
use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities
necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for capitalisation.
Income Tax
Income tax comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that
it relates to a business combination or items recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted
by the end of the reporting period, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of
assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the initial
recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor
taxable profit nor loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences
when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and
they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they
intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which
the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
A tax incentive that is not a tax base of an asset is recognised as a reduction of tax expense in profit or loss as and when it
is granted and claimed. Any unutilised portion of the tax incentive is recognised as a deferred tax asset to the extent that it
is probable that future taxable profits will be available against which the unutilised tax incentive can be utilised.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
(i) Critical judgments in applying the Company’s accounting policies
In the process of applying the Company’s accounting policies, which are described in Note 3, management is of the
opinion that there are no instances of application of judgement which are expected to have a significant effect on the
amounts recognised in the financial statements.
Notes To The Financial Statements
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(ii) Key sources of estimation uncertainty
Management believes that there are no key assumptions made concerning the future, and other key sources of
estimation uncertainty at the end of each reporting period, that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial year other than as follows:
Impairment of property, plant and equipment
The Group has assessed, based on certain impairment indications, that several of its assets may be impaired or
impairment in previous financial years may be reversible. The recoverable amounts of the assets were determined
based on value-in-use calculations. Based on these calculations, an impairment loss of RM84,643,000 were
recognised for the financial year ended 31 December 2012 as shown in Note 11.
Allowance for doubtful debts
Allowance for doubtful debts is made based on the evaluation of collectability and aging analysis of accounts and
on management’s estimate. A considerable amount of judgement is required in assessing the ultimate realisation
of these receivables, including the creditworthiness and the past collection history of each customer. If the financial
conditions of the customers with which the Group deals were to deteriorate, resulting in an impairment of their ability
to make payments, additional allowance may be required.
5. REVENUE
Freight and haulage services 198,945 192,913 127,383 125,186
Passenger services 81,204 91,781 81,204 91,781
Commuter services 79,309 82,824 79,309 82,824
Electric train services 31,886 23,939 31,886 23,939
Parcel and mail services 22,500 20,686 379 10
Claims from the Government for uneconomic services 40,827 28,820 40,827 28,820
454,671 440,963 360,988 352,560
Interest expense of financial liabilities that are not at fair value through profit or loss:
- Term loans 19,008 10,324 19,008 10,324
- Bank borrowings 9,505 6,371 9,402 6,019
- Al Bai Bithaman Ajil financing 177 234 - -
- RCCPS 570 570 570 570
- Others 415 324 289 324
29,675 17,823 29,269 17,237
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
6. FINANCE COSTS
Notes To The Financial Statements
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7. LOSS BEFORE TAX
Loss before tax is arrived at after charging (crediting)/charging :
Depreciation of property, plant and equipment (Note 11) 96,581 91,686 90,552 87,957
Impairment loss on property, plant and equipment
(Note 11) 84,643 20,600 84,643 20,600
Lease rental of locomotives 19,809 20,224 19,809 20,224
Allowance for doubtful debts of trade and other
receivables 3,394 3,332 2,522 1,984
Property, plant and equipment written off 910 2,174 910 2,174
Rental of premises 793 31 163 31
Hire of plant and equipment 411 6,213 411 460
Auditor’s remuneration 364 421 240 242
Director’s fees 100 76 96 74
Depreciation of investment properties (Note 12) 57 57 - -
Impairment loss on other investment 30 - 30 -
Provision for inventory 205 - 205 -
Net unrealised gain on foreign exchange (33) (33) - -
Reversal of provision of bonus (64) - - -
Amortisation of Government grant (78) (78) (78) (78)
Finance income
- loan stock (490) (490) (490) (490)
- fixed deposits (752) (1,732) (17) (861)
- staff loans (30) (33) (30) (33)
Hiring of machines (1,807) (1,228) (1,807) (1,228)
Gain on disposal of property, plant and equipment * (25,892) (1,265) (578) (1,198)
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
* Included in this income is recognition of sale of land by KTMB (Prai) Sdn Bhd, a subsidiary of Keretapi Tanah Melayu Berhad
“KTMB” to Prima Prai Sdn Bhd, based on developmental agreement signed on 15 September 1995. The development
projectwasconcludedandfullsettlementhasbeenmadeon28March2011.DetailofthearrangementexplainedinNote
21.
** Included in rental income from third parties is income from property rental that was derecognised in financial year 2011
amountingtoRM20,094,989duetouncertaintyintheownershipofthesaidincome.
In 2011, the Auditor General has audited Railway Assets Corporation “RAC” financial statements and in their opinion that
RAC is the rightful owner of the land and building. RAC was established in 1992 under Railway Act 1991 with the main
purpose of taking over all assets and liabilities of KTMB.
Due to this, there is no recognition of income from property rental in KTMB’s financial statements for year ended
31 December 2011.
In 2012, a decision was reached between RAC and KTMB whereby KTMB able to recognise the income from property
rental up to agreed cut-off date and thereafter the management of rental income from properties will be managed by RAC.
Reversal of allowance for doubtful debts of trade and
other receivables (4,006) (3,808) (3,327) (2,004)
Rental income from third parties** (38,056) (4,174) (37,946) (1,737)
Claims from the Government for uneconomic services (40,827) (28,820) (40,827) (28,820)
Dividend income
- associates - - (22,720) (13,773)
- subsidiaries - - (1,756) (1,109)
Management fees from subsidiaries - - (288) (288)
Notes To The Financial Statements
(Continued)
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8. EMPLOYEE BENEFITS
Wages and salaries 132,409 129,568 119,295 115,224
Bonus 2,149 1,963 - -
Incentives 12,022 12,697 - -
Director’s remuneration:
Directors of the Company
- salaries 487 490 487 490
- other emoluments 239 94 239 94
Directors of subsidiaries
- salaries 18 18 - -
- other emoluments 2 6 - -
Employees Provident Funds 19,195 17,702 17,403 15,888
Increase in liability for defined benefit plan (Note 29) 16,408 13,848 16,408 13,848
Provision for housing loan interest 26 42 26 42
Other benefits 80,427 65,194 76,808 63,829
263,382 241,622 230,666 209,415
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
The Government of Malaysia issued a directive to all corporatised entities that with effect from July 1994, the difference
between the commercial and subsidised rates of interest pertaining to staff housing loans, had to be settled by the
corporatisedentities concerned. Theoutstandingclaimsagainst theCompanyas referred to inNote28amounted to
RM5,756,000(2011:RM6,578,000).
2012 Remuneration received from the Group
The GroupSalary
RM’000
Fees
RM’000
Ex- Gratia
RM’000
Other
Emoluments
RM’000
Benefits -
in - kind
RM’000
Total
RM’000
Executive Directors
Datuk Elias bin Kadir 319 - 13 63 24 419
Dr Aminuddin bin Adnan (resigned on 30.04.2012) 168 - 21 142 - 331
Ch’ng Seong Keng 18 - - 2 - 20
505 - 34 207 24 770
Non-Executive Directors
Dato’ Sri’ Ir. Mohd Zin bin Mohamed - 96 - 63 36 195
Selvarajoo a/l Manikam - 9 - 25 - 34
Dato’ Sri Zakaria bin Bahari - 9 - 34 - 43
Rosli bin Abdullah - 9 - 38 - 47
Harun bin Johari - 9 - 16 - 25
Ruhaizah binti Mohamed Rashid - 1 - 24 - 25
Sr. Ahmad Zainuddin bin Jamaluddin - - - 31 - 31
Norazura binti Tadzim - 5 - 34 - 39
Datuk Kamaruzaman bin Mohd Noor - 7 - 37 - 44
Jamela binti Mohd Syed (resigned on 25.02.2012) - 9 - 1 - 10
9. KEY MANAGEMENT PERSONNEL COMPENSATION
Notes To The Financial Statements
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2012 Remuneration received from the Group
The GroupSalary
RM’000
Fees
RM’000
Ex- Gratia
RM’000
Other
Emoluments
RM’000
Benefits -
in - kind
RM’000
Total
RM’000
Abd Rahim bin Daud (resigned on 02.03.2011) - 2 - - - 2
Nik Roslini binti Raja Ismail (resigned on 30.06.2011) - 5 - - - 5
Datuk Elias bin Kadir (resigned on 30.06.2011) - 5 - - - 5
- 166 - 303 36 505
Total Directors’ Remuneration 505 166 34 510 60 1,275
Other key management personnel:
Short-term employee benefits 3,317 - 399 306 - 4,022
Employee Provident Funds - - - 408 - 408
3,317 - 399 714 - 4,430
Other key management personnel comprises persons other than the Directors of Group entities, having authority and
responsibility for planning, directing and controlling the activities of the entity either directly or indirectly.
2012 Remuneration received from the Company
The CompanySalary
RM’000
Fees
RM’000
Ex- Gratia
RM’000
Other
Emoluments
RM’000
Benefits -
in - kind
RM’000
Total
RM’000
Notes To The Financial Statements
Executive Directors
Datuk Elias bin Kadir 319 - 13 63 24 419
Dr Aminuddin bin Adnan (resigned on 30.04.2012) 168 - 21 142 - 331
487 - 34 205 24 750
Non-Executive Directors
Dato’ Sri’ Ir. Mohd Zin bin Mohamed - 96 - 58 36 190
Selvarajoo a/l Manikam - 9 - 25 - 34
Dato’ Sri Zakaria bin Bahari - 9 - 31 - 40
Rosli bin Abdullah - 9 - 38 - 47
Harun bin Johari - 9 - 16 - 25
Ruhaizah binti Mohamed Rashid - 1 - 24 - 25
Sr. Ahmad Zainuddin bin Jamaluddin - - - 26 - 26
Norazura binti Tadzim - 5 - 34 - 39
Datuk Kamaruzaman bin Mohd Noor - 7 - 37 - 44
Jamela binti Mohd Syed (resigned on 25.02.2012) - 9 - 1 - 10
96K
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1297
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Remuneration received from the Company
Salary
RM’000
Fees
RM’000
Ex- Gratia
RM’000
Other
Emoluments
RM’000
Benefits -
in - kind
RM’000
Total
RM’000
Abd Rahim bin Daud (resigned on 02.03.2011) - 2 - - - 2
Nik Roslini binti Raja Ismail (resigned on 30.06.2011) - 5 - - - 5
Datuk Elias bin Kadir (resigned on 30.06.2011) - 5 - - - 5
- 166 - 290 36 492
Total Directors’ Remuneration 487 166 34 495 60 1,242
Other key management personnel:
Short-term employee benefits 2,866 - 234 282 - 3,382
Employee Provident Funds - - - 350 - 350
2,866 - 234 632 - 3,732
Other key management personnel comprises persons other than the Directors of Group entities, having authority and
responsibility for planning, directing and controlling the activities of the entity either directly or indirectly.
2011 Remuneration received from the Group
The GroupSalary
RM’000
Fees
RM’000
Ex- Gratia
RM’000
Other
Emoluments
RM’000
Benefits -
in - kind
RM’000
Total
RM’000
Notes To The Financial Statements
Executive Directors
Dr Aminuddin bin Adnan 490 - - 94 12 596
Ch’ng Seong Keng 18 - - 6 - 24
508 - - 100 12 620
Non-Executive Directors
Dato’ Sri’ Ir. Mohd Zin bin Mohamed - 60 - 14 19 93
Selvarajoo a/l Manikam - 9 - 7 - 16
Dato’ Sri Zakaria bin Bahari - 8 - 11 - 19
Rosli bin Abdullah - 4 - 12 - 16
Harun bin Johari - 4 - 9 - 13
Puan Sri Dato’ Aida Boey binti Abdullah - 4 - - - 4
Ruhaizah binti Mohamed Rashid - - - 1 - 1
Norazura binti Tadzim - - - 6 - 6
Dato’ Othman bin Abd Razak - 1 - - - 1
Dato’ Mani Usilappan - 1 - - - 1
Datuk Kamaruzaman bin Mohd Noor - - - 6 - 6
Dr Kader bin Sultan Md Ismail - 4 - - - 4
Jamela binti Mohd Syed - 8 - 8 - 16
Datuk Elias bin Kadir (resigned on 30.06.2011) - 4 - 5 - 9
98K
ER
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1299
KE
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Remuneration received from the Group
Salary
RM’000
Fees
RM’000
Ex- Gratia
RM’000
Other
Emoluments
RM’000
Benefits -
in - kind
RM’000
Total
RM’000
Abd Rahim bin Daud (resigned on 02.03.2011) - 9 - - - 9
Nik Roslini binti Raja Ismail (resigned on 30.06.2011) - 9 - 5 - 14
- 125 - 84 19 228
Total Directors’ Remuneration 508 125 - 184 31 848
Other key management personnel:
Short-term employee benefits 3,357 - - 204 - 3,561
Employee Provident Funds - - - 456 - 456
3,357 - - 660 - 4,017
Other key management personnel comprises persons other than the Directors of Group entities, having authority and
responsibility for planning, directing and controlling the activities of the entity either directly or indirectly.
2011 Remuneration received from the Company
The CompanySalary
RM’000
Fees
RM’000
Ex- Gratia
RM’000
Other
Emoluments
RM’000
Benefits -
in - kind
RM’000
Total
RM’000
Notes To The Financial Statements
Executive Directors
Dr Aminuddin bin Adnan 490 - - 94 12 596
490 - - 94 12 596
Non-Executive Directors
Dato’ Sri’ Ir. Mohd Zin bin Mohamed - 60 - 13 19 92
Selvarajoo a/l Manikam - 9 - 7 - 16
Dato’ Sri Zakaria bin Bahari - 8 - 8 - 16
Rosli bin Abdullah - 4 - 12 - 16
Harun bin Johari - 4 - 9 - 13
Puan Sri Dato’ Aida Boey binti Abdullah - 4 - - - 4
Ruhaizah binti Mohamed Rashid - - - 1 - 1
Norazura binti Tadzim - - - 6 - 6
Dato’ Othman bin Abd Razak - 1 - - - 1
Dato’ Mani Usilappan - 1 - - - 1
Datuk Kamaruzaman bin Mohd Noor - - - 6 - 6
Dr Kader bin Sultan Md Ismail - 4 - - - 4
Jamela binti Mohd Syed - 8 - 8 - 16
Datuk Elias bin Kadir (resigned on 30.06.2011) - 4 - 5 - 9
100
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2012
101K
ER
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PI TA
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ELA
YU
BE
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AD
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NU
AL R
EP
OR
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Remuneration received from the Company
Salary
RM’000
Fees
RM’000
Ex- Gratia
RM’000
Other
Emoluments
RM’000
Benefits -
in - kind
RM’000
Total
RM’000
Abd Rahim bin Daud (resigned on 02.03.2011) - 9 - - - 9
Nik Roslini binti Raja Ismail (resigned on 30.06.2011) - 9 - 5 - 14
- 125 - 80 19 224
Total Directors’ Remuneration 490 125 - 174 31 820
Other key management personnel:
Short-term employee benefits 3,060 - - 204 - 3,264
Employee Provident Funds - - - 395 - 395
3,060 - - 599 - 3,659
Other key management personnel comprises persons other than the Directors of Group entities, having authority and
responsibility for planning, directing and controlling the activities of the entity either directly or indirectly.
Notes To The Financial Statements
10. INCOME TAX EXPENSE/(CREDIT)
Major components of income tax expense/(credit) include:
Estimated tax payable:
Current year 552 2,391 - -
Under/(Over)provision in prior years 6,236 (1,811) 8,359 -
6,788 580 8,359 -
Deferred tax expense (Note 17):
Current year (1,175) (571) - -
Under/(Over)provision in prior years 2,534 (219) - -
1,359 (790) - -
8,147 (210) 8,359 -
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
102
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2012
103K
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Loss before tax (231,993) (103,663) (275,591) (119,921)
Tax at statutory tax rate of 25% (57,998) (25,916) (68,898) (29,980)
Share of tax of associates (9,949) (5,715) - -
Tax effects of:
Non-deductible expenses 33,549 3,188 24,972 2,874
Non-taxable income (12,871) - (6,382) -
Deferred tax asset not recognised during the year 50,308 30,263 50,308 27,106
Adjusted of loss under Section 44A of Income Tax Act,
1967-Group relief for Companies (3,662) - - -
Under/(Over)provision of current tax in prior year 6,236 (1,811) 8,359 -
Under/(Over)provision of deferred tax in prior years 2,534 (219) - -
8,147 (210) 8,359 -
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
Notes To The Financial Statements
11. PROPERTY, PLANT AND EQUIPMENT
The Group
Freehold land and buildings
RM’000
Plant and machinery,
infrastructure, container
yards, rolling stocks and
rail vehiclesRM’000
Computer, road
vehicles, office
equipment, furniture and
fittings and renovation
RM’000
Under construction
RM’000Total
RM’000
Cost
As of 1 January 2011 12,953 1,408,494 112,006 49,605 1,583,058
Additions 103 88,811 7,300 14,858 111,072
Disposals - (2,207) (7,382) - (9,589)
Reclassification - 13,363 20,541 (33,904) -
Write-offs (68) (903) (3,153) - (4,124)
As of 31 December 2011/
1 January 2012
12,988 1,507,558 129,312 30,559 1,680,417
Additions 7,568 804 5,139 48,313 61,824
Disposals (450) (4,711) (1,923) - (7,084)
Reclassification - 58,888 416 (59,304) -
Write-offs - (7,243) - - (7,243)
As of 31 December 2012 20,106 1,555,296 132,944 19,568 1,727,914
A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense
at the effective income tax rate of the Company is as follows:
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105K
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Accumulated depreciation
As of 1 January 2011 2,446 812,199 90,083 - 904,728
Depreciation for the year 204 78,719 12,763 - 91,686
Disposals - (75) (5,052) - (5,127)
Write-offs (2) (368) (1,580) - (1,950)
As of 31 December 2011/
1 January 2012
2,648 890,475 96,214 - 989,337
Depreciation for the year 2,247 84,986 9,348 - 96,581
Disposals (190) (4,265) (1,605) - (6,060)
Write-offs - (6,333) - - (6,333)
As of 31 December 2012 4,705 964,863 103,957 - 1,073,525
The Group
Freehold land and buildings
RM’000
Plant and machinery,
infrastructure, container
yards, rolling stocks and
rail vehiclesRM’000
Computer, road
vehicles, office
equipment, furniture and
fittings and renovation
RM’000
Under construction
RM’000Total
RM’000
Notes To The Financial Statements
Accumulated impairment loss
As of 1 January 2011 1,740 385,970 12,790 - 400,500
Impairment loss for the year - 20,600 - - 20,600
As of 31 December 2011/
1 January 2012
1,740 406,570 12,790 - 421,100
Impairment loss for the year - 84,643 - - 84,643
As of 31 December 2012 1,740 491,213 12,790 - 505,743
Net book value
As of 1 January 2011 8,767 210,325 9,133 49,605 277,830
As of 31 December 2011 8,600 210,513 20,308 30,559 269,980
As of 31 December 2012 13,661 99,220 16,197 19,568 148,646
The Group
Freehold land and buildings
RM’000
Plant and machinery,
infrastructure, container
yards, rolling stocks and
rail vehiclesRM’000
Computer, road
vehicles, office
equipment, furniture and
fittings and renovation
RM’000
Under construction
RM’000Total
RM’000
106
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Cost
As of 1 January 2011 3,305 1,307,709 97,754 49,605 1,458,373
Additions 103 88,811 3,279 14,858 107,051
Disposals - (2,207) (2,553) - (4,760)
Reclassification - 13,363 20,541 (33,904) -
Write-offs (68) (903) (3,153) - (4,124)
As of 31 December 2011/
1 January 2012
3,340 1,406,773 115,868 30,559 1,556,540
Additions 440 607 3,882 48,313 53,242
Disposals - (4,610) (889) - (5,499)
Reclassification - 58,888 416 (59,304) -
Write-offs - (7,243) - - (7,243)
As of 31 December 2012 3,780 1,454,415 119,277 19,568 1,597,040
The Company
Freehold land and buildings
RM’000
Plant and machinery,
infrastructure, container
yards, rolling stocks and
rail vehiclesRM’000
Computer, road
vehicles, office
equipment, furniture and
fittings and renovation
RM’000
Under construction
RM’000Total
RM’000
Notes To The Financial Statements
Accumulated depreciation
As of 1 January 2011 1,027 719,169 79,790 - 799,986
Depreciation for the year 68 78,719 9,170 - 87,957
Disposals - (75) (557) - (632)
Write-offs (2) (368) (1,580) - (1,950)
As of 31 December 2011/
1 January 2012
1,093 797,445 86,823 - 885,361
Depreciation for the year 74 82,353 8,125 - 90,552
Disposals (1) (4,206) (627) - (4,834)
Write-offs - (6,333) - - (6,333)
As of 31 December 2012 1,166 869,259 94,321 - 964,746
The Company
Freehold land and buildings
RM’000
Plant and machinery,
infrastructure, container
yards, rolling stocks and
rail vehiclesRM’000
Computer, road
vehicles, office
equipment, furniture and
fittings and renovation
RM’000
Under construction
RM’000Total
RM’000
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109K
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Accumulated impairment losses
As of 1 January 2011 1,740 385,970 12,790 - 400,500
Impairment loss for year - 20,600 - - 20,600
As of 31 December 2011/
1 January 2012
1,740 406,570 12,790 - 421,100
Impairment loss for the year - 84,643 - - 84,643
As of 31 December 2012 1,740 491,213 12,790 - 505,743
Net book value
As of 1 January 2011 538 202,570 5,174 49,605 257,887
As of 31 December 2011 507 202,758 16,255 30,559 250,079
As of 31 December 2012 874 93,943 12,166 19,568 126,551
The Company
Freehold land and buildings
RM’000
Plant and machinery,
infrastructure, container
yards, rolling stocks and
rail vehiclesRM’000
Computer, road
vehicles, office
equipment, furniture and
fittings and renovation
RM’000
Under construction
RM’000Total
RM’000
Notes To The Financial Statements
(a) The Group’s freehold land and buildings comprise:
As of 1 January 2011
Freehold land 3 - 3
Buildings 12,950 4,186 8,764
12,953 4,186 8,767
As of 31 December 2011
Freehold land 3 - 3
Buildings 12,985 4,388 8,597
12,988 4,388 8,600
As of 31 December 2012
Freehold land 3 - 3
Buildings 20,103 6,445 13,658
20,106 6,445 13,661
The Group
Cost
RM’000
Accumulated
depreciation and
impairment
RM’000
Net book value
RM’000
(b) The Company has been granted the exclusive use and occupation of parcels of railway land and other property,
plant and equipments vested in the Railway Assets Corporation by the Government of Malaysia.
(c) Prime movers, trailers and side loaders of a subsidiary with a net book value of RM3,075,601 (31 December 2011:
RM5,326,209)and (1January2011:RM5,891,136)werepledgedtobanks forbanking facilitiesgrantedto that
subsidiary as referred to in Note 25.
(d) Buildings of a subsidiary with a net book value of RM5,903,463 (31 December 2011: RM6,242,617) and (1 January
2011:RM6,378,301)havebeenpledgedtobanksforbankingfacilitiesgrantedtothatsubsidiaryasdisclosedin
Note 25.
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(e) Included in property, plant and equipment of the Group and the Company are assets acquired under Government
grants, as disclosed in Note 27, costing:
31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Plant and machinery, infrastructure, rolling stocks, trailers, prime movers and rail vehicles 1,165 1,165 1,165
The Group and the Company
31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Other operating expenses
- Cargo services (11,284) 7,701 119,525- Intercity services 10,646 8,067 107,730- Commuter services 85,281 4,832 38,371
84,643 20,600 265,626
(f) Measurement of the recoverable amount of cash generating units (“CGU”)
Impairment losses have been recognised in the following line items of the statement of comprehensive income:
Following continuing significant operating losses, an impairment test was conducted by management to determine
whether the recoverable amount of property, plant and equipment used in operations exceed its carrying amount.
For the purpose of the impairment test, the property, plant and equipment were divided into three (3) independent
cash generating units (“CGUs”):
i) Cargo services
ii) Intercity services
iii) Commuter services
Notes To The Financial Statements
The value in use was determined by discounting the future cash flows generated from the continuing use of the cash
generating unit and was based on the following key assumptions:
• Cashflowswereprojectedbasedonhistoricalinformation,actualoperatingresultsandavailablemanagement
budgets/forecast covering a five-year period.
• Revenuegrowthwasprojectedasfollows:
(i) For Cargo Services : the growth for year 2013 is based on average monthly trends for the past three
yearsand6%perannumgrowthrateforyear2014–2017,(31December2011:acontinuous10%
- 20% per annum growth rate) and (1 January 2011: a continuous 10% per annum growth rate).
(ii) For Intercity Services : 22% per annum growth in 2013, 13% per annum growth rate for 2014, 5%
growthrateforyear2015–2017,(31December2011and1January2011:acontinuous5%per
annum growth rate).
(iii) For Commuter, revenue is projected based on average train set available.
• Railwayoperatingexpenseswereprojectedbasedon11%escalationrateperannumforCargo
(31 December 2011 and 1 January 2011: 3% per annum escalation rate).
• Personnelexpenseswereprojectedbasedon5%annualincrementandsalaryadjustmentof8%forevery3
years(31December2011and1January2011:3.5%annualincrementandsalaryadjustmentof8%every
3 years).
• Fuelcostisassumedtobebasedonfixedsubsidisedpricefortheentirecashflowsperiod.
• Ticketpricesareassumedtobefixedbasedon2012prices.
• Management assumes the annual uneconomic service claim from the Government of Malaysia will be
available throughout the period of the cash flows.
• Apre-taxdiscountrateof6.6%perannum(31December2011and1January2011:6.6%)wasappliedin
determining the recoverable amount.
The values assigned to the key assumptions represent management’s assessment of future trends and are based
on external sources and historical data.
During the year, the carrying amount of the above CGUs have been fully impaired as of 31 December 2012. The
management is of the opinion that the remaining amount with net carrying amount of RM126,551,000 has no
indication that these assets are impaired.
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113K
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12. INVESTMENT PROPERTIES
The GroupBuildings
RM’000Total
RM’000
Cost
As of 1 January 2011/31 December 2011/1 January 2012/
31 December 2012 2,846 2,846
Accumulated depreciation
As of 1 January 2011 (697) (697)
Depreciation for the year (57) (57)
As of 31 December 2011/1 January 2012 (754) (754)
Depreciation for the year (57) (57)
As of 31 December 2012 (811) (811)
Net book value
As of 1 January 2011 (2,149) (2,149)
As of 31December 2011 (2,092) (2,092)
As of 31December 2012 (2,035) (2,035)
13. INVESTMENTS IN SUBSIDIARIES
The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Unquoted shares at cost 6,849 6,849 6,849
Less: Accumulated impairment losses (200) (200) (200)
6,649 6,649 6,649
Details of the Company’s subsidiaries are as follows:
Name of SubsidiariesCountry of
Incorporated Principal ActivitiesEffective Equity
Interest
2012%
2011%
Held by the Company
Multimodal Freight Sdn. Bhd. Malaysia Provision of haulage freight forwarding and related services
100 100
KTM Distribution Sdn. Bhd. Malaysia Management of warehouses, office space and the provision of parcel and courier services
100 100
KTMB (Car Park) Sdn. Bhd. Malaysia Car park operator 100 100
KTMB Catering Services Sdn. Bhd. Malaysia Dormant - Caterers and proprietor of restaurants
100 100
KTMB (Sentul) Sdn. Bhd. Malaysia Property investment 100 100
KTMB Consultancy Services Sdn. Bhd.
Malaysia Dormant - Provision of railway consultancy services
100 100
KTMB (Brickfields) Sdn. Bhd. Malaysia Dormant - Property investment
100 100
ET Sdn. Bhd. Malaysia Dormant - Property investment
100 100
KTMB (Sungei Petani) Sdn. Bhd. Malaysia Dormant - Property investment
100 100
KTMB Heritage Hotel Sdn. Bhd. Malaysia Dormant - Operator of hotels,restaurants and cafes and related services
100 100
KTMB (Prai) Sdn. Bhd. Malaysia Property investment 100 100
Held through subsidiaries
MMF Logistics Pte. Ltd.# Singapore Dormant - Provision of freight forwarding services
100 100
Syarikat Pengangkutan Rel Utara Sdn. Bhd.#
Malaysia Provision of freight forwarding services 63 63
Kiriman Ekspres Sdn. Bhd. Malaysia Dormant - Provision of door to door parcel delivery services
100 100
KTMB Parking Pte. Ltd.# Singapore Car park operator 100 100
KTMB (Railway Village) Sdn. Bhd. Malaysia Property investment 100 100
# The financial statements of these companies were examined by auditors other than the auditors of the Company.
Notes To The Financial Statements
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115K
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14. INVESTMENTS IN ASSOCIATES
The Group31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Unquoted shares at cost 21,255 21,255 21,255
Unquoted loan stocks at cost 7,000 7,000 7,000
28,255 28,255 28,255
Share of post-acquisition reserves 129,601 117,315 106,982
157,856 145,570 135,237
Less: Accumulated impairment losses (25) (25) (25)
At 31 December 157,831 145,545 135,212
The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Unquoted shares at cost 18,855 18,855 18,855
Unquoted loan stocks at cost 7,000 7,000 7,000
25,855 25,855 25,855
Less: Accumulated impairment losses (25) (25) (25)
At 31 December 25,830 25,830 25,830
Notes To The Financial Statements
Details of the associates, which are all incorporated in Malaysia, are as follows:
Name of Associates Principal ActivitiesEffective Equity
Interest
2012%
2011%
Held by the Company
Fiberail Sdn. Bhd. Provision of services to install, manage, operate and maintain an optical fibre telecommunication system
36 36
Ipoh Cargo Terminal Sdn.Bhd. Inland clearance depot operator 30 30
Syarikat Perjalanan Terus Butterworth Kuala Lumpur Sdn. Bhd. @
Dormant- Provision of bus services
25 25
Rail Tech Industries Sdn. Bhd. # Dormant- Manufacture of rolling stock, repair and maintenance services
26 26
Admiral Cove Development Sdn. Bhd. Property and resort development 20 20
Kuala Lumpur Sentral Sdn. Bhd. Property development 26 26
Admiral Hill Hotel Sdn. Bhd. Hotel resort and related tourist development 20 20
Held through a subsidiary:
Sentul Raya Sdn. Bhd. Property development 30 30
@ Currently under liquidation.
# In 1994, the Company acquired a 50% equity interest in Rail Tech Industries Sdn. Bhd. (“RTI”), a company
incorporated in Malaysia for a cash consideration of RM1; In accordance with the joint venture and shareholder’s
agreements entered into with UMW Corporation Sdn. Bhd., it was the intention of both parties that the proportion of
the shareholding in RTI for the Company and UMW Corporation Sdn. Bhd. shall at all times be 26:74 respectively.
Hence, the results of RTI have been equity accounted based on the 26% shareholding.
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117K
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The summarised financial statements of the associates are as follows:
31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Assets and liabilities
Current assets 297,158 294,301 279,725
Non-current assets 1,260,783 1,355,969 1,300,804
Total assets 1,577,941 1,650,270 1,580,529
Current liabilities 584,696 656,699 605,441
Non-current liabilities 348,714 340,454 398,683
Total liabilities 933,410 997,153 1,004,124
Results
Revenue 266,469 257,959 307,373
Profit for the year 104,597 67,307 43,844
15. OTHER INVESTMENTS
Shares Unquoted
The Group31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Non-current
Available-for-sale financial assets 355 355 355
Less: Impairment loss (215) (185) (185)
Total assets 140 170 170
16. LONG TERM RECEIVABLE
The long term receivable represented the non-cash consideration of the phased development, construction and completion
of the Railway Village to be satisfied by its associate, Sentul Raya Sdn. Bhd. (“SRSB”) (refer to Note 14).
The Company received a letter from SRSB dated 24 December 2007 indicating that approval from relevant authorities
on the development of the Railway Village has only been granted on 14 August 2007. In view of the delays in obtaining
approval from the relevant authorities, the Company, KTMB (Sentul) Sdn. Bhd. and SRSB have mutually agreed that the
completion date of the Railway Village project is to be delayed.
In 2011, the Group decided that as the recognition of the long term receivable and the corresponding deferred gain (refer
to Note 26) is pending on the successful completion of the Railway Village (the progress of which is not wholly within the
control of the Group), the amount should only be disclosed as a contingent asset and not recorded in the statement of
financial position. The long term receivable and the corresponding gain will be recorded upon the completion of the Railway
Village.
17. DEFERRED TAX ASSETS AND LIABILITIES
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
At beginning of year (83) (873) - -
Transfer to/(from) profit or loss (Note 10) (1,359) 790 - -
At end of year (1,442) (83) - -
Certain deferred tax assets and liabilities have been offset in accordance with the Group’s accounting policy. The following
is an analysis of the deferred tax balances (after offset) for statements of financial position purposes:
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
Deferred tax assets 2,327 3,107 - -
Deferred tax liabilities (3,769) (3,190) - -
(1,442) (83) - -
Notes To The Financial Statements
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Deferred tax assets/(liabilities) provided in the financial statements are in respect of the tax effects of the following:
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
Deferred tax assets
Temporarily differences arising from provisions 2,309 3,107 - -
Unabsorbed capital allowances 18 - - -
2,327 3,107 - -
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
Deferred tax liabilities
Temporarily differences arising from property, plant
and equipment (3,769) (3,190) - -
As mentioned in Note 3, the tax effects of deductible temporary differences, unused tax losses and unused tax credits
which would give rise to deferred tax assets are recognised to the extent that it is probable that future taxable profits will
be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.
As of 31 December 2012, the estimated amount of temporary differences arising from trade receivables, unused tax losses,
unabsorbed capital allowances, the tax effects of which are not recognised in the financial statements due to uncertainty
of their realisation, is as follows:
The Group and The Company
2012
RM’000
2011
RM’000
Temporary difference arising from:
Property, plant and equipment 449,858 475,781Trade and other receivables (35,380) (36,558)Inventories (13,296) (13,092)Retirement benefits obligations (100,271) (95,365)Provision (5,756) (6,578)
Unused tax losses (822,498) (706,025)Unabsorbed capital allowances (1,148,106) (1,092,379)
(1,675,449) (1,474,216)
18. INVENTORIES
The Group and The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Spare parts 45,207 39,591 42,889
Fuel 2,036 1,800 1,035
Others 1,707 912 1,504
48,950 42,303 45,428
19. TRADE AND OTHER RECEIVABLES
The Group31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Trade
Trade receivables 51,440 50,738 47,887
Less : Allowance for doubtful debts (12,516) (12,225) (12,701)
38,924 38,513 35,186
Amounts due from associates 1,353 1,227 1,526
Less : Allowance for doubtful debts (373) (373) (373)
980 854 1,153
39,904 39,367 36,339
Non-trade
Amount due from Government of Malaysia 148,769 26,770 31,294
Less : Allowance for doubtful debts (952) (952) (952)
147,817 25,818 30,342
Other receivables 36,746 48,886 31,251
Less : Allowance for doubtful debts (33,016) (33,919) (21,515)
3,730 14,967 9,736
Notes To The Financial Statements
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121K
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T 2012The Group31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Amount due from associates 18,685 16,929 16,789
Less : Allowance for doubtful debts (9,094) (9,094) (9,094)
9,591 7,835 7,695
161,138 48,620 47,773
201,042 87,987 84,112
Deposits and prepayment consist of:
The Group31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Refundable deposits 298 316 1,317
Prepayment 28,627 4,023 4,469
28,925 4,339 5,786
The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Trade
Trade receivables 17,442 19,478 18,143
Less : Allowance for doubtful debts (2,365) (2,266) (2,660)
15,077 17,212 15,483
Amounts due from subsidiaries 2,038 876 1,263
Amounts due from associates 1,353 1,227 1,526
Less : Allowance for doubtful debts (373) (373) (373)
980 854 1,153
18,095 18,942 17,899
Non-trade
Amount due from Government of Malaysia 148,769 26,770 31,294
Less : Allowance for doubtful debts (952) (952) (952)
147,817 25,818 30,342
Other receivables 39,055 50,873 33,426
Less : Allowance for doubtful debts (33,016) (33,919) (21,515)
6,039 16,954 11,911
Amounts due from subsidiaries 1,174 1,583 2,056
Less : Allowance for doubtful debts (352) (353) (352)
822 1,230 1,704
Amounts due from associates 18,364 16,929 16,468
Less : Allowance for doubtful debts (9,094) (9,094) (9,094)
9,270 7,835 7,374
182,043 70,779 69,230
Notes To The Financial Statements
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Deposits and prepayments consist of:
The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Refundable deposits 138 185 262
Prepayment 24,695 2,433 4,308
24,833 2,618 4,570
Amount due from subsidiaries and associates
Included in the amount due from subsidiaries and associates are freight and haulage services that are subject to normal
trade terms. The amount is repayable within a fixed term of 30 days.
The other amount due from subsidiaries and associates which arises mainly from payment on behalf are non-trade in
nature, unsecured, interest free and repayable on demand.
Amount due from Government of Malaysia
The amount due from Government of Malaysia which arises mainly from receivables for subscription of shares and payment
on behalf are non-trade in nature, unsecured, interest free and repayable on demand.
20. CASH AND BANK BALANCES
The Group31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Deposits placed with:
Licensed banks 20,553 28,319 52,259
Financial institutions 350 - 2,056
Cash and bank balances 5,190 12,119 33,408
26,093 40,438 87,723
The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Deposits placed with licensed banks - - 34,000
Cash and bank balances 1,988 7,623 19,583
1,988 7,623 53,583
Deposits with financial institutions earn an average interest at 3.30% (3.20% in 31 December 2011 and 3.20% in 1 January
2011) per annum and have an average maturity period of 31 days to 240 days (31 days to 240 days in 31 December 2011
and 31 days to 240 days in 1 January 2011).
21. ASSETS HELD FOR SALE
The Group31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Assets held for sale 5,507 - -
KTMB (Prai) Sdn Bhd, a subsidiary of the Company has received 33 units of condominiums and apartments from Prima
Prai Sdn Bhd (“Developer”) as part of the consideration of sale of land in Prai, Penang. Based on the agreement, dated
15 September 1995, KTMB (Prai) will receive cash consideration of RM11,143,970, staff quarters and office space with the
valueequivalenttoRM7,128,000andRM5,200,000respectively.Duetofinancialtheconstraint,theDeveloperwasunable
to build the office space and in exchange transferred 33 units of condominiums and apartments in Prai with the equivalent
value.
Management had decided that the 33 units of condominiums and apartments are to be disposed off and accordingly, have
been classified as asset held for sale.
Notes To The Financial Statements
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22. SHARE CAPITAL
The Group and The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Authorised:
Ordinary shares of RM1 each:
At beginning of year 994,300 994,300 994,300
Issued during the year 1,000,000 - -
At end of year 1,994,300 994,300 994,300
10% Redeemable Cumulative Convertible
Preference Shares (“RCCPS”) of RM0.10 each 5,700 5,700 5,700
Special rights redeemable preference share of RM1 * * *
2,000,000 1,000,000 1,000,000
Issued and fully paid:
Ordinary shares of RM1 each:
At beginning of year 902,559 882,559 852,559
Issued during the year 234,900 20,000 30,000
Special rights redeemable preference share of RM1 * * *
At end of year 1,137,459 902,559 882,559
* Consists of 1 special rights redeemable preference share of RM1 each.
As approved by the shareholders in the Extraordinary General Meeting (“EGM”) held on 30 October 2012, the authorised
share capital of the Company was increased from RM1,000,000,000 to RM2,000,000,000 by creation of an additional
1,000,000,000 new ordinary shares of RM1 each.
During the financial year, the issued paid up share capital of the Company was increased from RM902,559,000 to
RM1,137,459,000 by way of issuance of 234,900,000 ordinary share of RM1 each at RM1 per ordinary share for working
capital purposes. The new ordinary shares issued rank pari passu with the then existing ordinary shares of the Company.
Special Rights Redeemable Preference Share (“Special Share”)
The Special Share enables the Government of Malaysia through the Minister of Finance Incorporated to ensure that certain
major decisions affecting the operations of the Company are consistent with Government policies. The Special Shareholder,
which may only be the Government or any representative or person acting on its behalf, is entitled to receive notices of
meetings but not to vote at such meetings of the Company. However, the Special Shareholder is entitled to attend and
speak at such meetings.
The Special Shareholder has the right to appoint any person, but not more than six at any time, to be Government-
appointed Directors.
The Special Shareholder has the right to require the Company to redeem the Special Share at par at any time by serving
written notice upon the Company and delivering the relevant share certificate.
The Special Shareholder shall be entitled to repayment of the capital paid up on the Special Share in priority to any
repayment of capital to any other members.
The Special Shareholder does not have any right to participate in the capital or profits of the Company.
Certain matters which vary the rights attached to the Special Share can only be effective with the consent in writing of the
Special Shareholder, in particular matters relating to the creation and issuance of additional shares which carry different
voting rights, the dissolution of the Company, substantial disposal of assets, amalgamations, mergers and takeovers.
23. REEDEMABLE CONVERTIBLE CUMULATIVE PREFERENCE SHARES (“RCCPS”)
The Group and The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Issued and fully paid:
RCCPS of RM0.10 each 5,700 5,700 5,700
The 10% Redeemable Convertible Cumulative Preference Shares (“RCCPS”) are issued at a premium of RM0.90 each per
share pursuant to the Subscription Agreement dated 26 July 1999 with the following salient features:
(i) A tenure of thirty years with a fixed preference dividend of 10% per annum (the “Fixed Dividend”) on the nominal
value of the Preference Shares.
(ii) The Fixed Dividend is to be cumulative and paid out of the profits available for distribution in respect of each financial
year. Any amounts remaining unpaid shall be accumulated and be paid in the following year(s) and the preference
shareholdershallbeentitledtoimposelatepaymentchargesof8%perannumontheunpaidamountoftheFixed
Dividend or an option to convert the aggregate of the amount equal to any arrears or accrual to the Fixed Dividend
andinterestof8%imposedthereonintofullypaidordinaryshares,and
(iii) The Preference Shares shall be convertible into ordinary shares on the basis of one new ordinary share for one
Preference Share and will be redeemable at RM1.05 for each Preference Share upon maturity at the end of the
thirtieth anniversary.
Notes To The Financial Statements
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The proceeds received from the issue of the RCCPS have been segregated between the liability component and the equity
component. The fair value of the liability component is estimated based on the present value of the dividend obligation whilst
the equity component represents the fair value of the conversion option. The RCCPS are accounted for in the statements
of financial position of the Group and of the Company as follows:
The Group and The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
57,000,000 RCCPS of RM0.10 each 5,700 5,700 5,700
RCCPS share premium 51,300 51,300 51,300
Liability component at initial recognition (6,417) (6,417) (6,417)
Equity components 50,583 50,583 50,583
RCCPS - liability component movement
At 1 January - Fair value recognised as liability
component 16,814 15,697 6,417
Interest accrued - opening balance adjustment - - 8,208
Interest accrued - recognised in profit or loss
(Note 6) 570 570 570
Penalty on late payment of interest 592 547 502
Total interest payable 1,162 1,117 9,280
At 31 December 17,976 16,814 15,697
24. RESERVES
Exchange fluctuation reserve
The exchange fluctuation reserve is used to record exchange differences arising from the translation of the financial
statements of foreign operations whose functional currencies are different from that of the Group’s functional currency. It is
also used to record the exchange differences arising from monetary items which form part of the Group’s net investment in
foreign operations, regardless of the currency of the monetary items.
25. LOANS AND BORROWINGS
The Group31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Unsecured
Term loan 1* 156,546 153,220 151,167
Term loan 2* 560,924 550,862 540,927
Term loan 3* 116,444 113,525 111,841
Term loan 4* 28,970 28,588 28,400
Term loan 5* 305,308 302,989 306,526
1,168,192 1,149,184 1,138,861
Bank overdraft 49,876 80,491 42,594
Revolving credits 90,000 80,000 40,590
1,308,068 1,309,675 1,222,045
Secured
Al Bai Bithaman Ajil Loan IX (“ABBA IX”) 2,865 2,939 2,991
Al Bai Bithaman Ajil Loan X (“ABBA X”) 581 595 610
Al Bai Bithaman Ajil Loan VIII (“ABBA VIII”) - - 827
Hire-purchase payables 1,653 1,384 -
Bank overdraft - - 4,639
5,099 4,918 9,067
1,313,167 1,314,593 1,231,112
Notes To The Financial Statements
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The Group31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Current
Unsecured
Bank overdraft 49,876 80,491 42,594
Revolving credits 90,000 80,000 40,590
Secured
Hire purchase payables 358 242 -
Al Bai Bithaman Ajil Loan IX (“ABBA IX”) 222 222 222
Al Bai Bithaman Ajil Loan X (“ABBA X”) 45 45 45
Bank overdraft - - 4,639
Al Bai Bithaman Ajil Loan VIII (“ABBA VIII”) - - 827
Total current portion 140,501 161,000 88,917
Total non-current portion 1,172,666 1,153,593 1,142,195
The Company
Unsecured
Term loan 1* 156,546 153,220 151,167
Term loan 2* 560,924 550,862 540,927
Term loan 3* 116,444 113,525 111,841
Term loan 4* 28,970 28,588 28,400
Term loan 5* 305,308 302,989 306,526
1,168,192 1,149,184 1,138,861
Bank overdraft 49,876 78,418 42,594
Revolving credits 90,000 80,000 40,590
1,308,068 1,307,602 1,222,045
The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Current
Unsecured
Bank overdraft 49,876 78,418 42,594
Revolving credits 90,000 80,000 40,590
Total current portion 139,876 158,418 83,184
Total non-current portion 1,168,192 1,149,184 1,138,861
* Refer to loan from the Government of Malaysia
Security
The Islamic term financing and term loan facilities of a subsidiaries are secured by way of the following:
(i) ABBA IX and ABBA X are secured first fixed charges of a subsidiary’s buildings, ownership claim over the buildings
amountingRM5,903,463(31December2011:RM6,242,617and1January2011:RM6,378,301)asdisclosedin
Note 11.
(ii) Bank overdraft of a subsidiary is secured by an ownership claim over certain prime movers and trailers as disclosed
in Note 11.
26. DEFERRED GAIN
On 11 September 1995, a subsidiary, KTMB (Sentul) Sdn. Bhd. (“KSSB”), entered into a sale and purchase agreement with
its associate, Sentul Raya Sdn. Bhd. (“SRSB”) for the transfer of parcels of land (referred to as the “Mixed Development Site”)
for the purpose of an integrated development incorporating commercial complexes and buildings, residential buildings,
entertainment and tourist facilities. The Company had procured the Government of Malaysia to revoke the reservation status
of the land and approval had been obtained for the alienation of the said parcels of land.
On 30 December 1995, the Company together with KSSB entered into a Joint Venture Agreement (as amended by various
supplementary agreements in 2000 and 2001) (“JVA”) with Taiping Consolidated Berhad (“TCB”) (now known as YTL Land
& Development Berhad), the holding company of SRSB, for the purpose of carrying out the following via SRSB:
a) the construction of the Railway Village; and
b) the development and construction of the Mixed Development Project.
Notes To The Financial Statements
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The consideration for the transfer of the Mixed Development Site and the minimum return pursuant to the JVA to be derived
by the Company based on KSSB’s shareholding in SRSB comprised the following:
a) cash consideration of RM36,400,000 of which RM4,000,000 was refundable;
b) payment in kind to KSSB by way of phased development, construction and completion of the Railway Village (which
is to comprise apartments and certain infrastructures, facilities and amenities to be constructed on the freehold
land belonging to KSSB’s wholly owned subsidiary) by SRSB by the end of financial year 2007 at its sole cost
and expense of which the total project costs there-of was at 21 December 2000, estimated to be not less than
RM69,216,000; and
c) payment of share of actual profit of SRSB.
The above consideration and minimum return are conditional upon completing of the transfer of entire Mixed Development
Site to SRSB. The transfer of the Mixed Development Site to SRSB had been completed in 2011.
The long term receivable and the corresponding gain will be recorded upon the completion of the Railway Village (refer to
Note 15).
27. GOVERNMENT GRANTS
The Group and The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Plant and equipment
As of 1 January 362 440 518
Amortisation (78) (78) (78)
As of 31 December 284 362 440
Other
As of 1 January - 38,412 -
Additions - - 62,238
Utilisation - (38,412) (23,826)
As of 31 December - - 38,412
Total 284 362 38,852
28. PROVISIONS
The Group and The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Government claims
As of 1 January 6,578 7,400 9,223
Provisions used during the year (822) (822) (822)
Reversal of provisions during the year - - (1,001)
As of 31 December 5,756 6,578 7,400
Non-current 4,934 5,756 6,578
Current 822 822 822
As of 31 December 5,756 6,578 7,400
The entire provision was in respect of claims by the Government of Malaysia on the difference between the commercial and
subsidisedrateofinterest,pertainingtostaffloans(Note8).
29. RETIREMENT BENEFIT OBLIGATIONS
The Group and The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Present value of unfunded obligations 132,545 130,020 114,505
Unrecognised actuarial losses (32,274) (34,655) (15,025)
Total retirement benefits 100,271 95,365 99,480
Non-current 93,955 85,486 92,196
Current 6,316 9,879 7,284
Total retirement benefits 100,271 95,365 99,480
The Group operates an unfunded, defined benefit Retirement Benefit Scheme (“the Scheme”) for its eligible employees. The
Group’s obligation under the Scheme is determined based on the latest actuarial valuation by an independent actuary dated
5 April 2013. Under the Scheme, eligible employees are entitled to retirement benefits varying between 50% and 100% of
their final salary on attainment of the retirement age of 56.
Notes To The Financial Statements
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All confirmed permanent employees (both executives and non-executives) hired on or prior to 31 July 1997 are entitled to
retirement benefits as follows:
Years of Service (YOS) Retirement Benefits
Up to 5 years 0.50 x YOS x SAL
More than 5 years and up to 10 years 0.75 x YOS x SAL
More than 10 years 1.00 x YOS x SAL
Yearsofservice(YOS)–servicefrom1August1992
Finalmonthlysalary(SAL)–lastdrawnmonthlybasicsalary
Movement in the present value of the defined benefit obligations
The Group and The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Defined benefit obligations as of 1 January 95,365 99,480 91,173
Benefits paid by the plan (11,502) (17,963) (5,233)
Current service costs and interest 16,408 13,848 13,540
Defined benefit obligations as of 31 December 100,271 95,365 99,480
Expense recognised in the profit or loss
The Group and The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Current service costs 7,296 6,800 6,723
Interest on obligation 7,415 6,718 6,395
Actuarial losses 1,697 330 422
16,408 13,848 13,540
The expense is recognised in the following line items in the profit or loss:
The Group and The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Other operating expenses 16,408 13,848 13,540
Actuarial assumptions
Principal actuarial assumptions at the end of the reporting period (expressed as weighted averages):
The Group and The Company31.12.2012
%
31.12.2011
%
1.1.2011
%
Discount rate 6.0 6.0 6.2
Expected rate of salary increase
- Executive 6.0 6.0 6.0
- Non executive 6.0 6.0 6.0
30. TRADE AND OTHER PAYABLES
The Group31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Trade
Trade payables 93,762 73,725 58,736
Non-trade
Amount due to associates 7,974 7,974 7,974
Accrued expenses 21,799 12,445 10,340
Other payables 33,499 34,173 46,983
Unearned revenue 1,754 1,994 2,402
Deposits 6,498 13,410 20,301
Interest payable 1,060 962 -
72,584 70,958 88,000
166,346 144,683 146,736
Notes To The Financial Statements
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The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Trade
Trade payables 90,449 65,986 51,318
Non-trade
Amount due to subsidiaries 46,927 33,585 32,986
Amount due to associates 7,974 7,974 7,974
Accrued expenses 11,985 10,638 5,197
Other payables 24,114 10,261 33,627
Unearned revenue 1,754 1,994 2,402
Deposits 6,498 13,382 11,801
Interest payable 1,060 963 -
100,312 78,797 93,987
190,761 144,783 145,305
Trade payables are non-interest bearing and the normal trade credit terms granted to the Group and the Company is up to
90 days (2011: 90 days).
Amount due to subsidiaries and associates
Amounts due from subsidiaries and associates arose mainly from advances given and collections made on behalf, which
are non-trade in nature, unsecured, interest-free and repayable on demand.
31. RELATED PARTIES
Identity of related parties
For the purposes of these financial statements, parties are considered to be related to the Group or the Company if the
Group or the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party
in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to
common control or common significant influence. Related parties may be individuals or other entities.
Key management personnel are defined as those persons having authority and responsibility for planning, directing and
controlling the activities of the Group either directly or indirectly. The key management personnel includes all the Directors
of the Group, and certain members of senior management of the Group.
The significant related party transactions of the Group and the Company, other than key management personnel
compensation (see Note 9), are as follows:
The Company2012
RM’000
2011
RM’000
Subsidiary companies
Multimodal Freight Sdn Bhd
Freight services revenue (4,212) (3,027)
Management fee (120) (120)
Dividend income (945) (840)
Freight services cost 12,036 10,749
KTM Distribution Sdn Bhd
Management fees (120) (120)
Dividend income (811) -
KTMB (Car Park) Sdn Bhd
Management fees (48) (48)
Dividend income - (50)
The Group and The Company2012
RM’000
2011
RM’000
Related parties
Fiberail Sdn Bhd
Dividend income (22,720) (13,773)
Wayleave income (4,757) (4,757)
Ipoh Cargo Terminal Sdn Bhd
Freight services revenue (5,210) (4,660)
Equipment storage (340) (340)
Kuala Lumpur Sentral Sdn Bhd
Interest income (490) (490)
Notes To The Financial Statements
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32. FINANCIAL INSTRUMENTS
32.1 Capital Management
The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability
to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future
development of the business.
32.2 Categories of financial instruments
Group31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Financial Assets
Available-for-sale:
Other investment 140 170 170
Loans and receivables:
Trade and other receivables 201,042 87,987 84,112
Refundable deposits 298 316 1,371
Cash and bank balances 26,093 40,438 87,723
227,573 128,911 173,322
Financial Liabilities
Amortised cost:
Loans and borrowings 1,313,167 1,314,593 1,231,112
Redeemable Convertible Cumulative Preference
Shares 17,976 16,814 15,697
Trade and other payables 166,346 144,683 146,736
1,497,489 1,476,090 1,393,545
The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Financial Assets
Available-for-sale:
Other investment 140 170 170
Loans and receivables:
Trade and other receivables 182,043 70,799 69,230
Refundable deposits 138 185 262
Cash and bank balances 1,988 7,623 53,583
184,309 78,757 123,245
Financial Liabilities
Amortised cost:
Loans and borrowings 1,308,068 1,307,602 1,222,045
Redeemable Convertible Cumulative Preference
Shares 17,976 16,814 15,697
Trade and other payables 190,761 144,783 145,305
1,516,805 1,469,199 1,383,047
32.3 Financial risk management
The Group has exposure to the following risks from its use of financial instruments:
• Creditrisk
• Liquidityrisk
• Marketrisk
32.3.1 Credit risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its
receivables from customers and investment securities.
Receivables
Risk management objectives, policies and processes for managing the risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing
basis.
Notes To The Financial Statements
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Exposure to credit risk, credit quality and collateral
As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is
represented by the carrying amounts in the statement of financial position.
Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired
are measured at their realisable values. A significant portion of these receivables are regular customers
that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality
of the receivables. Any receivables having significant balances past due more than 90 days, which are
deemed to have higher credit risk, are monitored individually.
Credit risks, or the risk of counterparties defaulting, are controlled by the application of credit approvals,
limits and monitoring procedures. Credit risks are minimised and monitored by limiting the Group’s
associations to business partners with high creditworthiness. Trade receivables are monitored on an
ongoing basis via Group management reporting procedures.
The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents and
non-current investments, arises from default of the counterparty, with a maximum exposure equal to the
carrying amount of these financial assets.
The Group does not have any significant exposure to any individual customer or counterparty nor does it
have any major concentration of credit risk related to any financial instruments.
The ageing of trade receivables of the Group as at the end of the reporting period was:
The GroupGross
RM’000
Individual
impairment
RM’000
Net
RM’000
31.12.2012
Not past due 1,123 - 1,123
Past due 1 - 30 days 13,933 - 13,933
Past due 31 - 60 days 10,185 - 10,185
Past due more than 90 days 27,552 (12,889) 14,663
52,793 (12,889) 39,904
31.12.2011
Not past due 2,790 - 2,790
Past due 1 - 30 days 12,342 - 12,342
Past due 31 - 60 days 13,710 - 13,710
Past due more than 90 days 23,123 (12,598) 10,525
51,965 (12,598) 39,367
1.1.2011
Not past due 2,963 - 2,963
Past due 1 - 30 days 11,523 - 11,523
Past due 31 - 60 days 11,757 (65) 11,692
Past due more than 90 days 23,170 (13,009) 10,161
49,413 (13,074) 36,339
Notes To The Financial Statements
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The ageing of trade receivables of the Company as at the end of the reporting period was:
The CompanyGross
RM’000
Individual
impairment
RM’000
Net
RM’000
31.12.2012
Not past due 260 - 260
Past due 1 - 30 days 7,150 - 7,150
Past due 31 - 60 days 5,377 - 5,377
Past due more than 90 days 8,046 (2,738) 5,308
20,833 (2,738) 18,095
31.12.2011
Not past due 376 - 376
Past due 1 - 30 days 6,728 - 6,728
Past due 31 - 60 days 6,269 - 6,269
Past due more than 90 days 8,208 (2,639) 5,569
21,581 (2,639) 18,942
1.1.2011
Not past due 92 - 92
Past due 1 - 30 days 5,798 - 5,798
Past due 31 - 60 days 5,233 (4) 5,229
Past due more than 90 days 9,809 (3,029) 6,780
20,932 (3,033) 17,899
The movements in the allowance for doubtful debts during the financial year were:
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
At 1 January (12,598) (13,074) (2,639) (3,033)Reclass to subsidiaries - - - 374Allowance for doubtful debts (3,024) (3,332) (798) (1,984)Reversal of allowance of doubtful
debts 2,733 3,808 699 2,004
At 31 December (12,889) (12,598) (2,738) (2,639)
Investments and other financial assets
Risk management objectives, policies and processes for managing the risk
Investments are allowed only in liquid securities and only with counterparties that have a credit rating
equal to or better than the Group. Transactions involving derivative financial instruments are with approved
financial institutions.
32.3.2 Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.
Notes To The Financial Statements
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Maturity analysis
The table below summarises the maturity profile of the Company’s financial liabilities as at the end of the reporting period based
on undiscounted contractual payments:
The Group
CarryingamountRM’000
Contractualinterest rate
%
Contractualcash flows
RM’000
Under 1 year
RM’0001 - 2 year
RM’0002 - 5 year
RM’000
More than 5 yearsRM’000
31.12.2012
Term loan 1 - unsecured* 156,546 8.00 197,593 - - 29,639 167,954
Term loan 2 - unsecured* 560,924 8.00 708,951 - - - 708,951
Term loan 3 - unsecured* 116,444 8.00 150,648 - - 22,598 128,050
Term loan 4 - unsecured* 28,970 4.00 30,822 - - 9,247 21,575
Term loan 5 - unsecured* 305,308 4.00 345,215 - - - 345,215
Hire - purchase payables 1,653 3.46 1,653 352 386 915 -Al Bai Bithaman Ajil Loan
IX - secured 2,865 4.05 3,915 222 444 666 2,583Al Bai Bithaman Ajil Loan
X - secured 581 4.05 799 45 90 134 530Redeemable Convertible
Cumulative Preference
Shares 17,976 8.00 24,885 - - - 24,885
Revolving credits 90,000 4.25 91,060 91,060 - - -
Bank overdraft 49,876 8.00 56,091 56,091 - - -
Trade and other payables 166,346 - 166,346 166,346 - - -
1,497,489 1,777,978 314,116 920 63,199 1,399,743
* Refer to loan from the Government of Malaysia
The Group
CarryingamountRM’000
Contractualinterest rate
%
Contractualcash flows
RM’000
Under 1 year
RM’0001 - 2 year
RM’0002 - 5 year
RM’000
More than 5 yearsRM’000
31.12.2011
Term loan 1 - unsecured* 153,220 8.00 197,593 - - 29,639 167,954
Term loan 2 - unsecured* 550,862 8.00 708,951 - - - 708,951
Term loan 3 - unsecured* 113,525 8.00 150,648 - - 22,598 128,050
Term loan 4 - unsecured* 28,588 4.00 30,822 - - 9,247 21,575
Term loan 5 - unsecured* 302,989 4.00 345,215 - - - 345,215
Hire - purchase payables 1,384 3.00 1,384 242 325 817 -Al Bai Bithaman Ajil Loan
IX - secured 2,939 4.05 4,349 222 222 666 3,239Al Bai Bithaman Ajil Loan
X - secured 595 4.05 889 45 45 134 665Redeemable Convertible
Cumulative Preference
Shares 16,814 8.00 24,885 - - - 24,885
Revolving credits 80,000 4.25 83,400 83,400 - - -
Bank overdraft 80,491 8.00 86,916 86,916 - - -
Trade and other payables 144,683 144,683 144,683 - - -
1,476,090 1,779,735 315,508 592 63,101 1,400,534
The table below summarises the maturity profile of the Company’s financial liabilities as at the end of the reporting period based
on undiscounted contractual payments:
* Refer to loan from the Government of Malaysia
Notes To The Financial Statements
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The Group
CarryingamountRM’000
Contractualinterest rate
%
Contractualcash flows
RM’000
Under 1 year
RM’0001 - 2 year
RM’0002 - 5 year
RM’000
More than 5 yearsRM’000
1.1.2011
Term loan 1 - unsecured* 151,167 8.00 197,593 - - 22,628 174,965
Term loan 2 - unsecured* 540,927 8.00 708,951 - - - 708,951
Term loan 3 - unsecured* 111,841 8.00 150,648 - - 6,686 143,962
Term loan 4 - unsecured* 28,400 4.00 30,823 - - 7,592 23,231
Term loan 5 - unsecured* 306,526 4.00 345,215 - - - 345,215Al Bai Bithaman Ajil Loan VIII - secured 827 7.00 836 836 - - -Al Bai Bithaman Ajil Loan IX - secured 2,991 9.55 9,142 2,909 2,757 2,441 1,035Al Bai Bithaman Ajil Loan X - secured 610 9.55 1,868 593 563 500 212Redeemable Convertible Cumulative Preference Shares 15,697 8.00 24,977 - - - 24,977
Revolving credits 40,590 4.25 40,590 40,590 - - -
Bank overdraft - secured 4,639 8.00 4,639 4,639 - - -
- unsecured 42,594 7.80 42,594 42,594 - - -
Trade and other payables 146,736 - 146,736 146,736 - - -
1,393,545 1,704,612 238,897 3,320 39,847 1,422,548
* Refer to loan from the Government of Malaysia
The table below summarises the maturity profile of the Company’s financial liabilities as at the end of the reporting period based
on undiscounted contractual payments:
The Company
CarryingamountRM’000
Contractualinterest rate
%
Contractualcash flows
RM’000
Under 1 year
RM’0001 - 2 year
RM’0002 - 5 year
RM’000
More than 5 yearsRM’000
31.12.2012
Term loan 1 - unsecured* 156,546 8.00 197,593 - - 29,639 167,954
Term loan 2 - unsecured* 560,924 8.00 708,951 - - - 708,951
Term loan 3 - unsecured* 116,444 8.00 150,648 - - 22,598 128,050
Term loan 4 - unsecured* 28,970 4.00 30,822 - - 9,247 21,575
Term loan 5 - unsecured* 305,308 4.00 345,215 - - - 345,215Redeemable Convertible Cumulative Preference Shares 17,976 8.00 24,885 - - - 24,885
Revolving credits 90,000 4.25 91,060 91,060 - - -
Bank overdraft 49,876 8.00 56,091 56,091 - - -
Trade and other payables 190,761 - 190,761 190,761 - - -
1,516,805 1,796,026 337,912 - 61,484 1,396,630
Notes To The Financial Statements
* Refer to loan from the Government of Malaysia
The table below summarises the maturity profile of the Company’s financial liabilities as at the end of the reporting period based
on undiscounted contractual payments:
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The Company
CarryingamountRM’000
Contractualinterest rate
%
Contractualcash flows
RM’000
Under 1 year
RM’0001 - 2 year
RM’0002 - 5 year
RM’000
More than 5 yearsRM’000
31.12.2011
Term loan 1 - unsecured* 153,220 8.00 197,593 - - 29,639 167,954
Term loan 2 - unsecured* 550,862 8.00 708,951 - - - 708,951
Term loan 3 - unsecured* 113,525 8.00 150,648 - - 22,598 128,050
Term loan 4 - unsecured* 28,588 4.00 30,822 - - 9,247 21,575
Term loan 5 - unsecured* 302,989 4.00 345,215 - - - 345,215Redeemable Convertible Cumulative Preference Shares 16,814 8.00 24,885 - - - 24,885
Revolving credits 80,000 4.25 83,400 83,400 - - -
Bank overdraft 78,418 8.00 84,691 84,691 - - -
Trade and other payables 144,783 144,783 144,783 - - -
1,469,199 1,770,988 312,784 - 61,484 1,396,630
The table below summarises the maturity profile of the Company’s financial liabilities as at the end of the reporting period based
on undiscounted contractual payments:
* Refer to loan from the Government of Malaysia
The Company
CarryingamountRM’000
Contractualinterest rate
%
Contractualcash flows
RM’000
Under 1 year
RM’0001 - 2 year
RM’0002 - 5 year
RM’000
More than 5 yearsRM’000
1.1.2011
Term loan 1 - unsecured* 151,167 8.00 197,593 - - 22,628 174,965
Term loan 2 - unsecured* 540,927 8.00 708,951 - - - 708,951
Term loan 3 - unsecured* 111,841 8.00 150,648 - - 6,686 143,962
Term loan 4 - unsecured* 28,400 4.00 30,823 - - 7,592 23,231
Term loan 5 - unsecured* 306,526 4.00 345,215 - - - 345,215Redeemable Convertible Cumulative Preference Shares 15,697 8.00 24,977 - - - 24,977
Revolving credits 40,590 4.25 40,590 40,590 - - -
Bank overdraft 42,594 7.80 42,594 42,594 -
Trade and other payables 145,305 - 145,305 145,305 - - -
1,383,047 1,686,696 228,489 - 36,906 1,421,301
Notes To The Financial Statements
* Refer to loan from the Government of Malaysia
The table below summarises the maturity profile of the Company’s financial liabilities as at the end of the reporting period based
on undiscounted contractual payments:
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32.3.3 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and
other prices will affect the Group’s financial position or cash flows.
Currency risk
Risk management objectives, policies and processes for managing the risk
The Group is exposed to transactional currency risk primarily through sales and purchases that are
denominated in currency other than the functional currency of the operations to which they relate. The
currencies giving rise to this risk are primarily United States Dollar, Singapore Dollar and Thai Baht.
Foreign exchange exposures in transactional currencies other than functional currencies of the operating
entities are kept to an acceptable level.
Exposure to foreign currency risk
The Group’s exposure to foreign currency (a currency which is other than the currency of the Group
entities) risk, based on carrying amounts as at the end of the reporting period was:
Denominated in
The GroupUSD
RM’000
SGD
RM’000
THB
RM’000
31.12.2012
Trade receivables - 822 -
Cash and cash equivalents - 579 -
Trade payables (3,080) - (4,579)
Exposure in the statement of financial position (3,080) 1,401 (4,579)
31.12.2011
Trade receivables - 852 -
Cash and cash equivalents - 828 -
Trade payables (1,547) (30) (2,792)
Exposure in the statement of financial position (1,547) 1,650 (2,792)
Denominated in
The GroupUSD
RM’000
SGD
RM’000
THB
RM’000
1.1.2011
Trade receivables - 954 -
Cash and cash equivalents - 1,415 -
Trade payables (1,806) (2,159) (1,912)
Exposure in the statement of financial position (1,806) 210 (1,912)
Denominated in
The CompanyUSD
RM’000
SGD
RM’000
THB
RM’000
31.12.2012
Trade receivables - 580 -
Cash and cash equivalents - 579 -
Trade payables (3,080) - (4,579)
Exposure in the statement of financial position (3,080) 1,159 (4,579)
31.12.2011
Trade receivables - 552 -
Cash and cash equivalents - 828 -
Trade payables (1,547) - (1,912)
Exposure in the statement of financial position (1,547) 1,380 (1,912)
1.1.2011
Trade receivables - 954 -
Cash and cash equivalents - 1,415 -
Trade payables (1,806) (2,159) (1,912)
Exposure in the statement of financial position (1,806) 210 (1,912)
Notes To The Financial Statements
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Currency risk sensitivity analysis
The exposure to currency risk of foreign exchange is not material and hence, sensitivity analysis is not
presented.
Interest rate risk
The Group’s investments in fixed rate instruments and its fixed rate borrowings are exposed to a risk
of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings
are exposed to a risk of change in cash flows due to changes in interest rates. Investments in equity
securities and short term receivables and payables are not significantly exposed to interest rate risk.
Risk management objectives, policies and processes for managing the risk
Cash flow interest rate risk is the risk that the future flows of a financial instrument will fluctuate because
of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial
instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-
bearing financial assets, the Group’s income and operating cash flows are substantially independent of
changes in market interest rates. The Group’s interest-bearing financial assets are mainly short term in
nature and have been mostly placed in fixed deposits.
The Group’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating
rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the
Group to fair value interest rate risk. The Group manages its interest rate exposure by maintaining a mix
of fixed and floating rate borrowings.
Notes To The Financial Statements
Exposure to interest rate risk
The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments,
based on carrying amounts as at the end of the reporting period was:
The Group31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Fixed rate instruments
Financial assets 20,903 28,319 54,315
Financial liabilities (1,173,291) (1,154,102) (1,143,289)
(1,152,388) (1,125,783) (1,088,974)
Floating rate instruments
Financial liabilities (139,876) (160,491) (87,823)
The Company31.12.2012
RM’000
31.12.2011
RM’000
1.1.2011
RM’000
Fixed rate instruments
Financial assets - - 34,000Financial liabilities (1,168,192) (1,149,184) (1,138,861)
(1,168,192) (1,149,184) (1,104,861)Floating rate instruments
Financial liabilities (139,876) (158,418) (83,184)
Interest rate risk sensitivity analysis
(a) Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through
profit or loss, and the Group does not designate derivatives as hedging instruments under a fair
value hedged accounting model. Therefore, a change in interest rates at the end of the reporting
period would not affect profit or loss.
(b) Cash flow sensitivity analysis for variable rate instruments
It is estimated that a change of 1% in interest rates at the end of the reporting period would have
increased/(decreased) post-tax profit or loss of the Group and of the Company by RM1,320,000
(2011: RM1,203,700) and RM1,305,000 (2011: RM1,188,100) respectively. This analysis
assumes that all other variables, in particular interest rates, remain constant.
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32.4 Fair value of financial instruments
The carrying amounts of cash and cash equivalents, trade and other receivables, short term receivables and
payables and short term borrowings approximate fair values due to the relatively short term nature of these financial
instruments.
The fair values of other financial assets and liabilities, together with the carrying amounts shown in the statement of
financial position, are as follows:
The Group The Company
Carrying
amount
RM’000
Fair value
RM’000
Carrying
amount
RM’000
Fair value
RM’000
31.12.2012
Financial assets
Other investments 140 * 140 *
Amount due from subsidiaries - - 2,860 #
Amount due from associates 10,571 # 10,571 #
Amount due from Government
of Malaysia 147,817 # 147,817 #
Financial liabilities
Loans and borrowings 1,171,638 1,171,638 1,168,192 1,168,192
Redeemable Convertible Cumulative
Preference Shares 17,976 17,976 17,976 17,976
Amount due to subsidiaries - - 46,927 #
Amount due to associates 7,924 # 7,974 #
31.12.2011
Financial assets
Other investments 170 * 170 *Amount due from subsidiaries - - 2,106 #Amount due from associates 8,689 # 8,689 #Amount due from Government
of Malaysia 25,818 # 25,818 #
Financial liabilities
Loans and borrowings 1,152,718 1,152,718 1,149,184 1,149,184Redeemable Convertible Cumulative
Preference Shares 16,814 16,814 16,814 16,814Amount due to subsidiaries - - 33,585 #
The Group The Company
Carrying
amount
RM’000
Fair value
RM’000
Carrying
amount
RM’000
Fair value
RM’000
1.1.2011
Financial assets
Other investments 170 * 170 *Long term receivables 69,216 * - -Amount due from subsidiaries - - 2,967 #Amount due from associates 8,848 # 8,527 #Amount due from Government of
Malaysia 30,342 # 30,342 #
Financial liabilities
Loans and borrowings 1,143,289 1,143,289 1,138,861 1,138,861Redeemable Convertible Cumulative
Preference Shares 15,697 15,697 15,697 15,697Amount due to subsidiaries - - 32,986 #
* It is not practicable to estimate the fair value of the Group’s and the Company’s unquoted shares and
long term receivables because of the lack of quoted market prices and the inability to estimate fair value
without incurring excessive costs. However, the Group and the Company do not anticipate the carrying
amounts recorded at the end of the reporting period to be significantly different from the values that would
be eventually received.
# It is not practicable to estimate the fair value of the amounts due to/from related parties and Government of
Malaysia due principally to the inability to estimate the settlement date without incurring excessive costs as
these amounts lack a fixed repayment term. However, the Group and the Company do not anticipate the
carrying amounts recorded at the end of the reporting period to be significantly different from the values that
would be eventually received or settled.
The methods and assumptions used by the management to determine fair values of financial instruments other than
those whose carrying amounts reasonably approximate their fair values are as follows:
Loans and borrowings
Fair value has been determined using discounted estimated cash flows. The discount rates used are the current
market incremental lending rates for similar type of lending, borrowing and leasing arrangements.
Notes To The Financial Statements
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32.4.1 Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different
levels have been defined as follows:
• Level1: Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities.
• Level2: InputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheasset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
• Level3: Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservable
inputs).
Level 1
RM’000
Level 2
RM’000
Level 3
RM’000
Total
RM’000
The Group
31.12.2012
Financial assets
Other investment
Unquoted company - - 140 140
31.12.2011
Financial assets
Other investment
Unquoted company - - 170 170
1.1.2011
Financial assets
Other investment
Unquoted company - - 170 170
33. CAPITAL COMMITMENTS
The Group The Company
2012
RM’000
2011
RM’000
2012
RM’000
2011
RM’000
Capital expenditure Property, plant and equipment
Approved and contracted for 82,216 112,935 79,172 110,428Approved but not contracted for 274,865 205,232 261,024 188,932
357,081 318,167 340,196 299,360
Lease obligations on rental of locomotive:
2011 - 1,959 - 1,9592012 3,080 8,493 3,080 8,4932013 9,227 - 9,227 -
34. JOINT VENTURE ARRANGEMENT
On18April 1996,Keretapi TanahMelayuBerhad (“KTMB”) entered into a Joint VentureAgreement (as amendedby
the supplementary agreement dated 19 February 2003) with Malaysian Resources Corporation Berhad (“MRCB”) and
Pembinaan Redzai Sdn Bhd (“PRSB”) to set out the mutual rights and obligations as shareholders in Kuala Lumpur Sentral
Sdn Bhd (“KLSSB”).
On18April1997,KLSSBentered intoaConcessionAgreement (asamendedby thesupplementaryagreementdated
10 March 1999) with the Government of Malaysia and Syarikat Tanah dan Harta Sdn Bhd to undertake the obligation to
construct a new railway central station on the Kuala Lumpur Brickfields railway yard (“KL Sentral Project”) in exchange for
being granted title to the surrounding commercial development lands.
MRCB guarantees to KTMB that the return to KTMB’s investment in the KL Sentral Project shall not be less than Ringgit
Malaysia One Hundred and Fifteen Million (RM115,000,000) only (“KTMB’s Return”), which shall be paid by KLSSB
by 31 December 2012 or within sixty (60) days upon completion of the KL Sentral Project, whichever shall be the earlier
(“Payment Date”). KTMB’s Return will be paid less any dividend and capital repayment that have already been distributed
to KTMB by KLSSB.
MRCB further guarantees that if the amount paid to KTMB by KLSSB by the Payment Date shall be less than KTMB’s
Return, MRCB shall pay to KTMB in cash the difference between the amount of cash received by KTMB and the amount
equivalent to KTMB’s Return (“the Deficit”) within sixty (60) days after the Payment Date.
As of 31 December 2012, KTMB decided, the recognition of KTMB’s Return amount should only be disclosed as a contingent
asset and not recorded in the statement of financial position upon the certainty of the receipt obtained from relevant party.
Notes To The Financial Statements
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The Directors of KERETAPI TANAH MELAYU BERHAD state that, in their opinion, the accompanying financial statements are drawn
up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements
of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company
as of 31 December 2012 and of the financial performance and the cash flows of the Group and of the Company for the year ended
on that date.
Signed on behalf of the Board
in accordance with a resolution of the directors,
________________________________________
DATO’ SRI IR. MOHD ZIN BIN MOHAMED
_______________________________________
DATUK ELIAS BIN KADIR
16 May 2013
Statement By Directors
KERETAPI TANAH MELAYU BERHAD (Incorporated in Malaysia)
Declaration By The OfficerPrimarily Responsible For The Financial Management Of The Company
KERETAPI TANAH MELAYU BERHAD (Incorporated in Malaysia)
I, HAZALINA BINTI ABDUL RAHMAN, being the Officer primarily responsible for the financial management of KERETAPI TANAH
MELAYU BERHAD, do solemnly and sincerely declare that the accompanying financial statements are, in my opinion, correct
and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory
Declarations Act, 1960.
__________________________________
HAZALINA BINTI ABDUL RAHMAN
Subscribed and solemnly declared by the abovenamed HAZALINA BINTI ABDUL RAHMAN at KUALA LUMPUR on this 16th day
of May 2013.
Before me,
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COMMISSIONER FOR OATHS