the sealink group - sealink.listedcompany.comsealink.listedcompany.com/misc/ar2017.pdf · the...
TRANSCRIPT
The Sealink Group
We are a Ship Owner / Charterer, Shipbuilder and
Ship Repairer.
Sealink Group builds, owns and operates a diverse fleet of marine
support vessels, include serving the global
exploration and marine industry.
Our products and services are geographically spread
to over 20 countries across the world.
We are listed on the Main Market of Bursa Malaysia.
SEALINK INTERNATIONAL BERHADSEALINK INTERNATIONAL BERHAD(800981-X)
Our Vision• ALeadingIntegratedService
ProviderfortheMarineIndustry
Our Mission• ConstructingHighPerformance
WorldClassVessels• Establishing,Preservingand
IntegratingaNetworkofGlobalCustomers
• ContinuouslyAchieving InternationalAccreditation inMaritimeSafetyStandards• ContinuouslyImproving
ManagementandOperationalEfficiencyandOptimizationofSystems
• ZeroAccidentsandZeroPollution• ContinuouslyImprovingin
Health,Safety,Security,QualityManagementandCorporateSocialResponsibility
Our Goals• SatisfyingOurCustomers• ImprovingandSustainingOur
BusinessGrowthandMarketShare
• BuildingaStrongandMotivatedWorkforce
Our Values• QualityandExcellence• Integrity• CustomersandEmployees areOurCompany’sAssets• InternationallyCompetitive• EnvironmentalFriendly• SocialConsciousness• FlexibilityinBusinessOperations
1 Vision, Mission and Philosophy
2 Corporate Information
3 Group Structure
4 - 5 Notice of Annual General Meeting
6 - 8 Profile of Directors
9 - 10 Profile of Key Senior Management
11 - 14 Chief Executive Officer’s Message and Management Discussion & Analysis
15 - 16 Audit Committee Report
17 - 20 Statement on Risk Management and Internal Control
21 - 30 Corporate Governance Overview Statement
31 - 33 Sustainability Statement
34 Directors’ Responsibility Statement for the Audited Financial Statement
35 - 104 Financial Statements
105 - 106 Landed Properties
107 - 108 Analysis of Shareholdings
Form of Proxy Details of the Group – Places of Operations/Offices
Contents
Sealink International Berhad (800981-X)
2Annual Report 2017
Board Of Directors
Yong Foh Choi Non-Independent Executive DirectorManaging Director
Yong Kiam Sam Non-Independent Executive DirectorChief Executive Officer cum Deputy Managing Director Eric Khoo Chuan Syn @ Khoo Chuan SynIndependent-Non Executive Director Datuk Sebastian Ting Chiew Yew Independent-Non Executive Director Toh Kian Sing Independent-Non Executive Director Wong Chie Bin Independent-Non Executive Director
Audit Committee
ChairmanWong Chie BinMember Toh Kian Sing Eric Khoo Chuan Syn @ Khoo Chuan Syn Datuk Sebastian Ting Chiew Yew
Nominating Commitee
ChairmanEric Khoo Chuan Syn @ Khoo Chuan SynMember Toh Kian Sing Wong Chie Bin Datuk Sebastian Ting Chiew Yew
Remuneration Committee
ChairmanToh Kian SingMember Eric Khoo Chuan Syn @ Khoo Chuan Syn Wong Chie Bin Datuk Sebastian Ting Chiew Yew
Company Secretary
Yeo Puay Huang(LS0000577)
Registered Office and Corporate Office
Lot1035,Block4,MCLDPiasauIndustrialArea,98000Miri,SarawakTel:085-651778Fax:085-652480Email:[email protected]:www.asiasealink.com
Registrar
Securities Services (Holdings) Sdn Bhd(36869-T)Level7,MenaraMilenium,JalanDamanlelaPusatBandarDamansara,DamansaraHeights50490KualaLumpur,WilayahPersekutuanTel:03-20849000Fax:03-20949940
Auditors
Ernst & Young(AF:0039)4thFloor,Unit4.1,Lot698WismaYongLungPelitaCommercialCentre98000Miri,SarawakTel:085-423881Fax:085-413921
Principal Bankers
HongLeongBankBerhadAmBank(M)BerhadCIMBBankBerhadUnitedOverseasBank(Malaysia)BhdStandardCharteredSaadiqBerhadMalayanBankingBerhadDBSBankLtd
Stock Exchange Listings
Listed on Main Market of Bursa Malaysia Securities Berhad on 29 July 2008
Stock Code
5145
Stock Name
SEALINK
CorporateInformation
Sealink International Berhad (800981-X)Annual Report 2017
3
GroupStructure
S INTERNATIONAL BERHADEALINK
SINGAPORE LABUAN MALAYSIA
Chartering Shipbuilding and Repair
800981-X
SealinkOffshore (L) LtdLL06872
100%
Era SurewaySdn. Bhd.
687555-V
45%
Navitex ShippingSdn. Bhd.
620404-K
** 100%
SealinkManagement
Sdn. Bhd.250551-H
100%
Era SurplusSdn. Bhd.
648806-D
100%
SealinkResources
(L) LtdLL06873
* 100%
SealinkMarine (L) LtdLL06874
* 100%
SealinkAntarabangsa
LtdLL07806
100%
Perkasa AsiaCorporation
LtdLL07807
100%
Hanvoir (L) LtdLL09810
100%
Sea-GoodPte Ltd199707263C
100%
Seabright(Singapore)
Pte Ltd201001447E
100%
Sealink Sdn. Bhd.
20471-D
100%
SutherfieldResourcesSdn. Bhd.
467227-T
100%
Cergas MajusamaSdn. Bhd.
635714-U
100%
Midas Choice
Sdn. Bhd.646673-H
100%
Sea LegendShippingSdn. Bhd.
703278-W
100%
Mitra AngkasaSdn. Bhd.
974404-T
100%
LogistineSdn. Bhd.
896190-T
25%
EuroedgeSdn. Bhd.
571944-T
100%
Sealink Marine
Sdn. Bhd.226309-A
100%
GodrimajuSdn. Bhd.
535404-U
100%
SeabrightSdn. Bhd.
30204-K
100%
Sea AlphaSdn. Bhd.
886816-V
** 100%
Sealink Pacific
Sdn. Bhd.191968-H
100%
Bristal ViewSdn. Bhd.
253385-T
100%
SeastenSdn. Bhd.1054955-A
49%
Sealink Engineeringand Slipway
Sdn. Bhd.653820-H
100%
Baram MouldingIndustriesSdn. Bhd.
200873-D
100%
Sealink ShipyardSdn. Bhd.
195853-D
100%
Aliran SaksamaSdn. Bhd.
473205-H
100%
* Companystruck-offasat 6September2017** Companyappliedtostrike-
offon28December2017
Sealink International Berhad (800981-X)
4Annual Report 2017
NoticeofAnnualGeneralMeeting
NOTICE OF TENTH ANNUAL GENERAL MEETING (“10thAGM”)ofSealinkInternationalBerhad(“theCompany”)willbeheldattheMeetingRoom,1stFloor,AdminBlock,SealinkEngineeringandSlipwaySdnBhd,Lot816,Block1,KualaBaramLandDistrict,98100KualaBaramMiri,Sarawak,onTuesday,22May2018at11:00a.m.forthefollowingpurposes:
AS ORDINARY BUSINESS
1. ToreceivetheDirectors’ReportandAuditedFinancialStatementsforthefinancialyearended31December2017togetherwiththeReportoftheAuditorsthereon.
2. ToapprovethepaymentofDirectors’FeesamountingtoRM277,830.00perannumforNon-
ExecutiveDirectorsandRM39,690.00perannumforExecutiveDirectorsforthefinancialyearending31December2018.
3. Tore-electMrWongChieBinwhoshallretireinaccordancewithArticle89oftheCompany’s
ArticlesofAssociationand,beingeligible,hasofferedhimselfforre-election. 4. Tore-electMrTohKianSingwhoshallretireinaccordancewithArticle89oftheCompany’s
ArticlesofAssociationand,beingeligible,hasofferedhimselfforre-election.
5. Tore-appointMessrs.Ernst&YoungastheAuditorsoftheCompanyandtoauthorisetheDirectorstodeterminetheirremuneration.
AS SPECIAL BUSINESS
To consider and, if thought fit, to pass the following ordinary resolutions :
6. ContinuationinofficeasIndependentNon-ExecutiveDirectors (i) “ThatsubjecttothepassingofResolution2,approvalbeandisgiventoMrWongChie
BinwhohasservedasanIndependentNon-ExecutiveDirectoroftheCompanyforaconsecutivetermofmorethannine(9)years,tocontinueinofficeasanIndependentNon-ExecutiveDirectoroftheCompany.”
(ii) “ThatsubjecttothepassingofResolution3,approvalbeandisgiventoMrTohKian
SingwhohasservedasanIndependentNon-ExecutiveDirectoroftheCompanyforaconsecutivetermofmorethannine(9)years,tocontinueinofficeasanIndependentNon-ExecutiveDirectoroftheCompany.”
7. TotransactanyotherbusinessofwhichduenoticeshallhavebeengiveninaccordancewiththeCompany’sArticlesofAssociationandtheCompaniesAct2016.
ByorderoftheBoard,
Yeo Puay Huang(f)CompanySecretary(LS0000577)Dated:23April2018
(Resolution 1)
(Resolution 2)
(Resolution 3)
(Resolution 4)
(Resolution 5)
(Resolution 6)
Sealink International Berhad (800981-X)Annual Report 2017
5
Notice of Annual General Meeting (continued)
NOTES:
1. OnlyDepositorswhosenamesappearintheGeneralMeetingRecordofDepositorsasat16May2018beregardedasMembersandshallbeentitledtoattend,speakandvoteatthe10thAGM.
2. AMemberentitledtoattend,speakandvoteatthis10thAGMmayappointaproxytoattend,speakandvoteonhisbehalf.AproxyneednotbeamemberoftheCompany.
3. WhereamemberoftheCompanyisanexemptauthorizednomineewhichholdsordinarysharesintheCompanyformultiplebeneficialownersinonesecuritiesaccount(omnibusaccount),thereisnolimittothenumberofproxieswhichtheexemptauthorizednomineemayappointinrespectofeachomnibusaccountitholds.
4. Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointororofhisattorneydulyauthorizedinwritingoriftheappointorisacorporation,eitherunderitscommonsealorunderthehandofanofficerorattorneyofthecorporationdulyauthorized.
5. TheinstrumentappointingaproxymustbedepositedattheregisteredofficeoftheCompanyatLot1035,Block4,MCLD,PiasauIndustrialArea,98000Miri,Sarawak,notlessthan48hoursbeforethetimesetforthis10thAGMoranyadjournmentthereof.
6. PursuanttoParagraph8.29A(1)oftheMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhad,allresolutionssetoutinthisNoticewillbeputtovotebywayofpoll.
Explanatory Notes
1. TheAuditedFinancialStatementsarefordiscussiononlyastheydonotrequireshareholders’approvalpursuanttoSection340(1)oftheCompaniesAct,2016.Hence,thisAgendaitemwillnotbeputforvoting.
2. Re-electionofdirectors
MrWongChieBinandMrTohKianSingshallretireinaccordancewithArticle89oftheCompany’sArticles ofAssociationand,beingeligible,haveofferedthemselvesforre-election.
Theprofileofthedirectorswhoarestandingforre-electionarestatedonpages6to8oftheAnnualReport2017.
3. ContinuationinofficeasIndependentNon-ExecutiveDirectors
TheproposedResolutions5and6aretoseekshareholders’approvaltoretainMrWongChieBinandMrTohKianSingasIndependentNon-ExecutiveDirectors.TheyhaveservedtheCompanyasIndependentNon-ExecutiveDirectorssinceMay2008formorethannine(9)years.TheNominatingCommitteehaveassessedbothofthemandtherebyrecommendedthattheycontinueinofficeasIndependentNon-ExecutiveDirectorsoftheCompanybasedonthefollowingjustifications:
• TheyhavefulfilledthecriteriaunderthedefinitionofIndependentDirectorsasstatedintheMainMarketListingRequirementsofBursaSecurities;
• Theypossess vast commercial experienceand knowledge that complements theCompany’sboardcomposition,andcontinuetoprovidevaluableinsightsandcontributionstotheBoard;
• TheyhaveparticipatedinboarddiscussionsandtheyareabletobringindependentandobjectivejudgementstotheBoard.
TheproposedResolution5wouldalsoallowMrWongChieBintoserveasChairmanoftheAuditCommitteepursuanttotherequirementsofParagraph15.10oftheMainMarket ListingRequirements ofBursaMalaysiaSecuritiesBerhad.
Sealink International Berhad (800981-X)
6Annual Report 2017
ProfileofDirectors
Yong Foh ChoiManaging DirectorNon-Independent Executive Director
Nationality/Age/Gender:Malaysian/79/Male
Date of Appointment:28December2007
Academic/Professional Qualification(s):• FoundingmemberofBumiArmadaNavigationSdn
Bhd(BANSB)• FounderofSealinkGroupofCompanies• Prominentbusinessman
Working Experience:• VenturedSSB’sbusinessdirectionintocharteringOSVs
totheoffshoreoilandgasindustry(1997-present)• FormedSealinkSdnBhd (CompanyNo. 20471-D)
(SSB)toprovidecharteringservicesofmarinevesselstonon-oilandgasindustries(1993-1997)
• ManagingDirectorofBumiArmadaNavigationSdnBhd(BANSB)(1974-1993)
• DiversifiedYongFohChoi&SonsEnterpriseSdnBhd(CompanyNo.20716-P)intopropertydevelopment,shippingandoffshorelogisticssupportservices(Mid1970s)
• IncorporatedYongFohChoi&SonsEnterpriseSdnBhd(CompanyNo.20716-P)tospearheadhisownbusiness interest in timber extraction, imports andexports(Early1960s)
Present Directorship(s):ListedIssuer:SealinkInternationalBerhad
OtherPublicCompanies:NIL
PastDirectorship(s)and/orAppointment(s):NIL
Additional Information1.Anyfamilyrelationshipwithanydirectorand/ormajor
shareholderofthelistedissuer: ThefatherofYongKiamSam,whoisaDirectorand
also theChief ExecutiveOfficer (CEO) of SealinkInternationalBerhad(SIB).
2.Anyconflictofinterestswiththelistedissuer:NIL
3.Otherthantrafficoffences,thelistofconvictionsforoffenceswithinthepast5yearsandparticularsofanypublicsanctionorpenalty imposedby the relevantregulatorybodiesduringthefinancialyear2017:NIL
4.Thenumberofboardmeetingsattendedinthefinancialyear:6/6
Yong Kiam SamChief Executive Officer cum Deputy Managing DirectorNon-Independent Executive Director
Nationality/Age/Gender:Malaysian/47/Male
Date of Appointment:28December2007
Academic/Professional Qualification(s):• Bachelor ofCommerce,University ofMelbourne,
Australia• MasterofBusinessAdministration,LondonBusiness
School,UnitedKingdom.
Working Experience:• DirectorofallthesubsidiariesofSealinkInternational
Berhad• Senior consultantwithErnst&YoungConsultants,
Singapore• AccountsExecutiveinLambirMyanmarInvestments
Ltd,Myanmar
Present Directorship(s):ListedIssuer:SealinkInternationalBerhad
OtherPublicCompanies:Nil
PastDirectorship(s)and/orAppointment(s):Nil
Additional Information1.Anyfamilyrelationshipwithanydirectorand/ormajor
shareholderofthelistedissuer:
HeisthesonofYongFohChoi,whoisaDirectorofSealinkInternationalBerhad.
2.Anyconflictofinterestswiththelistedissuer:Nil
3.Otherthantrafficoffences,thelistofconvictionsforoffenceswithinthepast5yearsandparticularsofanypublicsanctionorpenalty imposedby the relevantregulatorybodiesduringthefinancialyear2017:Nil
4.Thenumberofboardmeetingsattendedinthefinancialyear:6/6
Sealink International Berhad (800981-X)Annual Report 2017
7
Profile of Directors (continued)
Wong Chie BinIndependent Non-Executive DirectorChairman of Audit CommitteeMember of Nominating CommitteeMember of Remuneration Committee
Nationality/Age/Gender:Malaysian/62/Male
Date of Appointment:20May2008
Academic/Professional Qualification(s):• MemberofCharteredAccountantsAustraliaandNew
Zealand• FellowmemberofCharteredTaxInstituteofMalaysia• MemberofMalaysianInstituteofAccountants• BachelorDegreeinCommerce,UniversityofOtago,
NewZealand
Working Experience:• SeniorPartner,CroweHorwath• Over30years’ experience inaccounting,auditing,
taxationandmanagementconsultancyservices
Present Directorship(s):ListedIssuer:SealinkInternationalBerhad
OtherPublicCompanies:NIL
PastDirectorship(s)and/orAppointment(s):NIL
Additional Information1.Anyfamilyrelationshipwithanydirectorand/ormajor
shareholderofthelistedissuer:NIL
2.Anyconflictofinterestswiththelistedissuer:NIL
3.Otherthantrafficoffences,thelistofconvictionsforoffenceswithinthepast5yearsandparticularsofanypublicsanctionorpenalty imposedby the relevantregulatorybodiesduringthefinancialyear2017:NIL
4.Thenumberofboardmeetingsattendedinthefinancialyear:6/6
Toh Kian SingIndependent Non-Executive DirectorChairman of Remuneration CommitteeMember of Nominating CommitteeMember of Audit Committee
Nationality/Age/Gender: Singaporean/53/Male
Date of Appointment: 23May2008
Academic/Professional Qualification(s):• BachelorofLaw,NationalUniversityofSingapore• BachelorofCivilLaw,UniversityofOxford
Working Experience:• Hehasvastexperienceasashippinglitigationand
arbitration lawyer, specialising incharterparty,billsof lading, ship sale and purchase, shipbuildingandmarine insurancedisputes. Healso handlescommoditytrading(particularlyoilandminerals)andlettersofcreditdisputes.
• He is a practising advocate and solicitor of theSupremeCourtofSingapore.
• HewasappointedaSeniorCounseloftheSupremeCourtofSingaporeinJanuary2007.
• HeisanarbitratorlistedinthepanelofarbitratorsoftheSingaporeInternationalArbitrationCentre,ChinaMaritime ArbitrationCommission, Kuala LumpurRegionalCentreforArbitration,SingaporeChamberofMaritimeArbitration,LondonCourtofInternationalArbitration,DIFC-LCIAArbitrationCentre, PacificInternationalArbitrationCenter (Vietnam),MemberoftheSouthChinaInternationalEconomicandTradeArbitrationCommission).
Present Directorship(s):ListedIssuer:SealinkInternationalBerhad
OtherPublicCompanies:NIL
PastDirectorship(s)and/orAppointment(s):UTTrustPteLtd
Additional Information1.Anyfamilyrelationshipwithanydirectorand/ormajor
shareholderofthelistedissuer:NIL
2.Anyconflictofinterestswiththelistedissuer:NIL
3.Otherthantrafficoffences,thelistofconvictionsforoffenceswithinthepast5yearsandparticularsofanypublicsanctionorpenalty imposedby the relevantregulatorybodiesduringthefinancialyear2017:NIL
4.Thenumberofboardmeetingsattendedinthefinancialyear:5/6
Sealink International Berhad (800981-X)
8Annual Report 2017
Eric Khoo Chuan Syn @ Khoo Chuan SynIndependent Non-Executive DirectorChairman of Nominating CommitteeMember of Remuneration CommitteeMember of Audit Committee
Nationality/Age/Gender:Malaysian/62/Male
Date of Appointment:20May2008
Academic/Professional Qualification(s):• Bachelor of Laws (LLB) Hons, University of
Wolverhampton,England,UnitedKingdom
Working Experience:• Practising Advocate and Solicitor, Khoo & Co
(1982-present)• Magistrate,JudicialDepartment(1979–1982)• Barrister-at-Law,Gray’sInn,London,England(1979)
Present Directorship(s):ListedIssuer:SealinkInternationalBerhad
OtherPublicCompanies:Nil
PastDirectorship(s)and/orAppointment(s):Nil
Additional Information1.Anyfamilyrelationshipwithanydirectorand/ormajor
shareholderofthelistedissuer:Nil
2.Anyconflictofinterestswiththelistedissuer:Nil
3.Otherthantrafficoffences,thelistofconvictionsforoffenceswithinthepast5yearsandparticularsofanypublicsanctionorpenalty imposedby the relevantregulatorybodiesduringthefinancialyear2017:Nil
4.Thenumberofboardmeetingsattendedinthefinancialyear:5/6
Datuk Sebastian Ting Chiew YewIndependent Non-Executive Director Member of Audit CommitteeMember of Nominating CommitteeMember of Remuneration Committee
Nationality/Age/Gender:Malaysian/63/Male
Date of Appointment:20August2013
Academic/Professional Qualification(s):• BachelorofLaw(LLB)Hons(SecondClassUpper),
NorthLondonPolytechnic(nowknownasUniversityofNorthLondon)
• MasterofLaw(LLM),UniversityofCambridge(DarwinCollege)England
Working Experience:• Commissioner forNationalWaterCommission by
theMinisterofEnergyGreenTechnologyandWaterMalaysia(May2016–present)
• MemberofPiasauNatureReserveImplementationandEndowmentCommittee(February2015–present)
• Political Secretary toMinister of Energy GreenTechnologyandWaterMalaysia(April2009–2013)
• PoliticalSecretarytoMinisterofPlantationIndustriesandCommodities(May2004-April2009)
• Councillor,MiriMunicipalCouncil,MiriSarawak(1989-1999)
• Barrister-at-law,CouncilofLegalEducationLincoln’sInn,London,England(1983)
Present Directorship(s):ListedIssuer:SealinkInternationalBerhad
OtherPublicCompanies:NIL
PastDirectorship(s)and/orAppointment(s):NIL
Additional Information1.Anyfamilyrelationshipwithanydirectorand/ormajor
shareholderofthelistedissuer:Nil2.Anyconflictofinterestswiththelistedissuer:Nil3.Otherthantrafficoffences,thelistofconvictionsfor
offenceswithinthepast5yearsandparticularsofanypublicsanctionorpenalty imposedby the relevantregulatorybodiesduringthefinancialyear2017:Nil
4.Thenumberofboardmeetingsattendedinthefinancial
year:5/6
Profile of Directors (continued)
Sealink International Berhad (800981-X)Annual Report 2017
9
Lau Soo MoiGroup Director of the Subsidiaries of Sealink International Bhd
Nationality/Age/Gender:Malaysian/63/Female
Date of Appointment:4June2010
Academic/Professional Qualification(s):• Bachelor of Science, LondonUniversity, United
Kingdom• DiplomainShipManagement,NationalSeaTraining
Centre,UnitedKingdom(DistanceLearning)
Working Experience:• CompanyDirector,SubsidiariesofSealinkInternational
BerhadGroupintheMarineDivision(2010–Present)• GeneralManager,SealinkSdnBhd(2008-2010)• AssistantGeneralManager,SealinkSdnBhd(2002–
2008)• Operations,AdministrationandBusinessDevelopment
Manager,SealinkSdnBhd(1994–2002)• AdministrationManager,BumiArmadaNavigationSdn
BhdandSealinkSdnBhd(1985–1994)• Manager,LayangLayangServicesSdnBhd,aviation
branch(1981-Present)
Present Directorship(s):ListedIssuer:Nil
OtherPublicCompanies:Nil
Additional Information1.Anyfamilyrelationshipwithanydirectorand/ormajor
shareholderofthelistedissuer:Nil
2.Anyconflictofinterestswiththelistedissuer:Nil
3.Otherthantrafficoffences,thelistofconvictionsforoffenceswithinthepast5yearsandparticularsofanypublicsanctionorpenalty imposedby the relevantregulatorybodiesduringthefinancialyear2016:
SaveforapenaltyimposedbySuruhanjayaSyarikatMalaysia(SSM)inDecember2016pertainingtotheinadvertent non-submission of Audited FinancialStatementsbyanassociateCompanyamountingtoRM4,000whichhassincebeenpaidinfull,therearenootheroffences(otherthantrafficoffences)withinthepastfiveyearsorhadbeenimposedanypublicsanctionorpenaltybytherelevantregulatorybodiesduringthefinancialyear.
Yong Kiam MiawGeneral Manager for Sealink Shipyard Sdn BhdProject Manager (Property Development) for Sealink Sdn Bhd
Nationality/Age/Gender:Malaysian/51/Male
Date of Appointment:1September2014
Academic/Professional Qualification(s):• LicensedSecretary• BusinessAdministration
Working Experience:• GeneralManagerforSealinkShipyardSdnBhd• ManagerforLambirTimberSdnBhd• ManagerforSekiwaLoggingSdnBhd
Present Directorship(s):ListedIssuer:Nil
OtherPublicCompanies:Nil
Additional Information1.Anyfamilyrelationshipwithanydirectorand/ormajor
shareholderofthelistedissuer: SonofMrYongFohChoi BrotherofMrYongKiamSam
2.Anyconflictofinterestswiththelistedissuer:Nil
3.Otherthantrafficoffences,thelistofconvictionsforoffenceswithinthepast5yearsandparticularsofanypublicsanctionorpenalty imposedby the relevantregulatorybodiesduringthefinancialyear2017:Nil
ProfileofKeySeniorManagement
Sealink International Berhad (800981-X)
10Annual Report 2017
Capt. Bernard Anak IditHSE Manager Cum DPA
Nationality/Age/Gender:Malaysian/49/Male
Date of Appointment:2May2012
Academic/Professional Qualification(s):• Master of Foreign Going Ships – (COC, Class
1) – Mar i t ime Academy Malaysia (ALAM)(Degree in Nautical Science -World MaritimeUniversity/ALAM)
• SafetyAndHealthOfficerCertificate(NIOSH)• He isalsoaCertifiedSafetyandHealthofficerand
hasobtainedhisgreenbookin2008fromDepartmentofOccupationalSafetyandHealth(DOSH)Malaysia.RegisterSHO(DOSH)SHO-JKKPIS127/438/2/4992
• MemberofInstituteKelautanMalaysia(IKMAL)• MemberofNationalInstituteofOccupationalSafety
andHealth(NIOSH)
Working Experience:• Throughouthisseacareersince1990,hehadclocked
seaserviceofmorethan15yearssailingtoallpartsof theworldandservedonboardvariousMerchantShips.
• Hedecidedtoquitsailingin2005andworkedintheOilandGasCompanybasedinMiri.Duringhistenureas theHSEManager,hehasreceivedanumberofachievementsandawardsfromcharterers,authoritiesandprofessionalaffiliations.
• BorneoOccupationalSafetyandHealthPractitioners’Society(Boshps)servingasvicechairman.
Present Directorship(s):ListedIssuer:Nil
OtherPublicCompanies:Nil
Additional Information1.Anyfamilyrelationshipwithanydirectorand/ormajor
shareholderofthelistedissuer:Nil
2.Anyconflictofinterestswiththelistedissuer:Nil
3.Otherthantrafficoffences,thelistofconvictionsforoffenceswithinthepast5yearsandparticularsofanypublicsanctionorpenalty imposedby the relevantregulatorybodiesduringthefinancialyear2017:Nil
Angelia Chong Pei ChengGeneral Manager, Group Finance
Nationality/Age/Gender:Malaysian/42/Female
Date of Appointment:1April2018
Academic/Professional Qualification(s):• BachelorofCommerceinAccountancy,Universityof
Canterbury,Christchurch,NewZealand• CharteredAccountantcertifiedbyTheAssociationof
CharteredCertifiedAccountants(ACCA,FCCA)• CharteredAccountantcertifiedbyMalaysianInstitute
ofAccountants(CA,MIA)
Working Experience:• GeneralManager,GroupFinance,SealinkInternational
Berhad(1April2018-Present)• Headof Treasury /CorporateCompliance,Sealink
InternationalBerhad(2016-March2018)• HeadofCompliance,Sealink InternationalBerhad
(2015)• SeniorFinanceManager,PetraResourcesSdnBhd,
Miri(2013-2015)• SeniorFinanceManager,SemuaShippingGroupof
Companies(2005-2013)• Auditor,KPMGSarawak(1998-2005)• AssistantBusinessAdvisor,KPMGAuckland,New
Zealand(1997)
Present Directorship(s):ListedIssuer:Nil
OtherPublicCompanies:Nil
Additional Information1.Anyfamilyrelationshipwithanydirectorand/ormajor
shareholderofthelistedissuer:Nil
2.Anyconflictofinterestswiththelistedissuer:Nil
3.Otherthantrafficoffences,thelistofconvictionsforoffenceswithinthepast5yearsandparticularsofanypublicsanctionorpenalty imposedby the relevantregulatorybodiesduringthefinancialyear2017:Nil
Profile of Key Senior Management (continued)
Sealink International Berhad (800981-X)Annual Report 2017
11
Dear Valued Shareholders,
OnbehalfoftheBoardofDirectorsofSealinkInternationalBerhad(“theGroup”),IampleasedtopresenttoyouourAnnualReportforthefinancialyearended31December2017.Ithasbeenachallengingbutoptimisticyearforthemarineindustry,whichinevitablyimpactedourfinancialperformancefortheyearbutgivesrisetoconfidenceforthefuture.
Onanencouragingnote,theinitiativesandstrategiesundertakenhavebenefitedinreshapingandstrengtheningtheGroup,aswellasputusingoodsteadinwithstandingchallenges.Whiletheoilpriceandexternalenvironmentfactorsarebeyondourcontrol,wearefocusingondevelopingourstrengthsinordertomeetchallengesbetter.
MARKET OVERVIEW
TheMalaysiaoilandgasindustryhasahealthieroutlookin2018withBrentcrudeoilpricebreachingthekeypsychologicalmarkofUSD60perbarrel(bbl).Thisissupportedbyrobustoilconsumptiondemand,whichcoupledwithOPEC’sadherencetoproductioncutsandextensionoftheproductioncutsuntilend2018hasledtosteadyglobalinventorydrawdowns.Thisisapromisingsignalasfarasmarketrebalancingisconcernedandwillcontinuetosupportapositiveoilpricemovementhereon,aslongasthesupplysideiscappedbymarketparticipants.
Globalcapexbudgetsareexpectedtoremainresilientin2018andacceleratein2019albeitfromalowbaseasoilpriceaveragestotheUSD65/bblmark.Already,weareseeingsignsofrecoveryalongthevaluechainin2018forglobaloffshoreactivities.Oilandgasserviceproviderswithregionalorglobalfootprintarewellpoisedtocapitaliseonthistrend.
TheOrganizationofthePetroleumExportingCountries(“OPEC”)andnon-OPECoilproducersagreedon30November2017inViennatoextendthecurrentagreementofcuttingoiloutput.ThedecisionwastakenamidunprecedentedunanimitybetweenSaudiArabiaandRussia,twooftheworld’slargestoilproducers.ThedealalsoplacesproductioncapsforthefirsttimeonNigeriaandLibya,whichwereexemptfromthecutsandthishasresultedinanunexpectedsupplyglutintheearlypartof2017.Thus,fewersupplysidesurprisesareexpectedfromtheOPECandnon-OPECblocin2018.(Source: DBS Group Research report 2018)
Worldoildemandwouldgrowfasterthanexpectedin2018becauseofahealthyworldeconomy,addingatailwindtotheproducergroup’sefforttoremoveasupplyglutbycuttingoutput.Theglobalmarketisexpectedtoreturntobalanceonlytowardstheendof2018,noearlierthanpreviouslythought,ashigherpricesencouragetheUnitedStatesandothernon-memberproducerstopumpmore.Worldoildemandisexpectedtoriseby1.59millionbarrelsperday(bpd)thisyear,anincreaseof60,000bpdfromthepreviousforecast. (Source: OPEC)
DemandforOffshoreSupportVessels(OSV’s)isdrivenbyproductionsupport,rigsupportandtosomeextent,offshoreandsubseaconstructionsupport.ContinuousproductionsupportisbyfarthemostimportantdriverforOSV’s,whilerigsupportisthemaindriverfortheAnchorHandlingTugSupplysegment.
Withoilpricerecovering,webelievethatthedemandforoilserviceswillcomebackfirstfortheshallowwatersegments,asthesetypicallyhavealowerbreakevencost.ThiswillbebeneficialfortheGroupwhichhasthesevesseltypes.
OVERVIEW OF THE GROUP’S BUSINESS AND OPERATIONS
TheGroupisprincipallyinvolvedinthebusinessofcharteringofmarinevessels,shipbuildingandshiprepair.TheGroupbuilds,ownsandoperatesadiversefleetofmarinesupportvessels,whichservetheglobalexplorationandmarineindustry.
OurshipyardislocatedinKualaBaram,Miri,SarawakandtheworkshopinKrokop,Miri,Sarawak.Ourshipyardachievedthefirstmilestonein1999whenitdeliveredthefirstnewbuild,alandingcraftknownas“SealinkVictoria”.To-date,ourshipyardhasconstructedintotalsixtyeight(68)vessels(includingfabricationof2workbarges)withtotalvalueamountingtoaboutRM1.4billion.Armedwithtechnicalknowhowandmanagementcapabilities,ourGroupisabletoofferasophisticatedarrayofvesselsdesignedtomeetourcustomers’needs.TheGroup’sshipbuildingdivisionwillalsocontinueitsemphasisonshiprepair.ApartfromconstructionofOSVs,theGroupisdiversifyingintotheconstructionofharbortugsandothernon-oilandgasvessels.
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OVERVIEW OF THE GROUP’S BUSINESS AND OPERATIONS (continued)
OurshipoperationsarebasedinMiri,SarawakwithbranchofficeslocatedinLabuan,KemamanandSingapore.Theshippingdivisionhasafleetofthirtyfour(34)vesselsprovidingabroadrangeofservicestothemarinesectorwiththehigheststandardsofsafetyandtechnologyavailableintheindustry.
Asanintegratedserviceprovider,wehavefulldiscretionandcontroloverthedesignspecification,quality,costandtimelydeliveryofourvessels.Italsoprovidesuswiththeflexibilitytoeither“buildandsell”or“buildandcharter”ourvessels.Ourexperiencedmaintenanceteamcanrespondpromptlyandattendtoemergencyrepairsandwherenecessary,vessel(s)canbearrangedtobeupslippedinternallyatourslipwayinKualaBaramforvesselswithinthevicinity.ThisreducesourdependenceonotheryardsandprovidesourGroupwithadistinctcompetitiveadvantageovertheotherplayersinthemarket.
Overtheyears,theGrouphasestablishedareputationwithaproventrackrecordinbothofourcorebusinesses.Asatestimonytothis,ourclienteleincludesbothlocalandinternationalcompaniesfromtheUnitedStatesofAmerica,Australia,China,LatinAmerica,Europe,EastAfrica,SoutheastAsiaandtheMiddleEast.
TheGroupstrivestointensifyitseffortsandcommitmenttodeliverhighvalueproductsandserviceswithemphasisonsafeoperationsandtomaintainthegroup’spositionasoneoftheleadingintegratedserviceprovidersintheoffshoremarineservicessegment.
AsakeymeasuretomanagetheGroup’sexposuretothebusinessrisks,theGrouphascontinuedonthefollowinginitiativeswhichhavebeenreinforcedandcarriedforwardtothenextfiscalyear:
• Sustainablecostrationalizationandoptimizationofhumanresourceswhereonlycriticalpositionsarefilledwhenthe incumbents leave theGroup.Existingpersonnelare re-deployedwithin theGroup to takeonadditionalresponsibilitiesforbetterefficiencieswithoutimpairingtheadequacyofexistinginternalcontrolsystem;
• Closermonitoringof inventorymanagement,where stringent controls havebeendeployed toaccount forprocurementofgoodsandofservicesvis-à-visexistinginventorylevelstoconservecashflowsandminimizetheriskofinventoryobsolescence;
• Effectivecashflowmanagement.
Notwithstandingthechallengesfaced,theGroupisalwaysonthelook-outforstrategicallianceswithbusinesspartners,especiallythosewhichnicheexpertiseforbettermarketreach,allwiththeviewofenhancingshareholdervalue.Onthispremise,theGroupenteredintotwojointventureagreementsinNovember2017tohavedirectaccessandinvolvementwithnationalandinternationaloilmajorsandparticipateintheirtenderingexercisesdirectly.
Withtheongoinginitiativesinrationalizingandoptimizingcostsandexposures,webelievetheGroupwillbewellpoisedandpositionedtotideovertheprevailingbusinesschallenges.
OVERVIEW OF FINANCIAL PERFORMANCE
Financial results
TheGroup’sfinancialpositionhasimproveddespiteacontractioninearnings.Revenueforfinancialyear(“FY”)2017declinedbyRM48millionorby38%,primarilyduetoreducedcharterhireincome.Nevertheless,lossnetoftaxhasimprovedbymorethan10%orRM7million.Thisisinlinewiththeongoinginitiativesinrationalizingandoptimizingcostsandexposureswhichhavesignificantlyreducedourcostofsalesandotheroperatingexpenses&administrativeexpensesbyRM42millionandRM22millionrespectively.Financecostshavealsoreducedsubstantially,bymorethan20%,fromRM12.4milliontoRM9.5millionassomeloanshavebeencleared.
Chief Executive Officer’s Message and Management Discussion & Analysis (continued)
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Liquidity and resources
DespitesufferingalossinFY2017,onapositivenote,netcashflowsfromoperatingactivitiesamountedtoRM27million.TheGroupmonitorsitscashflowsactivelyandensuresallobligationsaremetasandwhentheyfalldue.TheGroupactivelymanagesitsdebtmaturityprofile,operatingcashflowsandtheavailabilityoffundingastoensurethatallrepaymentsandfundingneedsaremet.
BorrowingsreducedsignificantlytoRM188millionfromRM252millionin2016,adropofmorethan25%.ThisspeakswellontheviabilityoftheGroup’sbusinessdespitethetoughconditionsinwhichitoperates.Atthesametime,withreducedgearingthegroupwillhaveastrongerbalancesheettotakeonadditionalfinancingtofundexpansionwhentheindustryturnsaround.
Capital Management
TheGroup’sobjectiveswhenmanagingcapitalaretosafeguardtheGroup’sabilitytocontinueasagoingconcernandtomaintainanoptimalcapitalstructuresoastomaximizeshareholdersvalue.Inordertomaintainorachieveanoptimalcapitalstructure,theGroupmayadjustthedividendpayment,returncapitaltoshareholders,obtainnewfinancingfacilitiesordisposeofassetstoreduceborrowings.ManagementmonitorscapitalbasedontheGroup’sgearingratio.TheGroupisalsorequiredbycertainbankstomaintainagearingratioofnotexceedingacertainpercentagevaryingbetween100%and200%.TheGroup’sCompany’sstrategyistomaintaingearingratioofnotexceeding100%.Thegearingratioiscalculatedastotalloansandborrowingsdividedbyequitycapital.TheratiofortheGrouphasimprovedfrom55%in2016to49%in2017.
Dividend
ThedeclarationandpaymentofdividendwilldependupontheCompany’sfinancialperformance,cashrequirementsandissubjecttocertainlimitationsimposedundertheCompanyAct2016.Duetotheaforesaidlossesincurred,theBoarddoesnotrecommendanydividendfortheFY2017.
CORPORATE SOCIAL RESPONSIBILITY
TheGroupiscontinuouslycommittedtofulfillingourroleasaresponsiblecorporatesocialcitizen.ThemainfocusofourGrouponcorporatesocialinitiativesaretheWorkplace,theEnvironmentandtheCommunity,withtheviewofmaintainingasustainablevaluefortheGroupanditsshareholders.ActivitiesundertakeninthedischargeoftheGroup’scorporatesocialresponsibilitiesaresetoutseparatelyintheSustainabilityStatement.
CORPORATE GOVERNANCE AND INVESTORS’ RELATIONS
TheBoardbelieves inembeddingaculture in theGroupthatseekstobalancecompliancerequirementswiththeneed todeliver long-termstrategic value to shareholdersandstakeholders throughperformance,predicatedonentrepreneurship,controlandownership,andwithdueconsiderationtowardsethicsandintegrity.Assuch,theBoardstrivestoembracethesubstancebehindthePrinciplesandRecommendationsaspromulgatedbytheMalaysianCodeonCorporateGovernance2017andnotmerelytheform.
ApartfromthedisclosuresintheAnnualReport,theGrouphasalsoestablishedacorporatewebsiteatwww.asiasealink.comthathouses, inter-alia,documentationontheGroup’scorporategovernancepractices liketheBoardCharter,Whistle-BlowingPolicy,CodeofConductforDirectorsandemployeesoftheGroup,CorporateDisclosurePoliciesandProceduresandSustainabilityPolicythatareusefulforinvestorsaswellaspotentialinvestorstobeapprisedonhowtheBoardviewscorporategovernanceandengagementwithinvestors.
Chief Executive Officer’s Message and Management Discussion & Analysis (continued)
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OUTLOOK AND PROSPECTS
Althoughmarketsentimentsarestillcautious,thereismoreoptimismoverprospectsfortheoilandgasindustryinlightofmoderateoilpricerecoverytrend.TheGroupwillcontinuetomanagecostsandincreaseefficiencyinthisturbulenteconomicclimate.Ridingonourstrongfoundation,weareconfidentthattheGroupwillachievegoodresultsgoingforward.
Basedonindustryanalystreports,oilpriceswillhoveraroundUSD50toUSD60perbarrelin2018ascrudepriceshaveralliedontheextensionofOPECandnon-OPECmembers’productioncuts,andthemarketcouldrefocusontherevivalofUSshalegasproduction.
According toKenangaResearch, tenderingactivitieshavebeenon theriseandoilmajorsarereviewingprojectssuggestingthattheyarerelativelymoreupbeatontheupstreamsectorfollowingthestabilisationofoilprices.
Petronas’ActivityOutlookfor2018-2020alsoindicatesmostupstreamsub-segments’activitiesin2018wererevisedhighercomparedtothepreviousreport.Researchindicatesthattheupwardrevisioncouldbeduetothedelayedworkorderslastyearbeingpushedto2018whichmaypotentiallyleadtobettercontractflowsandfurtherprovideorder-bookreplenishmentopportunitiesforthesupportingsectors.
TheGroupwillcontinueitsemphasisonitscoreactivitiesofshipbuilding,shipcharterandshiprepair.TheGroup’sshipbuildingdivisionwillbelookingtowardsbuildingvesselswhichhaveanichemarketaswellasenhancingitsdocking(shiprepair)facilities,whilstcontinuouseffortswillbetakentowardsoptimisingcapacityutilisationoftheGroup’svessels.TheGroupisalsolookingatbuildingnewvesselsthataremoreenergyefficientandenvironmentfriendly,inlinewithtighterenvironmentalregulationsinthemaritimeindustry.Withtheongoinginitiativesinsustainablecostrationalisationandexposures,webelievetheGroupwillbewellpositionedtotideoverthecurrentbusinesschallenges.
WiththeGovernmentlendingstrongersupporttothemaritimeindustrywiththerecentlaunchoftheMalaysiaShippingMasterplan,thecountryissettobecomeaself-sufficientandinternationallycompetitivenation,thatcanbenefitusalongthemaritimeindustrysupplychain.
Barringanyunforeseencircumstancesorevents, theBoard isoptimistic thatdemandforoffshoremarinesupportvesselswillimprovewithfurtherincreasedexpenditureinoffshoreoilfielddevelopmentandmaintenanceworkbytheoilmajors.Theoutlookseemstobeimprovinginanticipationofashippingrecovery.
NOTE OF APPRECIATION
Onbehalfof theBoardofDirectors, Iwish toconveyoursincere thanksandappreciation toallourstakeholders,beginningwithourshareholdersfortheirconfidenceandbeliefintheprospectsofourGroup.Toourclients,businesspartners,associatesandprincipals;fortheircontinuoussupportandbeliefinourcompetencies.ToourBankersandtheauthorities;fortheirvitalroleinourstrategicplanningandexecution.ToourcommittedanddedicatedManagementteam;fortheirhardwork,professionalismandtirelesseffortsinmaintainingourpositionasoneoftheleadingmarineoffshoresupportvesselprovidersandshipbuildersinMalaysia.
Toourdedicatedandloyalemployees;youreffortshavenotgoneunnoticed.Letusweatherthisdownturntogetherasoneteamwithourvaluesupheld,andcomeoutofthiswithmoreresilienceandfocus.Letusmaintainourcommitmenttosteertowardsgreaterheightsinthefuturetogether.
Lastbutnotleast,myspecialthankstomyfellowDirectorsontheBoardfortheirinvaluablesupportandguidancethroughoutthefinancialyear.
Thankyou.
YONG KIAM SAMChiefExecutiveOfficer
Chief Executive Officer’s Message and Management Discussion & Analysis (continued)
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AuditCommitteeReport
1. COMPOSITION
TheAuditCommittee(the“Committee”),whichwasestablishedbytheBoard,comprisesthefollowingDirectorsasitsmembers:
Chairman : WongChieBin(IndependentNon-ExecutiveDirectorandmemberoftheMalaysianInstituteofAccountants)
Members : TohKianSing(IndependentNon-ExecutiveDirector) : EricKhooChuanSyn@KhooChuanSyn(IndependentNon-ExecutiveDirector) : DatukSebastianTingChiewYew(IndependentNon-ExecutiveDirector)
2. SUMMARY OF WORK UNDERTAKEN BY THE AUDIT COMMITTEE DURING THE FINANCIAL YEAR
TheAuditCommitteehadfive(5)meetingsduringthefinancialyearended31December2017.
Audit Committee Member Attendance
WongChieBin 5/5 TohKianSing 4/5 EricKhooChuanSyn@KhooChuanSyn 4/5 DatukSebastianTingChiewYew 4/5
TheAuditCommitteememberswereservedwithadequatenoticeofmeetingbytheCommitteeSecretary,settingoutthemeetingagendaandrelevantpapers,whichweredistributedwellbeforethemeetingtoenablethemtogothroughthematterstobedeliberatedatthemeeting.TheCompanySecretaryistheCommitteeSecretary.Atthemeetings,ManagementpersonneloftheGroup,includingtheExecutiveDirectors,GeneralManagerGroupFinance,HeadofTreasury/CorporateComplianceandrepresentativesoftheexternalandinternalauditors,wereinvitedtobrieftheAuditCommitteeonmattersontheagendathatrequiredtheirinput.
DuringthefinancialyearunderreviewanduptothedateofthisReport,theAuditCommitteecarriedoutthefollowingworkwhichhasmetitsresponsibilities,basedonitstermsofreference:
• reviewedthequarterlyfinancialannouncementsoftheGroupbeforerecommendingthesamefortheBoardofDirectors’approval, focusingonchanges inor implementationofmajoraccountingpolicychanges,significantandunusualeventsandcompliancewithaccountingstandardsandotherlegalrequirements;
• reviewedtheauditplanoftheexternalauditors,includingtheareasofauditemphasisandsummaryofplannedauditproceduresandevaluatedtheinternalcontrolsystem;
• reviewedtheexternalauditors’reportsarisingfromtheauditandanyupdatesonnewfinancialreportingstandardsissuedbytheMalaysianAccountingStandardsBoard;
• reviewed theperformanceof the external auditors in termsof their capability, professionalism, andindependencebeforerecommendingthemtotheBoardtobeconsideredforre-appointmentattheAnnualGeneralMeeting;
• metwitharepresentativeoftheexternalauditorsintheabsenceofManagementtoassessiftherewereissuesofconcernsthattheexternalauditorsfacedincarryingouttheirwork;
• reviewedtheauditedannualfinancialstatementsoftheGroupandtheCompanybeforerecommendingthesametotheBoardforapproval;
• reviewedthereportonriskassessmentfortheyear2017tabledbytheRiskManagementCommittee,whichprovidedthetopfive(5)significantrisks,controlissuesandsummaryofriskassessment;
• reviewedtheadequacyofthescope,functions,competencyandresourcesoftheinternalauditfunction.ThisincludesdeterminingwhethertheinternalauditfunctiondeploysinternalauditingstandardspromulgatedbytheInstituteofInternalAuditors,Inc.aglobalprofessionalbodyadvocatingstandardsfortheinternationalauditingprofession;
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2. SUMMARY OF WORK UNDERTAKEN BY THE AUDIT COMMITTEE DURING THE FINANCIAL YEAR (continued)
• reviewedtheinternalauditreportsandrecommendationsoninternalauditfindings,includingfollow-upbytheinternalauditfunctiononthestatusofManagement’simplementationofactionplanstoaddressissueshighlightedinpreviousinternalauditreports;
• reviewedrelatedpartytransactionsoftheGroupandanyconflictofinterestsituationthatmayarisewithintheCompanyandGroup,includinganytransaction,procedureorcourseofconductthatraisesquestionsofmanagementintegrity;
• revieweddormant/inactivecompaniestobewoundup/struckoff; • reviewedtheimpairmentofassetsoftheGroup; • reviewedthematerialbankreconciliationsoftheGroup; • reviewed theGroup’s trade receivables and tradepayables and sought relevant explanations from
Managementtobetterunderstandhowreceivablesandpayablesweremanaged; • reviewedtheCompany’sCorporateGovernanceStatement,AuditCommitteeReport,theStatementon
RiskManagementandInternalControlStatementandStatementonCorporateSocialResponsibility,beforerecommendingthemforapprovalbytheBoardforinclusionintheAnnualReport;and
• reportedtotheBoardonitsactivitiesandsignificantfindingsandresults.
TheAuditCommitteeisawareoftheimportanceforitsmemberstoundergocontinuousprofessionaleducationtostayappraisedofregulatorydevelopmentsthataffecttheCommitteeinthedischargeofitsresponsibilities.DetailsoftrainingcoursesandseminarsattendedbytheAuditCommitteemembersduringthefinancialyearunderreviewanduptothedateofthisReportaredisclosedintheCorporateGovernanceStatementincludedinthisAnnualReport.
3. SUMMARY OF WORK OF THE INTERNAL AUDIT FUNCTION
TheCompanyoutsourceditsinternalauditfunctiontoKPMG,anindependentprofessionalfirm,whichreporteddirectlytotheAuditCommittee.Uponexpiryandpendingrenewalofcontractattheendofthefinancialyear,theCommitteeshallevaluatetheperformanceoftheoutsourcedinternalauditserviceprovider.
Duringthefinancialyearunderreview,theInternalAuditorscarriedoutthefollowingwork:
• assistedtheAuditCommitteeinassessingtheadequacyandoperatingeffectivenessoftheGroup’sriskmanagementandinternalcontrolsystems,basedonaninternalauditplan(IAP)approvedbytheAuditCommitteebeforeinternalauditworkcommenced.TheIAPsetsthedirectionandscopeoftheplannedinternalaudit;
• conductedtheauditworkaspertheIAP; • coveredthefollowingkeyprocessesstatedintheIAPwhichincludedfinancial,procurement,inventory,
regulatorycompliance(Safety,healthandenvironment)andinformationtechnology,fixedasset,humanresourcesmanagementandcorporategovernance;
• followeduponthestatusofManagement’simplementationofinternalauditrecommendationsandactionplansinprecedingauditcycles;
• consultedManagementonanyareasofconcerned; • arrangedforexitmeetingwiththerespectiveprocessowners; • issuedfinalreportandpresentedtotheAuditCommittee;and • engagedwithManagementandprovidedcontinuousimprovementtotheGroup.
Thescopeof internalauditcoveredkeyoperatingcompanies in theGroup,encompassing theshipbuildingandcharteringoperationsassetoutintheIAP.FurtherdetailsoftheinternalauditfunctionanditsactivitiesareprovidedintheStatementonRiskManagementandInternalControlincludedinthisAnnualReport.
ThisAuditCommitteeReportismadeinaccordancewiththeresolutionoftheAuditCommitteedated3April2018.
Audit Committee Report (continued)
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INTRODUCTION
TheBoardofDirectors(the“Board”)ispleasedtopresenttheStatementonRiskManagementandInternalControl(the“Statement”),whichoutlinesthenatureandscopeoftheriskmanagementandinternalcontrolsystemintheGroup(comprisingtheCompanyanditssubsidiaries)forthefinancialyearended31December2017anduptothedateofapprovalofthisStatementforinclusionintheAnnualReportoftheCompany.
ThisisinlinewithParagraph15.26(b)oftheMainMarketListingRequirements(“MMLR”)ofBursaMalaysiaSecuritiesBerhad(“BursaSecurities”)whichstipulatesthatalistedissuermustensurethatitsBoardofDirectorsissuesastatementaboutthestateofriskmanagementandinternalcontrolofthelistedissuerasagroupandguidedbytheStatementonRiskManagementandInternalControl:GuidelinesforDirectorsofListedIssuers.
BOARD’S RESPONSIBILITY
TheBoardacknowledgesandaffirmsitsoverallresponsibilityfortheGroup’sriskmanagementandinternalcontrolsystemtosafeguardshareholders’investmentandtheGroup’sassets,includingreviewingtheadequacyandoperatingeffectivenessofthesysteminmeetingtheGroup’sobjectives.
TheBoardisassistedbythemanagementinimplementingtheBoard’spoliciesandproceduresonriskandcontrolbyidentifying,evaluatingandmanagingbusinessrisks,comprisingstrategic,financialandoperationalrisksaswellasasystemofinternalcontroltomitigatesuchrisks.
Inviewofthelimitationsinherentinanysystemofriskmanagementandinternalcontrol,thesystemisdesignedtomanage,ratherthantoeliminate,theriskoffailuretoachievetheGroup’sobjectives.Thesystemcan,therefore,onlyprovidereasonable,butnotabsolute,assuranceagainstanymaterialmisstatement,financiallossorfraudulentpractices.
KEY RISK MANAGEMENT AND INTERNAL CONTROL FEATURES AND PROCESSES
ThekeyfeaturesandprocessesthathavebeenestablishedtoensuretheadequacyandeffectivenessoftheGroup’sgovernance,riskmanagementandinternalcontrolsystemareasfollows:
1. Risk Management
TheBoardprovidesfullsupporttoimplementtheriskmanagementframeworkandprocesseswithanappropriateorganizational structureandensure that roles, responsibilitiesandaccountabilitiesareclearlydefinedandcommunicatedatalllevels.
TheGrouphasanongoing riskmanagementprocesswhich includes identifying,evaluatingandmanagingofsignificantrisksthatmayaffecttheachievementofGroupobjectives.Understandingtheriskswefaceandmanagingthemappropriatelywillenhanceourabilitytomakebetterdecisions,animprovedperformancetoachieveobjectivesandsubsequentlyassistinthecreation,protectionandmaximizationofvalue.ThiswillalsoassisttheBoardandManagementinmaintainingasoundinternalcontrolsystemwithintheGroupandsafeguardshareholders’investmentandtheGroup’sassets.
RiskmanagementisembeddedintheGroup’smanagementsystem.TheManagementandallheadsofdepartment/businessunitsoftheGroupareinvolvedintheidentificationandmanagementofsignificantrisks.ItisthegeneraldutyandresponsibilityofallpersonneloftheGrouptoadheretotheframeworkandatalltimesbeconsciousoftherisksrelatedtotheiractionsanddecisionsthatmayadverselyaffecttheoperations,reputationandassetsoftheGroup.ThisincludescarryingoutjobsinacarefulandconscientiousmannerthatcontributestothehighethicsandculturewithintheGroup.ThedeliberationsofrisksandrelatedmitigatingactivitiesarecarriedoutatregularmanagementmeetingoftheGroup.
StatementonRiskManagementandInternalControl
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1. Risk Management (continued)
TheRiskManagementCommittee(RMC)wasestablishedtoprovideriskoversightandassessriskmanagementmattersrelatingtotheGroupprudently.ThecriticalrisksweredocumentedanddeliberatedattheRiskManagementCommittee(RMC)meetingforonwardreportingtotheAuditCommitteeandBoardfornotation,includinganyconcernsthatwereraisedforfollow-up.
2. Organizational and reporting Structure
TheGrouphasanestablishedorganizationalstructurewithclearlydefinedlinesofresponsibilitiesandappropriatelevelsofdelegationandauthority.Keydutiesaresegregatedamongstdifferentpersonnelofmajorbusinessdivisionsand keyprocesses, suchas shipbuildingandcharteringoperations, financialmanagement andreporting,treasury,capitalexpendituremanagement,humanresourcemanagementandinformationmanagement.SegregationofdutiesamongstdifferentpersonnelisinplacesuchthatnoonepersonnelisinvolvedintheentirebusinessoftheGroupfromrequisitionforgoodsorservices,orderingfromvendors,receivingorhavingcustodyofthegoodsorservices,recordingoftransactionsandapprovalofpayments.
Aprocessof hierarchical reporting isestablishedviaa structuredorganizationchart,whichprovides foradocumentedandauditabletrailofaccountabilityinrespectofdecisionsmadeandexecuted.Duringthefinancialyearunderreview,managementandoperationsmeetingsconductedbySeniorManagementwhichcomprisestheChiefExecutiveOfficer,Directoranddivisionalheads,wereheldtooverseethefinancialandoperationalperformanceoftheGroup,includingthediscussionofchallengesfacedinoperationsandactionplanstoaddresstheconcerns.Theproceedingsofsuchmeetingswererecordedbywayofminuteswhichweretrackedforfollow-upactionplans.
3. Group Limits of Authority
TheGrouphasanestablishedGroupLimitsofAuthority(“GLOA”)manualwhichsetsouttheauthorizationlimitsfortheGroup’smanagementandstaffandalsothosemattersrequiringBoardapprovaltoensureaccountability,segregationofdutiesandcontrolovertheGroup’sfinancialcommitments.TheGLOAmanualisreviewedandupdatedfromtimetotimetobealignedwithbusiness,operationalandstructuralneedsandchanges.
4. Policies and Procedures
Policiesandprocedurestoensurecompliancewithriskmanagement,internalcontrolsandrelevantlawsandregulationsaresetoutprogressivelyinthestandardoperatingproceduresofthedepartmentordivisions.TheGrouphasestablishedinternalpoliciesandprocedurescoveringkeybusinessunitsandoperationsincludingISOcertificationfortheGroup’sshipbuildingdivisionthatprovidesforanorderlyprocessesanddocumentationsystemonitsactivities.Thesepoliciesandproceduresarereviewedandrevisedperiodicallytoensureitsrelevancetoaddressthechangingenvironment,operationalrequirementandchangesofrisk.
5. Audit
InternalandexternalAuditareoutsourcedtoindependentprofessionalfirms,whichreportdirectlytotheAuditCommittee.
AuditengagementsarecarriedoutbasedontheannualauditplanapprovedbytheAuditCommitteeandtakeintoconsiderationfeedbacksfromtheManagement.InternalAuditassessestheselectedareasundertheauditscopewithregardtoriskexposures,compliancetowardstheapprovedpoliciesandproceduresandrelevantlawsandregulationsandalso,attimes,benchmarkagainstavailablebestpractices.
Statement on Risk Management and Internal Control (continued)
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5. Audit (continued)
TheareascoveredbytheInternalAuditFunctionforthefinancialyearunderreviewencompassedkeyprocessessuchasfinancialandtreasurymanagement,fixedassetsmanagement,operations(coveringpurchasing,logistics,informationmanagement,inventorymanagement,humanresourcemanagement,safetyandsecurity,charteringandoperationsmanagement),regulatorycomplianceandgovernanceundertakenbysignificantcompaniesintheGroupinvolvedintheshipbuildingandcharteringoperations.
TherewasnorestrictionplaceduponthescopeoftheInternalAuditscopeofworkandrepresentativesoftheInternalAuditFunctionwereallowedunrestrictedaccesstotherecordsandrelevantpersonneloftheGroup.
Foranysignificantweaknessesorgapsidentifiedinthegovernanceprocesses,riskmanagementprocessesandcontrolsduringtheengagement,InternalAuditprovidesrecommendationstoManagementtoimprovetheirdesignandeffectivenessofcontrolswhereapplicable.AttheAuditCommitteemeetingswherethereportsoftheInternalAuditfindingsweretabled,pertinentclarificationweresoughtfromManagement,thusenabledtheAuditCommitteetoassessontheadequacyandoperatingeffectivenessoftheGroup’sriskmanagementandinternalcontrolsysteminmeetingthecorporateobjectives.TheAuditCommitteeinturnbriefedtheBoardonanycriticalissueshighlightedbytheInternalAuditors,includingremedialmeasurestobeimplementedbyManagement.
Inaddition,InternalAuditassessesandreportstheadequacyandeffectivenessoftheGroup’sgovernance,riskmanagementandinternalcontrolprocessesfortwo(2)cyclestotheAuditCommitteebasedontheengagementscarriedoutwithinthefinancialyearended31December2017.
ThecostsincurredontheInternalAuditFunctionforthefinancialyearunderreviewamountedtoapproximatelyRM72,080.
TheExternalAuditor’sannualplanwhichcomprisesplannedauditservices(inclusiveofthequarterlyreviewonthequarterlyfinancialresultsandotherregulatoryreportingrequirements),recurringnon-auditservicesandnon-recurringnon-auditservicesaretabledannuallytotheAuditCommitteefordeliberationandapproval.
Assurance by the Chief Executive Officer and General Manager, Group Finance on the adequacy and effectiveness of the risk management and internal control system
TheBoardhasreceivedassurancefromtheChiefExecutiveOfficerandGeneralManager,GroupFinancethattheGroup’sinternalcontrolandriskmanagementsystemisoperatingadequatelyandeffectively,inallmaterialaspects,forthefinancialyearunderreviewanduptothedateofapprovalofthisStatementforinclusioninthisAnnualReport.
Board’s comments on the adequacy and effectiveness of the Group’s risk management and internal control system
TheBoard,throughitsAuditCommittee,hasreviewedtheadequacyandoperatingeffectivenessoftheGroup’sriskmanagementandinternalcontrolsystemandthatrelevantactionshavebeenorarebeingtaken,asthecasemaybe,toremedyinternalcontrolweaknessesidentifiedfromthereview,whichwaslargelybasedonobservationsraisedbytheInternalAuditorsandExternalAuditorsdirectlytotheAuditCommittee.
TheBoardisnotawareofanysignificantweaknessesintheriskmanagementandinternalcontrolsystemthathasresultedinmateriallosses,contingenciesoruncertaintiesthatwouldrequirementionintheCompany’sAnnualReport.Notwithstanding this, theBoard, throughManagement,continues to takemeasures tostrengthen theGroup’s riskmanagementandinternalcontrolsystemfromtimetotimebasedonrecommendationsoftheInternalAuditFunctionaswellastheExternalAuditors.
Statement on Risk Management and Internal Control (continued)
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20Annual Report 2017
Review of Statement by the External Auditors
TheexternalauditorshavereviewedthisStatementonRiskManagementandInternalControlpursuanttothescopesetoutinAuditandAssurancePracticeGuide3,Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the Annual Report(“AAPG3”)issuedbytheMalaysianInstituteofAccountants(“MIA”)forinclusionintheannualreportoftheGroupfortheyearended31December2017,andreportedtotheBoardthatnothinghascometotheirattentionthatcausethemtobelievethatthestatementintendedtobeincludedintheannualreportoftheGroup,inallmaterialrespectshasnotbeenpreparedinaccordancewiththedisclosuresrequiredbyparagraphs41and42oftheStatementonRiskManagementandInternalControl:GuidelinesforDirectorsofListedIssuers,orisfactuallyinaccurate.
AAPG3doesnotrequiretheexternalauditorstoconsiderwhethertheDirectors’StatementonRiskManagementandInternalControlcoversallrisksandcontrols,ortoformanopinionontheadequacyandeffectivenessoftheGroup’sriskmanagementandinternalcontrolsystemincludingtheassessmentandopinionbytheDirectorsandmanagementthereon.Thereportfromtheexternalauditorswasmadesolelyfor,anddirectedsolelytotheBoardofDirectorsinconnectionwiththeircompliancewiththelistingrequirementsofBursaMalaysiaSecuritiesBerhadandfornootherpurposesorparties.TheexternalauditorsdonotassumeresponsibilitytoanypersonotherthantheBoardofDirectorsinrespectofanyaspectofthisreport.
This Statement is issued in accordance with a resolution of the Board dated 3 April 2018.
Statement on Risk Management and Internal Control (continued)
Sealink International Berhad (800981-X)Annual Report 2017
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CorporateGovernanceOverviewStatement
TheBoardofDirectors(“Board”)ofSealinkInternationalBerhad(“SIB”)recognizestheimportanceofadoptinghighstandardsofcorporategovernance,notonlytosafeguardstakeholders’interestsbutalsotoenhanceshareholdervalueandinbuildingasustainablebusinessinthelongrun.
TheBoardbelieves inembeddingaculture in theCompanyand itssubsidiaries (“Group”) thatseeks tobalancecompliancerequirementswiththeneedtodeliverlong-termstrategicvaluetoshareholdersandstakeholdersthroughperformance,predicatedonentrepreneurship,control andownership,andwithconsideration towardsethicsandintegrity.Assuch,theBoardstrivestoembracethesubstancebehindcorporategovernancerecommendationsandnotmerelytheform.
Paragraph15.25of theMainMarketListingRequirements (“MMLR”)ofBursaMalaysiaSecuritiesBerhad(“BursaSecurities”)requirestheBoardtoprovideanoverviewoftheapplicationofthePrinciplessetoutintheMalaysianCodeonCorporateGovernance(“MCCG2017”)forthefinancialyearended31December2017.ThedetailedapplicationbySIBforeachpracticeassetoutintheMCCG2017duringthefinancialyear31December2017(“FY2017”)isdisclosedintheCorporateGovernanceReport(“CGReport”).
BOARD OF DIRECTORS
Board Charter
TheBoardCharter,whichservesasareferencepointfortheBoard’sactivitiestoenableDirectorstocarryouttheirstewardshiproleanddischargetheirfiduciarydutiestowardstheCompany,alsocontainsaformalscheduleofmattersreservedtotheBoardfordeliberationanddecision,forexamplediscussiononstrategicmatters,sothatthecontrolanddirectionoftheCompany’sbusinessesareinitshands.
TheBoardCharterissubjecttoperiodicreviewtoensureitcontinuestoberelevant,especiallywhenthereisaneedtorevisetheclausesintandemwithchangesinregulatoryrequirementswhichaffecttheBoard’srole.BriefingsbytheCompanySecretarytotheBoardonregulatorychangesisoneofthesourcestodetermineiftheCharterneedstoberevised.InlinewiththeMCCG2017,theCompanyhasuploadedtheBoardCharteronitswebsitewww.asiasealink.com.
Duties and Responsibilities of the Board
Inthedischargeofitsfiduciaryandstewardshiprole,theBoardhasassumedthefollowingprincipalresponsibilitiesinrelationtotheCompany:• reviewandadoptastrategicorbusinessplan,asdevelopedbyManagement,incorporatingthedevelopmentof
riskpolicy,annualbudgetsandlong-termbusinessplans,takingintoaccountthesustainabilityoftheCompany’sbusiness,withconsiderationgiventotheenvironmental,socialandgovernanceelementsofthebusiness;
• overseetheconductandgovernanceoftheGroup’sbusinessesandevaluatewhetherornottheyarebeingproperlymanagedtoachievecorporateobjectives–thisprocessisnormallycarriedoutatscheduledBoardmeetingswiththeproceedingsandoutcomethereofrecorded;
• identifyprincipalbusinessrisksfacedbytheGroup,andensuretheimplementationofappropriateinternalcontrolsandmitigatingmeasurestomanagesuchrisks;
• successionplanning-ensurethatallcandidatesappointedtoSeniorManagementandBoardpositionsareofsufficientcalibreandthatthereareprocessestoprovidefortheorderlysuccessionofSeniorManagementandmembersof theBoard. PositionsofkeypersonnelarenormallydiscussedbyDirectors,via theNominatingCommittee,whenevervacanciesarise,inparticularthepositionsofBoardChairmanandfemaleDirector;
• overseethedevelopmentandimplementationofashareholdercommunicationpolicy–apart fromtheusualengagementandcommunicationwithshareholdersviatheGeneralMeetingsandannouncementsuploadedintheCompany’swebsite,thisprocessisaugmentedbyaGeneralManagerwhooverseesinvestorrelations;
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Duties and Responsibilities of the Board (continued)
• reviewtheadequacyandintegrityoftheGroup’smanagementinformationandinternalcontrolsystems,ensuringthereisasoundframeworkofreportinginternalcontrolandregulatorycomplianceissues;and
• overseetheGroup’sadherencetohighstandardsofconductandcorporatebehavior, includingtheCodeofEthicsforDirectorsoftheCompanyandEmployeeHandbookforemployeesoftheGroup.
Board Composition, Diversity
AtthedateofthisStatement,theBoardconsistsofsix(6)members,comprisingtwo(2)ExecutiveDirectorsandfour(4)IndependentDirectors.ThiscompositionfulfillstherequirementsassetoutunderMMLRofBursaSecurities,whichstipulatethatatleasttwo(2)Directorsorone-thirdoftheBoard,whicheverishigher,mustbeIndependent.TheprofileofeachDirectorissetoutinthisAnnualReport.Basedonanassessmentofitsskillsmatrix,theBoardisoftheviewthattheDirectors,withtheirdifferentbackgroundandspecializations,collectivelybringwiththemawiderangeofexperienceandexpertiseinareassuchasfinance;accountingandaudit;corporateaffairs;legal;andmarketingandoperations,whichareconsideredadequatefortheGroup’sneeds.
TheManagingDirectorandtheChiefExecutiveOfficeroverseetheday-to-dayoperationsoftheGroup’sbusiness.TheNon-ExecutiveDirectors,whichcompriseexclusively IndependentDirectors,providetherelevantchecksandbalancebyreviewingtheGroup’sperformanceagainstbudgetandinquiringoftheExecutiveDirectorsaswellasSeniorManagementpersonnelexplanations,asneeded,atscheduledBoardandAuditCommitteemeetings.Allthefour(4)IndependentDirectorssitonthethree(3)BoardCommittees,namelytheAuditCommittee,NominatingCommitteeandRemunerationCommittee–theExecutiveDirectorsareinvitedtoattendBoardCommitteemeetingstoproviderelevantinputandinsightstotheagendaitems.
Reinforce Independence of the Board
TheBoardisinthemidstofidentifyingaDirectortohelmtheBoardChairmanpositionsincethedemiseofitsformerChairman.AteachmeetingoftheBoard,theDirectorsappointfromamongstthemaDirectortochairthemeeting.FortheSix(6)meetingsconvenedduringthefinancialyearunderreview,theDirectorwhochairedthemeetingswasanIndependentDirector.ThecurrentcompositionofIndependentNon-ExecutiveDirectorsintheBoard,whichcomprisesamajorityofBoardmembers,providesforpertinentchecksandbalanceintheBoardsuchthatnooneDirectorhasunfetteredpowersindecisionmaking.
TheChairmanofthemeetingisresponsibleforensuringtheadequacyandeffectivenessoftheBoard’sgovernanceprocessandactsasafacilitatoratBoardmeetingstoensurethatcontributionsfromDirectorsareforthcomingonmattersbeingdeliberatedandthatnoBoardmemberdominatesthediscussions.WhilsttheChiefExecutiveOfficerimplementstheGroup’sstrategicinitiatives,policiesanddecisionadoptedbytheBoardandoverseestheoperationsandbusinessdevelopmentoftheGroup,theIndependentDirectorsbringtobearobjectiveandindependentviews,adviceandjudgmentoninterests,notonlyoftheCompany,butalsoofshareholdersandstakeholders.
IndependentDirectorsareessentialforprotectingtheinterestsofshareholdersandcanmakesignificantcontributionsto theCompany’sdecisionmakingbybringing in thequalityofdetached impartiality. TheBoard recognises theimportanceofestablishingcriteriaonindependencetobeusedintheannualassessmentofitsIndependentDirectors.ThedefinitiononindependenceaccordswiththeMMLRofBursaSecurities.Attheendofthefinancialyearunderreview,twooftheIndependentDirectors,namelyMrWongChieBinandMrTohKianSinghaveservedforacumulativeperiodexceedingnine(9)years.
Corporate Governance Overview Statement (continued)
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Board Meetings and Supply of Information to the Board
Supply of, and access to, information
TheBoardissuppliedwithrelevantinformationandreportsonfinancial,operational,corporate,regulatory,businessdevelopmentandauditmatters,bywayofBoardreportsoruponspecificrequests,fordecisionstobemadeonaninformedbasisandforaneffectivedischargeoftheBoard’sresponsibilities.
Timelydisseminationofmeetingagenda,includingtherelevantBoardandBoardCommitteepaperstoallDirectorspriortotheBoardandBoardCommitteemeetingsrespectivelytogiveeffecttoBoarddecisionsandtodealwithmattersarisingfromsuchmeetings,isobserved.BoardmembersarefurnishedonatimelybasiswithpertinentexplanationsandinformationonrelevantissuesandrecommendationsbyManagement.TheissuesarethendeliberatedanddiscussedthoroughlybytheBoardpriortodecisionmaking,includingdecisionstodefercertainresolutionswhentheinformationneededtomakeinformeddecisionsareinadequate.
Inaddition,BoardmembersareupdatedontheCompany’sactivitiesanditsoperationsonaregularbasis,largelythroughscheduledBoardandBoardCommitteemeetings.AllDirectorshaveaccesstoCompanyinformationonatimelybasisinanappropriatemannerandqualitynecessarytoenablethemtodischargetheirdutiesandresponsibilities.
SeniorManagementoftheGroupandexternaladvisersareinvitedtoattendBoardand/orBoardCommitteemeetingstoprovideadditionalinsightsandprofessionalviews,adviceandexplanationsonspecificitemsonthemeetingagenda.BesidesdirectaccesstoManagement,DirectorsmayobtainindependentprofessionaladviceattheCompany’sexpense,ifconsiderednecessary,infurtheranceoftheirduties.ThisprocedureisformalisedintheCompany’sBoardCharter.
DirectorshaveunrestrictedaccesstotheadviceandservicesoftheCompanySecretarytoenablethemtodischargetheirdutieseffectively. TheBoard is regularlyupdatedandadvisedby theCompanySecretary,who isqualified,experiencedandcompetentonstatutoryandregulatoryrequirements,ontheresultantimplicationsofanychangesinregulatoryrequirementstotheCompanyandDirectorsinrelationtotheirdutiesandresponsibilities.TheCompanySecretary,whooverseesadherencetoBoardpoliciesandprocedures,briefstheBoardontheproposedcontentsandtimingofmaterialannouncementstobemadetoregulators,aswellasanychangestoregulatoryrequirementsthatmayaffecttheCompanyandtheBoard.TheCompanySecretaryattendsallBoardandBoardCommitteemeetingsandensuresthatmeetingsareproperlyconvened,andthataccurateandproperrecordsof theproceedingsandresolutionspassedaretakenandmaintainedaccordingly.TheremovaloftheCompanySecretary,ifany,isamatterfortheBoard,asawhole,todecide.
Board Meetings
TheBoardordinarilymeetsatleastfive(5)timesayear,scheduledwellinadvancebeforetheendoftheprecedingfinancialyeartofacilitatetheDirectorsinplanningtheirmeetingschedulefortheyear.Additionalmeetingsareconvenedwhenurgentandimportantdecisionsneedtobemadebetweenscheduledmeetings.BoardandBoardCommitteepapers,whicharepreparedbyManagement,providetherelevantfactsandanalysisforthereferenceofDirectorstoassisttheminmakinginformeddecisions.Themeetingagenda,relevantreportsandBoardpapersarefurnishedtoDirectorsandBoardCommitteememberswellbeforethemeetingstoallowtheDirectorssufficienttimetostudyforeffectivediscussionanddecisionmakingduringmeetings.AtthequarterlyBoardmeetings,theBoardreviewsthebusinessperformanceoftheGroupanddiscussesmajorstrategic,operational,complianceandfinancialissues.TheChairmanoftheAuditCommitteebriefstheDirectorsateachBoardmeetingthesalientmattersdeliberatedbytheAuditCommitteewhichrequiretheBoard’sattentionordirection,includingapproval,asthecasemaybe.AllpertinentissuesdiscussedatBoardmeetingsinarrivingatdecisionsandconclusionsareproperlyrecordedbytheCompanySecretarybywayofminutesofmeetings,whichareconfirmedbytheChairmanatthenextmeeting.
Corporate Governance Overview Statement (continued)
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24Annual Report 2017
Board Meetings (continued)
TherewereSix(6)Boardmeetingsheldduringthefinancialyearended31December2017,withdetailsofDirectors’attendancesetoutbelow:
Name of Director Attendance
YongFohChoi 6/6 YongKiamSam 6/6 WongChieBin 6/6 TohKianSing 5/6 EricKhooChuanSyn@KhooChuanSyn 5/6 DatukSebastianTingChiewYew 5/6
ItisthepracticeoftheCompanyforDirectorstodevotesufficienttimeandeffortstocarryouttheirresponsibilities.Inaddition, theBoardCharter requiresDirectors tonotify theChairmanbeforeacceptinganynewdirectorship,notwithstandingthattheMMLRofBursaSecuritiesallowsaDirectortositontheboardsoffive(5)listedissuers.Suchnotificationisexpectedtoincludeanindicationoftimethatwillbespentonthenewappointment.
BOARD OF COMMITTEES
TheBoardhasestablishedseveralBoardCommitteewhosecompositionsandTermsofreferenceareinaccordancewithBursaandtheBestPracticesprescribedbyMCCGandspecifiedintheBoardCharter.
Audit Committee
TheAuditCommitee,establishedbytheBoardwithspecifictermsofreference,comprisesthefollowingmembersasatthedateofthisStatement,whoareexclusivelyIndependentDirectors:
• WongChieBin(Chairman);• TohKianSing;• EricKhooChuanSyn@KhooChuanSyn;and• DatukSebastianTingChiewYew.
Nominating Committee
TheNominatingCommittee, establishedby theBoardwith specific termsof reference,comprises the followingIndependentNon-ExecutiveDirectorsasitsmembers:
• EricKhooChuanSyn@KhooChuanSyn(Chairman);• TohKianSing;• WongChieBin;and• DatukSebastianTingChiewYew.
TheNominatingCommittee isprimarily responsible for recommendingsuitableappointments to theBoard, takingintoconsiderationtheBoardstructure,size,compositionandtherequiredmixofexpertiseandexperiencewhichtheDirectorshouldbringtotheBoard.ItassessestheeffectivenessoftheBoardasawhole,theBoardCommitteesandthecontributionofeachDirector.Whereconsideredappropriate,theNominatingCommitteeconsidersrecommendationofcandidatefordirectorshipbyshareholdersorexistingDirectors.Basedonitstermsofreference,theNominatingCommitteecarriesouttheassessmentprocessregardlessofwhetherthecandidate isfornewappointmentorre-appointment.
Corporate Governance Overview Statement (continued)
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Nominating Committee (continued)
ThefinaldecisionontheappointmentofacandidaterecommendedbytheNominatingCommitteerestswiththeBoard.TheCompanySecretaryensuresthatallappointmentsareproperlymadeuponobtainingallnecessaryinformationfromtheDirector.DuringthefinancialyearunderreviewandasatthedateofthisStatement,theNominatingCommitteemettwice(2times),attendedbyallmembers.Duringthemeetings,theNominatingCommitteecarriedoutthefollowingactivitieswithinitstermsofreferenceandreportedtheoutcometotheBoard:
• reviewedanddiscussedtheexistingBoardDiversitypolicy;• reviewedtrainingundertakenbyDirectorsaswellasthosetrainingthatareavailableforDirectorsfortheensuing
year;• discussedthesearchforaBoardChairmanandfemaleDirector;• reviewedtheDirectors’EvaluationForm,BoardSkillsMatrixFormandBoard&BoardCommitteeEvaluationForm
usedintheannualassessmentandevaluationoftheBoard,BoardCommitteesandindividualDirectors.Theseevaluationformstookintoconsiderationthecompetency,experience,character,integrityandtimeavailabilityof theofficersconcernedaswell as theevaluationcriteria setout in the relevant exhibits of theCorporateGovernanceGuide–TowardsBoardroomExcellence2ndEditiononassessmentoftheBoard,BoardCommitteesandindividualDirectors.ForthepurposeofassessingtheindependenceofIndependentDirectors,thecriteriasetoutinParagraph1.01oftheMMLRofBursawereused;and
• followingtheassessmentoftheBoard,BoardCommitteesandindividualDirectors,recommendedfortheBoard’sconsiderationtomoveforshareholders’approvalthere-appointmentand/orre-electionofthoseDirectorsretiringattheforthcomingAnnualGeneralMeeting.InassessingwhetherornottorecommendretiringDirectorsforre-appointmentorre-electionbyshareholders,theNominatingtookintoconsiderationpertinentevaluationcriteriaprovidedintherelevantexhibitsofCorporateGovernanceGuide–TowardsBoardroomExcellence2ndEdition.
WhilstthereisaBoardDiversityPolicy,thereisnospecificpolicythereinonthediversityofitsmembersintermsofgender,ageorethnicityorsetatargettoachieveablendoftheseattributes.TheBoardbelievesthattheCompanyshouldbeappointingDirectorswhohavetherelevantskills,experienceandtimetocontributetowardsrealisingtheCompany’sobjectives.Assuch,infillingcasualvacanciesorappointingadditionalorre-appointingDirectors,theBoard,viatheNominatingCommittee,assessesthecompetency,experience,character,integrityandtimeavailabilityofthecandidatesinrelationtotheneedsoftheGroup.
Remuneration Committee
TheRemunerationCommittee,establishedby theBoardwithspecific termsof reference,comprises the followingmembersasatthedateofthisStatement,whoareexclusivelyIndependentDirectors:
• TohKianSing(Chairman);• WongChieBin;• EricKhooChuanSyn@KhooChuanSyn;and• DatukSebastianTingChiewYew.
TheRemunerationCommitteeisentrustedbytheBoardto:
• establishaformalandtransparentprocedureforsettingapolicyonremunerationofExecutiveDirectorsandSeniorManagementandforfixingtheremunerationpackagesofallDirectorsandSeniorManagementoftheGroup;and
• ensurethatthelevelsofremunerationarecommensuratewiththequalificationsofExecutiveDirectorsandSeniorManagementandaresufficienttoattractandretainthepersonnelrequiredtomanagetheCompany’sbusiness.
Corporate Governance Overview Statement (continued)
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26Annual Report 2017
Remuneration Committee (continued)
During the financial yearunder review, theBoardapprovedaRemunerationPolicy, subject toannual review, torewardmembersoftheBoardandSeniorManagement.TheRemunerationCommitteerecommendstotheBoardtheremunerationofExecutiveDirectors,largelybasedontheirperformanceandalsotheGroup’sperformance.InthecaseofIndependentDirectors,thelevelofremunerationreflectstheexperienceandlevelofresponsibilitiesundertakenbytheIndependentDirectorsconcerned.Inallinstances,thedeliberationsareconductedwiththeDirectorsconcernedabstainingfromdiscussionsontheirindividualremuneration.Duringthefinancialyear,theCommitteemettwice(2)attendedbyallmemberstodeliberateandrecommendfortheBoard’sconsiderationonemployees’basicremuneration(includingbonuses),theremunerationandbonusesofExecutiveDirectorsandDirectors’fees.
DetailsofDirectors’ remuneration (includingbenefits-in-kind) foreachDirectorduring thefinancialyearended31December2017areasfollows:
Directors’ Fee Basic Benefits- Company Subsidiaries Salary in Kind Total (RM) (RM) (RM) (RM) (RM) Executive Director YongFohChoi 19,845 - 314,777 11,944 346,566YongKiamSam 19,845 - 579,570 7,000 606,415Non-Executive Director KhooChuanSyn@KhooChuanSyn 66,150 - - - 66,150TohKianSing 66,150 - - - 66,150WongChieBin 79,380 - - - 79,380DatukSebastianTingChiewYew 66,150 - - - 66,150
DIRECTORS’ TRAINING AND EDUCATION
TheBoardismindfuloftheimportanceforitsmemberstoundergocontinuoustrainingtobeapprisedofchangestoregulatoryrequirementsandtheimpactsuchregulatoryrequirementshaveontheGroupandDirectors.
AlltheDirectorsoftheCompanyhaveattendedtheMandatoryAccreditationProgrammeconductedbyBursaMalaysiaTrainingSdnBhdwithinthestipulatedtimeframerequiredbytheMMLRofBursaSecurities.
DetailsofthetrainingattendedbyDirectorsoftheCompanyforthefinancialyearunderreviewanduptothedateofthisStatementassetoutbelow:
Name of Director and designation Training topics and duration
YongFohChoi– Managing Director, • RecentAmendmentsToTheListingRequirementsArisingFromNon-Independent Executive Director CompaniesAct2016&DealingsInListedSecurities,ClosedPeriodAnd
InsiderTrading
YongKiamSam–Chief Executive • BIMCOShiptermSeminarOfficer cum Deputy Managing Director, • SeminaronStackedrigs&Vessels’ReactivationRisksNon-Independent Executive Director • TransferPricingBreakfastSeminar2017 • Joint ABS-AMSA-MPA-USCG-Singapore (Operating in Australian,
Singapore&USWaters) • 2017AsianOffshoreSupportJournal
Corporate Governance Overview Statement (continued)
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DIRECTORS’ TRAINING AND EDUCATION (continued)
Name of Director and designation Training topics and duration
WongChieBin– Audit Committee • WithholdingTaxinMalaysia-PrinciplesandLatestDevelopmentsChairman, Independent Non-Executive • GST&CustomsHealthCheckfromLegal&OperationalPerspectiveDirector • KursusPeningkatanKualitiAuditKoperasi • CompanyLaw2016:TotalRevampwithHugeTaxPlanningOpportunities • NewPublicRulingsin2016andGuidelinesin2017 • NationalTaxConference2017 • AuditQualityEnhancementProgrammeforSMPs2017 • ImpactonAdoptionofMFRS9,15&16AuditIssuesArisingfromrecent
changes • CaseStudyWorkshopforIndependentDirectors • InternalAuditFunctionforAuditCommitteeWorkshop • NationalTaxSeminar2017 • PersidanganJuruauditKoperasi2017
TohKianSing–Remuneration Committee • TalkforChineseclientson“InternationalTradeContractPerformanceChairman, Independent Non-Executive andDisputeHandling”Director • TalkforJapanesefirmson“CulturalInfluenceonArbitration–ASingapore
Perspective” • TalkforAngangSteelCompanyLimitedon“InternationalTradeContract
PerformanceandDisputeSettlements” • Participated in theSingapore InsolvencyConferenceorganisedby
theLawSocietyofSingaporeasoneoftheFacilitators.TitleofTalk,“Restructuring&InsolvencyintheOffshoreOil&Gas&MarineSector”
• Participated in theMLAANZAnnualConference organisedby theMaritimeLawAssociationofAustraliaandNewZealand.TitleoftheTalk,“Admiralty:Singapore,NewZealand&Australia”
• TalkforChineselawyersandclientsinChongqing,titled“ExperiencesandLessonsofChineseLawyers’ParticipationinInternationalArbitration”
• ParticipatedinaSeminar,“OneBeltOneRoad”atShengzhen
EricKhooChuanSyn@KhooChuan • SeminarPercukaianKebangsaan2017Syn-Nominating Committee Chairman, • NationalSymposiumOnIslamicBankingAndFinance2018Independent Non-Executive DirectorDatukSebastianTingChiewYew- • InternationalICTInfrastructureandDigitalEconomicConferenceSarawakIndependent Non-Executive Director • ParliamentarianSeminar • ParliamentaryAffairsbytheInternationalCentreforParliamentaryStudies • TheArtOfDebatingAndQuestionsarrangedbyTheInternationalCentre
forParliamentaryStudiesinUnitedKingdom
TheDirectorsarenotifiedperiodicallyby theCompanySecretaryon the typesof trainingcoursesavailable in themarketthattheDirectorsmayconsiderattendinginordertoenhancetheirskillsandknowledgeinthedischargeoftheirstewardshiprole.
ACCOUNTABILITY AND AUDIT
Uphold integrity in financial reporting by the Company
ItistheBoard’scommitmenttopresentabalancedandmeaningfulassessmentoftheGroup’sfinancialperformanceandprospectsattheendofeachreportingperiodandfinancialyear,primarilythroughthequarterlyannouncementoftheGroup’sresultstoBursaSecurities,theannualfinancialstatementsoftheGroupandCompanyaswellastheChiefExecutiveOfficer’sMessageandmanagementdiscussionandanalysis(MD&A)intheAnnualReport.
Corporate Governance Overview Statement (continued)
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Audit Committee
ThecompositionoftheAuditCommittee,includingitsrolesandresponsibilitiesenshrinedinitstermsofreferenceapprovedbytheBoard,aresetout intheAuditCommitteeReport includedinthisAnnualReport.OneofthekeyresponsibilitiesoftheAuditCommitteeinitstermsofreferenceistoensurethatthefinancialstatementsoftheGroupandCompanycomplywithapplicablefinancialreportingstandardsinMalaysia.SuchfinancialstatementscomprisethequarterlyfinancialreportannouncedtoBursaSecuritiesandtheannualstatutoryfinancialstatements.Indischargingthisrole,meetingsarescheduledwithformalitemsontheagendafocusingoninterimandyear-endfinancialreporting,theauditingprocessandrelatedpartytransactions.TherelevantpapersfortheagendaarefurnishedtoCommitteememberswellbefore themeetings. At suchmeetings,questions raisedbymembersof theCommittee tobetterunderstandtheGroup’sfinancialperformanceandsituationarerespondedbytheHeadofGroupFinancebeforetheCommitteerecommendedthefinancialperformanceandreportingtotheBoardforapprovaltoissuetoregulatorsand/orshareholders.
ThetermsofreferenceoftheAuditCommitteeincludeapolicyonthetypesandnatureofnon-auditservicespermittedtobeprovidedbytheexternalauditorsoftheCompanysoasnottocompromisetheirindependenceandobjectivity.Inassessingtheindependenceofexternalauditors,theAuditCommitteeobtainsassurancefromtheexternalauditors,confirmingthattheyare,andhavebeen,independentthroughouttheconductoftheauditengagementwiththeCompanyinaccordancewiththeindependencecriteriasetoutintheBy-LawsoftheMalaysianInstituteofAccountants(“MIA”).Forthefinancialyearunderreview,thisassurancewasprovidedbytheexternalauditorswhentheypresentedtheirauditplantotheAuditCommittee,confirmingthattheycompliedwiththeBy-LawsofMIAonprofessionalethics,conductandpracticewhichaddressed,amongstothers,thecriteriaon,andthreatsagainst,professionalindependence.
Duringthefinancialyearunderreview,theAuditCommitteeassessedtheperformanceoftheexternalauditorsandtheinternalauditfunctionlargelyintermsoftheirqualityandtimelinessofservicestotheGroupbeforerecommendingtoBoardforrenewalorterminationoftheirservices,asthecasemaybe.
Recognise and manage risks of the Group
TheBoardhasestablishedaRiskManagementCommitteewhichisentrustedtoformaliseariskmanagementprocesstoidentify,evaluate,control,reportandmonitorsignificantrisksfacedbytheGroup.Periodicreportingofrisksidentifiedandevaluated,whicharescoredfortheirlikelihoodofoccurrenceandtheimpactthereofbasedonpre-setriskmeasuringmetrics,includingmitigatingmeasures,ismadetotheAuditCommitteeaspartofaholisticapproachonriskmanagement,todevelopacomprehensiveEnterpriseRiskFrameworktoenhancetheGroup’sexistingriskmanagementactivitiesandinitiatives.PersonneloftheGrouphavebeentrainedtoperiodicallyidentifyandevaluaterisks,supportedbypertinentevidencecorroboratingtheriskprofilesofvariousbusinessunits,andultimatelytheGroupriskprofile, forupwardreportingtotheRiskManagementCommittee,whichischairedbytheChiefExecutiveOfficerhelmedbytheHeadofMarineDivision,HeadofShipbuildingDivision,HeadofGroupFinanceandtheHeadofCorporateCompliance.TheriskprofileoftheGroup,followingareviewbytheRiskManagementCommitteeistabledtotheAuditCommitteeandquestions,ifany,arefieldedbytheHeadofCompliance,whoalsoactsastheGroup’sRiskCoordinator.
TheinternalauditfunctionoftheGroupisoutsourcedtoanindependentprofessionalfirm,namelyKPMG,whoundertakesregularreviewsoftheadequacyandoperatingeffectivenessoftheGroup’ssystemofinternalcontrols.TheinternalauditfunctionreportsdirectlytotheAuditCommittee.
FurtherdetailsontheEnterpriseRiskManagementFrameworkandactivitiesoftheinternalauditfunctioncanbeseenintheStatementonRiskManagementandInternalControlincludedinthisAnnualReport.
Corporate Governance Overview Statement (continued)
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INTERGRITY IN CORPORATE REPORTING WITH STAKEHOLDERS
Strengthen relationship between the Company and its shareholders
Shareholder participation at general meeting
TheAnnualGeneralMeeting(“AGM”),whichistheprincipalforumforshareholderdialogue,allowsshareholderstoreviewtheGroup’sperformanceviatheCompany’sAnnualReportandposequestionstotheBoardforclarification.AttheAGM,shareholdersparticipateindeliberatingresolutionsbeingproposedorontheGroup’soperationsingeneral.AtthelastAGM,aquestionandanswersessionwasheldwheretheChairmaninvitedshareholderstoraisequestionswithresponsesfromtheBoard.
TheNoticeofAGMiscirculatedatleasttwenty-one(21)daysbeforethedateofthemeetingtoenableshareholderstogothroughtheAnnualReportandpaperssupportingtheresolutionsproposed.ShareholdersareinvitedtoaskquestionsbothabouttheresolutionsbeingproposedbeforeputtingaresolutiontovoteaswellasmattersrelatingtotheGroup’soperationsingeneral.AlltheresolutionssetoutintheNoticeofthelastAGMwereputtovotebyshowofhandsanddulypassed.TheoutcomeoftheAGMwasannouncedtoBursaonthesamemeetingday.Goingforward,theBoardwilladoptpollvotingandwillappointascrutineertovalidatethevotescastattheAGM.
Communication and engagement with shareholders
TheBoard recognizes the importanceofbeing transparentandaccountable to theCompany’s investorsand,assuch,hasvariouschannelstomaintaincommunicationwiththem.ThevariouschannelsarethroughthequarterlyannouncementsonfinancialresultstoBursaSecurities,relevantannouncementsandcirculars,andwhennecessary,theAnnualandExtraordinaryGeneralMeetingsandthroughtheGroup’swebsitewhereshareholderscanaccesspertinentinformationconcerningtheGroup.
Code of Conduct
TheBoardrecognisestheimportanceofhavinginplaceaCodeofConduct,settingoutthestandardsofconductexpectedfromDirectorsandemployees,toengendergoodcorporatebehavior.TheBoardChartersetsoutaCodeofEthicstobeobservedbyDirectors.Asfortheconductofemployees,theBoardhasformalisedanEmployeeHandbooktobeobservedbyemployeesacrosstheGroup.TheBoardhasalsoadoptedWhistle-BlowingPoliciesandProcedures,whichoutlinewhen,howandtowhomaconcernmaybeproperlyraisedabouttheactualorpotentialcorporatefraudorbreachofregulatoryrequirementsinvolvingemployee,ManagementorDirectorintheGroup.ToassessadherencetotheCodeofConductandEmployeeHandbookbyDirectorsoftheCompanyandemployeesintheGrouprespectively,theCompanyappointedaComplianceOfficerwhoalsodoublesasaRiskCoordinatorfortheGroup’sriskmanagementinitiatives.TheCodeofConducthasbeenuploadedontotheCompany’swebsite.
Ensure timely and high quality disclosure
TheBoardisawareoftheneedtoestablishcorporatedisclosurepoliciesandprocedurestoenablecomprehensive,accurateandtimelydisclosuresrelatingtotheCompanyanditssubsidiariestobemadetotheregulators,shareholdersandstakeholders.Accordingly,theBoardhas,duringthefinancialyearunderreview,formalisedpertinentpoliciesandproceduresoncorporatedisclosurenotonly tocomplywith thedisclosure requirementsasstipulated in theMMLRofBursaSecurities,butalsoidentifythepersonsresponsibletoapproveanddisclosematerialinformationtotheregulators,shareholdersandstakeholders.TheCorporateDisclosurePoliciesandProcedures,whicharesubjecttoannualreview,setout,amongstothers,thetypesofactivities/transactionsthatrequireimmediateannouncementtotheregulators,protocolondisclosureofinformation,spokespersonfortheGroupandprocedurestobefollowedifissuedbyregulatorswithanoticeonunusualmarketactivities.
Toaugmenttheprocessofdisclosure,theBoardhasearmarkedadedicatedsectionforcorporategovernanceontheCompany’swebsitewhereinformationontheCompany’sannouncementstotheregulators,rightsofshareholders,theCompany’sAnnualReport,etc.,maybeaccessed.
This Statement is issued in accordance with a resolution of the Board dated 3 April 2018.
Corporate Governance Overview Statement (continued)
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30Annual Report 2017
ADDITIONAL COMPLIANCE INFORMATION
Utilisation of ProceedsDuringthefinancialyear,therewerenoproceedsraisedfromanycorporateproposal.
Share BuybacksTheCompanydidnotcarryoutanysharebuy-backsduringthefinancialyear.
Options, Warrants or Convertible SecuritiesTherewasnoexerciseofOptionsorConvertibleSecuritiesorconversionofwarrantsduringthefinancialyear.
American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) ProgrammeTheCompanydidnotsponsoranyADRorGDRprogrammeduringthefinancialyear.
Imposition of Sanctions/PenaltiesTherewerenomaterialsanctionorpenaltiesimposedontheCompanyanditssubsidiaries,Directorsormanagementbytherelevantregulatorybodiesduringthefinancialyear.
Audit FeesTheamountofauditfeespaidandpayabletoexternalauditorsbytheCompanyandtheGroupforthefinancialyearended31December2017amountedtoRM55,000andRM242,244respectively.
Non-Audit FeesTheamountofnon-audit feespaidandpayabletoexternalauditorsbytheGroupfor thefinancialyearended31December2017amountedtoRM51,000.
Variation in ResultsThereisnomaterialvariancebetweenthefinancialresultsandtheunauditedresultspreviouslymadeforthefinancialyearended31December2017.
Profit GuaranteeTherewasnoprofitguaranteegivenbytheCompanyduringthefinancialyear.
Material ContractsTherewerenomaterialcontractsoutsidetheordinarycourseofbusinessenteredintobytheCompanyanditssubsidiariesinvolvingDirector’sandmajorshareholder’sinterestwhichwerestillsubsistingattheendofthefinancialyearorenteredintosincetheendofthepreviousfinancialyear.
Revaluation of Landed Properties TheCompanyanditssubsidiariesdidnotadoptanyrevaluationpolicyonlandedpropertiesduringthefinancialyear.
Profit Forecast VarianceTherewasnoprofitforecastissuedinrespectofthefinancialresultended31December2017.
Recurrent related Party TransactionsTherelatedpartytransactionsaredisclosedinpage94ofthisannualreport.
Corporate Governance Overview Statement (continued)
Sealink International Berhad (800981-X)Annual Report 2017
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SustainabilityStatement
SealinkInternationalBerhad(“Company”)presentsitsfirstSustainabilityStatementpublishedinlinewithMainMarketListingRequirements(“MMLR”)ofBursaSecuritiesintheCompany’sannualreportforthefinancialyearended31December2017(“FYE2017”).TheCompanywillalsocomplywiththedetaileddisclosurerequirementsinPracticeNote9oftheMMLRintheCompany’sannualreportfromFYE2018onwards.Assuch,noseparatedisclosureoftheCorporateSocialResponsibilityStatementwillbemadefromFYE2017onwards.
TheBoardofDirectors(“Board”)ispleasedtodemonstrateourcommitmenttocreatelong-termsustainablevalueandbusinessgrowthtoachieveourstrategicobjectivesandenhanceshareholdersvalueinthelongterm.Weundertakedevelopmentsthataresocially,economicallyandenvironmentallyconduciveforasustainablelong-termfutureandthatarematerialtoourbusinessoperations.
STAKEHOLDERS’ ENGAGEMENT
Inbuildinglong-termbusinessgrowth,itisessentialtounderstandandberesponsivetothestakeholders’concernsorexpectationsoftheCompany.Wehaveidentifiedthekeystakeholdersrelevanttoouroperationsandthedifferentplatformsthatwillbeusedtoengagewithallthedifferentstakeholdergroups,asindicatedinthetablebelow.
Stakeholders Engagement Platforms
Shareholders • AnnualGeneralMeeting • QuarterlyReports • AnnualReport GovernmentandRegulators • Regulatoryrequirements Clients(Customers) • Survey • Customerengagement Management • Meetings Employees • Internalandexternalstafftrainings • Meetings • Performanceappraisalsystem • Health,SafetyandEnvironment’sDay Community • Donations • Companywebsite
ENVIRONMENT SUSTAINABILITY
WeareaccreditedbytheMarineDepartmentofMalaysiaandmaintainaSafetyManagementSystem(SMS)forrunningourMarineOperations.WestrictlycomplywithTheInternationalConventionforthePreventionofPollutionfromShips(MARPOL).TheSMSsystemensuresthat:
• allactivitiesarecompliantwiththelaw;• HSEmattersaremanagedasacriticalbusinessactivity;• HSEistheresponsibilityofallemployees(managersandindividuals);• anyonecan‘StopWork’orintervene,whereunsafeconditionsarepresentorunsafeactivitiesareobserved.
ItistheobligationofeveryonetoactimmediatelytocorrectanysituationthatdeviatesfromourpolicyorSMS.Wemustensurethatthesestandardsarenevercompromised.
Managementisminimisingtheuseofpaperinprintviascanningofdocumentsandonlyprintwhennecessary.TheGroup’senvironmentalpolicyto“go-green”iscarriedoutonanongoingbasistoavoidandreducewasteandusingrecyclingandenvironmentally-friendlydisposalmethodsinstead.
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SOCIAL SUSTAINABILITY• Community RecognisingtheimportanceoftheCommunity,theGroup,duringthefinancialyearunderreview,hasdonated
fundstothoseinneed,namely,MiriPalliativeCareAssociationandotherdeservingorganizations.TheGroupalsoprovidesopportunities forundergraduatestudents togainexposureon realprojects through internshipprograms.Thetrainingprovidesthestudentspersonalgrowthandexposuretodifferentjobopportunitiesaspartofourinitiativeofgivingbacktothelocalcommunity.
• TrainingandDevelopment Werecogniseourpeople’sskills,professionalismandthevaluetheycontributetotheGroup.Wealsoinvestin
humanresourcecapitalthroughemployeetraininganddevelopmentsuchasOffshorePetroleumIndustryTrainingOrganization(OPITO)trainingandotherrelevanttraining.
• SafetyandHealth TheBoardismindfuloftheneedtoensureasafeworkingenvironmentforallemployees.Pertinentpolicieson
healthandsafetyhavebeenformalisedinwritinganddisseminatedtotheworkforceforcompliance.
Ourvisionis‘GoalZeroIncident’workenvironmentandouraspirationistobea‘valuecreatingpartner’toourclients(customers),shareholdersandcommunitieswhereweworkandlive.Toachieveourvisionandaspirations,theCompanycommittedtoaHSEpolicywherebywemanageHSEmattersasacriticalbusinessactivity,pursuethegoalof‘noharmtopeopleandprotecttheenvironment’.Inadditiontotheabove,weprovideandensuresafetyworkingenvironmentonboardshipbyestablishingandsafeguardingallidentifiedrisksandpromotesafetyconsciousattitudeamongalltheemployeesandalsocontinuouslyimprovetheirsafetymanagementskillsthroughtraining,meetings,forums,discussionsandtalks.
TheGroupwasproudlyawardedbyoilmajorsfortwocommendableachievements,ie,CarigaliHess,2016SafetyAwardForExcellence(S.A.F.E)forPlatinumCategory.WealsoreachedanothermilestoneasourteamachievedShellMalaysia2YearsGoalZeroDaysforyear2016.
TheGroup’soperationspersonnelaswellascontractworkersareprovidedwith,andarerequiredtowearpersonalprotectiveequipmentwhencarryingouttheirworkattheshipyard,onvesselsoratthewarehouseinordertoachievezerolosstimeinjuryorfatalityarisingfromworkplaceaccidents.Apartfromtheneedtobebriefedonsafetyissuesuponarrival,visitorstotheShipyardandvesselsarealsorequiredtoputonsafetyhelmetsandbootsbeforeventuringtothesites.
TheGrouphasalsoorganizedanin-houseHealth,SafetyandEnvironment(HSE)Daywhichcoversawarenessrelatingtohazardsattheworkplace,healthtalkandfiredrills,whichwasconductedincollaborationwithanoilmajor.
TheGrouphasaSafetyOfficer,whoisresponsibleforoverseeingmattersconcerningthesafetyandhealthofemployees.ASafetyandHealthCommitteehasalsobeenestablishedsince2005todeliberateonissuesrelatingtohazardsattheworkplacesothatappropriateremedialmeasuresmaybetakentoaddressanygaps,allwithaviewofsustainingasafeworkingenvironmentintheGroup.
RecognisingtheimportanceofHSEasoneoftheGroup’sbusinessstrategy,acopyof“Health,Safety,EnvironmentandSecurityPolicy”canbedownloadedfromtheCompany’swebsiteatwww.asiasealink.com.Throughthesepoliciesandguidelines,theGroupaimstofurtherimprovesafetyawarenessamongallemployees.
Sustainability Statement (continued)
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ECONOMIC AND GOVERNANCE SUSTAINABILITY
Wefocusonbuildingsustainablerelationshipswithstakeholdersandutiliseourresourcestocontributetoeconomicgrowthandbringvaluetoourstakeholders.TheBoardplacesgreatimportanceoncorporategovernanceandbelievesinthecorrelationbetweengoodgovernanceandperformance.TheBoardhasformalizedinwritingaCodeofConductandanEmployeeHandbook thatemphasizes,amongstothers,zero tolerance forunethicalpractices.TheGroupconductsbusinessinanhonestandethicalwaytoprotectallourstakeholders.TheCodeofConduct,whichappliesalsotoDirectors,andtheGroup’swhistle-blowingpoliciesandprocedureshavebeenuploadedtotheCompany’swebsite.
TheGrouphasalsobeenprogressivelydevelopingpertinentpoliciesandproceduresaddressingitskeybusinessoperationstoensurethatbusinessisconductedaboveboardatalltimes.TheyguideandalignwithcorporateinitiativestheGrouphasimplementedtoaddressindustrychallengesandhelpusachieveoperationalexcellence.
Sustainability Statement (continued)
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34Annual Report 2017
Directors’ResponsibilityStatementfortheAuditedFinancialStatementTheDirectorsarerequiredbytheCompaniesAct2016(CA)topreparethefinancialstatementsforeachfinancialyearwhichhavebeenmadeoutinaccordancewiththeapplicableMalaysianFinancialReportingStandards(MFRSs),theInternationalFinancialReportingStandards(IFRs)andtherequirementsoftheCAinMalaysia.
TheDirectorsareresponsibletoensurethatthefinancialstatementsgiveatrueandfairviewofthestateofaffairsoftheGroupandoftheCompanyattheendofthefinancialyear,andoftheresultsandcashflowsoftheGroupandoftheCompanyforthefinancialyear.
Inpreparingthefinancialstatements,theDirectorshave:
• Adoptedappropriateaccountingpoliciesandappliedthemconsistently;
• Madejudgmentsandestimatesthatarereasonableandprudent;and
• Preparedthefinancialstatementsonagoingconcernbasis.
TheDirectorsareresponsibletoensurethattheGroupandtheCompanykeepaccountingrecordswhichdisclosethefinancialpositionoftheGroupandoftheCompanywithreasonableaccuracy,enablingthemtoensurethatthefinancialstatementscomplywiththeCA.
TheDirectorsareresponsiblefortakingsuchstepsasarereasonablyopentothemtosafeguardtheassetsoftheGroupandoftheCompany,andtodetectandpreventfraudandotherirregularities.
36 – 38 Directors’ Report
39 Statement by Directors
39 Statutory Declaration
40 – 43 Independent Auditors’ Report 44 Statements of Profit or Loss and Other Comprehensive Income
45 Statements of Financial Position
46 – 47 Statements of Changes in Equity
48 – 49 Statements of Cash Flows
50 – 104 Notes to the Financial Statements
Financial Statementsand Reports
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36Annual Report 2017
Directors’Report
TheDirectorshavepleasureinpresentingtheirreporttogetherwiththeauditedfinancialstatementsoftheGroupandoftheCompanyforthefinancialyearended31December2017.
Principal activities
TheCompanyisprincipallyengagedininvestmentholding.TheprincipalactivitiesofthesubsidiariesaredisclosedinNote15tothefinancialstatements.
Results
Group Company RM RM
Lossnetoftax (49,729,630) (1,303,670)
Lossattributableto:OwnersoftheCompany (49,729,630) (1,303,670)
Therewerenomaterialtransferstoorfromreservesorprovisionsduringthefinancialyearotherthandisclosedinthefinancialstatements.
IntheopinionoftheDirectors,theresultsoftheoperationsoftheGroupandoftheCompanyduringthefinancialyearwerenotsubstantiallyaffectedbyanyitem,transactionoreventofamaterialandunusualnature.
Directors
ThenamesoftheDirectorsoftheCompanyinofficesincethebeginningofthefinancialyeartothedateofthisreportare:
YongFohChoiYongKiamSamWongChieBinEricKhooChuanSyn@KhooChuanSynTohKianSingDatukSebastianTingChiewYew
TheinformationofDirectorsofsubsidariesisavailableattheCompany’sregisteredofficeandthesaidinformationisdeemedincorporatedhereinbysuchreferenceandmadeaparthereof.
Directors’ benefits
Neitherattheendofthefinancialyear,noratanytimeduringthatyear,didtheresubsistanyarrangementtowhichtheCompanywasaparty,wherebytheDirectorsmightacquirebenefitsbymeansoftheacquisitionofsharesinordebenturesoftheCompanyoranyotherbodycorporate.
Sincetheendofthepreviousfinancialyear,noDirectorhasreceivedorbecomeentitledtoreceiveabenefit(otherthanbenefitsincludedintheaggregateamountofemolumentsreceivedordueandreceivablebytheDirectorsorthefixedsalaryofafull-timeemployeeoftheCompanyasshowninNote10tothefinancialstatements)byreasonofacontractmadebytheCompanyorarelatedcorporationwithanyDirectororwithafirmofwhichaDirectorisamember,orwithacompanyinwhichaDirectorhasasubstantialfinancialinterest,exceptasdisclosedinNote28tothefinancialstatements.
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Directors’ Report (continued)
Directors’ interests
AccordingtotheregisterofDirectors’shareholdings,theinterestsofDirectorsinofficeattheendofthefinancialyearinsharesintheCompanyanditsrelatedcorporationsduringthefinancialyearwereasfollows:
Number of Ordinary Shares At At 1 January 31 DecemberThe Company: 2017 Acquired Sold 2017
Direct interestYongFohChoi 45,716,800 - - 45,716,800YongKiamSam 67,382,399 - - 67,382,399EricKhooChuanSyn@KhooChuanSyn 30,000 - - 30,000WongChieBin 90,000 - - 90,000DatukSebastianTingChiewYew 137,500 - - 137,500
Deemed interest through holding companyYongFohChoi 259,080,800 - - 259,080,800YongKiamSam 259,080,800 - - 259,080,800
Holding company:
Direct interestYongFohChoi 1,237,500 - (237,500) 1,000,000YongKiamSam 262,500 237,500 - 500,000
YongFohChoiandYongKiamSambyvirtueoftheirinterestinsharesintheCompanyarealsodeemedinterestedinsharesofalltheCompany’ssubsidiariestotheextenttheCompanyhasaninterest.
TohKianSingdoesnothaveanyinterestinsharesintheCompanyoritsrelatedcorporationsduringthefinancialyear.
Indemnification of directors and officers
Noindemnitieshavebeengivenorinsurancepremiumspaid,duringorsincetheendofthefinancialyear,foranypersonwhoisorofficeroftheCompany.
Other statutory information
a) BeforethestatementsofprofitorlossandothercomprehensiveincomeandstatementsoffinancialpositionoftheGroupandoftheCompanyweremadeout,theDirectorstookreasonablesteps:
i) toascertainthatproperactionhadbeentakeninrelationtothewritingoffofbaddebtsandthemakingofprovisionfordoubtfuldebtsandsatisfiedthemselvesthatallknownbaddebtshadbeenwrittenoffandthatadequateprovisionhadbeenmadefordoubtfuldebts;and
ii) toensurethatanycurrentassetswhichwereunlikelytorealisetheirvalueasshownintheaccountingrecordsintheordinarycourseofbusinesshadbeenwrittendowntoanamountwhichtheymightbeexpectedsotorealise.
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Directors’ Report (continued)
Other statutory information (continued)
b) Atthedateofthisreport,theDirectorsarenotawareofanycircumstanceswhichwouldrender:
i) theamountwrittenoff forbaddebtsor theamountof theprovision fordoubtfuldebts in thefinancialstatementsoftheGroupandoftheCompanyinadequatetoanysubstantialextent;and
ii) thevaluesattributedtocurrentassetsinthefinancialstatementsoftheGroupandoftheCompanymisleading.
c) Atthedateofthisreport,theDirectorsarenotawareofanycircumstanceswhichhavearisenwhichwouldrenderadherencetotheexistingmethodofvaluationofassetsorliabilitiesoftheGroupandoftheCompanymisleadingorinappropriate.
d) Atthedateofthisreport,theDirectorsarenotawareofanycircumstancesnototherwisedealtwithinthisreportorfinancialstatementsoftheGroupandoftheCompanywhichwouldrenderanyamountstatedinthefinancialstatementsmisleading.
e) Atthedateofthisreport,theredoesnotexist:
i) anychargeontheassetsoftheGrouporoftheCompanywhichhasarisensincetheendofthefinancialyearwhichsecurestheliabilitiesofanyotherperson;or
ii) anycontingentliabilityoftheGrouporoftheCompanywhichhasarisensincetheendofthefinancialyear.
f) IntheopinionoftheDirectors:
i) nocontingentorotherliabilityhasbecomeenforceableorislikelytobecomeenforceablewithintheperiodoftwelvemonthsaftertheendofthefinancialyearwhichwillormayaffecttheabilityoftheGrouporoftheCompanytomeettheirobligationswhentheyfalldue;and
ii) noitem,transactionoreventofamaterialandunusualnaturehasarisenintheintervalbetweentheendofthefinancialyearandthedateofthisreportwhichislikelytoaffectsubstantiallytheresultsoftheoperationsoftheGrouporoftheCompanyforthefinancialyearinwhichthisreportismade.
Auditors
Theauditors,Ernst&Young,haveexpressedtheirwillingnesstocontinueinoffice.Auditors’remunerationsaredisclosedinNote8tothefinancialstatements.
Totheextentpermittedbylaw,theCompanyhasagreedtoindemnifyitsauditors,Ernst&Young,aspartofthetermsofitsauditengagementagainstclaimsbythirdpartiesarisingfromtheaudit(foranunspecifiedamount).NopaymenthasbeenmadetoindemnifyErnst&Youngduringorsincethefinancialyear.
SignedonbehalfoftheBoardinaccordancewitharesolutionoftheDirectorsdated3April2018
Yong Kiam Sam Yong Foh Choi
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StatementbyDirectorsPursuant to Section 251(2) of the Companies Act 2016
We,Yong Kiam SamandYong Foh Choi,beingtwooftheDirectorsofSealink International Berhad,doherebystatethat,intheopinionoftheDirectors,theaccompanyingfinancialstatementssetoutonpages44to104aredrawnupinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct2016inMalaysiasoastogiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasat31December2017andoftheirfinancialperformanceandcashflowsfortheyearthenended.
SignedonbehalfoftheBoardinaccordancewitharesolutionoftheDirectorsdated3April2018
Yong Kiam Sam Yong Foh Choi
StatutoryDeclarationPursuant to Section 251(1)(B) of the Companies Act 2016
I,Angelia Chong Pei Cheng, being theOfficerprimarily responsible for the financialmanagement ofSealink International Berhad,dosolemnlyandsincerelydeclarethattheaccompanyingfinancialstatementssetoutonpages44to104areinmyopinioncorrect,andImakethissolemndeclarationconscientiouslybelievingthesametobetrueandbyvirtueoftheprovisionsoftheStatutoryDeclarationsAct,1960.
SubscribedandsolemnlydeclaredbytheabovenamedAngelia Chong Pei ChengatMiriintheStateofSarawakon3April2018.
Angelia Chong Pei Cheng(MIA19359)
Beforeme,
CommissionerforOathsPuk LiLi @ Puk Lee LinLicenseNo:Q024
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40Annual Report 2017
IndependentAuditors’Reportto the Members of Sealink International Berhad– 800981-X (Incorporated in Malaysia)
Report on the Audit of the Financial Statements
Opinion
WehaveauditedthefinancialstatementsofSealinkInternationalBerhad,whichcomprisestatementsoffinancialpositionasat31December2017oftheGroupandoftheCompany,andthestatementsofprofitorlossandothercomprehensiveincome,statementsofchangesinequityandstatementsofcashflowsoftheGroupandoftheCompanyfortheyearthenended,andnotestothefinancialstatements,includingasummaryofsignificantaccountingpolicies,assetoutonpages44to104.
Inouropinion,theaccompanyingfinancialstatementsgiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasat31December2017,andoftheirfinancialperformanceandtheircashflowsfortheyearthenendedinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct2016inMalaysia.
Basis for Opinion
WeconductedourauditinaccordancewithapprovedstandardsonauditinginMalaysiaandInternationalStandardsonAuditing.OurresponsibilitiesunderthosestandardsarefurtherdescribedintheAuditors’ResponsibilitiesfortheAuditoftheFinancialStatementssectionofourreport.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.
Independence and Other Ethical Responsibilities
WeareindependentoftheGroupandoftheCompanyinaccordancewiththeBy-Laws(onProfessionalEthics,ConductandPractice)oftheMalaysianInstituteofAccountants(“By-Laws”)andtheInternationalEthicsStandardsBoardforAccountants’CodeofEthics forProfessionalAccountants (“IESBACode”),andwehave fulfilledourotherethicalresponsibilitiesinaccordancewiththeBy-LawsandtheIESBACode.
Key Audit Matters
Keyauditmattersarethosemattersthat,inourprofessionaljudgement,wereofmostsignificanceinourauditofthefinancialstatementsoftheGroupandoftheCompanyforthecurrentyear.WehavedeterminedthattherearenokeyauditmatterstocommunicateinourreportonthefinancialstatementsoftheCompany.ThekeyauditmattersfortheauditofthefinancialstatementsoftheGrouparedescribedbelow.ThesematterswereaddressedinthecontextofourauditofthefinancialstatementsoftheGroupasawhole,andinformingouropinionthereon,andwedonotprovideaseparateopiniononthesematters.Foreachmatterbelow,ourdescriptionofhowourauditaddressedthematterisprovidedinthatcontext.
WehavefulfilledtheresponsibilitiesdescribedintheAuditors’responsibilitiesfortheauditofthefinancialstatementssectionofourreport,includinginrelationtothesematters.Accordingly,ourauditincludedtheperformanceofproceduresdesignedtorespondtoourassessmentoftherisksofmaterialmisstatementofthefinancialstatements.Theresultsofourauditprocedures,includingtheproceduresperformedtoaddressthemattersbelow,providethebasisofourauditopinionontheaccompanyingfinancialstatements.
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Independent Auditors’ Report (continued)
Recoverability of carrying amounts of vessels
Inviewofthedepressedeconomicconditionsintheoffshoremarinesector,theGroupperformedanassessmentontherecoverableamountonthevesselsstatedatRM452,941,676asat31December2017whichrepresented89.42%oftheGroup’stotalassets,todeterminewhetherthecarryingvalueofthesevesselsarerecoverable.
Theestimatedrecoverableamountisdeterminedbasedonthehigherofanasset’svalueinuse(“VIU”)andfairvaluelesscoststosell(“FV”).Therecoverableamountwascomparedtothecarryingvalueofeachassetwithidentifiedimpairmenttriggers.If therecoverableamount is lower,thecarryingvalueoftheasset isreducedtoitsestimatedrecoverableamountandthedifferenceisregardedasanimpairmentloss.
TheGroupconsideredeachvesselasacash-generatingunit(“CGU”).ValueinuseisthepresentvalueofthefuturecashflowsexpectedtobederivedfromtheCGU.TheFVrepresentsanestimateoftheamountreceivedintheeventthevesselissoldonawillingbuyerandawillingsellerbasis.TheFVonthevesselswasbasedonvaluationbyanindependentvaluer.
Basedontheoutcomeoftheimpairmentassessment,noimpairmentlossisrecognisedinthestatementsofprofitorlossandothercomprehensiveincomeastherecoverableamountofthevesselsarehigherthanthecarryingamount.
Theimpairmentassessmentofthevesselsissignificanttoourauditduetoitsmagnitudeandtheuseofsignificantestimatesindeterminingtherecoverableamount.Weevaluatedmanagement’sassessmentofimpairmentindicatorsforvessels.Ourauditproceduresincludedconsideringtheobjectivity,independenceandexpertiseoftheexternalvaluerandassessingthevaluationmodelandsignificantestimatesusedbytheexternalvaluer,includingcomparisonswithrecenttransactionsinvolvingothersimilarvessels.Inaddition,weevaluatedtheadequacyoftheGroup’sdisclosuresregardingtheimpairmentofthesevesselsasdisclosedinNote2.9,Note3(b)andNote13tothefinancialstatements.
Information Other than the Financial Statements and Auditors’ Report Thereon
TheDirectorsoftheCompanyareresponsiblefortheotherinformation.Theotherinformationcomprisestheinformationincludedintheannualreport,butdoesnotincludethefinancialstatementsoftheCompanyandourauditors’reportthereon.
OuropiniononthefinancialstatementsoftheGroupandoftheCompanydoesnotcovertheotherinformationandwedonotexpressanyformofassuranceconclusionthereon.
Inconnectionwithourauditof thefinancialstatementsof theGroupandof theCompany,our responsibility is toreadtheotherinformationand,indoingso,considerwhethertheotherinformationismateriallyinconsistentwiththefinancialstatementsoftheGroupandoftheCompanyorourknowledgeobtainedintheauditorotherwiseappearstobemateriallymisstated.
If,basedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementofthisotherinformation,wearerequiredtoreportthatfact.Wehavenothingtoreportinthisregard.
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Independent Auditors’ Report (continued)
Responsibilities of the Directors for the Financial Statements
TheDirectorsof theCompanyareresponsible for thepreparationoffinancialstatementsof theGroupandof theCompanythatgiveatrueandfairviewinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct2016inMalaysia.TheDirectorsarealsoresponsibleforsuchinternalcontrolastheDirectorsdetermineisnecessarytoenablethepreparationoffinancialstatementsoftheGroupandoftheCompanythatarefreefrommaterialmisstatement,whetherduetofraudorerror.
InpreparingthefinancialstatementsoftheGroupandoftheCompany,theDirectorsareresponsibleforassessingtheGroup’sandtheCompany’sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccountingunlesstheDirectorseitherintendtoliquidatetheGrouportheCompanyortoceaseoperations,orhavenorealisticalternativebuttodoso.
Auditors’ Responsibilities for the Audit of the Financial Statements
OurobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsoftheGroupandoftheCompanyasawholearefreefrommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditors’reportthatincludesouropinion.Reasonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordancewithapprovedstandardsonauditinginMalaysiaandInternationalStandardsonAuditingwillalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.
AspartofanauditinaccordancewithapprovedstandardsonauditinginMalaysiaandInternationalStandardsonAuditing,weexerciseprofessionaljudgementandmaintainprofessionalscepticismthroughouttheaudit.Wealso:
• IdentifyandassesstherisksofmaterialmisstatementofthefinancialstatementsoftheGroupandoftheCompany,whetherduetofraudorerror,designandperformauditproceduresresponsivetothoserisks,andobtainauditevidencethatissufficientandappropriatetoprovideabasisforouropinion.Theriskofnotdetectingamaterialmisstatementresultingfromfraudishigherthanforoneresultingfromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions,misrepresentations,ortheoverrideofinternalcontrol.
• Obtainanunderstandingof internalcontrolrelevanttotheaudit inordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheGroup’sandtheCompany’sinternalcontrol.
• EvaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesandrelateddisclosuresmadebytheDirectors.
• ConcludeontheappropriatenessoftheDirectors’useofthegoingconcernbasisofaccountingand,basedontheauditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmaycastsignificantdoubtontheGroup’sortheCompany’sabilitytocontinueasagoingconcern.Ifweconcludethatamaterialuncertaintyexists,wearerequiredtodrawattentioninourauditors’reporttotherelateddisclosuresinthefinancialstatementsoftheGroupandoftheCompanyor,ifsuchdisclosuresareinadequate,tomodifyouropinion.Ourconclusionsarebasedontheauditevidenceobtaineduptothedateofourauditors’report.However,futureeventsorconditionsmaycausetheGrouportheCompanytoceasetocontinueasagoingconcern.
Sealink International Berhad (800981-X)Annual Report 2017
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Auditors’ Responsibilities for the Audit of the Financial Statements (continued)
• Evaluatetheoverallpresentation,structureandcontentofthefinancialstatementsoftheGroupandoftheCompany,includingthedisclosures,andwhetherthefinancialstatementsoftheGroupandoftheCompanyrepresenttheunderlyingtransactionsandeventsinamannerthatachievesfairpresentation.
• Obtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusinessactivitieswithin theGrouptoexpressanopiniononthefinancialstatementsof theGroup.Weareresponsible for thedirection,supervisionandperformanceofthegroupaudit.Weremainsolelyresponsibleforourauditopinion.
WecommunicatewiththeDirectorsregarding,amongothermatters,theplannedscopeandtimingoftheauditandsignificantauditfindings,includinganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit.
WealsoprovidetheDirectorswithastatementthatwehavecompliedwithrelevantethicalrequirementsregardingindependence,andtocommunicatewiththemallrelationshipsandothermattersthatmayreasonablybethoughttobearonourindependence,andwhereapplicable,relatedsafeguards.
FromthematterscommunicatedwiththeDirectors,wedeterminethosemattersthatwereofmostsignificanceintheauditofthefinancialstatementsoftheGroupandoftheCompanyforthecurrentyearandarethereforethekeyauditmatters.Wedescribethesemattersinourauditors’reportunlesslaworregulationprecludespublicdisclosureaboutthematterorwhen,inextremelyrarecircumstances,wedeterminethatamattershouldnotbecommunicatedinourreportbecausetheadverseconsequencesofdoingsowouldreasonablybeexpectedtooutweighthepublicinterestbenefitsofsuchcommunication.
Other matters
ThisreportismadesolelytothemembersoftheCompany,asabody,inaccordancewithSection266oftheCompaniesAct2016inMalaysiaandfornootherpurpose.Wedonotassumeresponsibilitytoanyotherpersonforthecontentofthisreport.
Ernst & Young Yong Nyet YunAF:0039 2708/04/18(J)CharteredAccountants CharteredAccountant
Miri,Malaysia3April2018
Independent Auditors’ Report (continued)
Sealink International Berhad (800981-X)
44Annual Report 2017
StatementsofProfitorLossandOtherComprehensiveIncomefor the financial year ended 31 December 2017
Group Company Note 2017 2016 2017 2016 RM RM RM RM
Revenue 4 75,184,805 122,901,656 2,498,822 3,577,821
Costofsales (85,623,770) (127,306,731) - - Gross (loss)/profit (10,438,965) (4,405,075) 2,498,822 3,577,821
Otherincome 5 4,641,228 9,775,394 221,363 -Administrativeexpenses (20,382,872) (26,200,700) (3,339,256) (4,320,355)Otherexpenses (15,488,384) (31,517,841) - -
Operating loss (41,668,993) (52,348,222) (619,071) (742,534)
Financeincome 6 3,028,575 2,695,583 1,619,951 1,085,684Financecosts 7 (9,523,990) (12,443,099) (2,304,550) (1,781,763)
Shareofresultsofajointventure (950,121) 391,017 - -Shareofresultsofanassociate (1,021,652) (1,370,159) - - Lossbeforetax 8 (50,136,181) (63,074,880) (1,303,670) (1,438,613)
Incometaxexpense 11 406,551 6,419,511 - 144,551Loss net of tax (49,729,630) (56,655,369) (1,303,670) (1,294,062)Other comprehensive income to be reclassified to profit or loss in subsequent periodsForeigncurrencytranslation,netoftax (19,588,334) 11,487,102 - - Other comprehensive income for the year, net of tax (19,588,334) 11,487,102 - - Total comprehensive income for the year, net of tax (69,317,964) (45,168,267) (1,303,670) (1,294,062)Loss attributable to:OwnersoftheCompany (49,729,630) (56,655,369) (1,303,670) (1,294,062)
Total comprehensive income attributable to:OwnersoftheCompany (69,317,964) (45,168,267) (1,303,670) (1,294,062)
Loss per share attributable to owners of the Company (sen per share):
Basic 12 (9.95) (11.33) Theaccompanyingaccountingpoliciesandexplanatorynotesformanintegralpartofthefinancialstatements.
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StatementsofFinancialPositionas at 31 December 2017
Group Company Note 2017 2016 2017 2016 RM RM RM RMAssets
Non-current assets
Property,plantandequipment 13 506,551,704 609,228,055 2,207 3,360Landuserights 14 10,656,694 11,235,447 - -Investmentinsubsidiaries 15 - - 385,599,639 385,469,639Investmentinanassociate 16 3,795,158 4,724,774 - -Investmentinajointventure 17 6,738,552 7,539,563 - -Otherreceivables 19 394,251 4,991,935 - - 528,136,359 637,719,774 385,601,846 385,472,999
Current assets
Inventories 18 34,150,743 49,864,589 - -Tradeandotherreceivables 19 38,925,700 32,382,837 67,719,849 30,749,867Othercurrentassets 20 539,746 556,371 - 3,500Investmentsecurities 21 64,641 63,011 - -Taxrecoverable 827,407 1,310,407 38,360 117,580Cashandbankbalances 22 30,157,806 42,336,149 234,231 1,723,946 104,666,043 126,513,364 67,992,440 32,594,893 Total assets 632,802,402 764,233,138 453,594,286 418,067,892
Equity and liabilities
Current liabilities
Loansandborrowings 23 99,892,698 131,316,796 - 6,140,000Tradeandotherpayables 24 32,371,042 29,738,536 86,446,834 41,531,770Incometaxpayable 1,119,023 81,074 - - 133,382,763 161,136,406 86,446,834 47,671,770 Net current liabilities (28,716,720) (34,623,042) (18,454,394) (15,076,877)
Non-current liabilities
Loansandborrowings 23 87,844,931 120,268,959 - 1,945,000Deferredtaxliabilities 25 26,439,255 28,374,356 - - 114,284,186 148,643,315 - 1,945,000 Total liabilities 247,666,949 309,779,721 86,446,834 49,616,770Net assets 385,135,453 454,453,417 367,147,452 368,451,122 Equity attributable to owners of the Company
Sharecapital 26 329,086,883 250,000,000 329,086,883 250,000,000Sharepremium 26 - 79,086,883 - 79,086,883Retainedearnings 3,600,758 53,330,388 38,060,569 39,364,239Otherreserves 27 52,447,812 72,036,146 - - Total equity 385,135,453 454,453,417 367,147,452 368,451,122Total equity and liabilities 632,802,402 764,233,138 453,594,286 418,067,892 Theaccompanyingaccountingpoliciesandexplanatorynotesformanintegralpartofthefinancialstatements.
Sealink International Berhad (800981-X)
46Annual Report 2017
StatementsofChangesinEquityfor the financial year ended 31 December 2017
Attributable to Equity Holders of the Company Foreign currency2017 Equity, Share Share Retained translationGroup total capital premium earnings reserve Note RM RM RM RM RM
Openingbalanceat1January2017 454,453,417 250,000,000 79,086,883 53,330,388 72,036,146
Lossfortheyear (49,729,630) - - (49,729,630) -Othercomprehensiveincome 27 (19,588,334) - - - (19,588,334)Totalcomprehensiveincome (69,317,964) - - (49,729,630) (19,588,334)
TransferpursuanttoCompaniesAct2016(Note2.2(a)) - 79,086,883 (79,086,883) - -
Closingbalanceat31December2017 385,135,453 329,086,883 - 3,600,758 52,447,812
2016Group
Openingbalanceat1January2016 499,621,684 250,000,000 79,086,883 109,985,757 60,549,044
Lossfortheyear (56,655,369) - - (56,655,369) -Othercomprehensiveincome 27 11,487,102 - - - 11,487,102Totalcomprehensiveincome (45,168,267) - - (56,655,369) 11,487,102
Closingbalanceat31December2016 454,453,417 250,000,000 79,086,883 53,330,388 72,036,146
Theaccompanyingaccountingpoliciesandexplanatorynotesformanintegralpartofthefinancialstatements.
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Statements of Changes in Equity for the financial year ended 31 December 2017 (continued)
Equity, Share Share Retained total capital premium earnings RM RM RM RM2017Company
Openingbalanceat1January2017 368,451,122 250,000,000 79,086,883 39,364,239
Lossnetoftax,representingtotalcomprehensiveincome (1,303,670) - - (1,303,670)
TransferpursuanttoCompaniesAct2016(Note2.2(a)) - 79,086,883 (79,086,883) -Closingbalanceat31December2017 367,147,452 329,086,883 - 38,060,569
2016Company
Openingbalanceat1January2016 369,745,184 250,000,000 79,086,883 40,658,301
Lossnetoftax,representingtotalcomprehensiveincome (1,294,062) - - (1,294,062)
Closingbalanceat31December2016 368,451,122 250,000,000 79,086,883 39,364,239
Theaccompanyingaccountingpoliciesandexplanatorynotesformanintegralpartofthefinancialstatements.
Sealink International Berhad (800981-X)
48Annual Report 2017
StatementsofCashFlowsfor the financial year ended 31 December 2017
Group Company Note 2017 2016 2017 2016 RM RM RM RMOperating activities
Lossbeforetax (50,136,181) (63,074,880) (1,303,670) (1,438,613)
Adjustmentsfor:Financeincome 6 (3,028,575) (2,695,583) (1,619,951) (1,085,684)Dividendincomefrominvestmentsecurities 5 (1,630) (1,658) - -Amortisationoflanduserights 14 578,753 578,765 - -Depreciationofproperty,plantandequipment 13 43,327,337 46,499,443 1,153 1,648Impairmentlossonamountduefromasubsidiary 8 - - 29,418 -Impairmentlossontradeandotherreceivables 8 629,324 89,998 - -Impairmentlossonproperty,plantandequipment 8 - 30,487,178 - -Financecosts 7 9,523,990 12,443,099 2,304,550 1,781,763Inventorieswrittenoff 8 106,648 543,670 - -Loss/(Gain)ondisposalofproperty,plantandequipment 5,8 13,411,305 (44,999) - -Gainondisposalofajointventure 5 (249,193) - - -Property,plantandequipmentwrittenoff 8 31,473 564,465 - -Reserveonconsolidation 5 - (1,011,604) - -Reversalofdepositwrittenoff 5 (186,000) - - -Reversalofinventorywrittendown 5,8 (7,750) (1,269,538) - -Reversalofimpairmentlossontradereceivables 5 (36,000) (295,599) - -Reversalofimpairmentonproperty,plantandequipment 5 - (6,154,500) - -Shareofresultsofajointventure 950,121 (391,017) - -Shareofresultsofanassociate 1,021,652 1,370,159 - -Unrealisedloss/(gain)onforeignexchange 514,553 1,049,676 2,429 (1,722)
Totaladjustments 66,586,008 81,761,955 717,599 696,005 Operating cash flows before changes in working capital 16,449,827 18,687,075 (586,071) (742,608)ChangesinworkingcapitalDecreaseininventories 16,735,868 36,987,378 - -(Increase)/Decreaseintradeandotherreceivables (1,349,128) 18,781,335 22,710 154,380(Increase)/Decreaseinothercurrentassets (9,701) 368,111 3,500 (3,500)(Decrease)/Increaseintradeandotherpayables (1,251,572) (16,519,731) 407,203 (108,599)Netchangeinholdingcompanybalances 4,000,000 - 4,000,000 -Netchangeinsubsidiariesbalances - - 3,485,751 39,668,210
Totalchangesinworkingcapital 18,125,467 39,617,093 7,919,164 39,710,491
Sealink International Berhad (800981-X)Annual Report 2017
49
Statements of Cash Flows for the financial year ended 31 December 2017 (continued)
Group Company Note 2017 2016 2017 2016 RM RM RM RM
Cash flows from operations 34,585,208 58,304,168 7,333,093 38,967,883
Interestreceived 3,028,575 2,695,583 1,619,951 1,085,684Interestpaid (10,649,374) (14,223,837) (2,304,550) (1,781,763)Incometaxpaid (407,452) (957,660) (10,030) (28,330)Incometaxrefunded 402,597 464,235 89,250 - Net cash flows fromoperating activities 26,949,640 46,282,489 6,727,714 38,243,474
Investing activitiesAcquisitionofasubsidiary,netofcash 15 - 711,698 - -Purchaseofproperty,plantandequipment (1,113,092) (770,836) - (2,069)Proceedsfromdisposalofproperty,plantandequipment 18,698,974 45,000 - -Acquisitionofadditionalsharesinasubsidiary - - (130,000) -Acquisitionofredeemableconvertiblepreferencesharesinsubsidiaries - - - (31,500,000)Acquisitionofredeemablepreferencesharesinajointventure (656,000) - - -Proceedsfromdisposalofredeemablepreferencesharesinajointventure - 1,200,000 - -Proceedsfromdisposalofordinarysharesinajointventure 756,000 - - -Dividendreceivedfromajointventure - 577,961 - -
Net cash flows from/(used in) investing activities 17,685,882 1,763,823 (130,000) (31,502,069)
Financing activities
Salesofinvestmentsecurities - 267,655 - -Proceedsofloansandborrowings 27,730,918 - - -Repaymentsofloansandborrowings (78,350,147) (79,250,667) (8,085,000) (6,140,000)Repaymentoffinanceleases (58,249) (52,478) - -Netmovementintradefinancing (8,200,000) (2,100,000) - -Netmovementinfixeddepositpledged 6,434,452 (357,132) - -Netmovementincashatbankrestrictedinuse 771,269 (851,033) - -
Net cash flows used in financing activities (51,671,757) (82,343,655) (8,085,000) (6,140,000)
Net (decrease)/increase in cash and cash equivalents (7,036,235) (34,297,343) (1,487,286) 601,405Effect of exchange rate changes on cash and cash equivalents (332,920) (209,681) (2,429) 1,722Cash and cash equivalents at1 January (3,898,434) 30,608,590 1,723,946 1,120,819
Cash and cash equivalents at 31 December 22 (11,267,589) (3,898,434) 234,231 1,723,946
Theaccompanyingaccountingpoliciesandexplanatorynotesformanintegralpartofthefinancialstatements.
Sealink International Berhad (800981-X)
50Annual Report 2017
NotestotheFinancialStatements– 31 DECEMBER 2017
1. Corporate information
TheCompanyisapubliclimitedliabilitycompany,incorporatedanddomiciledinMalaysia,andislistedontheMainMarketofBursaMalaysiaSecuritiesBerhad.TheregisteredofficeoftheCompanyislocatedatLot1035,Block4,MCLD,PiasauIndustrialArea,98000Miri,Sarawak.
TheimmediateandultimateholdingcompanyoftheCompanyisSealinkHoldingsSdn.Bhd.,whichisincorporatedinMalaysia.
TheCompanyisprincipallyengagedininvestmentholding.TheprincipalactivitiesofthesubsidiariesaredisclosedinNote15tothefinancialstatements.
Therehavebeennosignificantchangesinthenatureoftheprincipalactivitiesduringthefinancialyear.
2. Summary of significant accounting policies
2.1 Basis of preparation
ThefinancialstatementsoftheGroupandoftheCompanyhavebeenpreparedinaccordancewithMalaysianFinancialReportingStandards(“MFRS”),InternationalFinancialReportingStandards(“IRFS”)andtherequirementsoftheCompaniesAct2016inMalaysia.
ThefinancialstatementsoftheGroupandoftheCompanyhavealsobeenpreparedonthehistoricalcostbasisexceptasdisclosedintheaccountingpoliciesbelowandarepresentedinRinggitMalaysia(“RM”).
On15September2016,theCompaniesAct2016(“NewAct”)wasenactedanditreplacestheCompaniesAct,1965inMalaysiawitheffectfrom31January2017.ThekeychangesoftheNewActonthefinancialstatementsaredisclosedinNote2.2.
2.2 Changes in accounting policies and regulatory requirements
(a) Changes in regulatory requirements
CompaniesAct2016(“NewAct”)
AmongstthekeychangesintroducedintheNewActwhichwillaffectthefinancialstatementsoftheCompanyuponthecommencementoftheNewActon31January2017are:
- theremovalofauthorisedsharecapital; - theordinarysharesoftheCompanywillceasetohaveparornominalvalue;and - theCompany’ssharepremiumwillbecomepartofsharecapital
(b) Changes in accounting policies
Theaccountingpoliciesadoptedareconsistentwiththoseofthepreviousfinancialyearexceptasfollows:
On1January2017,theGroupandtheCompanyadoptedthefollowingnewandamendedMFRSsmandatoryforannualfinancialperiodsbeginningonorafter1January2017.
• AmendmentstoMFRS107:DisclosureInitiatives • AmendmentstoMFRS112:RecognitionofDeferredTaxAssetsforUnrealisedLosses
• AnnualImprovementstoMFRSStandards2014–2016Cycle:AmendmentstoMFRS12:DisclosureofInterestsinOtherEntities–ClarificationoftheScopeofDisclosureRequirementsinMFRS12
TheadoptionoftheabovenewMFRSs,AmendmentstoMFRSsandAnnualImprovementstoMFRSsdidnothaveanyeffectonthefinancialperformanceorpositionoftheGroupandoftheCompany.
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Notes to the Financial Statements (continued)
2. Summary of significant accounting policies (continued)
2.3 Standards issued but not yet effective
ThestandardsandinterpretationsthatareissuedbutnotyeteffectiveuptothedateofissuanceoftheGroup’sandoftheCompany’sfinancialstatementsaredisclosedbelow.TheGroupandtheCompanyintendtoadoptthesestandards,ifapplicable,whentheybecomeeffective.
Effective for annual periods beginning
Descriptions on or after
AmendmentstoMFRS2:ClassificationandMeasurementofShare-based 1January2018PaymentTransactionsMFRS9:FinancialInstruments 1January2018MFRS15:RevenuefromContractswithCustomers 1January2018AmendmentstoMFRS140:TransfersofInvestmentProperty 1January2018AnnualImprovementstoMFRSStandards2014–2016Cycle(i) AmendmentstoMFRS1:First-timeAdoptionofMalaysianFinancial 1January2018 ReportingStandards(ii) AmendmentstoMFRS128:InvestmentsinAssociatesandJointVentures 1January2018ICInterpretation22:ForeignCurrencyTransactionsandAdvanceConsideration 1January2018AmendmentstoMFRS9:PrepaymentFeatureswithNegativeCompensation 1January2019MFRS16:Leases 1January2019AmendmentstoMFRS128:Long-termInterestsinAssociatesandJointVentures 1January2019AnnualImprovementstoMFRSStandards2015–2017Cycle(i) AmendmentstoMFRS3:BusinessCombination 1January2019(ii) AmendmentstoMFRS11:JointArrangements 1January2019(iii) AmendmentstoMFRS112:IncomeTaxes 1January2019(iv) AmendmentstoMFRS123:BorrowingCosts 1January2019AmendmentstoMFRS119:PlanAmendment,CurtailmentorSettlement 1January2019ICInterpretation23:UncertaintyoverIncomeTaxTreatments 1January2019MFRS17:InsuranceContracts 1January2021AmendmentstoMFRS10andMFRS128:SaleorContributionofAssetsbetween DeferredanInvestoranditsAssociateorJointVenture
(a) MFRS 9 Financial Instruments
MFRS9introducesnewrequirementsforclassificationandmeasurement,impairmentandhedgeaccounting.MFRS9iseffectiveforannualperiodsbeginningonorafter1January2018,withearlyapplicationpermitted.Retrospectiveapplicationisrequired,butrestatementofcomparativeinformationisnotcompulsory.During2017,theGroupandtheCompanyhaveperformedadetailedimpactassessmentofMFRS9onclassificationandmeasurement,andimpairment.TheGroupandtheCompanydonothaveanyhedgerelationships.TheassessmentisbasedoncurrentlyavailableinformationandmaybesubjecttochangesarisingfromfurtherreasonableandsupportableinformationbeingmadeavailabletotheGroupandtotheCompanyin2018whentheGroupandtheCompanyadoptMFRS9.
BasedontheanalysisoftheGroup’sandtheCompany’sfinancialassetsandliabilitiesasat31December2017onthebasisoffactsandcircumstancesthatexistatthatdate,theDirectorsoftheCompanyhaveassessedtheimpactofMFRS9totheGroup’sandoftheCompany’sfinancialstatementsasfollows:
Sealink International Berhad (800981-X)
52Annual Report 2017
Notes to the Financial Statements (continued)
2. Summary of significant accounting policies (continued)
2.3 Standards issued but not yet effective (continued)
(a) MFRS 9 Financial Instruments (continued)
(i) Classification and measurement
TheGroupandtheCompanydonotexpectasignificantimpactonitsfinancialpositionorequityonapplyingtheclassificationandmeasurementrequirementsofMFRS9.Itexpectstocontinuemeasuringatfairvalueallfinancialassetscurrentlyheldatfairvalue.
Loansandreceivablesareheldtocollectcontractualcashflowsandareexpectedtogiverisetocashflowsrepresentingsolelypaymentsofprincipalandinterest.TheGroupandtheCompanyanalysedthecontractualcashflowcharacteristicsofthoseinstrumentsandconcludedthattheymeetthecriteriaforamortisedcostmeasurementunderMFRS9.Therefore,reclassificationfortheseinstrumentsisnotrequired.
(ii) Impairment
TheGroupandtheCompanywillapplythesimplifiedapproachandrecordlifetimeexpectedlossesonalltradereceivables,whileforotherfinancialassets,theGroupandtheCompanywillapplythegeneralapproachindeterminingimpairmentamount.TheGroupandtheCompanyhavedeterminedthatnoadditionallossallowanceisnecessary.
(b) MFRS 15: Revenue from Contracts with Customers
MFRS15establishesafive-stepmodeltoaccountforrevenuearisingfromcontractswithcustomers.UnderMFRS15,revenueisrecognisedatanamountthatreflectstheconsiderationwhichanentityexpectstobeentitledinexchangefortransferringgoodsorservicestoacustomer.Anentityrecognisesrevenuewhen(oras)aperformanceobligationissatisfied,i.ewhen“control”ofthegoodsorservicesunderlyingtheparticularperformanceobligationistransferredtothecustomer.
TheGroupand theCompanyhaveperformedapreliminary impactassessmentofadoptingMFRS15basedoncurrentlyavailableinformation.ThisassessmentmaybesubjecttochangesarisingfromongoinganalysisuntiltheGroupandtheCompanyadoptsMFRS15in2018.
TheGroupandtheCompanyplantoapplythechangesinaccountingpoliciesretrospectivelytoeachreportingyearpresented,usingthefullretrospectiveapproach.
Basedonitsassessment,theDirectorsdonotexpectthattheapplicationofMFRS15willresultinsignificantimpactsonthefinancialstatementsoftheGroupandoftheCompanyotherthanadditionaldisclosurestobeprovided.
(c) MFRS 16: Leases
MFRS16willreplaceMFRS117Leases,ICInterpretation4DeterminingwhetheranArrangementcontainsaLease,ICInterpretation115OperatingLease-IncentivesandICInterpretation127EvaluatingtheSubstanceofTransactionsInvolvingtheLegalFormofaLease.MFRS16setsouttheprinciplesfortherecognition,measurement,presentationanddisclosureofleasesandrequireslesseestoaccountforallleasesunderasingleon-balancesheetmodelsimilartotheaccountingforfinanceleasesunderMFRS117.
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Notes to the Financial Statements (continued)
2. Summary of significant accounting policies (continued)
2.3 Standards issued but not yet effective (continued)
(c) MFRS 16: Leases (continued)
Atthecommencementdateofalease,alesseewillrecognisealiabilitytomakeleasepaymentsandanassetrepresentingtherighttousetheunderlyingassetduringtheleaseterm.Theright-of-useassetisinitiallymeasuredatcostandsubsequentlymeasuredatcost(subjecttocertainexceptions),lessaccumulateddepreciationandimpairmentlosses,adjustedforanyremeasurementoftheleaseliability.Theleaseliabilityisinitiallymeasuredatpresentvalueoftheleasepaymentsthatarenotpaidatthatdate.Subsequently,theleaseliabilityisadjustedforinterestandleasepayments,aswellastheimpactofleasemodifications.
ClassificationofcashflowswillalsobeaffectedasoperatingleasepaymentsunderMFRS117arepresentedasoperatingcashflows,whereasunderMFRS16,theleasepaymentswillbesplitintoaprincipal(whichwillbepresentedasfinancingcashflows)andaninterestportion(whichwillbepresentedasoperatingcashflows).
LessoraccountingunderMFRS16issubstantiallythesameastheaccountingunderMFRS117.LessorswillcontinuetoclassifyallleasesusingthesameclassificationprincipleasinMFRS117anddistinguishbetweentwotypesofleases:operatingandfinanceleases.MFRS16alsorequireslesseesandlessorstomakemoreextensivedisclosuresthanunderMFRS117.
MFRS16iseffectiveforannualperiodsbeginningonorafter1January2019.EarlyapplicationispermittedbutnotbeforeanentityappliesMFRS15.Alesseecanchoosetoapplythestandardusingeitherafullretrospectiveoramodifiedretrospectiveapproach.TheGroupandtheCompanyplantoassessthepotentialeffectofMFRS16onitsfinancialstatementsinyear2018.
(d) IC Interpretation 22 Foreign Currency Transactions and Advance Consideration
Theinterpretationclarifiesthat,indeterminingtheexchangeratetouseoninitialrecognitionofanasset,expenseorincome,whenconsiderationforthatitemhasbeenpaidorreceivedinadvanceinaforeigncurrencywhichresultedintherecognitionofanon-monetaryassetornon-monetaryliability,thedateoftransaction is thedateonwhichanentity initially recognises thenon-monetaryassetornon-monetaryliabilityarisingfromtheadvanceconsideration.Iftherearemultiplepaymentsorreceiptsinadvance,thentheentitymustdeterminethetransactiondateforeachpaymentorreceiptofadvanceconsideration.
Entitiesmayapplytheamendmentseitherretrospectivelyorprospectively.Specifictransitionprovisionsapplytoprospectiveapplication.Earlyapplicationispermittedandmustbedisclosed.TheapplicationoftheseamendmentswillnothaveanimpactontheGroupandontheCompanyastheGroupandtheCompanyarealreadyaccountingfortransactionsinvolvingthepaymentorreceiptofadvanceconsiderationinforeigncurrencyinawaythatisconsistentwiththeamendments.
(e) MFRS 128 Long-term Interests in Associates and Joint Ventures
TheamendmentsclarifythatanentityappliesMFRS9FinancialInstrumentstolong-terminterestsinanassociateorjointventuretowhichtheequitymethodisnotappliedbutthat,insubstance,formpartofthenetinvestmentintheassociateorjointventure(long-terminterests).InapplyingMFRS9,anentitydoesnotaccountforanylossesoftheassociate,orjointventure,oranyimpairmentlossesonthenetinvestment,recognisedasadjustmentstothenetinvestmentintheassociateorjointventurethatarisefromapplyingMFRS128InvestmentsinAssociatesandJointVentures.
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54Annual Report 2017
Notes to the Financial Statements (continued)
2. Summary of significant accounting policies (continued)
2.3 Standards issued but not yet effective (continued)
(e) MFRS 128 Long-term Interests in Associates and Joint Ventures (continued)
Entitiesmust apply theamendments retrospectively,withcertainexceptions.Earlyapplicationof theamendmentsispermittedandmustbedisclosed.Astheamendmentseliminateambiguityinthewordingofthestandard,theDirectorsoftheGroupandoftheCompanydonotexpecttheamendmentstohaveanyimpactontheGroup’sandtheCompany’sfinancialstatements.
(f) Annual Improvements to MFRS Standards 2014–2016 Cycle
TheAnnualImprovementstoMFRSStandards2014-2016CycleincludeanumberofamendmentstovariousMFRSs,whicharesummarisedbelow.TheseamendmentsdonothaveasignificantimpactontheGroup’sandtheCompany’sfinancialstatements.
Amendments to MFRS 128 Investments in Associates and Joint Ventures
Theamendmentsclarifythat:
- anentitythatisaventurecapitalorganisation,orotherqualifyingentity,mayelect,atinitialrecognition,onaninvestment-by-investmentbasis,tomeasureitsinvestmentsinassociatesandjointventuresatfairvaluethroughprofitorloss.
- ifanentity,thatisnotitselfaninvestmententity,hasaninterestinassociateorjointventurethatisaninvestmententity,theentitymay,whenapplyingtheequitymethod,electtoretainthefairvaluemeasurementappliedby that investmententityassociateor jointventure to the investmententityassociate’s or joint venture’s interests in subsidiaries. Thiselection ismadeseparately for eachinvestmententityassociateorjointventure,atalaterdateonwhich:
(i) theinvestmententityassociateorjointventureisinitiallyrecognised; (ii) theassociateorjointventurebecomesaninvestmententity;and (iii) theinvestmententityassociateorjointventurefirstbecomesaparent.
(g) Annual Improvements to MFRS Standards 2015–2017 Cycle
TheAnnualImprovementstoMFRSStandards2015-2017CycleincludeanumberofamendmentstovariousMFRSs,whicharesummarisedbelow.TheseamendmentsdonothaveasignificantimpactontheGroup’sandtheCompany’sfinancialstatements.
(i) Amendments to MFRS 3: Business Combinations
Theamendmentsclarifythat,whenanentityobtainscontrolofabusinessthatisajointoperation,itappliestherequirementsforabusinesscombinationachievedinstages,includingremeasuringpreviouslyheldinterestsintheassetsandliabilitiesofthejointoperationatfairvalue.Indoingso,theacquirerremeasuresitsentirepreviouslyheldinterestinthejointoperation.
Anentityappliestheseamendmentstobusinesscombinationsforwhichtheacquisitiondateisonorafterthebeginningofthefirstannualreportingperiodbeginningonorafter1January2019.Earlierapplicationispermitted.
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Notes to the Financial Statements (continued)
2. Summary of significant accounting policies (continued)
2.3 Standards issued but not yet effective (continued)
(g) Annual Improvements to MFRS Standards 2015–2017 Cycle (continued)
(ii) Amendments to MFRS 11: Joint Arrangements
Apartythatparticipatesin,butdoesnothavejointcontrolof,ajointoperationmightobtainjointcontrolof the jointoperation inwhichtheactivityof the jointoperationconstitutesabusinessasdefinedinMFRS3.Theamendmentsclarifythatthepreviouslyheldinterestsinthatjointoperationarenotremeasured.
Anentityappliestheseamendmentstotransactionsinwhichitobtainsjointcontrolonorafterthebeginningofthefirstannualreportingperiodbeginningonorafter1January2019.Earlierapplicationispermitted.
(iii) Amendments to MFRS 112: Income Taxes
Theamendmentsclarifythattheincometaxconsequencesofdividendsarelinkedmoredirectlytopasttransactionsoreventsthatgenerateddistributableprofitsthantodistributionstoowners.Therefore,anentityrecognisestheincometaxconsequencesofdividendsinprofitorloss,othercomprehensiveincomeorequityaccordingtowheretheentityoriginallyrecognisedthosepasttransactionsorevents.
Anentityappliestheseamendmentsforannualreportingperiodsbeginningonorafter1January2019.Earlierapplicationispermitted.Whenanentityfirstappliestheseamendments,itappliesthemtotheincometaxconsequencesofdividendsrecognisedonorafterthebeginningoftheearliestcomparativeperiod.
(iv) Amendments to MFRS 123: Borrowing Costs
Theamendmentsclarifythatanentitytreatsaspartofgeneralborrowingsanyborrowingoriginallymadetodevelopaqualifyingassetwhensubstantiallyalloftheactivitiesnecessarytopreparethatassetforitsintendeduseorsalearecomplete.
Anentityappliestheseamendmentstoborrowingcosts incurredonorafter thebeginningof theannualreportingperiodsbeginningonorafter1January2019.Earlierapplicationispermitted.
(h) IC Interpretation 23 Uncertainty over Income Tax Treatments
TheinterpretationaddressestheaccountingforincometaxeswhentaxtreatmentsinvolveuncertaintythataffectstheapplicationofMFRS112anddoesnotapplytotaxesorleviesoutsidethescopeofMFRS112,nordoesitspecificallyincluderequirementsrelatingtointerestandpenaltiesassociatedwithuncertaintaxtreatments.
Theinterpretationspecificallyaddressesthefollowing: - whetheranentityconsidersuncertaintaxtreatmentsseparately; - theassumptionsanentitymakesabouttheestimationoftaxtreatmentsbytaxationauthorities; - howanentitydeterminestaxableprofit(taxloss),taxbases,unusedtaxlosses,unusedtaxcredits
andtaxrates;and - howanentityconsiderschangesinfactsandcircumstances.
Anentitymustdeterminewhethertoconsidereachuncertaintaxtreatmentseparatelyortogetherwithoneormoreuncertaintaxtreatments.Theapproachthatbetterpredictstheresolutionoftheuncertaintyshouldbefollowed.TheGroupandtheCompanywillapplytheinterpretationfromitseffectivedate.
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2. Summary of significant accounting policies (continued)
2.3 Standards issued but not yet effective (continued)
(i) Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
Theamendmentsclarifythat:
- gainsandlossesresultingfromtransactionsinvolvingassetsthatdonotconstituteabusiness,betweeninvestoranditsassociateorjointventurearerecognisedintheentity’sfinancialstatementsonlytotheextentofunrelatedinvestors’interestsintheassociateorjointventure;and
- gainsandlossesresultingfromtransactionsinvolvingthesaleorcontributionofassetstoanassociateorajointventurethatconstituteabusinessisrecognisedinfull.
TheamendmentsaretobeappliedprospectivelytothesaleorcontributionofassetsoccurringinannualperiodsbeginningonorafteradatetobedeterminedbytheMalaysianAccountingStandardsBoard.Earlierapplicationispermitted.TheseamendmentsarenotexpectedtohaveanyimpactontheGroup.
2.4 Basis of consolidation
TheconsolidatedfinancialstatementscomprisethefinancialstatementsoftheCompanyanditssubsidiariesasatthereportingdate.ThefinancialstatementsofthesubsidiariesusedinthepreparationoftheconsolidatedfinancialstatementsarepreparedforthesamereportingdateastheCompany.Consistentaccountingpoliciesareappliedforliketransactionsandeventsinsimilarcircumstances.
TheCompanycontrolsaninvesteeifandonlyiftheCompanyhasallthefollowing:
(i) Powerovertheinvestee(i.eexistingrightsthatgiveitthecurrentabilitytodirecttherelevantactivitiesoftheinvestee);
(ii) Exposure,orrights,tovariablereturnsfromitsinvestmentwiththeinvestee;and(iii) Theabilitytouseitspowerovertheinvesteetoaffectitsreturns.
WhentheCompanyhas less thanamajorityof thevotingrightsofan investee, theCompanyconsiders thefollowinginassessingwhetherornottheCompany’svotingrightsinaninvesteearesufficienttogiveitpowerovertheinvestee:
(i) ThesizeoftheCompany’sholdingofvotingrightsrelativetothesizeanddispersionofholdingsoftheothervoteholders;
(ii) PotentialvotingrightsheldbytheCompany,othervoteholdersorotherparties; (iii) Rightsarisingfromothercontractualarrangements;and (iv) AnyadditionalfactsandcircumstancesthatindicatethattheCompanyhas,ordoesnothave,thecurrent
abilitytodirecttherelevantactivitiesatthetimethatdecisionsneedtobemade,includingvotingpatternsatpreviousshareholders’meetings.
Subsidiariesareconsolidatedwhen theCompanyobtainscontrolover thesubsidiaryandceaseswhen theCompanylosescontrolofthesubsidiary.Allintra-groupbalances,incomeandexpensesandunrealisedgainsandlossesresultingfromintra-grouptransactionsareeliminatedinfull.
Losseswithinasubsidiaryareattributedtothenon-controllinginterestsevenifthatresultsinadeficitbalance.
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2. Summary of significant accounting policies (continued)
2.4 Basis of consolidation (continued)
ChangesintheGroup’sownershipinterestsinsubsidiariesthatdonotresultintheGrouplosingcontroloverthesubsidiariesareaccountedforasequitytransactions.ThecarryingamountsoftheGroup’sinterestsandthenon-controllinginterestsareadjustedtoreflectthechangesintheirrelativeinterestsinthesubsidiaries.TheresultingdifferenceisrecogniseddirectlyinequityandattributedtoownersoftheCompany.
WhentheGrouplosescontrolofasubsidiary,againorlosscalculatedasthedifferencebetween(i)theaggregate
ofthefairvalueoftheconsiderationreceivedandthefairvalueofanyretainedinterestand(ii) thepreviouscarryingamountoftheassetsandliabilitiesofthesubsidiaryandanynon-controllinginterest,isrecognisedinprofitorloss.Thesubsidiary’scumulativegainorlosswhichhasbeenrecognisedinothercomprehensiveincomeandaccumulatedinequityarereclassifiedtoprofitorlossorwhereapplicable,transferreddirectlytoretainedearnings.Thefairvalueofanyinvestmentretainedintheformersubsidiaryatthedatecontrolislostisregardedasthecostoninitialrecognitionoftheinvestment.
Business combinations
Acquisitionsofsubsidiariesareaccountedforusingtheacquisitionmethod.Thecostofanacquisitionismeasuredastheaggregateoftheconsiderationtransferred,measuredatacquisitiondatefairvalueandtheamountofanynon-controllinginterestsintheacquiree.
TheGroupelectsonatransaction-by-transactionbasiswhethertomeasurethenon-controllinginterestsintheacquireeeitheratfairvalueorattheproportionateshareoftheacquiree’sidentifiablenetassets.Transactioncostsincurredareexpensedandincludedinadministrativeexpenses.
Anycontingentconsiderationtobetransferredbytheacquirerwillberecognisedatfairvalueattheacquisitiondate.Subsequentchangesinthefairvalueofthecontingentconsiderationwillberecognisedinprofitorloss.However,ifthecontingentconsiderationisclassifiedasequity,itwillnotberemeasured.Subsequentsettlementisaccountedforwithinequity.
WhentheGroupacquiresabusiness,itassessesthefinancialassetsandliabilitiesassumedforappropriateclassificationanddesignationinaccordancewiththecontractualterms,economiccircumstancesandpertinentconditionsasattheacquisitiondate.Thisincludestheseparationofembeddedderivativesinhostcontractsbytheacquiree.
Ifthebusinesscombinationisachievedinstages,theacquisitiondatefairvalueoftheacquirer’spreviouslyheldequityinterestintheacquireeisremeasuredtofairvalueattheacquisitiondatethroughprofitorloss.
Goodwillisinitiallymeasuredatcost,beingtheexcessoftheaggregateoftheconsiderationtransferredandtheamountrecognisedfornon-controllinginterestsoverthenetidentifiableassetsacquiredandliabilitiesassumed.Ifthisconsiderationislowerthanfairvalueofthenetassetsofthesubsidiaryacquired,thedifferenceisrecognisedinprofitorloss.
2.5 Subsidiaries
AsubsidiaryisanentityoverwhichtheGrouphascontrolled.
In theCompany’s separate financial statements, investments in subsidiariesareaccounted forat cost lessimpairmentlosses.Ondisposalofsuchinvestments,thedifferencebetweennetdisposalproceedsandtheircarryingamountsisincludedinprofitorloss.
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2. Summary of significant accounting policies (continued)
2.6 Foreign currency
a) Functional and presentation currency
TheindividualfinancialstatementsofeachentityintheGrouparemeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(“thefunctionalcurrency”).TheconsolidatedfinancialstatementsarepresentedinRinggitMalaysia(RM),whichisalsotheCompany’sfunctionalcurrency.
b) Foreign currency transactions
TransactionsinforeigncurrenciesaremeasuredintherespectivefunctionalcurrenciesoftheCompanyand its subsidiariesandare recordedon initial recognition in the functional currenciesat exchangeratesapproximatingthoserulingatthetransactiondates.Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesaretranslatedattherateofexchangerulingatthereportingdate.Non-monetaryitemsdenominatedinforeigncurrenciesthataremeasuredathistoricalcostaretranslatedusingtheexchangeratesasatthedatesoftheinitialtransactions.Non-monetaryitemsdenominatedinforeigncurrenciesmeasuredatfairvaluearetranslatedusingtheexchangeratesatthedatewhenthefairvaluewasdetermined.
ExchangedifferencesarisingonthesettlementofmonetaryitemsorontranslatingmonetaryitemsatthereportingdatearerecognisedinprofitorlossexceptforexchangedifferencesarisingonmonetaryitemsthatformpartoftheGroup’snetinvestmentinforeignoperations,whicharerecognisedinitiallyinothercomprehensiveincomeandaccumulatedunderforeigncurrencytranslationreserveinequity.TheforeigncurrencytranslationreserveisreclassifiedfromequitytoprofitorlossoftheGroupondisposaloftheforeignoperation.
Exchangedifferencesarisingonthetranslationofnon-monetaryitemscarriedatfairvalueareincludedinprofitorlossfortheperiodexceptforthedifferencesarisingonthetranslationofnon-monetaryitemsinrespectofwhichgainsandlossesarerecogniseddirectlyinequity.Exchangedifferencesarisingfromsuchnon-monetaryitemsarealsorecogniseddirectlyinequity.
c) Foreign operations
TheassetsandliabilitiesofforeignoperationsaretranslatedintoRMattherateofexchangerulingatthereportingdateandincomeandexpensesaretranslatedatexchangeratesatthedatesofthetransactions.Theexchangedifferencesarisingonthetranslationaretakendirectlytoothercomprehensiveincome.Ondisposalofaforeignoperation,thecumulativeamountrecognisedinothercomprehensiveincomeandaccumulatedinequityunderforeigncurrencytranslationreserverelatingtothatparticularforeignoperationisrecognisedintheprofitorloss.
Goodwillandfairvalueadjustmentsarisingontheacquisitionofforeignoperationsaretreatedasassetsandliabilitiesoftheforeignoperationsandarerecordedinthefunctionalcurrencyoftheforeignoperationsandtranslatedattheclosingrateatthereportingdate.
2.7 Property, plant and equipment
Allitemsofproperty,plantandequipmentareinitiallyrecordedatcost.Thecostofanitemofproperty,plantandequipmentisrecognisedasanassetif,andonlyif,itisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheGroupandthecostoftheitemcanbemeasuredreliably.
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2. Summary of significant accounting policies (continued)
2.7 Property, plant and equipment (continued)
Subsequent to recognition,plantandequipmentaremeasuredatcost lessaccumulateddepreciationandaccumulated impairment losses.When significantparts of property, plant andequipment are required tobereplacedin intervals, theGrouprecognisessuchpartsas individualassetswithspecificuseful livesanddepreciation,respectively.Likewise,whenamajorinspectionisperformed,itscostisrecognisedinthecarryingamountoftheplantandequipmentasareplacementiftherecognitioncriteriaaresatisfied.Allotherrepairandmaintenancecostsarerecognisedinprofitorlossasincurred.
Depreciationiscomputedonastraight-linebasisovertheestimatedusefullivesoftheassetsasfollows:
Leaseholdland 49-60years Buildingsandwharf 10-50years Vessels 8-20years Vesselequipment 1.5-10years Drydockingcost 2.5years Equipment,furnitureandfittings 1.5-10years Plantandmachinery 10years Motorvehicles 5years Assetsunderconstruction included inplantandequipmentarenotdepreciatedas theseassetsarenotyet
availableforuse.
Thecarryingvaluesofproperty,plantandequipmentarereviewedforimpairmentwheneventsorchangesincircumstancesindicatethatthecarryingvaluemaynotberecoverable.
Theresidualvalue,usefullifeanddepreciationmethodarereviewedateachfinancialyear-end,andadjustedprospectively,ifappropriate.
Anitemofproperty,plantandequipmentisderecognisedupondisposalorwhennofutureeconomicbenefitsareexpectedfromitsuseordisposal.Anygainorlossonderecognitionoftheassetisincludedintheprofitorlossintheyeartheassetisderecognised.
2.8 Land use rights
Landuserightsareinitiallymeasuredatcost.Followinginitialrecognition,landuserightsaremeasuredatcostlessaccumulatedamortisationandaccumulatedimpairmentlosses.Thelanduserightsareamortisedovertheirleaseterms.
2.9 Impairment of non-financial assets
TheGroupassessesateachreportingdatewhetherthereisanindicationthatanassetmaybeimpaired.Ifanysuchindicationexists,orwhenanannualimpairmentassessmentforanassetisrequired,theGroupmakesanestimateoftheasset’srecoverableamount.
Anasset’srecoverableamountisthehigherofanasset’sfairvaluelesscoststosellanditsvalueinuse.Forthepurposeofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiablecashflows(cash-generatingunits(“CGU”)).
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2. Summary of significant accounting policies (continued)
2.9 Impairment of non-financial assets (continued)
Inassessingvalueinuse,theestimatedfuturecashflowsexpectedtobegeneratedbytheassetarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.Wherethecarryingamountofanassetexceedsitsrecoverableamount,theassetiswrittendowntoitsrecoverableamount.ImpairmentlossesrecognisedinrespectofaCGUorgroupsofCGUsareallocatedfirsttoreducethecarryingamountofanygoodwillallocatedtothoseunitsorgroupsofunitsandthen,toreducethecarryingamountoftheotherassetsintheunitorgroupsofunitsonapro-ratabasis.
Impairmentlossesarerecognisedinprofitorloss. Anassessmentismadeateachreportingdateastowhetherthereisanyindicationthatpreviouslyrecognised
impairment lossesmayno longerexistormayhavedecreased.Apreviously recognised impairment loss isreversedonlyiftherehasbeenachangeintheestimatesusedtodeterminetheasset’srecoverableamountsincethelastimpairmentlosswasrecognised.Ifthatisthecase,thecarryingamountoftheassetisincreasedtoitsrecoverableamount.Thatincreasecannotexceedthecarryingamountthatwouldhavebeendetermined,netofdepreciation,hadnoimpairmentlossbeenrecognisedpreviously.Suchreversalisrecognisedinprofitorloss.
2.10 Investments in associates and joint ventures
AnassociateisanentityinwhichtheGrouphassignificantinfluence.Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvesteebutisnotcontrolorjointcontroloverthosepolicies.
Ajointventureisajointarrangementwherebythepartiesthathavejointcontrolofthearrangementhaverights
to thenetassetsof the joint arrangement. Joint control is thecontractuallyagreedsharingofcontrol of anarrangement,whichexistsonlywhendecisionsabouttherelevantactivitiesrequiretheunanimousconsentofthepartiessharingcontrol.
Onacquisitionofaninvestmentinassociateorjointventure,anyexcessofthecostofinvestmentovertheGroup’sshareofthenetfairvalueoftheidentifiableassetsandliabilitiesoftheinvesteeisrecognisedasgoodwillandincludedinthecarryingamountoftheinvestment.AnyexcessoftheGroup’sshareofthenetfairvalueoftheidentifiableassetsandliabilitiesoftheinvesteeoverthecostofinvestmentisexcludedfromthecarryingamountoftheinvestmentandisinsteadincludedasincomeinthedeterminationoftheGroup’sshareoftheassociate’sorjointventure’sprofitorlossfortheperiodinwhichtheinvestmentisacquired.
Anassociateorajointventureisequityaccountedforfromthedateonwhichtheinvesteebecomesanassociateorajointventure.
Undertheequitymethod,oninitialrecognitiontheinvestmentinanassociateorajointventureisrecognisedatcost,andthecarryingamountisincreasedordecreasedtorecognisetheGroup’sshareoftheprofitorlossandothercomprehensiveincomeoftheassociateorjointventureafterthedateofacquisition.WhentheGroup’sshareoflossesinanassociateorajointventureequalorexceedsitsinterestintheassociateorjointventure,theGroupdoesnotrecognisefurtherlosses,unlessithasincurredlegalorconstructiveobligationsormadepaymentsonbehalfoftheassociateorjointventure.
ProfitsandlossesresultingfromupstreamanddownstreamtransactionsbetweentheGroupanditsassociateorjointventurearerecognisedintheGroup’sfinancialstatementsonlytotheextentofunrelatedinvestors’interestsintheassociateorjointventure.Unrealisedlossesareeliminatedunlessthetransactionprovidesevidenceofanimpairmentoftheassettransferred.
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Notes to the Financial Statements (continued)
2. Summary of significant accounting policies (continued)
2.10 Investments in associates and joint ventures (continued)
ThefinancialstatementsoftheassociatesandjointventuresarepreparedasofthesamereportingdateastheCompany.Wherenecessary,adjustmentsaremadetobringtheaccountingpoliciesinlinewiththoseoftheGroup.
Afterapplicationof theequitymethod, theGroupappliesMFRS139Financial Instruments:RecognitionandMeasurementtodeterminewhetheritisnecessarytorecogniseanyadditionalimpairmentlosswithrespecttoitsnetinvestmentintheassociateorjointventure.Whennecessary,theentirecarryingamountoftheinvestmentistestedforimpairmentinaccordancewithMFRS136ImpairmentofAssetsasasingleasset,bycomparingitsrecoverableamount(higherofvalueinuseandfairvaluelesscoststosell)withitscarryingamount.Anyimpairmentlossisrecognisedinprofitorloss.Reversalofanimpairmentlossisrecognisedtotheextentthattherecoverableamountoftheinvestmentsubsequentlyincreases.
IntheCompany’sseparatefinancialstatements,investmentsinassociatesandjointventuresareaccountedforatcostlessimpairmentlosses.Ondisposalofsuchinvestments,thedifferencebetweennetdisposalproceedsandtheircarryingamountsisincludedinprofitorloss.
2.11 Financial assets
Financialassetsarerecognisedinthestatementsoffinancialpositionwhen,andonlywhen,theGroupandtheCompanybecomeapartytothecontractualprovisionsofthefinancialinstrument.
Whenfinancialassetsarerecognisedinitially,theyaremeasuredatfairvalue,plus,inthecaseoffinancialassetsnotatfairvaluethroughprofitorloss,directlyattributabletransactioncosts.
TheGroupandtheCompanydeterminetheclassificationoftheirfinancialassetsatinitialrecognition,andthecategoriesincludefinancialassetsatfairvaluethroughprofitandlossandloansandreceivables.
(a) Financial assets at fair value through profit or loss
Financialassetsareclassifiedasfinancialassetsatfairvaluethroughprofitorlossiftheyareheldfortradingoraredesignatedassuchuponinitialrecognition.Financialassetsheldfortradingarederivatives(includingseparatedembeddedderivatives)orfinancialassetsacquiredprincipallyforthepurposeofsellinginthenearterm.
Subsequenttoinitialrecognition,financialassetsatfairvaluethroughprofitorlossaremeasuredatfairvalue.Anygainsorlossesarisingfromchangesinfairvaluearerecognisedinprofitorloss.Netgainsornetlossesonfinancialassetsatfairvaluethroughprofitorlossdonotincludeexchangedifferences,interestanddividendincome.Exchangedifferences,interestanddividendincomeonfinancialassetsatfairvaluethroughprofitorlossarerecognisedseparatelyinprofitorlossaspartofotherlossesorotherincome.
Financialassetsatfairvaluethroughprofitorlosscouldbepresentedascurrentornon-current.Financialassetsthatareheldprimarilyfortradingpurposesarepresentedascurrentwhereasfinancialassetsthatarenotheldprimarilyfortradingpurposesarepresentedascurrentornon-currentbasedonthesettlementdate.
(b) Loans and receivables
Financialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarketareclassifiedasloansandreceivables.
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2. Summary of significant accounting policies (continued)
2.11 Financial assets (continued)
(b) Loans and receivables (continued)
Subsequenttoinitialrecognition,loansandreceivablesaremeasuredatamortisedcostusingtheeffectiveinterestmethod.Gainsand lossesarerecognised inprofitor losswhenthe loansandreceivablesarederecognisedorimpaired,andthroughtheamortisationprocess.
Loansandreceivablesareclassifiedascurrentassets,exceptforthosehavingmaturitydateslaterthan12monthsafterthereportingdatewhichareclassifiedasnon-current.
Afinancialassetisderecognisedwherethecontractualrighttoreceivecashflowsfromtheassethasexpired.Onderecognitionofafinancialassetinitsentirety,thedifferencebetweenthecarryingamountandthesumoftheconsiderationreceivedandanycumulativegainorlossthathadbeenrecognisedinothercomprehensiveincomeisrecognisedinprofitorloss.
Regularwaypurchasesorsalesarepurchasesorsalesoffinancialassetsthatrequiredeliveryofassetswithintheperiodgenerallyestablishedby regulationorconvention in themarketplaceconcerned.All regularwaypurchasesandsalesoffinancialassetsarerecognisedorderecognisedonthetradedatei.e.,thedatethattheGroupandtheCompanycommittopurchaseorselltheasset.
2.12 Impairment of financial assets
TheGroupandtheCompanyassessateachreportingdatewhetherthereisanyobjectiveevidencethatafinancialassetisimpaired.
Trade and other receivables and other financial assets carried at amortised cost
Todeterminewhetherthereisobjectiveevidencethatanimpairmentlossonfinancialassetshasbeenincurred,theGroupandtheCompanyconsiderfactorssuchastheprobabilityofinsolvencyorsignificantfinancialdifficultiesofthedebtoranddefaultorsignificantdelayinpayments.Forcertaincategoriesoffinancialassets,suchastradereceivables,assetsthatareassessednottobeimpairedindividuallyaresubsequentlyassessedforimpairmentonacollectivebasisbasedonsimilarriskcharacteristics.ObjectiveevidenceofimpairmentforaportfolioofreceivablescouldincludetheGroup’sandtheCompany’spastexperienceofcollectingpayments,anincreaseinthenumberofdelayedpaymentsintheportfoliopasttheaveragecreditperiodandobservablechangesinnationalorlocaleconomicconditionsthatcorrelatewithdefaultonreceivables.
Ifanysuchevidenceexists,theamountofimpairmentlossismeasuredasthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflowsdiscountedatthefinancialasset’soriginaleffectiveinterestrate.Theimpairmentlossisrecognisedinprofitorloss.
Thecarryingamountofthefinancialassetisreducedbytheimpairmentlossdirectlyforallfinancialassetswiththeexceptionoftradereceivables,wherethecarryingamountisreducedthroughtheuseofanallowanceaccount.Whenatradereceivablebecomesuncollectible,itiswrittenoffagainsttheallowanceaccount.
Ifinasubsequentperiod,theamountoftheimpairmentlossdecreasesandthedecreasecanberelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised,thepreviouslyrecognisedimpairmentlossisreversedtotheextentthatthecarryingamountoftheassetdoesnotexceeditsamortisedcostatthereversaldate.Theamountofreversalisrecognisedinprofitorloss.
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2. Summary of significant accounting policies (continued)
2.13 Cash and cash equivalents
Cashandcashequivalentscomprisecashatbankandonhand,demanddeposits,andshort-term,highlyliquidinvestmentsthatarereadilyconvertibletoknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangesinvalue.ThesealsoincludebankoverdraftsthatformanintegralpartoftheGroup’scashmanagement.
2.14 Construction contracts
Wheretheoutcomeofaconstructioncontractcanbereliablyestimated,contractrevenueandcontractcostsarerecognisedasrevenueandexpensesrespectivelybyusingthestageofcompletionmethod.Thestageofcompletionismeasuredbyreferencetotheproportionofcontractcostsincurredforworkperformedtodatetotheestimatedtotalcontractcosts.
Wheretheoutcomeofaconstructioncontractcannotbeestimatedreliably,contractrevenueisrecognisedtotheextentofcontractcostsincurredthatarelikelytoberecoverable.Contractcostsarerecognisedasexpenseintheperiodinwhichtheyareincurred.
Whenitisprobablethattotalcontractcostswillexceedtotalcontractrevenue,theexpectedlossisrecognisedasanexpenseimmediately.
Contractrevenuecomprisestheinitialamountofrevenueagreedinthecontractandvariationsincontractwork,claimsandincentivepaymentstotheextentthatitisprobablethattheywillresultinrevenueandtheyarecapableofbeingreliablymeasured.
Whenthetotalofcostsincurredonconstructioncontractsplusrecognisedprofits(lessrecognisedlosses)exceedsprogressbillings,thebalanceisclassifiedasamountduefromcustomersoncontracts.Whenprogressbillingsexceedcostsincurredplus,recognisedprofits(lessrecognisedlosses),thebalanceisclassifiedasamountduetocustomersoncontracts.
2.15 Inventories
Inventoriesarestatedatlowerofcostandnetrealisablevalue.
Costisdeterminedusingtheweightedaverageandonafirst-in-first-outbasis.Thecostofrawmaterialscomprisescostsofpurchase.Thecostsoffinishedgoodsandwork-in-progresscomprisecostsofrawmaterials,directlabour,otherdirectcostsandappropriateproportionsofmanufacturingoverheadsbasedonnormaloperatingcapacity.
Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusinesslesstheestimatedcostsofcompletionandtheestimatedcostsnecessarytomakethesale.Inarrivingatthenetrealisablevalue,dueallowanceismadeforalldamaged,obsoleteandslowmovingitems.
2.16 Financial liabilities
Financialliabilitiesareclassifiedaccordingtothesubstanceofthecontractualarrangementsenteredintoandthedefinitionsofafinancialliability.
Financialliabilities,withinthescopeofMFRS139,arerecognisedinthestatementoffinancialpositionwhen,andonlywhen,theGroupandtheCompanybecomeapartytothecontractualprovisionsofthefinancialinstrument.Financialliabilitiesareclassifiedasotherfinancialliabilities.
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2. Summary of significant accounting policies (continued)
2.16 Financial liabilities (continued)
Other financial liabilities
TheGroup’sand theCompany’s financial liabilities include tradepayables, otherpayablesand loansandborrowings.
Tradeandotherpayablesarerecognisedinitiallyatfairvalueplusdirectlyattributabletransactioncostsandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod.
Loansandborrowingsarerecognisedinitiallyatfairvalue,netoftransactioncostsincurred,andsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod.BorrowingsareclassifiedascurrentliabilitiesunlesstheGrouphasanunconditionalrighttodefersettlementoftheliabilityforatleast12monthsafterthereportingdate.
Forotherfinancialliabilities,gainsandlossesarerecognisedinprofitorlosswhentheliabilitiesarederecognised,andthroughtheamortisationprocess.
Afinancialliabilityisderecognisedwhentheobligationundertheliabilityisextinguished.Whenanexistingfinancialliabilityisreplacedbyanotherfromthesamelenderonsubstantiallydifferentterms,orthetermsofanexistingliabilityaresubstantiallymodified,suchanexchangeormodificationistreatedasaderecognitionoftheoriginalliabilityandtherecognitionofanewliability,andthedifferenceintherespectivecarryingamountsisrecognisedinprofitorloss.
2.17 Financial guarantee contracts
Afinancialguaranteecontractisacontractthatrequirestheissuertomakespecifiedpaymentstoreimbursetheholderforalossitincursbecauseaspecifieddebtorfailstomakepaymentwhendue.
Financialguaranteecontractsarerecognisedinitiallyasaliabilityatfairvalue.Subsequenttoinitialrecognition,financialguaranteecontractsarerecognisedasincomeinprofitorlossovertheperiodoftheguarantee.IfthedebtorfailstomakepaymentrelatingtofinancialguaranteecontractwhenitisdueandtheGroup,astheissuer,isrequiredtoreimbursetheholderfortheassociatedloss,theliability ismeasuredatthehigherof thebestestimateoftheexpenditurerequiredtosettlethepresentobligationatthereportingdateandtheamountinitiallyrecognisedlesscumulativeamortisation.
2.18 Borrowing costs
Borrowingcostsarecapitalisedaspartofthecostofaqualifyingassetiftheyaredirectlyattributabletotheacquisition,constructionorproductionof thatasset.Capitalisationofborrowingcostscommenceswhentheactivitiestopreparetheassetforitsintendeduseorsaleareinprogressandtheexpendituresandborrowingcostsareincurred.Borrowingcostsarecapitaliseduntiltheassetsaresubstantiallycompletedfortheirintendeduseorsale.
Allotherborrowingcostsarerecognisedinprofitorlossintheperiodtheyareincurred.BorrowingcostsconsistofinterestandothercoststhattheGroupandtheCompanyincurredinconnectionwiththeborrowingoffunds.
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Notes to the Financial Statements (continued)
2. Summary of significant accounting policies (continued)
2.19 Employee benefits
(a) Defined contribution plans
TheGroupparticipatesinthenationalpensionschemeasdefinedbythelawsofthecountryinwhichithasoperations.TheGroupmakescontributionstotheEmployeeProvidentFundinMalaysia,adefinedcontributionpensionscheme.Contributionstodefinedcontributionpensionschemesarerecognisedasanexpenseintheperiodinwhichtherelatedserviceisperformed.
(b) Short term benefits
Wages,salaries,bonusesandsocialsecuritycontributionsarerecognisedasanexpenseintheyearinwhichtheassociatedservicesarerenderedbyemployees.Shorttermaccumulatingcompensatedabsencessuchaspaidannualleavearerecognisedwhenservicesarerenderedbyemployeesthatincreasetheirentitlementtofuturecompensatedabsences.Shorttermnon-accumulatingcompensatedabsencessuchassickleavearerecognisedwhentheabsencesoccur.
2.20 Leases
As lessee
Financeleases,whichtransfertotheGroupsubstantiallyalltherisksandrewardsincidentaltoownershipoftheleaseditem,arecapitalisedattheinceptionoftheleaseatthefairvalueoftheleasedassetor,iflower,atthepresentvalueoftheminimumleasepayments.Anyinitialdirectcostsarealsoaddedtotheamountcapitalised.Leasepaymentsareapportionedbetweenthefinancechargesandreductionoftheleaseliabilitysoastoachieveaconstantrateofinterestontheremainingbalanceoftheliability.Financechargesarechargedtoprofitorloss.Contingentrents,ifany,arechargedasexpensesintheperiodsinwhichtheyareincurred.
Leasedassetsaredepreciatedovertheestimatedusefullifeoftheasset.However,ifthereisnoreasonablecertaintythattheGroupwillobtainownershipbytheendoftheleaseterm,theassetisdepreciatedovertheshorteroftheestimatedusefullifeandtheleaseterm.
Operatingleasepaymentsarerecognisedasanexpenseinprofitorlossonastraight-linebasisovertheleaseterm.Theaggregatebenefitofincentivesprovidedbythelessorisrecognisedasareductionofrentalexpenseovertheleasetermonastraight-linebasis.
2.21 Revenue
RevenueisrecognisedtotheextentthatitisprobablethattheeconomicbenefitswillflowtotheGroupandtherevenuecanbereliablymeasured.Revenueismeasuredatthefairvalueofconsiderationreceivedorreceivable.
a) Rendering of services
Revenuefromservicesrenderedisrecognisednetofdiscountsasandwhentheservicesareperformed.
b) Sale of goods
Revenuefromsaleofgoodsisrecogniseduponthetransferofsignificantriskandrewardsofownershipofthegoodstothecustomer.Revenueisnotrecognisedtotheextentwheretherearesignificantuncertaintiesregardingrecoveryoftheconsiderationdue,associatedcostsorthepossiblereturnofgoods.
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66Annual Report 2017
Notes to the Financial Statements (continued)
2. Summary of significant accounting policies (continued)
2.21 Revenue (continued)
c) Construction contracts
RevenuefromconstructioncontractsisaccountedforbypercentageofcompletionmethodasdescribedinNote2.14.
d) Rental income
Rentalincomeisrecognisedastherentalaccruedunlesscollectabilityisindoubt.
e) Dividend income
DividendincomeisrecognisedwhentheGroup’srighttoreceivepaymentisestablished.
f) Management fees
Managementfeesarerecognisedwhenservicesarerendered.
2.22 Income taxes
a) Current tax
Currenttaxassetsandliabilitiesaremeasuredattheamountexpectedtoberecoveredfromorpaidtothetaxationauthorities.Thetaxratesandtaxlawsusedtocomputetheamountarethosethatareenactedorsubstantivelyenactedbythereportingdate.
Currenttaxesarerecognisedinprofitorlossexcepttotheextentthatthetaxrelatestoitemsrecognisedoutsideprofitorloss,eitherinothercomprehensiveincomeordirectlyinequity.
ForLabuantradingactivity,itsprofitswouldbesubjecttotaxunderLabuanBusinessActivityTax1990undertwooptions:
i) tobetaxedatrateof3%onauditedprofits;or ii) uponelection,topayaflattaxofRM20,000.
b) Deferred tax
Deferredtaxisprovidedusingtheliabilitymethodontemporarydifferencesatthereportingdatebetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsforfinancialreportingpurposes.
Deferredtaxliabilitiesarerecognisedforalltemporarydifferences,except:
- wherethedeferredtaxliabilityarisesfromtheinitialrecognitionofgoodwillorofanassetorliabilityinatransactionthatisnotabusinesscombinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitorloss;and
- inrespectoftaxabletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,associates
andinterestsinjointventures,wherethetimingofthereversalofthetemporarydifferencescanbecontrolledanditisprobablethatthetemporarydifferenceswillnotreverseintheforeseeablefuture.
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Notes to the Financial Statements (continued)
2. Summary of significant accounting policies (continued)
2.22 Income taxes (continued)
b) Deferred tax (continued)
Deferredtaxassetsarerecognisedforalldeductibletemporarydifferences,carryforwardofunusedtaxcreditsandunusedtaxlosses,totheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferences,andthecarryforwardofunusedtaxcreditsandunusedtaxlossescanbeutilisedexcept:
- wherethedeferredtaxassetrelatingtothedeductibletemporarydifferencearisesfromtheinitialrecognitionofanassetorliabilityinatransactionthatisnotabusinesscombinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitorloss;and
- inrespectofdeductibletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,associatesandinterestsinjointventures,deferredtaxassetsarerecognisedonlytotheextentthatitisprobablethatthetemporarydifferenceswillreverseintheforeseeablefutureandtaxableprofitwillbeavailableagainstwhichthetemporarydifferencescanbeutilised.
Thecarryingamountofdeferredtaxassetsisreviewedateachreportingdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitwillbeavailabletoallowallorpartofthedeferredtaxassettobeutilised.Unrecogniseddeferredtaxassetsarereassessedateachreportingdateandarerecognisedtotheextentthatithasbecomeprobablethatfuturetaxableprofitwillallowthedeferredtaxassetstobeutilised.
Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheyearwhentheassetisrealisedortheliabilityissettled,basedontaxratesandtaxlawsthathavebeenenactedorsubstantivelyenactedatthereportingdate.
Deferredtaxrelatingtoitemsrecognisedoutsideprofitorlossisrecognisedoutsideprofitorloss.Deferredtaxitemsarerecognisedincorrelationtotheunderlyingtransactioneitherinothercomprehensiveincomeordirectlyinequityanddeferredtaxarisingfromabusinesscombinationisadjustedagainstgoodwillonacquisition.
Deferredtaxassetsanddeferredtaxliabilitiesareoffset,ifalegallyenforceablerightexiststosetoffcurrenttaxassetsagainstcurrenttaxliabilitiesandthedeferredtaxesrelatetothesametaxableentityandthesametaxationauthority.
c) Goods and Services Tax (“GST”)
Revenues,expensesandassetsarerecognisednetoftheamountofGSTexcept:
- WheretheGSTincurredinapurchaseofassetsorservicesisnotrecoverablethetaxationauthority,inwhichcasetheGSTisrecognisedaspartofthecostacquisitionoftheassetoraspartoftheexpenseitemasapplicable;and
- ReceivablesandpayablesthatarestatedwiththeamountofGSTincluded.
ThenetamountofGSTrecoverablefrom,orpayableto,thetaxationauthorityisincludedaspartofothercurrentassetsorliabilitiesinthestatementsoffinancialposition.
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Notes to the Financial Statements (continued)
2. Summary of significant accounting policies (continued)
2.23 Current versus non-current classification
TheGrouppresentsassetsand liabilities in thestatementoffinancialpositionbasedoncurrent/non-currentclassification.Anassetiscurrentwhenitis:
• Expectedtoberealisedorintendedtobesoldorconsumedinthenormaloperatingcycle • Heldprimarilyforthepurposeoftrading • Expectedtoberealisedwithintwelvemonthsafterthereportingperiod • Cashorcashequivalentunlessrestrictedfrombeingexchangedorusedtosettlealiabilityforatleast
twelvemonthsafterthereportingperiod
Allotherassetsareclassifiedasnon-current.
Aliabilityiscurrentwhen:
• Itisexpectedtobesettledinthenormaloperatingcycle • Itisheldprimarilyforthepurposeoftrading • Itisduetobesettledwithintwelvemonthsafterthereportingperiod • Thereisnounconditionalrighttodeferthesettlementoftheliabilityforatleasttwelvemonthsafterthe
reportingperiod
TheGroupclassifiesallotherliabilitiesasnon-current.
Deferredtaxassetsandliabilitiesareclassifiedasnon-currentassetsandliabilities.
2.24 Segment reporting
Formanagementpurposes,theGroupisorganisedintooperatingsegmentsbasedontheirproductsandserviceswhichareindependentlymanagedbytherespectivesegmentmanagersresponsiblefortheperformanceoftherespectivesegmentsundertheircharge.ThesegmentmanagersreportdirectlytothemanagementoftheCompanywhoregularlyreviewthesegmentresultsinordertoallocateresourcestothesegmentsandtoassessthesegmentperformance.AdditionaldisclosuresoneachofthesesegmentsareshowninNote36,includingthefactorsusedtoidentifythereportablesegmentsandthemeasurementbasisofsegmentinformation.
2.25 Share capital and share issuance expenses
AnequityinstrumentisanycontractthatevidencesaresidualinterestintheassetsoftheGroupandtheCompanyafterdeductingallofitsliabilities.Ordinarysharesareequityinstruments.
Ordinarysharesarerecordedattheproceedsreceived,netofdirectlyattributableincrementaltransactioncosts.Ordinarysharesareclassifiedasequity.Dividendsonordinarysharesarerecognisedinequityintheperiodinwhichtheyaredeclared.
2.26 Contingencies
Acontingentliabilityorassetisapossibleobligationorassetthatarisesfrompasteventsandwhoseexistencewillbeconfirmedonlybytheoccurrenceornon-occurrenceofuncertainfutureevent(s)notwhollywithinthecontroloftheGroup.
ContingentliabilitiesandassetsarenotrecognisedinthestatementsoffinancialpositionoftheGroupandoftheCompany.
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Notes to the Financial Statements (continued)
2. Summary of significant accounting policies (continued)
2.27 Fair value measurements
TheGroupmeasuresfinancialinstrumentsatfairvalueateachreportingdate.
Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarketparticipantsatthemeasurementdate.Thefairvaluemeasurementisbasedonthepresumptionthatthetransactiontoselltheassetortransfertheliabilitytakesplaceeither:
-Intheprincipalmarketfortheassetorliability,or -Intheabsenceofaprincipalmarket,inthemostadvantageousmarketfortheassetorliability TheprincipalorthemostadvantageousmarketmustbeaccessibletobytheGroupandtheCompany.Thefair
valueofanassetoraliabilityismeasuredusingtheassumptionsthatmarketparticipantswouldusewhenpricingtheassetorliability,assumingthatmarketparticipantsactintheireconomicbestinterest.
Afairvaluemeasurementofanon-financialassettakesintoaccountamarketparticipant’sabilitytogenerateeconomicbenefitsbyusingtheassetinitshighestandbestuseorbysellingittoanothermarketparticipantthatwouldusetheassetinitshighestandbestuse.
TheGroupandtheCompanyusevaluationtechniquesthatareappropriateinthecircumstancesandforwhichsufficientdataareavailabletomeasurefairvalue,maximisingtheuseofrelevantobservableinputsandminimisingtheuseofunobservableinputs.
Allassetsandliabilitiesforwhichfairvaluesinmeasuredordisclosedinthefinancialstatementsarecategorisedwithinthefairvaluehierarchy,describedasfollows,basedonthelowestlevelinputthatissignificanttothefairvaluemeasurementsasawhole:
Level1 - Quoted(unadjusted)marketpricesinactivemarketsforidenticalassetsorliabilitiesLevel2 - Valuationtechniquesforwhichthelowestlevelinputthatissignificanttothefairvaluemeasurement
isdirectlyorindirectlyobservableLevel3 - Valuationtechniquesforwhichthelowestlevelinputthatissignificanttothefairvaluemeasurement
isunobservable.
Forassetsandliabilitiesthatarerecognisedinthefinancialstatementsonarecurringbasis, theGroupandtheCompanydeterminewhether transfershaveoccurredbetweenLevels in thehierarchyby re-assessingcategorisation(basedonthelowestlevelinputthatissignificanttothefairvaluemeasurementasawhole)attheendofeachreportingperiod.
Forthepurposeoffairvaluedisclosures,theGroupandtheCompanyhavedeterminedclassesofassetsandliabilitiesonthebasisofnature,characteristicsandrisksoftheassetsorliabilityandthelevelofthefairvaluehierarchyasexplainedabove.
3. Significant accounting judgements and estimates
ThepreparationoftheGroup’sfinancialstatementsrequiresmanagementtomakejudgements,estimatesandassumptionsthataffectthereportedamountsofrevenues,expenses,assetsandliabilities,andthedisclosureofcontingentliabilitiesatthereportingdate.However,uncertaintyabouttheseassumptionsandestimatescouldresultinoutcomesthatcouldrequireamaterialadjustmenttothecarryingamountoftheassetorliabilityaffectedinthefuture.
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70Annual Report 2017
Notes to the Financial Statements (continued)
3. Significant accounting judgements and estimates (continued)
Key sources of estimation uncertainty
Thekeyassumptionsconcerningthefutureandotherkeysourcesofestimationuncertaintyatthereportingdatethathaveasignificantriskofcausingamaterialadjustmenttothecarryingamountsofassetsandliabilitieswithinthenextfinancialyeararediscussedbelow.
a) Useful lives of property, plant and equipment
Thecostofproperty,plantandequipmentisdepreciatedonastraight-linebasisovertheassets’estimatedeconomicusefullives.Managementestimatestheusefullivesoftheseproperty,plantandequipmenttobewithin1.5to60years.Thesearecommonlifeexpectanciesappliedintheshipbuildingandshipcharteringindustries.Changes in theexpected levelofusageand technologicaldevelopmentscould impact theeconomicuseful livesand the residual valuesof theseassets. Therefore, futuredepreciationchargescouldberevised.ThecarryingamountoftheGroup’sproperty,plantandequipmentatthereportingdateisdisclosedinNote13.A5%differenceintheexpectedusefullivesoftheseassetsfrommanagement’sestimateswouldresultinapproximately4.32%(2016:3.69%)varianceintheGroup’slossfortheyear.
b) Impairment of vessels
Animpairmentexistswhenthecarryingvalueofanassetorcash-generatingunitexceedsitsrecoverableamount,whichisthehigherofitsfairvaluelesscoststosellanditsvalueinuse.Thefairvaluelesscoststosellcalculationisbasedonvaluationperformedbyindependentshipvaluers,availabledatafrombindingsalestransactionsinanarm’slengthtransactionofsimilarassetsorobservablemarketpriceslessincrementalcostsfordisposingoftheasset.Thevalueinusecalculationisbasedonadiscountedcashflowmodel.
TheGroupperformedareviewoftherecoverableamountofvesselswithindicatorsofimpairmentandconcludedthatnoimpairmentisrequiredduringthefinancialyear(2016:RM30,487,178).A5%differenceinthefairvaluelesscosttosale(“FVLCS”)ofvesselswouldresultinincrease/(decrease)intheGroup’slossfortheyearasfollows:
2017 2016 % %
IncreaseinFVLCS - (18.74) ReductioninFVLCS - 21.91
4. Revenue
Group Company 2017 2016 2017 2016 RM RM RM RM
Charterhirerevenue 53,318,084 61,949,393 - - Saleofvessels 19,350,000 58,181,592 - - Contractservices 2,516,721 2,602,671 - - Managementfee - - 2,498,822 3,577,821 Rentalincome - 168,000 - - 75,184,805 122,901,656 2,498,822 3,577,821
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Notes to the Financial Statements (continued)
5. Other income
Group Company 2017 2016 2017 2016 RM RM RM RM
Dividendincomefrominvestmentsecurities 1,630 1,658 - - Gainondisposalofajointventure 249,193 - - - Gainondisposalofproperty,plant andequipment - 44,999 - - Rentalincome 458,000 - - - Reserveonconsolidation - 1,011,604 - - Reversalofinventorywrittendown 7,750 - - - Reversalofimpairmentonproperty,plant andequipment - 6,154,500 - - Reversalofimpairmentlossontrade receivables(Note19) 36,000 295,599 - - Reversalofdepositwrittenoff 186,000 - - - Sundryincomefromshipoperations 3,702,655 2,267,034 221,363 - 4,641,228 9,775,394 221,363 -
6. Finance income
Group Company 2017 2016 2017 2016 RM RM RM RM Interestincomefrom: -Currentaccount 59,489 72,887 13,804 - -Shorttermdeposits 428,575 580,016 - - -Associate 2,356,210 1,895,830 - - -Subsidiaries - - 1,606,147 1,085,684 -Others 184,301 108,293 - - -Redeemableconvertiblepreference sharesinterestfromajointventure - 38,557 - - 3,028,575 2,695,583 1,619,951 1,085,684
7. Finance costs
Group Company 2017 2016 2017 2016 RM RM RM RM Interestexpenseson: -Bankloans 6,832,055 7,959,199 - - -Bankoverdrafts 2,175,155 2,280,276 - - -Islamicloans 291,197 702,202 291,197 702,202 -Loanfromsubsidiaries - - 2,013,353 1,079,561 -Obligationsunderfinanceleases 4,807 7,378 - - -Revolvingcredits 2,642,794 3,274,782 - - -Redeemablepreferenceshares (1,296,634) - - - Carriedforward 10,649,374 14,223,837 2,304,550 1,781,763
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72Annual Report 2017
Notes to the Financial Statements (continued)
7. Finance costs (continued)
Group Company 2017 2016 2017 2016 RM RM RM RM
Broughtforward 10,649,374 14,223,837 2,304,550 1,781,763
Less:Interestexpensescapitalisedin: -Vesselswork-in-progress (674,090) (1,780,738) - - -Completedvessel (451,294) - - - 9,523,990 12,443,099 2,304,550 1,781,763
8. Loss before tax
Group Company 2017 2016 2017 2016 RM RM RM RM Thefollowingitemshavebeenincluded inarrivingatlossbeforetax:
Employeebenefitsexpense(Note9) 18,900,971 21,035,193 2,586,579 3,620,486 Amortisationoflanduserights(Note14) 578,753 578,765 - - Auditors’remunerations -Currentyear 242,244 261,319 55,000 64,000 -Overprovisioninpreviousyears - (1,000) - - Charterexpenses 966,576 238,782 - - Depreciationofproperty,plantand equipment(Note13) 43,327,337 46,499,443 1,153 1,648 Impairmentlossonamountduefrom asubsidiary - - 29,418 - Impairmentlossontradeand otherreceivables 629,324 89,998 - - Impairmentlossonproperty,plant andequipment(Note13) - 30,487,178 - - Inventorieswrittenoff 106,648 543,670 - - Lossondisposalofproperty,plant andequipment 13,411,305 - - - Netlossonforeignexchange 485,425 1,392,421 5,280 1,334 Non-executiveDirectors’fees 303,230 307,412 277,830 257,830 Rentalofpremises 260,854 296,546 12,000 12,000 Reversalofinventorieswrittendown - (1,269,538) - - Property,plantandequipmentwrittenoff 31,473 564,465 - -
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Notes to the Financial Statements (continued)
9. Employee benefits expense
Group Company 2017 2016 2017 2016 RM RM RM RM
Salariesandwages 16,913,525 18,802,588 2,301,743 3,207,785 Socialsecuritycontributions 166,906 183,517 15,561 31,371 Contributionstodefinedcontributionplan 1,708,173 1,945,695 269,275 381,330 Otherbenefits 112,367 103,393 - - 18,900,971 21,035,193 2,586,579 3,620,486 IncludedinemployeebenefitsexpenseoftheGroupandoftheCompanyaretheExecutiveDirectors’remuneration
amountingtoRM934,038(2016:RM1,034,365)andRM130,905(2016:RM70,718)respectivelyasfurtherdisclosedinNote10.
10. Directors’ remuneration
ThedetailsofremunerationreceivablebyDirectorsoftheCompanyduringtheyearareasfollows:
Group Company 2017 2016 2017 2016 RM RM RM RM Executive: Salariesandotheremoluments 819,509 923,000 84,637 35,797 Fees 39,690 32,075 39,690 32,075 Definedcontributionplan 74,839 79,290 6,578 2,846 TotalExecutiveDirectors’remuneration (excludingbenefits-in-kind) 934,038 1,034,365 130,905 70,718 Estimatedmoneyvalueofbenefits-in-kind 18,943 28,176 18,943 28,176 TotalExecutiveDirectors’remuneration (includingbenefits-in-kind) 952,981 1,062,541 149,848 98,894 Non-Executive: Fees 277,830 257,830 277,830 257,830 TotalDirectors’remuneration 1,230,811 1,320,371 427,678 356,724
ThenumberofDirectorsoftheCompanywhosetotalremunerationduringtheyearfellwithinthefollowingbandsisanalysedbelow:
Number of Directors 2017 2016 ExecutiveDirectors: RM350,001–RM400,000 1 - RM400,001–RM450,000 - 1 RM600,001–RM650,000 1 - RM650,001–RM700,000 - 1
Non-ExecutiveDirectors: RM50,001–RM100,000 4 4
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74Annual Report 2017
Notes to the Financial Statements (continued)
11. Income tax expense
Major components of income tax expense
Themajorcomponentsofincometaxexpensefortheyearsended31December2017and2016are:
Group Company 2017 2016 2017 2016 RM RM RM RM Statements of profit or loss and other comprehensive income:
Currentincometax: Malaysianincometax 1,466,488 268,821 - - Under/(Over)provisioninrespect ofpreviousyears 61,979 (607,855) - (144,551) 1,528,467 (339,034) - (144,551)
Deferredincometax(Note25):
Reversaloftemporarydifferences (2,457,013) (6,293,730) - - Under/(Over)provisioninrespect ofpreviousyears 521,912 (155,665) - -
(1,935,101) (6,449,395) - - Shareoftaxofajointventure 83 368,918 - - Incometaxexpenserecognised inprofitorloss (406,551) (6,419,511) - (144,551) Reconciliation between tax expense and accounting loss
Thereconciliationbetweentaxexpenseandtheproductofaccountinglossmultipliedbytheapplicablecorporatetaxratefortheyearsended31December2017and2016areasfollows:
Group Company 2017 2016 2017 2016 RM RM RM RM
Lossbeforetax (50,136,181) (63,074,880) (1,303,670) (1,438,613) TaxatMalaysianstatutorytax rateof24%(2016:24%) (12,032,683) (15,137,971) (312,881) (345,267) Adjustments: Non-deductibleexpenses 11,269,333 23,093,816 312,604 345,545 Incomenotsubjecttotaxation (6,615,440) (14,860,613) - - Deferredtaxassetsnot recognisedduringtheyears 6,624,999 1,398,691 - - Reversalofdeferredtaxassets notrecognisedinpreviousyears (426,545) (1,041) - (278)
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Notes to the Financial Statements (continued)
11. Income tax expense (continued)
Group Company 2017 2016 2017 2016 RM RM RM RM Reversalofdeferredtaxliabilities notrecognisedinpreviousyears 277 - 277 - EffectofGrouprelief 287,404 (548,106) - - Under/(Over)provisionofdeferred taxinpreviousyears 521,912 (155,665) - - Under/(Over)provisionofincome taxinpreviousyears 61,979 (607,855) - (144,551) Shareoftaxofajointventure 83 368,918 - - Singaporestatutorystepped incomeexemption (80,684) - - - Taxincentive (17,186) - - - Others - 30,315 - - Incometaxexpenserecognised inprofitorloss (406,551) (6,419,511) - (144,551)
Currentincometaxiscalculatedatthestatutorytaxrateof24%(2016:24%)oftheestimatedassessablelossfortheyear.
TheprofitarisingfromtheshippingoperationsofsubsidiariesinSingaporeispartialexemptedfromincometax.
Theabovereconciliationispreparedbyaggregatingseparatereconciliationsforeachnationaljurisdiction.
12. Loss per share
Basiclosspershareamountsarecalculatedbydividinglossfortheyear,netoftax,attributabletoownersoftheCompanybytheweightedaveragenumberofordinarysharesoutstandingduringthefinancialyear.
Thefollowingreflectthelossandsharedatausedinthecomputationofbasiclosspersharefortheyearsended31December:
2017 2016 RM RM
LossnetoftaxattributabletoownersoftheCompany (49,729,630) (56,655,369)
Numberofordinarysharesinissueduringtheyear 500,000,000 500,000,000
2017 2016 Sen Sen
Basiclosspershareforlossfortheyear (9.95) (11.33)
Therearenodilutivepotentialordinaryshares.AssuchthedilutedearningspershareoftheGroupisequivalenttobasiclosspershare.
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76Annual Report 2017
Notes to the Financial Statements (continued)
13.
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(71,34
3)
Exch
ange
ratedifferen
ce
-(40,99
7,45
0)
(15,97
7)
--
-(41,01
3,42
7)
At3
1.12
.201
7
72,5
73,1
88
727,
459,
064
8,52
1,59
8 40
,518
,246
3,
935,
259
7,12
0,96
6 86
0,12
8,32
1
Sealink International Berhad (800981-X)Annual Report 2017
77
Notes to the Financial Statements (continued)13
. P
rop
erty
, pla
nt a
nd
eq
uip
men
t (co
ntin
ued
)
Ve
ssel
s, v
esse
l
La
nd,
equi
pmen
t E
quip
men
t,
C
apita
l
bu
ildin
gs
and
dock
ing
furn
iture
P
lant
and
M
otor
w
ork-
in-
Gro
up
and
wha
rf*
expe
nses
a
nd fi
tting
s m
achi
nery
ve
hicl
es
prog
ress
To
tal
RM
R
M
RM
R
M
RM
R
M
RM
Acc
um
ula
ted
dep
reci
atio
n
an
d im
pai
rmen
t lo
ss:
At1
.1.201
6
22,276
,816
18
1,10
7,10
46,97
2,66
732
,621
,258
4,06
6,95
13,82
0,72
425
0,86
5,52
0
Cha
rgeforthe
yea
r(Note8)
2,05
2,51
840
,259
,275
93
3,84
53,10
9,15
014
4,65
5-
46,499
,443
Rec
lassifica
tion
-(721
)72
1-
--
-
Dispo
sals
-
-(62,40
0)
-(214
,145
)-
(276
,545
)
Writtenoff
-
(1,821
,309
)(550
,610
)(756
,142
)(23,34
8)
-(3,151
,409
)
Impa
irmen
tlos
s(N
ote8)
-30
,487
,178
-
--
-30
,487
,178
Exch
ange
ratedifferen
ce
-4,37
7,35
414
,133
-
--
4,39
1,48
7
At3
1.12
.201
6an
d1.1.20
17
24,329
,334
25
4,40
8,88
17,30
8,35
634
,974
,266
3,97
4,11
33,82
0,72
432
8,81
5,67
4
Cha
rgeforthe
yea
r(Note8)
1,79
5,96
238
,341
,974
67
5,16
92,39
6,30
611
7,92
6-
43,327
,337
Rec
lassifica
tion
--
312
(312
)-
--
Dispo
sals
-
(5,559
,302
)(43,81
1)
-(244
,738
)-
(5,847
,851
)
Writtenoff
(341
)(10,61
0)
(26,34
1)
-(2,578
)-
(39,87
0)
Exch
ange
ratedifferen
ce
-(12,66
3,55
5)
(15,11
8)
--
-(12,67
8,67
3)
At3
1.12
.201
7
26,1
24,9
55
274,
517,
388
7,89
8,56
7 37
,370
,260
3,
844,
723
3,82
0,72
4 35
3,57
6,61
7
N
et c
arry
ing
am
ou
nt:
At3
1.12
.201
6
48,245
,219
55
1,52
9,03
91,25
4,87
35,54
3,73
720
8,46
62,44
6,72
160
9,22
8,05
5
At3
1.12
.201
7
46,4
48,2
33
452,
941,
676
623,
031
3,14
7,98
6 90
,536
3,
300,
242
506,
551,
704
Sealink International Berhad (800981-X)
78Annual Report 2017
Notes to the Financial Statements (continued)
13. Property, plant and equipment (continued)
*Land, buildings and wharf
Workshop Wharf, Leasehold and yard and Group land renovation buildings Total RM RM RM RM Cost:
At1January2016 37,629,735 3,353,018 31,327,110 72,309,863 Additions 213,000 51,690 - 264,690 At31December2016and1January2017 37,842,735 3,404,708 31,327,110 72,574,553 Writtenoff - - (1,365) (1,365)
At31December2017 37,842,735 3,404,708 31,325,745 72,573,188 Accumulated depreciation and impairment loss:
At1January2016 6,278,349 2,168,955 13,829,512 22,276,816 Chargefortheyear 649,427 197,173 1,205,918 2,052,518 At31December2016and1January2017 6,927,776 2,366,128 15,035,430 24,329,334 Chargefortheyear 447,354 168,889 1,179,719 1,795,962 Writtenoff - - (341) (341) At31December2017 7,375,130 2,535,017 16,214,808 26,124,955
Net carrying amount:
At31December2016 30,914,959 1,038,580 16,291,680 48,245,219
At31December2017 30,467,605 869,691 15,110,937 46,448,233
Office Company Signboard equipment Total RM RM RM Cost:
At1January2016 7,390 6,981 14,371 Additions - 2,069 2,069 At31December2016,1January2017 and31December2017 7,390 9,050 16,440 Accumulated depreciation:
At1January2016 5,050 6,382 11,432 Chargefortheyear(Note8) 739 909 1,648 At31December2016and1January2017 5,789 7,291 13,080 Chargefortheyear(Note8) 739 414 1,153 At31December2017 6,528 7,705 14,233
Sealink International Berhad (800981-X)Annual Report 2017
79
Notes to the Financial Statements (continued)
13. Property, plant and equipment (continued)
Office Company Signboard equipment Total RM RM RM
Net carrying amount:
At31December2016 1,601 1,759 3,360
At31December2017 862 1,345 2,207 i) Assetsheldunderfinanceleases
Duringthefinancialyear,theGroupacquiredproperty,plantandequipmentwithanaggregatecostRM14,400(2016:Nil)bymeansoffinanceleases.Thecashoutflowsonacquisitionofproperty,plantandequipmentoftheGroupamountedtoRM1,113,092(2016:RM770,836).
Thecarryingamountofproperty,plantandequipmentheldunderfinanceleasesatthereportingdatewereasfollows:
Motor Group vehicles Total RM RM Net carrying amount
At31December2016 134,380 134,380 At31December2017 71,123 71,123 ii) Assetspledgedassecurity
Inadditiontoassetsheldunderfinanceleases,theGroup’svesselswithacarryingamountofRM260,819,892(2016:RM444,246,242)aremortgagedtosecuretheGroup’sbankloans(Note23).In2016,theGroup’splantandmachinerywithacarryingamountofRM5,739,826mortgagedtosecuretheGroup’sbankloan(Note23).
TheGroup’sleaseholdlandwithcarryingamountofRM25,759,893(2016:RM27,743,104)ismortgagedtosecuretheGroup’sbankloans(Note23).
Inviewofthedepressedeconomicconditionsintheoffshoremarinesector,theGroupperformedanassessmentduringthefinancialyearontherecoverableamountofthevesselstodeterminewhetherthecarryingvalueofthesevessels,whichareincharteringsegment,arerecoverable.ThereviewwascarriedoutinaccordancewithMFRS136“ImpairmentofAssets”.Theestimatedrecoverableamountisdeterminedbasedonthehigherofanasset’svalueinuse(“VIU”)andfairvaluelesscoststosell(“FV”).Therecoverableamountwascomparedtothecarryingvalueofeachassetwithidentifiedimpairmenttriggers.Iftherecoverableamountislower,thecarryingvalueoftheassetisreducedtoitsestimatedrecoverableamountandthedifferenceisregardedasanimpairmentloss.
TheGroupconsideredeachvesselasacash-generatingunit(“CGU”).However,theyaregroupedtogetherfordisclosurepurposes.ValueinuseisthepresentvalueofthefuturecashflowsexpectedtobederivedfromtheCGU.TheFVrepresentsanestimateoftheamountreceivedintheeventthevesselissoldonawillingbuyerandawillingsellerbasis
Sealink International Berhad (800981-X)
80Annual Report 2017
Notes to the Financial Statements (continued)
13. Property, plant and equipment (continued)
TheGrouphasreviewedthecarryingvalueofallthevesselsownedbytheGroupandconcludedthatthereisnoimpairmentlossrequiredforyear2017.In2016,theGrouphadmadeanimpairmentchargeofRM30.5million.Theimpairmentlosswasrecognisedinthestatementofprofitorlossandothercomprehensiveincome.FVofthevesselsatRM258.1millionwasdeterminedusingthemarketcomparablemethod.Thevaluationshadbeenperformedbyan independentvaluerandwerebasedonproprietarydatabasesofpricesof transactionsforvesselsofsimilarnatureandcondition.TheFVisatLevel3ofthefairvaluehierarchy.
14. Land use rights Group 2017 2016 RM RM Cost:
At1Januaryand31December 16,686,200 16,686,200
Accumulated amortisation:
At1January 5,450,753 4,871,988 Amortisationfortheyear(Note8) 578,753 578,765
At31December 6,029,506 5,450,753
Net carrying amount 10,656,694 11,235,447
Amounttobeamortised: -Notlaterthanoneyear 578,753 578,753 -Laterthanoneyearbutnotlaterthanfiveyears 2,315,012 2,315,012 -Laterthanfiveyears 7,762,929 8,341,682
Landuserightspledgedassecurity
LanduserightswithanaggregatecarryingvalueofRM8,585,914(2016:RM7,035,915)arepledgedassecuritiesforbankborrowingsasreferredtoinNote23.
15. Investment in subsidiaries
Company 2017 2016 RM RM Unquotedshares,atcost: -Ordinaryshares 242,060,174 241,930,174 -Redeemableconvertiblepreferenceshares 167,845,750 167,845,750
409,905,924 409,775,924 Impairmentlosses (24,306,285) (24,306,285)
385,599,639 385,469,639
Sealink International Berhad (800981-X)Annual Report 2017
81
Notes to the Financial Statements (continued)
15. Investment in subsidiaries (continued)
Detailsofthesubsidiariesareasfollows: Percentage of Country of Principal equity held Name of subsidiaries incorporation activities 2017 2016 % %
CergasMajusamaSdn.Bhd. Malaysia Charteringofmarinevessels 100 100 EraSurewaySdn.Bhd. Malaysia Charteringofmarinevessels 100 100 EraSurplusSdn.Bhd. Malaysia Charteringofmarinevessels 100 100 MidasChoiceSdn.Bhd. Malaysia Charteringofmarinevessels 100 100 GodrimajuSdn.Bhd. Malaysia Charteringofmarinevessels 100 100 EuroedgeSdn.Bhd. Malaysia Charteringofmarinevessels 100 100 NavitexShippingSdn.Bhd.** Malaysia Inactive 100 100
SeabrightSdn.Bhd. Malaysia Charteringofmarinevessels 100 100 SealinkEngineeringAndSlipway Malaysia Shipbuilding 100 100 Sdn.Bhd.
SealinkManagementSdn.Bhd. Malaysia Inactive 100 100 SealinkMarineSdn.Bhd. Malaysia Inactive 100 100
SealinkPacificSdn.Bhd. Malaysia Charteringofmarinevessels 100 100 SealinkSdn.Bhd. Malaysia Charteringofmarinevesselsand 100 100 lettingofproperties
SutherfieldResourcesSdn.Bhd. Malaysia Charteringofmarinevessels 100 100 SealinkShipyardSdn.Bhd. Malaysia Shipbuilding 100 100
Sea-GoodPteLtd.* Singapore Charteringofmarinevessels 100 100 SealinkOffshore(L)Ltd. FederalTerritory Investmentholding 100 100 ofLabuan, andcharteringof Malaysia marinevessels
SeaAlphaSdn.Bhd.** Malaysia Inactive 100 100
Seabright(Singapore) Singapore Shipowner 100 100 PrivateLimited*
Subsidiary of Sealink Shipyard Sdn. Bhd.
AliranSaksamaSdn.Bhd. Malaysia Lettingofproperties 100 100 andinvestmentholding
Sealink International Berhad (800981-X)
82Annual Report 2017
Notes to the Financial Statements (continued)
15. Investment in subsidiaries (continued)
Detailsofthesubsidiariesareasfollows: Percentage of Country of Principal equity held Name of subsidiaries incorporation activities 2017 2016 % %
Subsidiary of Sealink Engineering And Slipway Sdn. Bhd.
BaramMouldingIndustries Malaysia Lettingofproperty 100 100 Sdn.Bhd. andinvestmentholding
Subsidiary of Sealink Pacific Sdn. Bhd.
BristalViewSdn.Bhd. Malaysia Propertyholding 100 100
Subsidiary of Midas Choice Sdn. Bhd.
SeaLegendShippingSdn.Bhd. Malaysia Investmentholding 100 100
Subsidiary of Sea Legend Shipping Sdn. Bhd.
MitraAngkasaSdn.Bhd. Malaysia Shipownerand 100 100 charteringofvessels
Subsidiaries of Sealink Offshore (L) Ltd.
SealinkResources(L)Ltd.# FederalTerritory Inactive 100 100 ofLabuan, Malaysia
SealinkMarine(L)Ltd.# FederalTerritory Inactive 100 100 ofLabuan, Malaysia
SealinkAntarabangsaLtd. FederalTerritory Charteringof 100 100 ofLabuan, marinevessel Malaysia
PerkasaAsiaCorporationLtd. FederalTerritory Charteringof 100 100 ofLabuan, marinevessel Malaysia
Hanvoir(L)Ltd. FederalTerritory Inactive 100 100 ofLabuan, Malaysia
* AuditedbyafirmotherthanErnst&Young.
** PursuanttoSection550oftheCompaniesAct2016,SeaAlphaSdn.Bhd.andNavitexShippingSdn.Bhd.haveappliedforstrikeofffromtheRegisteron28December2017.
# PursuanttoSection151(4)oftheLabuanCompaniesAct1990,SealinkResources(L)Ltd.andSealinkMarine(L)Ltd.hadon6September2017beenstruckofffromtheRegister.
Sealink International Berhad (800981-X)Annual Report 2017
83
Notes to the Financial Statements (continued)
15. Investment in subsidiaries (continued)
Acquisition of a subsidiary
On30August2016,SeaLegendShippingSdnBhd,asubsidiaryofSealinkInternationalBerhadacquiredbyadditional499,999ordinarysharesand2,500,000redeemablepreferencesharesinMitraAngkasaSdn.Bhd.foratotalcashconsiderationofRM585,604.Consequently,MitraAngkasaSdn.Bhd.becomesawholly-ownedsubsidiary.
Thefairvaluesoftheidentifiableassetsandliabilitiesofsubsidiaryasatthedateofacquisitionwere:
Fair Value 2017 2016 RM RM
Property,plantandequipment - 14,573,905 Tradeandotherreceivables - 747,036 Inventories - 50,549 Cashandbankbalances - 1,297,302 - 16,668,792 Loansandborrowings - (6,903,000) Tradeandotherpayables - (6,571,376) - (13,474,376) Netidentifiableassets - 3,194,416 Less:Previouslyaccountedforasajointventure - (1,597,208) Netidentifiableassetsacquired - 1,597,208 2017 2016 RM RM Theeffectoftheacquisitionsoncashflowsisasfollows:
Totalcostofthebusinesscombination - (585,604) Less:Cashandcashequivalentsofsubsidiariesacquired - 1,297,302 Netcashinflowonacquisitions - 711,698 Reservearisingonacquisition
Group’sinterestinfairvalueofnetidentifiableassets - 1,597,208 Reserveonacquisition - (1,011,604) Costofbusinesscombination - 585,604 Impactofacquisitioninstatementsofprofitorlossandothercomprehensiveincome
Fromthedateofacquisition,MitraAngkasaSdn.Bhd.hadcontributedanetlossofRM434,915totheGroup’slossnetoftax.Ifthecombinationhadtakenplaceatthebeginningofthefinancialyear,theGroup’slossfromcontinuingoperations,netoftaxwouldhavebeenRM57,852,973andrevenuefromcontinuingoperationswouldhavebeenRM124,202,462.
Sealink International Berhad (800981-X)
84Annual Report 2017
Notes to the Financial Statements (continued)
16. Investment in an associate
TheGroup’s interest in theassociate isaccounted forusing theequitymethod in theconsolidatedfinancialstatements.Reconciliationwiththecarryingamountoftheinvestmentinconsolidatedfinancialstatementsissetoutbelow:
Group 2017 2016 RM RM
Unquotedshares,atcost 3,500,000 3,500,000 Shareofpostacquisitionreserves 295,158 1,224,774
3,795,158 4,724,774
Detailsoftheassociateareasfollows:
Percentage of Country of equity held Name of associate incorporation Principal activity 2017 2016 % %
LogistineSdn.Bhd.* Malaysia Providingoffshore 25 25 supportvessels,equipment andengineeringconsultation foroilandgasactivities
* AuditedbyafirmotherthanErnst&Young.
ThesummarisedfinancialinformationoftheassociatenotadjustedfortheproportionofownershipinterestheldbytheCompanyisasfollows:
2017 2016 RM RM
Assets and liabilities: Non-currentassets 49,188,483 51,591,775 Currentassets 4,205,434 5,819,440 Totalassets 53,393,917 57,411,215
Non-currentliabilities (3,559,871) (15,411,718) Currentliabilities (23,744,782) (16,821,308) Totalliabilities (27,304,653) (32,233,026) Results: Revenue 298,480 6,826,508 Lossfortheyear (4,086,609) (1,142,125)
Sealink International Berhad (800981-X)Annual Report 2017
85
Notes to the Financial Statements (continued)
17. Investment in a joint venture
TheGroup’sinterestinthejointventureisaccountedforusingtheequitymethodintheconsolidatedfinancialstatements.Reconciliationwiththecarryingamountoftheinvestmentinconsolidatedfinancialstatementsissetoutbelow:
Group 2017 2016 RM RM Unquotedshares,atcost -Ordinaryshares 1,959,998 2,799,998 -Redeemablepreferenceshares 5,556,004 4,900,004 7,516,002 7,700,002 Shareofpostacquisitionreserves (777,450) (160,439)
6,738,552 7,539,563
Detailsofthejointventureareasfollows: Percentage of Country of equity held Name of joint venture incorporation Principal activities 2017 2016 % % Joint venture of Era Surplus Sdn. Bhd.
SeastenSdn.Bhd. Malaysia Vesselownerandoperator 49 70
ThesummarisedfinancialinformationofthejointventurenotadjustedfortheproportionofownershipinterestheldbytheCompanyisasfollows:
2017 2016 RM RM Assets and liabilities: Non-currentassets 8,945,859 9,753,646 Currentassets 2,398,482 2,293,654 Totalassets 11,344,341 12,047,300
Currentliabilities (1,936,271) (1,119,371) Totalliabilities (1,936,271) (1,119,371)
Results: Revenue 4,617,012 4,046,492 (Loss)/Profitfortheyear (1,519,859) 875,824
Sealink International Berhad (800981-X)
86Annual Report 2017
Notes to the Financial Statements (continued)
18. Inventories
Group 2017 2016 RM RM Cost Consumables 1,588,846 1,535,501 Machineryandequipment 1,461,855 1,574,095 Rawmaterials 11,563,331 12,462,764 Vesselpartsandmaterials 314,862 317,577 Vesselswork-in-progress - 33,974,652 Completedvessel 19,221,849 -
34,150,743 49,864,589
Includedincompletedvesselandvesselswork-in-progressare:
Interestexpense 451,294 1,525,621
19. Trade and other receivables
Group Company 2017 2016 2017 2016 RM RM RM RM Current
Trade receivables Thirdparties 15,418,716 16,212,724 - - Amountduefromajointventure 1,729,767 - - - Less:Allowanceforimpairmentof thirdparties (1,051,561) (497,443) - - Tradereceivables,net 16,096,922 15,715,281 - - Other receivables Refundabledeposits 725,806 951,204 2,000 2,000 Otherreceivables -Others 1,344,686 1,153,361 113,792 136,502 -Subsidiaries - - 840,671 880,371 Amountduefromanassociate 21,159,256 14,994,012 - - Amountduefromsubsidiaries - - 66,763,386 29,730,994 Amountduefromajointventure 135,184 355,810 - -
23,364,932 17,454,387 67,719,849 30,749,867 Less:Allowanceforimpairmentof otherreceivables (536,154) (786,831) - - 22,828,778 16,667,556 67,719,849 30,749,867 38,925,700 32,382,837 67,719,849 30,749,867 Non-current
Other receivables Amountduefromanassociate 394,251 4,991,935 - - Totaltradeandotherreceivables 39,319,951 37,374,772 67,719,849 30,749,867 Add:Cashandbankbalances(Note22) 30,157,806 42,336,149 234,231 1,723,946 Totalloansandreceivables 69,477,757 79,710,921 67,954,080 32,473,813
Sealink International Berhad (800981-X)Annual Report 2017
87
Notes to the Financial Statements (continued)
19. Trade and other receivables (continued)
(a) Trade receivables
Tradereceivablesarenon-interestbearingandaregenerallyon30to60day(2016:30to60day)terms.Theyarerecognisedattheiroriginalinvoiceamountswhichrepresenttheirfairvaluesoninitialrecognition.Tradereceivablesarepartiallysecured.
Ageinganalysisoftradereceivables
TheageinganalysisoftheGroup’stradereceivablesisasfollows:
Group 2017 2016 RM RM
Neitherpastduenorimpaired 4,529,299 4,126,115 1to30dayspastduenotimpaired 4,731,831 4,239,499 31to60dayspastduenotimpaired 2,416,869 3,206,293 61to90dayspastduenotimpaired 1,931,696 1,261,755 91to120dayspastduenotimpaired 742,697 1,473,885 Morethan121dayspastduenotimpaired 1,744,530 1,407,734 11,567,623 11,589,166 Impaired 1,051,561 497,443
17,148,483 16,212,724 Receivablesthatareneitherpastduenorimpaired
TradeandotherreceivablesthatareneitherpastduenorimpairedarecreditworthydebtorswithgoodpaymentrecordswiththeGroup.
NoneoftheGroup’stradereceivablesthatareneitherpastduenorimpairedhavebeenrenegotiatedduringthefinancialyear.
Receivablesthatarepastduebutnotimpaired
TheGrouphastradereceivablesamountingtoRM11,567,623(2016:RM11,589,166)thatarepastdueatthereportingdatebutnotimpaired.
Thebalancesofreceivablesthatarepastduebutnotimpairedareunsecuredinnature.
Receivablesthatareimpaired
TheGroup’stradereceivablesthatareimpairedatthereportingdateandthemovementoftheallowanceaccountsusedtorecordtheimpairmentareasfollows:
Group 2017 2016 RM RM
Totalreceivables 1,051,561 497,443 Less:Allowanceforimpairment (1,051,561) (497,443)
- -
Sealink International Berhad (800981-X)
88Annual Report 2017
Notes to the Financial Statements (continued)
19. Trade and other receivables (continued)
(a) Trade receivables (continued)
Group 2017 2016 RM RM
Movementinallowanceaccounts: At1January 497,443 743,569 Chargefortheyear 608,508 49,473 Reversalofimpairmentlosses(Note5) (36,000) (295,599) Writtenoff (18,390) -
At31December 1,051,561 497,443 Tradereceivablesthatareindividuallydeterminedtobeimpairedatthereportingdaterelatetodebtors
thathavedefaultedonpaymentsandtherearedoubtsastotherecoverability.Thesereceivablesarenotsecuredbyanycollateralorcreditenhancements.
(b) Amount due from subsidiaries
Thisamountisunsecuredandisrepayableondemand.
IncludedintheamountduefromsubsidiariesisanamountofRM62,458,053(2016:RM16,809,530)whichbearsinterestchargeat3.53%(2016:3.52%-5.40%)perannum.
(c) Amount due from an associate
Thisamountisunsecuredandisrepayableondemand.
IncludedintheamountduefromanassociateisanamountofRM4,991,935(2016:RM12,747,063)whichbearsinterestchargeat6.95%(2016:6.95%)perannumandisfullyrepayableby2019.
(d) Amount due from a joint venture
Thisamountisunsecured,non-interestbearingandisrepayableondemand.
(e) Other receivables
Thisamountisunsecured,non-interestbearingandisrepayableondemand.
20. Other current assets
Group Company 2017 2016 2017 2016 RM RM RM RM
Prepaymentforinsurance 195,147 288,668 - - Otherprepaidoperatingexpenses 344,599 267,703 - 3,500 539,746 556,371 - 3,500
Sealink International Berhad (800981-X)Annual Report 2017
89
Notes to the Financial Statements (continued)
21. Investment securities
Group 2017 2016 RM RM Wholesalemoneymarketfund quotedinMalaysia,atmarketvalue 64,641 63,011
22. Cash and bank balances
Group Company 2017 2016 2017 2016 RM RM RM RM
Cashatbanksandonhand 17,974,007 20,890,920 234,231 1,723,946 Shorttermdepositswithlicensedbanks 12,183,799 21,445,229 - - Cashandbankbalances 30,157,806 42,336,149 234,231 1,723,946 DepositsoftheGroupwithlicensedbanksamountingtoRM12,183,799(2016:RM17,819,554)arepledgedto
banksforbankguaranteesissuedtothirdpartiesandforshorttermfacilitiesgrantedbythebankstotheGroup.
IncludedincashandbankbalancesisanamountofRM465,766(2016:RM2,072,999)whichisrestrictedinuseassetbyabankinordertomaintaintheliquidityrequirements.
TheeffectiveinterestratesandthematurityofdepositsoftheGroupasatthereportingdateareasfollows:
Interest rate Maturity 2017 2016 2017 2016 % % Days Days
Depositswithlicensedbanks 2.90 - 3.10 1.55-3.30 15 - 365 31-365
Forthepurposeofthestatementsofcashflows,cashandcashequivalentscomprisethefollowingasatthereportingdate:
Group Company 2017 2016 2017 2016 RM RM RM RM
Cashandbankbalances 30,157,806 42,336,149 234,231 1,723,946 Bankoverdrafts(Note23) (28,775,830) (26,342,030) - - 1,381,976 15,994,119 234,231 1,723,946 Cashatbankrestrictedinuse (465,766) (2,072,999) - - Shorttermdepositspledgedassecurity (12,183,799) (17,819,554) - - Cashandcashequivalents (11,267,589) (3,898,434) 234,231 1,723,946
Sealink International Berhad (800981-X)
90Annual Report 2017
Notes to the Financial Statements (continued)
23. Loans and borrowings
Group Company Maturity 2017 2016 2017 2016 RM RM RM RM Current Secured: Bankoverdrafts(Note22) Ondemand 28,775,830 26,342,030 - - Obligationsunder financeleases (Note29(b)) 2018 44,336 55,049 - - Revolvingcredits 2018 46,000,000 54,200,000 - - Islamicloans - 6,140,000 - 6,140,000 Termloans 2018 25,072,532 44,579,717 - - 99,892,698 131,316,796 - 6,140,000 Non-current Secured: Obligationsunder financeleases (Note29(b)) 2019-2020 41,223 74,359 - - Islamicloans - 1,945,000 - 1,945,000 Termloans 2019-2022 87,803,708 118,249,600 - - 87,844,931 120,268,959 - 1,945,000
Totalloansandborrowings 187,737,629 251,585,755 - 8,085,000
Theremainingmaturitiesoftheloansandborrowingsasat31Decemberareasfollows:
Group Company 2017 2016 2017 2016 RM RM RM RM
Ondemandorwithinoneyear 99,896,349 131,316,796 - 6,140,000 Laterthan1yearbutnot laterthan2years 39,455,438 72,337,873 - 1,945,000 Laterthan2yearsbutnot laterthan5years 48,385,842 47,931,086 - - 187,737,629 251,585,755 - 8,085,000
Bankoverdrafts
BankoverdraftsweresecuredbychargesoverleaseholdlandandbuildingsoftheGroup,legalmortgageonvesselandfixeddepositspledgedtothebank.
Obligationsunderfinanceleases
Thisobligationwassecuredbyachargeovertheleasedassets(Note13).
Revolvingcredits
Revolvingcreditsaresecuredbycorporateguaranteeby theholdingcompany,achargeover theGroup’sleaseholdlandandbuildings,fixeddepositspledgedtothebank,andafreeholdlandownedbyasubsidiary.
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91
Notes to the Financial Statements (continued)
23. Loans and borrowings (continued)
Islamicloans
Islamic loansare securedbycorporateguaranteeof three subsidiaries, fixeddeposits in thenameof thesubsidiaries,andthesubsidiaries’vessels.
Termloans
Theseloansaresecuredbylegalchargesovercertainvessels,assignmentoftimecharterproceedsandleaseholdlandandbuildingsoftheGroup,corporateguaranteebyholdingcompanyandachargeoverfixeddepositsofthesubsidiaries.
Theeffectiveinterestratesat31Decemberforloansandborrowingsareasfollows:
Group Company 2017 2016 2017 2016 % % % % Bankoverdrafts 7.15 - 8.29 6.65-8.31 - - Obligationsunderfinanceleases 4.55 - 4.81 4.55-4.81 - - Termloans -Floatingrates 4.74 - 6.72 2.72-6.72 - - Islamicloans - 5.94 - 5.94 Revolvingcredits 5.07 - 5.90 5.07-5.90 - -
24. Trade and other payables
Group Company 2017 2016 2017 2016 RM RM RM RM
Current Trade payables Thirdparties 8,323,812 9,120,654 - - Other payables Accruedoperatingexpenses 6,813,428 8,674,845 527,390 689,653 Depositsreceived 91,000 63,000 - - Otherpayables 13,142,802 11,850,037 574,394 4,928 Amountduetoholdingcompany 4,000,000 - 4,000,000 - Amounttoarelatedcompany - 30,000 - - Amountduetosubsidiaries - - 81,345,050 40,837,189 24,047,230 20,617,882 86,446,834 41,531,770 Totaltradeandotherpayables 32,371,042 29,738,536 86,446,834 41,531,770 Add:Loansandborrowings(Note23) 187,737,629 251,585,755 - 8,085,000 Totalfinanceliabilitiescarried atamortisedcost 220,108,071 281,324,291 86,446,834 49,616,770
Sealink International Berhad (800981-X)
92Annual Report 2017
Notes to the Financial Statements (continued)
24. Trade and other payables (continued)
(a) Trade payables
Theseamountsarenon-interestbearing.Tradepayablesarenormallysettledon30to90day(2016:30to90day)terms.
(b) Other payables
Theseamounts are non-interestbearing. Included in otherpayables of theGroup is an amount ofRM10,066,543 (2016:RM10,247,230)due tocompanies inwhichcertainDirectorsof theGrouphavesubstantialfinancialinterests.
(c) Amount due to holding company
Thisamountisunsecured,non-interestbearingandisrepayableondemand.
(d) Amount due to subsidiaries
Thisamountisunsecuredandisrepayableondemand.
IncludedintheamountduetosubsidiariesisanamountofRM70,170,259(2016:RM14,089,223)whichbearsinterestatratesrangingfrom3.53%to5.71%(2016:3.52%to5.40%)perannum.
(e) Amount due to a related company
Thisamountisunsecured,non-interestbearingandisrepayableondemand.
25. Deferred tax liabilities
Property, Unutilised Unabsorbed plant and tax capital equipment losses allowances Total Group RM RM RM RM
At1January2016 51,964,239 (10,119,849) (7,020,639) 34,823,751 Recognisedinprofitorloss(Note11) (1,935,089) (589,650) (3,924,656) (6,449,395) At31December2016and1January2017 50,029,150 (10,709,499) (10,945,295) 28,374,356 Recognisedinprofitorloss(Note11) (1,089,192) 863,417 (1,709,326) (1,935,101) At31December2017 48,939,958 (9,846,082) (12,654,621) 26,439,255 Unrecognisedtaxlossesandcapitalallowances
Atthereportingdate,theGrouphasunutilisedtaxlossesandunabsorbedcapitalallowancesofapproximatelyRM40,719,376andRM26,039,994respectively(2016:RM33,937,661andRM26,466,939)thatareavailableforoffsetagainstfuturetaxableprofitsofthecompaniesinwhichthelossesarose,forwhichnodeferredtaxassetisrecognisedduetouncertaintyofitsrecoverability.
Unutilisedtaxlossesandunabsorbedcapitalallowances
TheavailabilityofunutilisedtaxlossesandunabsorbedcapitalallowancesforoffsettingagainstfuturetaxableprofitsoftherespectivesubsidiariesinMalaysiaaresubjecttonosubstantialchangesinshareholdingsundertheIncomeTaxAct,1967andguidelinesissuedbythetaxauthority.
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Notes to the Financial Statements (continued)
26. Share capital and share premium
Amount Number of Share Share ordinary shares capital premium Total RM RM RM Issued and fully paid
Group/Company
Balanceasat1January2016, 500,000,000 250,000,000 79,086,883 329,086,883 31December2016and 1January2017 Transferfromsharepremium accountpursuanttothe CompaniesAct2016 - 79,086,883 (79,086,883) - Balanceasat31December2017 500,000,000 329,086,883 - 329,086,883
TheholdersofordinarysharesareentitledtoreceivedividendsasandwhendeclaredbytheCompany.AllordinarysharescarryonevotepersharewithoutrestrictionsandrankequallywithregardtotheCompanyresidualassets.
TheCompaniesAct2016(“Act”)whichbecameeffectiveon31January2017,abolishedtheconceptofauthorisedsharecapitalandparvalueofsharecapital.Consequently,theamountstandingtothecreditofthesharepremiumbecomespartoftheCompany’ssharecapitalpursuanttothetransitionalprovisionssetoutinSection618(2)oftheAct.Notwithstandingthisprovision,theCompanymaywithin24monthsfromthecommencementoftheAct,usetheamountstandingtothecreditofitssharepremiumofRM79,086,883forpurposesassetoutinSection618(3)oftheAct.Thereisnoimpactonthenumbersofordinarysharesinissueortherelativeentitlementofanyofthemembersasaresultofthistransition.
27. Other reserves
Foreign currency translation reserve Total Group RM RM
At 1 January 2016 60,549,044 60,549,044
Othercomprehensiveincome: Foreigncurrencytranslation 11,487,102 11,487,102
At 31 December 2016 and 1 January 2017 72,036,146 72,036,146
Othercomprehensiveincome: Foreigncurrencytranslation (19,588,334) (19,588,334)
At 31 December 2017 52,447,812 52,447,812
Foreign currency translation reserve
TheforeigncurrencytranslationreserverepresentsexchangedifferencesarisingfromthetranslationofthefinancialstatementsofforeignoperationswhosefunctionalcurrenciesaredifferentfromthatoftheGroup’spresentationcurrency.
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94Annual Report 2017
Notes to the Financial Statements (continued)
28. Related party transactions
(a) Sale and purchase of goods and services
Inadditiontotherelatedpartyinformationdisclosedelsewhereinthefinancialstatements,thefollowingsignificanttransactionsbetweentheGroupandtheCompanyandrelatedpartiestookplaceattermsagreedbetweenthepartiesduringthefinancialyear:
Group Company 2017 2016 2017 2016 RM RM RM RM Transactionswithholdingcompany
Loansfromholdingcompany - - 4,000,000 - Transactionswithsubsidiaries Sundryincome - - (5,067) - Managementfee - - (2,498,822) (3,577,821) Interestincome - - (1,606,147) (1,103,984) Interestexpense - - 2,013,353 1,079,561 Loanstosubsidiaries - - 5,082,242 1,886,835 Transactionswitharelatedcompany
Rentalexpense 120,000 120,000 12,000 12,000 Transactionswithcompaniesin whichcertainDirectorshave substantialinterests Rentalexpense 94,644 90,217 - - Hiringcharges - 210,000 - - Legalandprofessionalfees 60,564 241,969 - - Salesofproperty,plantand equipment - (41,000) - - Manpowersupply (20,758) (7,481) - -
TransactionwithaDirector
Rentalexpense - 3,900 - - Relatedcompanies:
RelatedcompaniesarecompanieswithinSealinkHoldingsSdn.Bhd.group.
(b) Compensation of key management personnel
TheremunerationofDirectorsandothermembersofkeymanagementduringtheyearwasasfollows:
Group Company 2017 2016 2017 2016 RM RM RM RM
Short-termemployeebenefits 4,469,620 4,181,401 2,706,188 2,235,115 Definedcontributionplan 435,610 378,253 282,537 233,469 4,905,230 4,559,654 2,988,725 2,468,584
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95
Notes to the Financial Statements (continued)
29. Commitments
(a) Capital commitments
Capitalexpenditureasatthereportingdateisasfollows:
Group 2017 2016 RM RM Capitalexpenditure Approvedbutnotcontractedfor: Property,plantandequipment 126,968,720 126,968,720
(b) Finance lease commitments
TheGrouphasfinanceleasesforcertainitemsofmotorvehicles(Note13).Theseleasesdonothavetermsofrenewal,buthadpurchaseoptionsatnominalvaluesattheendoftheleaseterm.
Futureminimumleasepaymentsunderfinanceleasestogetherwiththepresentvalueofthenetminimumleasepaymentsareasfollows:
Group 2017 2016 RM RM Minimum lease payments:
Notlaterthan1year 46,728 59,856 Laterthan1yearbutnotlaterthan2years 30,496 41,928 Laterthan2yearsbutnotlaterthan5years 11,991 36,087 Totalminimumleasepayments 89,215 137,871 Less:Amountsrepresentingfinancecharges (3,656) (8,463)
Presentvalueofminimumleasepayments 85,559 129,408
Present value of payments:
Notlaterthan1year 44,336 55,049 Laterthan1yearbutnotlaterthan2years 27,788 39,536 Laterthan2yearsbutnotlaterthan5years 13,435 34,823
Presentvalueofminimumleasepayments 85,559 129,408 Less:Amountduewithin12months(Note23) (44,336) (55,049)
Amountdueafter12months(Note23) 41,223 74,359
30. Fair value of financial instruments
(a) Fair values of financial instruments not carried at fair value Setoutbelow,isacomparisonofthecarryingamountsandfairvaluesoftheGroup’sfinancialinstruments,
byclass,otherthanthosewithcarryingamountswhicharereasonableapproximationsoffairvalues:
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Notes to the Financial Statements (continued)
30. Fair value of financial instruments (continued)
(a) Fair values of financial instruments not carried at fair value (continued)
Carrying amount Fair value 2017 2016 2017 2016 RM RM RM RM Group Financial liabilities: Non-current: Interest-bearingloansandborrowings -Obligationsunderfinanceleases 41,223 74,359 41,165 74,219 Themethodsandassumptionsusedtoestimatethefairvaluesofthefinancialinstrumentsnotcarriedat
fairvalueareasfollows:
Loans,advancesandfinancing
Thefairvaluesoffixedrateloans/financingwithremainingmaturityoflessthanoneyearandvariablerateloans/financingareestimatedtoapproximatetheircarryingamounts.Forfixedrateloans/financingwithremainingmaturityofmorethanoneyear,thefairvaluesareestimatedbasedondiscountedcashflowsusingprevailingmarketratesofloans/financingofsimilarcreditrisksandmaturity.Thefairvaluesofimpairedloans/financingarerepresentedbytheircarryingamounts,netofanycollectiveandindividualassessmentallowances,beingtheexpectedrecoverableamount.
(b) Determination of fair value
Thefollowingareclassesoffinancial instruments thatarenotcarriedat fairvalueandwhosecarryingamountsarereasonableapproximationoffairvalues:
Note
Tradeandotherreceivables 19 Tradeandotherpayables 24 Loansandborrowings(currentandnon-current, 23 exceptnon-currentfixedratesloansandborrowings)
Thecarryingamountsofthesefinancialassetsandliabilitiesarereasonableapproximationoffairvaluesduetotheirshort-termnature.
Financial guarantees
Thefairvalueoffinancialguaranteesisdeterminedbasedontheprobabilityweighteddiscountedcashflowmethod.Theprobabilityhasbeenestimatedandassignedforthefollowingkeyassumptions:
- Thelikelihoodoftheguaranteedpartydefaultingwithintheguaranteedperiod;
- Theexposureontheportionthatisnotexpectedtoberecoveredduetotheguaranteedparty’sdefault;
- Theestimatedlossexposureifthepartyguaranteedweretodefault
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Notes to the Financial Statements (continued)
31. Fair value measurement
Fair value hierarchy
TheGroupclassifiesfairvaluemeasurementusingafairvaluehierarchythatreflectsthesignificanceoftheinputsusedinmakingthemeasurements.Thefairvaluehierarchyhasthefollowinglevels:
Level1- Quotedpricesinactivemarketsforidenticalassetsorliabilities;
Level2- InputsotherthanquotedpricesincludedinLevel1thatareobservablefortheassetorliability,eitherdirectlyorindirectly;and
Level3- Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs).
ThefollowingtableprovidesthefairvaluemeasurementhierarchyoftheGroup’sassetsandliabilities.
Quantitativedisclosuresfairvaluemeasurementhierarchyforassetsandliabilitiesasat31Decemberareasfollows:
Level 1 Level 2 Level 3 Total RM RM RM RM Group
At 31 December 2017
Assets measured at fair value: Wholesalemoneymarketfund 64,641 - - 64,641 Liabilities for which fair values are disclosed: (Note 30(a)) Interest-bearingloansandborrowings -Non-currentobligationsunder financeleases - 41,165 - 41,165
At 31 December 2016
Assets measured at fair value: Wholesalemoneymarketfund 63,011 - - 63,011
Liabilities for which fair values are disclosed: (Note 30(a)) Interest-bearingloansandborrowings -Non-currentobligationsunder financeleases - 74,219 - 74,219
TherehavebeennotransfersbetweenLevel1andLevel2duringthefinancialyear.
32. Financial risk management objectives and policies
TheGroupandtheCompanyareexposedtofinancialrisksarisingfromtheiroperationsandtheuseoffinancialinstruments.TheGroup’soverallfinancialriskmanagementstrategyseekstominimisepotentialadverseeffectsoffinancialperformanceoftheGroup.Thekeyfinancialrisksincludecreditrisk,liquidityrisk,interestrateriskandforeigncurrencyrisk.
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98Annual Report 2017
Notes to the Financial Statements (continued)
32. Financial risk management objectives and policies (continued)
FinancialriskmanagementpoliciesareperiodicallyreviewedandapprovedbytheBoardofDirectorsandexecutedbythemanagement.TheauditcommitteeofSealinkInternationalBerhadprovidesindependentoversighttotheeffectivenessoftheriskmanagementprocess.
Itisandhasbeenthroughoutthecurrentandpreviousfinancialyear,theGroup’sandtheCompany’spolicythatnoderivativesshallbeundertaken.
ThefollowingsectionsprovidedetailsregardingtheGroup’sandCompany’sexposuretotheabove-mentionedfinancialrisksandtheobjectives,policiesandprocessesforthemanagementoftheserisks.
(a) Credit risk
Creditriskistheriskoflossthatmayariseonoutstandingfinancialinstrumentsshouldacounterpartydefaultonitsobligations.Atthereportingdate,theGroup’sexposuretocreditriskarisesprimarilyfromtradeandotherreceivables.TheCompany’sexposuretocreditriskarisesprincipallyfromloansandadvancestosubsidiariesandfinancialguaranteegiventobanksforcreditfacilitiesgrantedtosubsidiaries.
Financialassetsthatareneitherpastduenorimpaired
InformationregardingtradeandotherreceivablesthatareneitherpastduenorimpairedisdisclosedinNote19.Depositswithbanksandotherfinancialinstitutionsthatareneitherpastduenorimpairedareplacedwithorenteredintowithreputablefinancialinstitutionsorcompanieswithhighcreditratingsandnohistoryofdefault.
Financialassetsthatareeitherpastdueorimpaired
InformationregardingfinancialassetsthatareeitherpastdueorimpairedisdisclosedinNote19. (b) Liquidity risk
LiquidityriskistheriskthattheGrouportheCompanywillencounterdifficultyinmeetingfinancialobligationsduetoshortageoffunds.TheGroup’sandtheCompany’sexposuretoliquidityriskarisesprimarilyfrommismatchesofthematuritiesoffinancialassetsandliabilities.TheGroupadoptsaprudentapproachtomanagingitsliquidityrisk.TheGroupalwaysmaintainssufficientcashandcashequivalents,andhasavailablefundingthroughadiversesourceofcommittedanduncommittedcreditfacilitiesfromvariousbanks.
Analysisoffinancialinstrumentsbyremainingcontractualmaturities
ThetablebelowanalysesthematurityprofileoftheGroup’sandtheCompany’sfinancialliabilitiesbasedoncontractualundiscountedrepaymentobligations.
On demand or within One to one year five years Total RM RM RM Group
At 31 December 2017
Financialliabilities: Tradeandotherpayables 32,371,042 - 32,371,042 Loansandborrowings 106,488,906 93,862,579 200,351,485 Totalundiscountedfinancialliabilities 138,859,948 93,862,579 232,722,527
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Notes to the Financial Statements (continued)
32. Financial risk management objectives and policies (continued)
(b) Liquidity risk (continued)
On demand or within One to one year five years Total RM RM RM Group
At 31 December 2016
Financialliabilities: Tradeandotherpayables 29,738,536 - 29,738,536 Loansandborrowings 138,650,730 123,502,211 262,152,941 Totalundiscountedfinancialliabilities 168,389,266 123,502,211 291,891,477 Company At 31 December 2017
Financialliabilities: Tradeandotherpayables 86,446,834 - 86,446,834 Financialguaranteecontracts* 173,087,669 - 173,087,669 Totalundiscountedfinancialliabilities 259,534,503 - 259,534,503 At 31 December 2016
Financialliabilities: Tradeandotherpayables 41,531,770 - 41,531,770 Loansandborrowings 6,508,855 1,979,697 8,488,552 Financialguaranteecontracts* 221,501,367 - 221,501,367 Totalundiscountedfinancialliabilities 269,541,992 1,979,697 271,521,689
* Basedonthemaximumamountthatcanbecalledunderthefinancialguaranteecontracts.
(c) Interest rate risk
InterestrateriskistheriskthatthefairvalueorfuturecashflowsoftheGroup’sandtheCompany’sfinancialinstrumentswillfluctuatebecauseofchangesinmarketinterestrates.
TheGroup’sandtheCompany’sexposuretomarketriskforchangesininterestratesariseprimarilyfromtheirloansandborrowings.
Sensitivityanalysisforinterestraterisk
Atthereportingdate,ifinterestrateshadbeenlower/higherby10basispointswithallothervariablesheldconstant,theGroup’slossnetoftaxwouldhavebeenRM160,013(2016:RM191,107)higher/lower,arisingmainlyasaresultoflower/higherinterestexpenseonfloatingrateloansandborrowings.Theassumedmovementinbasispointsforinterestratesensitivityanalysisisbasedonthecurrentlyobservablemarketenvironment.
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100Annual Report 2017
Notes to the Financial Statements (continued)
32. Financial risk management objectives and policies (continued)
(d) Foreign currency risk
Foreigncurrencyriskistheriskthatthefairvalueorfuturecashflowsofafinancialinstrumentwillfluctuatebecauseofchangesinforeignexchangerates.
TheGrouphastransactionalcurrencyexposuresarisingfromsalesandpurchasesthataredenominatedinacurrencyotherthantherespectivefunctionalcurrencyofGroupentities,primarilyRinggitMalaysia(RM),SingaporeDollar(SGD)andUnitedStatesDollars(USD).TheforeigncurrenciesinwhichthesetransactionsaredenominatedaremainlySingaporeDollar(SGD),UnitedStatesDollars(USD),AustralianDollars(AUD)andBruneiDollar(BND).
TheGroupuses forwardcurrencycontracts tominimise theexposuresarising fromsalesaftera firmcommitmenthasbeenentered.ItistheGroup’spolicynottoenterintoforwardcontractsuntilfirmcommitmentisinplace.
Foreignexchangeexposuresintransactionalcurrenciesotherthanfunctionalcurrenciesoftheoperatingentitiesarekept toanacceptable level.TheGroupmaintainsanaturalhedge,wheneverpossible,byborrowingorholdingcashandcashequivalentsdenominatedinforeigncurrencies.
Sensitivityanalysisforforeigncurrencyrisk
Thefollowingtabledemonstratesthesensitivityof theGroup’s lossnetof taxtoareasonablypossiblechangeintheSGD,USDandBNDagainstRMexchangerate,RMandUSDagainstSGDexchangerateandSGD,RMandAUDagainstUSDexchangeratewithallothervariablesheldconstant.
Group Company Loss net of tax Loss net of tax 2017 2016 2017 2016 RM RM RM RM
SGD/RM-strengthenby5% 639,656 (475,241) 1,938 1,983 SGD/RM-weakenby5% (639,656) 475,241 (1,938) (1,983)
USD/RM-strengthenby5% (1,123,819) (833,115) 1,442 1,600 USD/RM-weakenby5% 1,123,819 833,115 (1,442) (1,600)
BND/RM-strengthenby5% (10,622) - - - BND/RM-weakenby5% 10,622 - - -
RM/SGD-strengthenby5% (365,493) 377,811 - - RM/SGD-weakenby5% 365,493 (377,811) - - USD/SGD-strengthenby5% (2,699,466) 1,208,782 - - USD/SGD-weakenby5% 2,699,466 (1,208,782) - - SGD/USD-strengthenby5% (51,946) (69,473) - - SGD/USD-weakenby5% 51,946 69,473 - - RM/USD-strengthenby5% (148,712) (589) - - RM/USD-weakenby5% 148,712 589 - - AUD/USD-strengthenby5% - 10,613 - - AUD/USD-weakenby5% - (10,613) - -
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101
Notes to the Financial Statements (continued)
33. Capital management
TheGroup’sobjectiveswhenmanagingcapitalaretosafeguardtheGroup’sabilitytocontinueasagoingconcernandtomaintainanoptimalcapitalstructuresoastomaximiseshareholdersvalue.Inordertomaintainorachieveanoptimalcapitalstructure,theGroupmayadjustthedividendpayment,returncapitaltoshareholders,obtainnewfinancingfacilitiesordisposeassetstoreduceborrowings.
Managementmonitorscapitalbasedon theGroup’sand theCompany’sgearing ratio. TheGroupand theCompanyarealsorequiredbycertainbankstomaintainagearingratioofnotexceedingcertainpercentagevaryingbetween100%and200%.TheGroup’sandtheCompany’sstrategiesaretomaintaingearingratioofnotexceeding100%.
Thegearingratioiscalculatedastotalloansandborrowingsdividedbyequitycapital.
Group Company Note 2017 2016 2017 2016 RM RM RM RM
Loansandborrowings 23 187,737,629 251,585,755 - 8,085,000
Totalequity 385,135,453 454,453,417 367,147,452 368,451,122
Gearingratio 48.75% 55.36% - 2.19%
34. Segment information
Formanagementpurposes,theGroupisorganisedintobusinessunitsbasedontheirproductsandservices,andhastworeportableoperatingsegmentsasfollows:
I. Shipbuilding
II. Charteringofvessels
III. Othersconsistofinvestmentholdingandlettingofproperties
Exceptasindicatedabove,nooperatingsegmentshavebeenaggregatedtoformtheabovereportableoperatingsegments.
Managementmonitorstheoperatingresultsofitsbusinessunitsseparatelyforthepurposeofmakingdecisionsaboutresourceallocationandperformanceassessment.Segmentperformanceisevaluatedbasedonoperatingprofitorlosswhich,incertainrespectsasexplainedinthetablebelow,ismeasureddifferentlyfromoperatingprofitorlossintheconsolidatedfinancialstatements.Groupfinancing(includingfinancecostsrecognisedinprofitorloss)andincometaxesaremanagedonagroupbasisandarenotallocatedtooperatingsegments.
Transferpricesbetweenoperatingsegmentsareonanarm’slengthbasisinamannersimilartotransactionswiththirdparties.
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102Annual Report 2017
Notes to the Financial Statements (continued)
34
. S
egm
ent i
nfo
rmat
ion
(co
ntin
ued
)
Per
con
solid
ated
Adj
ustm
ents
and
fi
nanc
ial
Shi
pbui
ldin
g
C
hart
erin
g
Oth
ers
elim
inat
ions
sta
tem
ents
2017
20
16
2017
20
16
2017
20
16
2017
20
16
20
17
2016
RM
R
M
RM
R
M
RM
R
M
RM
R
M
Not
es
RM
R
M
Rev
enue
:
Externalcus
tomers
21,8
66,7
21
60,784
,263
53
,318
,084
62
,117
,393
-
--
-
75,1
84,8
05
122,90
1,65
6
Inter-s
egmen
t3,
525,
610
5,50
1,55
414
,130
,404
19
,056
,849
2,
576,
822
3,65
5,82
1(2
0,23
2,83
6)
(28,21
4,22
4)
A
--
Totalrev
enue
25
,392
,331
66
,285
,817
67
,448
,488
81
,174
,242
2,
576,
822
3,65
5,82
1(2
0,23
2,83
6)
(28,21
4,22
4)
75
,184
,805
12
2,90
1,65
6
Res
ults
:
Interestin
come
6,16
0,58
84,53
8,73
04,
431,
508
3,43
8,82
73,
309,
981
1,52
6,38
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3,50
2)
(6,808
,361
)
3,02
8,57
52,69
5,58
3
Dep
reciationan
d
amortisation
4,24
5,52
95,41
7,96
442
,139
,796
44
,340
,780
36
7,365
32
7,97
0(2
,846
,600
)(3,008
,506
)
43,9
06,0
90
47,078
,208
Othernon
-cas
h
exp
ense
s13
1,47
9(527
,003
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5,40
830
,409
,406
-
910
(179
,442
)53
2,46
0B
767,4
45
30,415
,773
Segm
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s(1
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,385
)(8,608
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)(4
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2,76
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(49,90
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(3,2
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(25,81
3,95
6)
2,42
9,27
721
,251
,489
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(50,
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(63,07
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Ass
ets:
Inve
stmen
tinan
assoc
iate
--
--
3,79
5,15
84,72
4,77
4-
-
3,79
5,15
84,72
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Inve
stmen
tina
jointven
ture
--
6,73
8,55
2-
-7,53
9,56
3-
-
6,73
8,55
27,53
9,56
3
Add
ition
sto
non
-currentassets
565,
348
42,486
14
,417
,744
36
,772
,554
-
215,06
9(1
3,87
0,00
0)
(36,25
9,27
3)
D
1,11
3,09
277
0,83
6
Segm
enta
ssets
183,
329,
139
201,53
8,82
775
9,63
6,59
684
3,72
3,25
954
8,55
3,51
549
2,01
2,44
4(8
58,7
16,8
48)
(773
,041
,392
)E
632,
802,
402
764,23
3,13
8
Segm
entliabilities
117,
194,
265
133,43
3,31
3 41
0,72
5,04
640
5,07
5,20
813
8,48
6,21
8 10
8,38
2,53
0 (4
18,7
38,5
80)
(337
,111
,330
)F
247,
666,
949
309,77
9,72
1
Sealink International Berhad (800981-X)Annual Report 2017
103
Notes to the Financial Statements (continued)
34. Segment information (continued)
A Inter-segmentrevenuesareeliminatedonconsolidation.
B Othermaterialnon-cashexpensesconsistofthefollowingitemsaspresentedintherespectivenotestothefinancialstatements:
2017 2016 Note RM RM
Inventorieswrittenoff 8 106,648 543,670 Property,plantandequipmentwrittenoff 8 31,473 564,465 Impairmentlossontradeandotherreceivables 8 629,324 89,998 Impairmentlossonproperty,plantandequipment 8 - 30,487,178 Reversalofinventorieswrittenoff 8 - (1,269,538) 767,445 30,415,773
C Thefollowingitemsareaddedto/(deductedfrom)segmentlosstoarriveat“Lossbeforetax”presentedintheGroup’sstatementsofprofitorlossandothercomprehensiveincome:
2017 2016 RM RM
Profitfrominter-segmentsales (6,811,474) (4,561,158) Financecosts 10,830,981 6,740,030 Shareofresultsofanassociate (1,021,652) (1,370,159) Shareofresultsofajointlycontrolledentity (950,121) 391,017 Unallocatedcorporateexpenses 381,543 20,051,759 2,429,277 21,251,489
D Additionstonon-currentassetsconsistof:
Property,plantandequipment 1,113,092 770,836
E Thefollowingitemsareaddedto/(deductedfrom)segmentassetstoarriveattotalassetsreportedintheGroup’sstatementsoffinancialposition:
2017 2016 RM RM
Investmentinsubsidiaries (395,763,173) (395,633,175) Investmentinanassociate 295,158 1,224,774 Investmentinajointventure (777,450) (160,439) Inter-segmentassets (462,471,383) (378,472,552) (858,716,848) (773,041,392)
Sealink International Berhad (800981-X)
104Annual Report 2017
Notes to the Financial Statements (continued)
34. Segment information (continued)
F Thefollowingitemsareaddedto/(deductedfrom)segmentliabilitiestoarriveattotalliabilitiesreportedintheGroup’sstatementsoffinancialposition:
2017 2016 RM RM
Deferredtaxliabilities 12,272,272 10,924,871 Inter-segmentliabilities (431,010,852) (348,036,201) (418,738,580) (337,111,330)
Geographicalinformation
Revenueandnon-current assets informationbasedon thegeographical locationof customersandassetsrespectivelyareasfollows:
Revenue Non-current assets 2017 2016 2017 2016 RM RM RM RM
Malaysia 71,776,956 52,993,771 491,052,621 563,494,137 Singapore 3,407,849 11,726,293 26,155,777 56,969,365 UnitedArabEmirates - 58,181,592 - - 75,184,805 122,901,656 517,208,398 620,463,502 Non-currentassets informationpresentedaboveconsist of the following itemsaspresented in theGroup’s
statementsoffinancialposition:
2017 2016 RM RM
Property,plantandequipment 506,551,704 609,228,055 Landuserights 10,656,694 11,235,447
517,208,398 620,463,502
35. Authorisation of financial statements for issue
Thefinancialstatementsfortheyearended31December2017wereauthorisedforissueinaccordancewitharesolutionoftheDirectorson3April2018.
Sealink International Berhad (800981-X)Annual Report 2017
105
LandedProperties
LandIdentification /Postal Address
Lot156,Block5,KualaBaramLandDistrict/[Lot156,KualaBaramIndustrialEstate,98100KualaBaram,Miri,Sarawak]
Lot816,Block1,KualaBaramLandDistrict(formerlyknownasLot1282,KualaBaramLandDistrict)/[Lot816,KualaBaramIndustrialEstate,98100KualaBaram,Miri,Sarawak]
Lot1341,MiriConcessionLandDistrict/[Lot1341,JalanCattleya1,Krokop/PiasauIndustrialEstate,98000Miri,Sarawak]
Lot2142,Block4,MiriConcessionLandDistrict/[Lot2142,JalanCattleya1,Krokop/PiasauIndustrialEstate,98000Miri,Sarawak]
Lot1339,MiriConcessionLandDistrict/[Lot1339,JalanCattleya1,Krokop/PiasauIndustrialEstate,98000Miri,Sarawak]
Lot372,Block1,KualaBaramLandDistrict/[Lot372,KualaBaramIndustrialEstate,98100KualaBaram,Miri,Sarawak]
Lot1340,MiriConcessionLandDistrict/[Lot1340,JalanCattleya1,Krokop/PiasauIndustrialEstate,98000Miri,Sarawak]
Descriptionof Property
Vacantagriculture
land
Industriallandandbuilding
Industriallandandbuilding
Industriallandandbuilding
Industriallandandbuilding
Vacantindustrial
land
Industriallandandbuilding
ApproximateAge of theBuilding(Years)
N/A
10
9
9
48
N/A
38
Tenure/Dateof Expiry of
Lease
60years/Leasetermexpireson02.08.2071
60years/Leasetermexpireson27.02.2056
60years/Leasetermexpireson31.12.2027
60years/Leasetermexpireson24.02.2052
60years/Leasetermexpireson31.12.2027
60years/Leasetermexpireson07.04.2057
60years/Leasetermexpireson31.12.2027
Areamore or
less(sq m)
8,050
116,170
1,971
4,700
4,059
123,780
4,039
Net Book Value as at
31.12.2017(RM’000)
180
19,734
376
1,537
663
9,546
1,245
SEALINK SHIPYARD SDN BHD (195853-D)
Usage
N/A
Shipyard,slipwayand
fabricationyard
Vacantworkshopand
vacantworkersquarters
Shipyardwithone(1)detached
building(workersquartersand
vacantworkshop)
One(1)singlestoreyofficecumworkshop
N/A
Utilizeasashipyardwithone(1)detached
building(workshopandwarehouse)
SEALINK SENDIRIAN BERHAD (20471-D)
Sealink International Berhad (800981-X)
106Annual Report 2017
Landed Properties (continued)
LandIdentification /Postal Address
Lot482,Block4,MiriConcessionLandDistrict/[Lot482,Block4,MiriConcessionLandDistrict,98009Miri,Sarawak]
Lot8133,Block1,LambirLandDistrict(formerlyknownasLot1802,LambirLandDistrict)[2/10thundividedrighttitleshare&interest]/[2½Mile,Kilometre4,RiamRoad,Miri,Sarawak]
Lot323,Block1,KualaBaramLandDistrict(formerlyknownasProvisionalLeaseLot2040,KualaBaramLandDistrict)/[Lot323,KualaBaramIndustrialEstate,98100Miri,Sarawak]
Lot8139,DistrictofLabuan,WilayahPersekutuan(FormerlyknownasCountryLease205316669)/[JalanRancha-RanchaLama,KampungRancha-Rancha,87000Labuan,WilayahPersekutuan,Labuan]
Lot12039,DistrictofLabuan,WilayahPersekutuan(FormerlyknownasCountryLease205316669)/[JalanRancha-RanchaLama,KampungRancha-Rancha,87000Labuan,WilayahPersekutuan,Labuan]
Lot288,Block1,KualaBaramLandDistrict/[Lot288,KualaBaramIndustrialEstate,98100KualaBaram,Miri,Sarawak]
Descriptionof Property
Vacantindustrial
land
Vacantagriculture
land
Industriallandandbuilding
Vacantindustrial
land
Vacantindustrial
land
Industrialland
andbuilding
ApproximateAge of theBuilding(Years)
N/A
N/A
9
N/A
N/A
8
Tenure/Dateof Expiry of
Lease
60years/Leasetermexpireson11.06.2036
60years/Leasetermexpireson02.10.2071
60years/Leasetermexpireson17.07.2058
999years/Leasetermexpireson02.08.2865
999years/Leasetermexpireson02.08.2865
60years/Leasetermexpireson22.10.2067
Areamore or
less(sq m)
19,441
23,110
19,750
9,841
31,330
19,647
Net Book Value as at
31.12.2017(RM’000)
6,305
78
3,530
570
1,814
2,001
SEALINK SENDIRIAN BERHAD (20471-D)
Usage
N/A
N/A
Usedforthree(3)detached
buildingsutilizedasoffice,storage
yard&latheworkshop
N/A
N/A
Two(2)blocksofworkers
quarters
BARAM MOULDING INDUSTRIES SDN BHD (200873-D)
BRISTAL VIEW SDN BHD (253385-T)
ALIRAN SAKSAMA SDN BHD (473205-H)
Sealink International Berhad (800981-X)Annual Report 2017
107
AnalysisofShareholdingsas at 30 March 2018
Class of Equity Security
Issuedandpaidupcapital : RM250,000,000.00comprisingof500,000,000ordinaryshares
ClassofShares : Ordinaryshares
Votingrights : Onevoteperordinaryshare(onapoll)
Distribution of Shareholdings
No. of No. of Holders % Holdings %
1-99 5 0.17 204 0.00100-1,000 723 24.83 155,500 0.031,001-10,000 957 32.86 6,140,396 1.2310,001-100,000 1,004 34.48 37,339,600 7.47100,001-24,999,999* 220 7.55 84,184,301 16.8425,000,000andabove** 3 0.10 372,179,999 74.44
Total 2,912 100.00 500,000,000 100.00
Remark :*lessthan5%ofissuedholdings
:**5%Andaboveofissuedholdings
Directors’ Shareholdings
No. of Shares No. of SharesName Of Directors Direct % Indirect %
1. EricKhooChuanSyn@KhooChuanSyn 30,000 0.01 - 0.002. DatukSebastianTingChiewYew 137,500 0.03 - 0.003. TohKianSing - 0.00 - 0.004. WongChieBin 30,000 0.01 - 0.00 CIMSECNominees(Tempatan)SdnBhd - 0.00 60,000 0.01 CIMBBankForWongChieBin(M73031)5. YongFohChoi 45,716,800 9.14 326,463,199(a) 65.296. YongKiamSam 67,382,399 13.48 304,797,600(b) 60.96
Total 113,296,699 22.66 631,320,799 126.26
Note :(a)DeemedinterestbyvirtueofhissubstantialshareholdinginSealinkHoldingsSdnBhdandhisson,YongKiam
Sam’sshareholdingintheCompany(b)Deemedinterestbyvirtueofhisfather,YongFohCho’ssubstantialshareholdinginSealinkHoldingsSdnBhdand
alsohisfather’sshareholdingintheCompany
Substantial Shareholders
No. of Shares No. of SharesName Direct % Indirect %
SealinkHoldingsSdn.Bhd.(164959-P) 259,080,800 51.82 - -YongKiamSam 67,382,399 13.48 304,797,600 60.96YongFohChoi 45,716,800 9.14 326,463,199 65.29
Sealink International Berhad (800981-X)
108Annual Report 2017
Analysis of Shareholdings (continued)
Thirty (30) Largest Shareholders
No. Name Shareholdings %
1. SealinkHoldingsSdn.Bhd. 259,080,800 51.822. YongKiamSam 67,382,399 13.483. YongFohChoi 45,716,800 9.144. AffinHwangNominees(Tempatan)Sdn.Bhd. 6,832,900 1.37 Pledged Securities Account For Kong Sing Nguong (M05)5. TingHuaPing 3,392,500 0.686. YiiSiewSang 3,180,000 0.647. DataHasratSdnBhd 2,000,000 0.408. LaiChunLian 1,695,500 0.349. LeeCheeKeong 1,314,900 0.2610. KenangaNominees(Tempatan)SdnBhd 1,247,000 0.25 Pledged Securities Account For Ting Hua Kuok (ET) 11. HSBCNominees(Asing)SdnBhd 1,227,000 0.2512. AffinHwangNominees(Tempatan)Sdn.Bhd. 1,180,000 0.24 Pledged Securities Account For Teh Poo Seng (M02)13. TanCheowHo 1,100,000 0.2214. TengkuABMalekBinTengkuMohamed 1,100,000 0.2215. RHBNominees(Tempatan)SdnBhd 1,097,000 0.22 Pledged Securities Account For Lee Tian An16. AffinHwangNominees(Tempatan)Sdn.Bhd. 1,087,000 0.22 Pledged Securities Account For Chew Cheong Ber (M02) 17. GanLayHar 1,042,000 0.2118. LeasingCorporationSdnBhd 1,009,000 0.2019. PublicNominees(Tempatan)SdnBhd 921,600 0.18 Pledged Securities Account For Sin Huan Kwang (E-TWU)20. RHBCapitalNominees(Tempatan)SdnBhd 900,000 0.18 Pledged Securities Account For Teh Poo Seng (CEB)21. SPJutajayaSdnBhd 873,100 0.1722. LauKaTee 850,000 0.1723. AgrosegarSdnBhd 800,000 0.1624. BahteraOffshore(M)SdnBhd 800,000 0.1625. AMSECNominees(Tempatan)SdnBhd 750,000 0.15 Pledged Securities Account For Harold Tan Hong Lee 26. NgWanWa 750,000 0.1527. PublicNominees(Tempatan)SdnBhd 736,000 0.15 Pledged Securities Account For Voon Fook Soon (E-PDG/JPN)28. LeeCheeKok 720,000 0.1429. PublicInvestNominees(Asing)SdnBhd 705,000 0.14 Exempt An For Phillip Securities Pte Ltd (CLIENTS)30. AMSECNominees(Tempatan)SdnBhd 700,000 0.14 Pledged Securities Account For Kong Sing Nguong
Total 410,190,499 82.04
TotalIssuedShareholdings 500,000,000
S INTERNATIONAL BERHAD
(800981-X)
EALINK
I/We______________________________________________________NRICNo./CompanyNo._____________________________
of______________________________________________________________________________________________________being*amember/membersofSEALINK INTERNATIONAL BERHADherebyappoint______________________________________________________________________________________________NRICNo.________________________________
of______________________________________________________________________________________________________orfailinghim/her,_________________________________________________NRICNo._________________________________
of______________________________________________________________________________________________________orChairmanofthemeetingasmy/ourproxytovoteforme/usonmy/ourbehalf,attheTenthAnnualGeneralMeeting(“10thAGM”)oftheCompanytobeheldonTuesday,22May2018at11:00a.m.andatanyadjournmentthereoffor/against*theresolution(s)tobeproposedthereat.
NO. RESOLUTIONS FOR AGAINST
1. ToapprovethepaymentofDirectors’FeesamountingtoRM277,830.00perannumforNon-ExecutiveDirectorsandRM39,690.00perannumforExecutiveDirectorsforthefinancialyearending31December2018.
2. Tore-electMrWongChieBinasDirectoroftheCompany.
3. Tore-electMrTohKianSingasDirectoroftheCompany.
4. Tore-appointMessrsErnst&YoungastheAuditorsoftheCompanyandtoauthorisetheDirectorstodeterminetheirremuneration.
5. ContinuationinofficeofMrWongChieBinasIndependentNon-ExecutiveDirector.
6. ContinuationinofficeofMrTohKianSingasIndependentNon-ExecutiveDirector.
(Pleaseindicatewith(X)howyouwishyourvotetobecast.Ifnospecificdirectionastovotingisgiven,theproxywillvoteashethinksfitorabstainfromvotingathisdiscretion).Datedthis______dayofMay,2018.
_______________________________________SignatureofShareholder(s)/CommonSeal
NOTES:1. OnlyDepositorswhosenamesappearintheGeneralMeetingRecordofDepositorsasat16May2018beregardedasMembers
andshallbeentitledtoattend,speakandvoteatthe10thAGM.
2. AMembermayappointaproxytoattend,speakandvoteonhisbehalf.AproxyneednotbeamemberoftheCompany.
3. WhereamemberoftheCompanyisanexemptauthorizednomineewhichholdsordinarysharesintheCompanyformultiplebeneficialownersinonesecuritiesaccount(omnibusaccount),thereisnolimittothenumberofproxieswhichtheexemptauthorizednomineemayappointinrespectofeachomnibusaccountitholds.
4. Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointororofhisattorneydulyauthorizedinwritingoriftheappointorisacorporation,eitherunderitscommonsealorunderthehandofanofficerorattorneyofthecorporationdulyauthorized.
5. TheinstrumentappointingaproxymustbedepositedattheregisteredofficeoftheCompanyatLot1035,Block4,MCLD,PiasauIndustrialArea,98000Miri,Sarawak,notlessthan48hoursbeforethetimesetforthis10thAGMoranyadjournmentthereof.
6. PursuanttoParagraph8.29A(1)oftheMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhad,allresolutionssetoutinthisNoticewillbeputtovotebywayofpoll.
No. of Shares Held :
FormofProxy
Lot1035,Block4,MCLD,PiasauIndustrialArea,98000Miri,Sarawak
TheCompanySecretary
SEALINK INTERNATIONAL BERHAD (800981-X)
1stfoldhere
Thenfoldhere
AFFIXSTAMP
Foldthisflapforsealing
DetailsoftheGroupPLACESOFOPERATIONS/OFFICES
HeadquartersLot 1035, Block 4, MCLD, Piasau Industrial Area, 98000 Miri, SarawakTel : 085-651 778Fax : 085-652 480
Other Places of Operations Lot 816, Block 1, Kuala Baram Land District, 98100 Kuala Baram Miri, Sarawak Tel : 085- 605 767Fax : 085- 605 428
Lot 1339, Jalan Cattleya 1, MCLD, Krokop, 98000 Miri, SarawakTel : 085-605 767Fax : 085-605 428
545 Orchard Road #09-07, Far East Shopping Centre, 238882 SingaporeTel : +65 6737 7911Fax : +65 6737 4889
Lot 20, Manmohan’s Warehouse,Jalan Patau Patau,87000 Wilayah Persekutuan LabuanTel : 087-581 686Fax : 087-582 686
Lot 18234 Ground Floor & First Floor,Jalan Air Putih, Kampung Jaya,24000 Chukai Kemaman,TerengganuTel : 09-850 4012 Fax : 09-850 4013
SINTERNATIONAL BERHAD
(800981-X)
EALINK